PIB, PETRO-DOLLARS AND PETRO-INDUCED POVERTY: THE PLIGHT OF OIL PRODUCING COMMUNITIES
The Beverly Hillbillies was an American sitcom created by Paul Henning and broadcast by CBS for nine seasons in the sixties and early seventies. In that series, poor mountaineer, Jed Clampett accidentally strikes oil on his Appalachian property. Oil company executive, Brewstar of OK Oil company offers a fortune to Jed to acquire the drilling license and that’s how the life of poor Jed and his family were transformed, culminating to his moving his poor rural family to highbrow Beverly Hills. As at 1971 when the series ended, Jed the once poor rural mountaineer was worth over ninety one million dollars all because he accidentally struck oil on his property. Now that brings us to the reason for this article. No script writer in Nigeria, either in the pre-independence era or even today, will ever write such a script. That’s because in Nigeria, Jed and his poor family will be yanked off their property without any proper compensation and some company will be awarded the mining and prospecting license to start pumping the petro-dollars. Jed and his family for no reason of theirs, will be poorer, the oil company and the nation will be richer. One would have thought that the new Petroleum Industry Bill will address this properly, but no it’s same old injustice.
Within 24hours of submission of the Petroleum Industry Bill (PIB), I was privileged to have seen a copy online and scanned through it. It didn’t take me 2 minutes to get to the paragraph that forms the most important component of Petroleum industry – the ownership of Petroleum resources. I lost my appetite reading that same old travesty. According to the PIB, “the entire property and control of all petroleum in, under or upon any lands within Nigeria, its territorial waters, or which forms part of its Continental Shelf and the Exclusive Economic Zone, is vested in the Government of the Federation”. That is separating the land from the resources within.
If you think this is not injustice probably because you couldn’t care less since you are not from an oil producing community, then let’s look at the following scenario. The middle belt and the North are blessed with vast arable land, thus they do very well in agriculture. Now it might interest you that their land is that arable only because it contains the right mix of certain minerals and nutrients in the soil (soil properties). Imagine if government now decides to say that the minerals and nutrients in the soil are owned by the federal government, therefore government has the right to re-allocate such lands arbitrarily to strangers without factoring in the traditional owners of such land. I’m sure there’ll be lots of protesst if this is done. Do not forget that the oil they are drilling was formed from organic materials from dead organisms, including those of our ancestors, therefore separating the people from the land and the land from the resources therein is wicked and evil. However, the people of Niger Delta have been robbed in broad day light with these evil legislations, which didn’t start today by the way. Let’s take a quick trip in time to when it all started, by looking at excerpt of an article I wrote earlier on this.
“From 1914, the date of the Colonial Mineral Ordinance, the first oil related legislation in the new colonial state of Nigeria, the grant of licenses for oil production was restricted to British companies and individuals. No special consideration was given to the host communities and there were no states then. Thus, Shell was given exclusive exploration and production license in 1937, before the monopoly was broken in 1937 following the granting of license to Mobil. Upon attaining independence, others such as Gulf (Chevron), Elf and Agip joined the fray. The government attempted to nationalize the petroleum sector by increasing her stake through the creation of Nigerian National Oil Company (NNOC) in 1971. This was followed by the creation of the Nigerian National Petroleum Company (NNPC) by Decree 33 of 1977. The main onshore exploration and production activities undertaken today by foreign oil companies in Nigeria are in joint ventures with the NNPC, the state oil company (Source: Human Rights Watch – The Price of Oil, 2011). In all of these, the host communities were not carried along. The states were also not parties to the joint venture licenses. The implication is that the oil producing States are positioned as beggars, waiting on the federal government to feed it with whatever crumbs they deem necessary through the miserly 13% derivation. This is clearly a fundamental anomaly! The relationship between the federal government and the oil producing states has been more of parasitic than symbiotic – the centre continuously sucking up the states and host communities with no regard to the development of the region” (Petroleum Subsidy, Resource Control and the Plight of Host Communities, by R.T. Sibe. Published 18th Jan 2012, accessible online via http://thewillnigeria.com/opinion/11926-PETROLEUM-SUBSIDY-RESOURCE-CONTROL-AND-THE-PLIGHT-THE-HOST-COMMUNITIES.html).
The United Nations Declaration on the Rights of Indigenous Peoples states in Article 26 that “Indigenous peoples have the right to the lands, territories and resources which they have traditionally owned, occupied or otherwise used or acquired. As such, they have the right to own, use, and develop and control such lands, territories and resources that they possess”. Although Nigeria is a member of the United Nations and a signatory to this, a certain piece of legislation exists, that strips the indigenous people of their rights as outlined above. People sit in the comfort of their Abuja offices and remotely partition our lands and seas and allocate it to their business associates, surrogates and friends as oil blocs without recourse to the original owners of the land. They cede the land to the state and the resources therein to the federal government – the indigenous owners are seen as tenants on properties that were passed on to them or acquired legitimately by their fore fathers even before the country was amalgamated. The resources of the region, the people and their well being have been sacrificed on the altar of our national economy. While the economy of the nation thrives on the largesse of the proceeds from the region, the economic and socioeconomic conditions of the people continue to deteriorate. The economy of the nation practically runs on the proceeds from the land, yet the land stinks with poverty and the stench of spilled crude oil, dead and decaying fishes, mollusks, crustaceans, etc is deeply nauseating and enough to drive away one’s sanity.
The PIB attempts (pretends to actually) to address this. Yes, they did consider the host community, but that consideration is like a thief who came to rob you of one million naira and on his way out decides to give you one hundred thousand for your upkeep. And no that’s not the end, he even puts an unholy caveat that should you report to the police and he is caught that you will lose the one hundred thousand Naira (your money, originally) he gave you. Now, that’s audacious injustice! Now let’s look at what provisions the PIB made in this regard. Section 116 prescribes the formation of the Petroleum Host Communities Fund (PHC Fund). The PHC fund shall be “utilized for the development of the economic and social infrastructure of the communities within the petroleum producing area”. Section 118 describes the funding arrangements and beneficiary conditions as:
(1) Every upstream petroleum producing company shall remit on a monthly basis ten percent of its net profit as follows:
a. for profit derived from upstream petroleum operations in onshore areas and in the offshore and shallow water areas, all of such remittance shall be made directly into the PHC Fund; and
b. for profit derived from upstream petroleum operations in deepwater areas, all of the remittance directly in to the Fund for the benefit of the petroleum producing littoral States.
(2) For the purpose of this section ‘net profit’ means the adjusted profit less royalty, allowable deductions and allowances, less Nigerian Hydrocarbon Tax less Companies Income Tax.
(3) At the end of each fiscal year, each upstream petroleum company shall reconcile its remittance pursuant to subsection (1) of this section with its actual filed tax return to the Service and settle any such difference.
(4) The contributions made by each upstream petroleum company pursuant to subsection (1) of this section, will constitute an immediate credit to its total fiscal rent obligations as defined in this Act.
(5) Where an act of vandalism, sabotage or other civil unrest occurs that causes damage to any petroleum facilities within a host community, the cost of repair of such facility shall be paid from PHC Fund entitlement unless it is established that no member of the community is responsible.
(6) The Minister shall, subject to the provisions of section 8 of this Act, make regulations on entitlement, governance and management structure with respect to the PHC Fund established under this Act.
To this, I say – Thanks, but no thanks. The PHC fund is akin to a man who legitimately inherited a property from his father and the village chief decided to take over the property forcefully, rent it out and give him a paltry 10%. I’m sure no one, not even any member of the executive or the legislature, will allow this to happen to his heritage. Will members of the host community be part of the oil company’s drilling crew or the government’s regulatory body to ascertain the exact quantity of oil drilled, the operating cost and the net profit? Or do they want us to trust Shell and the likes just like that? Are these not the same companies that has colluded with successive governments to short change our people? Are these not the same companies that consistently polluted our land and creeks with impunity? Do they want us to believe them even when it’s public knowledge that not even NNPC knows the exact quantity of oil drilled and sold per day? Do they think we are suffering from willful amnesia? Trust is earned not imposed!
Now over to the laughable caveat provided by this section – acts of sabotage and vandalism. Who defines what an act of vandalism or sabotage is? The oil companies who are themselves protecting their interests or the toothless regulatory agencies who depend on data supplied by the oil companies? We all know that in this country, there is hardly any oil spill that the oil companies will not blame it on vandalism or sabotage. They always cash in on failures on the path of regulatory agencies, either deliberately or due to lack of the right technology, to heap the blame on the host communities. The implication of this is that the PHC Fund will perpetually be used as maintenance cost for these oil monsters. If we are to uphold this caveat, then I suggest we should re-name it the Oil Companies Equipment Maintenance Fund (OCEMF), for that is what this fund will be used for eventually.
We like to cite the United States of America at our convenience, but when it comes to oil and gas issues we shy away from the truth. In the USA, oil and gas rights to a particular parcel might be owned by “private individuals, corporations, Indian tribes, or by local, state, or federal governments. Unless explicitly separated by a deed, oil and gas rights are owned by the surface landowner. Once severed from surface ownership, oil and gas rights may be bought, sold, or transferred, like other real estate property”. In Nigeria, in one fell swoop, government unilaterally assumed ownership of all mineral resources since the colonial mineral ordinance of 1914 without factoring in the traditional owners of the land. The traditional owners of the land has since seen their condition turn from bad to worse through corporate recklessness and environmental “terrorism” by the operators. "So na like this we go dey dey?"
In America, oil and gas is regulated by the respective states via statutes and common law. According to USLEGAL INC., “The regulation of oil and gas field activities are managed best at the state level where regional and local conditions are understood and where regulations can be tailored to fit the needs of the local environment. Hence, the experience, knowledge, and information necessary to regulate effectively most commonly rests with state regulatory agencies”. In Nigeria, all power belongs to the almighty, all-knowing federal government and her agencies. The PIB didn’t change this. All I see are name changes and restructuring all at the federal level – no power is delegated/shared to/with the state or local governments. And so while they are stuck up in the cozy and beautiful Petro-dollar-built city called Abuja, they remotely legislate and regulate the Petro-induced poverty stricken Niger Delta. "How dem go know say we dey suffer o, Aso Rock different from Olumo!"
On Gas flares, the PIB offers the host communities some hope. Section 281 states that “Any licensee or lessee who flares gas after the flare-out date contrary to section 275, commits an offence under this Act, and shall be liable on conviction to pay a fine which shall not be less than the value of gas flared or vented pursuant to subsection (3) of section 277”. As promising as this is, however, it was silent on how the fines collected will be utilized. It will be crass injustice to collect such fines and not plough back same to the host communities for social and infrastructural developments, especially health infrastructure since they are at immediate health risk.
The new PIB also appears to be hard on operational recklessness that has left the environment of the host communities in the polluted state they are in today. Section 293 outlines the duties of the oil companies to restore the environment. Subsection 1 particularly states that:
Any person engaged in activities requiring a license, lease or permit in the upstream and downstream petroleum industry shall:
(a) manage all environmental impacts in accordance with the licensee or lessee's environmental management plan or programme, as approved by the Agency.
(b) as far as it is reasonably practicable, rehabilitate the environment affected by exploration and production operations, whenever environmental impacts occur as a result of licensees and lessees operations:
(i) to its natural or pre-existing state before the operations or activities as a result of which the environmental impact occurred; or
(ii) to a state that is in conformity with generally accepted principles of sustainable development
This provision is quite encouraging. However, we must remind ourselves that even currently, there are similar legislations in existence yet the region is in this state of mess. There were such laws in existence yet the UNEP report reveals the people have been leaving in a battered environment for decades. Implementation has always been a problem which we must look at. Apart from the fears of proper implementation, the bill also left a loop hole in the form of the familiar caveat for sabotage. See subsection 2 to 4 as cited below:
(2) Subject to subsection (1) of this section, the licensee or lessee shall not be liable for, or under an obligation, to rehabilitate where the act adversely affecting the environment has occurred as a result of sabotage of petroleum facilities, which also includes tampering with the integrity of any petroleum pipeline and storage systems.
(3) Where there is a dispute as to the cause of an act that has resulted in harm to the environment, the licensee, lessee or any affected person or persons shall refer the matter to the Agency for a determination and the determination of the Agency shall be final.
(4) Where the act referred to in subsection (3) of this section is found to have occurred as a result of sabotage, costs of restoration and remediation shall be borne by the local government and the State governments within which the act occurred
Again, I ask, who is responsible for defining what is an act of sabotage? The Oil Companies who are shying away from responsibilities or the compromising regulatory agent who relies on facts and data presented by the oil companies? When it is proven to be an act of sabotage why will the federal government shift responsibility for cost of restoration to the state and local government when they are not direct parties to the Joint Venture (JV) agreement? When it is time to collect revenue the federal government will take responsibility, when it’s time to take care of cost of restoration they gladly pass the buck to state and local governments. Absurd! Going by this arrangement, I’m afraid the oil producing communities, Local Governments and States will continue to be at the receiving end, while the federal government and the oil companies will continue to smile to the bank.
Fortunately, the bill is not a law yet, it is still a proposal until deliberated and passed by the National Assembly. So, we have ample time to push for these fundamental anomalies to be corrected. So, what can you do? Pick you phone and call your representatives in the National Assembly; pick your pen and write to your legislators. Organize peaceful rallies to drum up support. The writers should put their pen to paper for history will hold you in high esteem if you support such noble cause. Civil society groups must organize and speak up. We cannot continue to be silent in the wake of such cheating.
I call on people from non-oil producing states to stand up against this. Today, it is our oil, tomorrow it might be your agriculture or your solid mineral or that undiscovered resources on/in your land (after all, no one knew Ghana would discover oil in commercial quantity). It’s not only when there is an upward movement in gas pump price or the removal of fuel subsidy that we will carry placards. This is the height of injustice and deserves condemnation by all lovers of justice, equity and fair play. If there is any reason to ever OCCUPY, this is one! We are all on trial, history is taking minutes!
Written By R. Tombari Sibe, MNSE
[email protected]