Gas Flaring: Where Goes The Funds From Fines?

President Muhammadu Buhari, Minister of Petroleum Resources
President Muhammadu Buhari, Minister of Petroleum Resources

Over the past several
decades, oil-producing communities in Nigeria have experienced and suffered from oil pollutions and gas emissions or gas flaring occasioned by activities of multinational oil companies. It has been commonly termed a natural disaster. In fact, it has become a principle that influences their environments and lives as well as economies. The change has been so difficult and the magnitude so great as to make a full appreciation of the impact it has on the people, their economy, and the polity exceedingly difficult.
With the increasing rate of gas flare, which is generally expected to continue until 2030 and beyond at a higher level, we are expecting more consequences of gas flare without a substantial move to curb it. It is adversely affecting the economic power and prosperity of the oil-bearing communities as its production intensifies. In short, their economies are in the process of extinction as the country intensifies effort in exporting gas and oil and producing for local consumption. The oil-production areas share the hazardous effects.
This is why the Chairman of Ogba/Egbema/Ndoni Local Government Area of Rivers State, Mr Austin Ahiamadu described as unjust and wrong for the Federal Government to keep the money accruing from the fines paid by oil companies on gas flaring and oil pollution instead of giving such money to the host communities. The council boss who made the assertion at a public function organised for oil companies and oil-producing host communities in Ogba/Egbema/Ndoni and Ahoada-West Local Government Areas in Port Harcourt, argued that since the impact of gas flaring and oil pollution directly affects the host communities, such monies should be given to them as compensation for the hazards and difficulties they suffer.
Represented by the council secretary, Barrister Victor Onyije, Mr Ahiamadu noted that since the Federal Government normally has 60 per cent equities in the joint venture business, the  federal government was by implication part of the party that caused the flare and pollution, and wondered why a party that cause the problem should turn around to benefit from the fine instead of being part of those that should suffer the penalties.
“Equity, justice and logic demand that the community people who suffer the negative effects of the flare and pollution should enjoy the money derivable from the fine”, he stressed and called for a review of the existing or appropriate law for the interest and protection of the host communities.
Indeed, host communities of oil companies face a lot of hazards which have far-reaching negative implications on their socio-economic life. For a sustainable development and harmonious relationship to exist in oil-producing communities, justice and fairness must prevail in their dealings.
Projections for future disasters that would result from gas flaring and oil pollution are generally very positive given the attitude of the government towards its stoppage coupled with the plans by oil companies for rapid growth in their oil and gas business. All the oil companies, no doubt, on daily basis, plan for growth with a strategy for expansion of their storage systems to meet the growing level of internal and external demands. Although they may regard their explorations and development activities as compatible with the well-being of the natural environment and the people, the companies have not been able to monitor and regulate their activities with a view to the timely identification and prevention or solution of any environmental or safety problems associated with their activities.
If the Federal Government is sensitive to the plight of the oil companies’ host communities, they do not have to be reminded on what to do with the funds accruing from the fines paid by these companies for gas flaring and oil pollution. The attitude of the federal government and its decision to keep the money does not and will not augur will with the oil-producing communities whose developmental needs should be paramount and a priority in the scheme of things or programmes of all governments. The monies accrued from the fines must be channeled to the development of the areas and not for the federal government to withhold or divert it.
The money is meant for the consolidation and restructuring of the damaged resources, land, crops, houses, and so on, of the people in the oil-communities, including their rehabilitation. They have financial problems and youth restiveness erupt as a likely case in point. Investment in these areas is in high risk while there is a downturn in the economic activities of the people. All these signal crisis as development has been on a very low level for long, despite their contributions to the nation’s economic growth. Government’s policies are not focused on the growth of the oil-bearing communities and nothing  is being done to support their growth. The room to increase per capita incomes remains ample in all of these communities.
Growth in the oil-producing areas must be driven by events rather than being starved and enslaved on their rights by external forces. They need transformation through the provision of infrastructure needs and be salvaged from their impoverished base. Infrastructure provision has been at a low level in these areas for long with high demand for water, electricity, transport, roads, sanitation systems, education, health, among others more so as population continues to rise.
Continued rapid progress of the oil-producing areas depends on high rates of investment in infrastructure through the funds accrued from fines and the 13 per cent derivation funds accruing to the states. Infrastructure needs are among the major and greatest problems in the oil areas. As expected and noticed, Ogba/Egbema/Ndoni and Ahoada-West are the two areas with the highest risk of environmental pollution resulting from oil and gas emission. They have more communities and commitment or stakes in the economy of the nation for many decades.
Leading oil companies operate in the areas and pay huge money as fines to the federal government but they do not benefit from them. The operations of the companies are meant to drive massive development to the areas to serve as compensation for their suffering and the resources gotten from their lands. Even though that cannot be seen as a sanguine about the future, continued infrastructural development will, however, put some hope in the people and provide unprecedented growth to the areas. It is an extraordinary fact that the funds paid as fines by oil companies will pave way for investments in the oil areas as they are currently providing the financial resources that have helped to sustain development and investments elsewhere in the country, as well as hold down the country’s interest rates and foreign earning.
Witness to the financial health of the country is the fact that the oil producing communities are the largest holders of the nation’s foreign currency reserves in the world. So, the federal government should re-examine its decision to collect the fines without using the accrued monies for the development of oil-producing communities hosting the companies. It is the responsibility of the federal government and states to carry  out infrastructure investments in the oil areas with the 13 per cent derivation funds and the money accruing from the fines on oil pollution and gas flaring.
These funds should be used to positively impact on oil-producing communities in Ogba/Egbema/Ndoni, Ahoada-West Local Government Areas and other oil-producing areas of the country. These communities do not have anything to show for the oil exploration going on in their areas, inspite of the 13 per cent derivation and the money accruing to them from the fines on oil pollution and gas flaring.
The federal and state governments should come to the aid of the people in oil-producing communities. Their roads are bad while some do not have electricity and good drinking water, and those who have are not enjoying them because of poor equipment. Hospitals and basic amenities are not in the communities to make life worth living. The Federal government should release the money from the fines while states should set aside 40 per cent of the 13 per cent derivation fund for the exclusive development of the oil-bearing communities to reduce poverty in the areas. They should tell us the channel to which these funds are directed.
While development and growth indicators are poor nationwide, the greatest need for attention is predominantly in the oil-bearing communities or areas. Development activities must be designed to improve the quality of life of the people who in turn, will contribute to the development of the country and promote peace and stability.
Development at the community level will ensure flagship activities, assist strengthen state and local government capacity to deliver basic services and generate revenue for economic sustainability. Through innovative approaches such as skills acquisition centres and rural industrialisation, government can provide welfare needs of the people in the oil-producing communities as well as create employment for the youth.
People in the oil-bearing areas need to be integrated into government programmes to give them a sense of belonging and address their special vulnerability. Government should support the aspirations of oil communities through a well-planned roadmap of development as well as strengthen local governments of the communities to deliver quality basic amenities and services to the people, while providing quality education for their children.

Shedie Okpara