Editorial
Another Look At PIB Provisions
Progress on the Petroleum Industry Bill (PIB) currently under careful considerations in the National
Assembly (NASS) may be stalled as two prominent groups in the Niger Delta region, the Pan-Niger Delta Forum (PANDEF) and the Niger Delta Dialogue (NDD), have outrightly rejected no fewer than 12 significant provisions in the Petroleum Host and Impacted Communities Development Bill (PHICDB).
Specifically, both groups are asking for the redrafting, rephrasing and restructuring of the observed provisions to accommodate the interests of the poor and neglected people of the oil and gas host and impacted communities in the Niger Delta or lose the peace and development sought by the PHICDB in the region.
PANDEF and NDD revealed their positions during the NDD’s Strategic Communication and Advocacy Training session for major stakeholders in PANDEF, NDD, and the various Policy Advocacy Committees (PACs) in Port Harcourt recently. The PHICDB is an essential part of the Petroleum Industry Bill (PIB) currently before both chambers of the National Assembly.
The PHICDB seeks to promote sustainable mutual social and economic benefits from petroleum operations to host and impacted communities. It is equally designed to enhance peaceful and harmonious coexistence between settlers and host/impacted communities as well as create a framework to support their development process.
The objectionable provisions include the Interpretations Section, which the groups claim was vague in the use of words and terms such as “host and impacted communities” to describe oil-bearing communities in the region. They also faulted the silence of the bill on how the clusters should be formed and the trust fund shared. Similarly, they rejected the vague use of the term ‘Settlor(s)’ in Part 2, Section 2, Subsection 1 and 2 of the draft bill.
Additionally, the stakeholders wondered why “sabotage spill” was not clearly defined but its effects were highlighted in the draft bill. Further, they condemned the observed silence in the sharing formula of the accruing fund from the “Settlor(s)” between host and impacted communities, particularly given that there are more impacted settlements than host communities in available oil industry records.
Furthermore, the groups took a swipe at Part 3, Section 9, Subsection 1 and 2 of the draft bill for resting the creation and determination of the membership of the Board of Trustees (BoTs) for the trust funds on the International Oil Companies (IOCs). They also picked holes in Section 11, which splits the utilisation of the Endowment Fund to 70 per cent for capital expenditure; 20 per cent for the Reserve Fund; and 10 per cent for the settlor(s) special projects.
Expressing worry that the Presidency failed to specify how the operating expenditures of the settlor(s) would be verified to ascertain the accruing funds to the cluster trusts, the stakeholders objected to Section 22 that the settlors’ Operating Expenditure (OPEX) paid into the trust fund shall be subject to Petroleum Income Tax (PIT) and Companies Income Tax (CIT) deductibles.
Section 5 of the bill was queried for failing to give specific sanctions for underpayment, late payment or non-payment of agreed money into the cluster trust fund as and when due. They lamented the insufficient clarity on time frames for the incorporation of cluster trusts for host and impacted communities and the failure to stipulate penalties for reneging on implementation of agreed projects and programmes by the settlor(s) as contained in Section 3 of the bill.
First, it must be established that the broad objectives of the PHICDB are commendable, and that is to find an acceptable framework for an active company-community engagement mechanism structure. But it shouldn’t be seen as a substitute for the government’s responsibility to provide basic services and infrastructure for the host and impacted communities.
However, the flawed provisions identified by PANDEF and NDD are troubling. These principally relate to the power vested in the oil industry to determine crucial parameters connected to how funding will be allocated. We also need to know what constitutes a host community and how the BoTs to manage the funds will be set up.
If the purported purpose of the bill is to empower host communities to take charge of their development needs, why does it give the IOCs the sole power to appoint and determine the composition of the BoT, cutting communities out of the decision-making process? This way, investors can appoint non-indigenous persons as board members. This is a source of conflict and highly undesirable for a bill that aims to build trust.
Again, the issues regarding the lack of an enforceable time frame for project implementation must not be ignored because of its likely consequences. It will probably institutionalise the perception among communities that their concerns are marginal to those of industry, hence, generate serious grievance for many.
It is equally sad that the PHICDB makes settlors the sole authority for determining areas of operation. In effect, this is the power to determine which communities are impacted by the petroleum industry and as such benefit from the trust fund. This means communities that suffer environmental damage from the petroleum industry, but which, if not designated as a host community, will be denied compensations. This enables IOCs to fulfill their obligations in a way that suits their needs, not the communities’.
The PHICDB, as it stands, downplays the role of government in the development of host communities. Instead, it places that responsibility on the oil companies, with the only role for the government that of the Nigerian Petroleum Regulatory Commission (NPRC). NPRC is to mediate in disputes with the proviso that the decision of the Commission remains valid until overturned by the Federal High Court.
But being a creation of the government, it is believed that the NPRC may not be an impartial arbiter because the likely outcome in any such dispute will be favourable to industry, not the communities. And since historical antecedents of such litigations in court have tended to take years, if they are resolved at all, likely the NPRC decision will unduly last longer.
Clearly, the PHICDB vests too much power in the IOCs, particularly in terms of deciding how development projects are determined and implemented, as well as their beneficiaries. This may further alienate communities that already consider themselves cut out of decision-making. In consequence, the Federal Government and NASS should re-examine the PIB and accommodate the recommendations of the PACs to prevent another round of tension and agitations in the region.
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