While the Petroleum Industry Act passed in 2021, contains key provisions aimed at addressing long standing development challenges in oil producing communities in Nigeria, several provisions on the other hand have the potential to cause disaffection and conflict between oil firms and host communities. For the example, provisions for the establishment and management of the Host Communities Trust explicitly emphasize the primacy of oil firms, restrict community involvement and agency, and force duties on communities that they are not legally allowed to take on.
Rather than promote development, some provisions of the PIA and its accompanying Regulation, may result in increased deprivation for communities and create new conflict scenarios. The PIA is also guilty of treating communities as oil company colonies and delegating authority over community development to oil firms. The fact that the Act blames host communities for oil theft and oil infrastructure sabotage, and mandates them to become unpaid, unskilled, and unarmed guardians of oil equipment and pipelines, is perhaps the most contentious and unjust aspect of the Act.
We draw your attention specifically to Section 257 of the PIA.
Section 257 of the PIA states that “where in any year, an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disrupts production activities within the host community, the community shall forfeit its entitlement to the extent of the cost of repairs of the damage that resulted from the activity with respect to the provisions of this Act within that financial year”.
The Regulation puts it more clearly that in the event of the occurrence of any act of vandalism, sabotage or other civil unrest, the host community located in the area of the disruptive activity will have its share of the HCDT funds (which is 3% of the oil company operating cost in the area for the previous 12 months) deducted to the amount it takes to repair or replace the damage to the oil facility, or the operating expenditure incurred in the period if the act led to a shutdown of production, or the value of crude oil, condensate, natural gas liquids or natural gas that was spilled or lost as a result of the act.
It is important to note the following about this provision;
- a. Section 257 runs contrary to Nigerian laws. The destruction of oil infrastructure or any infrastructure for that matter is a crime with well-established punishments after due determination of guilt by a court. No existing law provides for punishment of an entire community (in this case the denial of due benefit) for a crime committed by a person or persons at large. No Nigerian law permits the award of punishment for any supposed crime without the determination of a court of law. It is implausible that an entire community, including all its men, women and children collectively sabotaged oil infrastructures. Why then should the entire community bear the consequence?
- b. Section 1 and 2 of the Petroleum Production and Distribution Anti-Sabotage Act and Section 7 of the Miscellaneous Offence Act all employ the terminology “any person” when referencing potential culprits of crimes. This specific language underscores the idea that accountability should be linked to individual(s) rather than collectives, in this case, an entire community. This is in tandem with international principles that prohibit the unjust penalization of a person or a group of persons for the wrongdoings of others.
- c. The PIA erroneously assumes that any third party interference with any oil facility is perpetrated by oil producing communities who must therefore be punished by deducting from their share of HCDT benefits. Nothing is further from the truth. Several reports have carefully documented the complicity of an array of actors in the oil theft ecosystem (which is the principal reason for oil facility vandalism). Identified actors include military personnel, oil company officials, armed criminals from all parts of the country, foreign nationals, etc. Punishing oil producing communities for the criminal actions of others is not only prejudiced, it is also illegal.
- e. The PIA forces communities to take responsibility for the protection of oil infrastructure. The Act does not say how it expects unarmed and untrained communities to guard oil facilities against well-established and well-armed cartels of oil thieves, a responsibility which the Nigerian security forces have consistently failed at fulfilling. The only plausible explanation is that the Act accepts and has now codified the unverified narrative often presented by oil companies that communities are responsible for majority of oil infrastructure sabotage. While available evidence points to the contrary, this provision of the Act is an outright criminalization oil producing communities.
- f. In 2022 alone, Nigeria’s National Oil Spill Detection and Response Agency, NOSDRA reported crude oil spill worth 18,836, 805 barrels. Calculated against the current average cost of a barrel of crude oil, this gives a figure well above $1.5 billion. This amount is likely higher than the entitlement of all HCDT put together. It does not include the cost of repairing the damaged facilities and other costs. It is likely that when implemented, this provision will lead to consistent shortfall in funding for the HCDT Some communities may even be left ‘owing’ and in debt for future HCDT funds. Without doubt, this provision of the PIA will result in conflicts.
- g. The reference to civil unrest as one of the conditions that could result in the denial of benefit to communities is disturbing. It is possible to expand this provision to include all protests against oil companies, including other forms of public (and legal) expression of concern and dissent. The fluid usage of the term in the Act, and the lack of further clarification in the Regulation allows oil companies room to stretch the application of the provision, especially against ‘itinerant’ communities. In practical terms, the inclusion the provision against ‘civil unrest’ amounts to stifling community dissent.
Concerned with the above listed contentious implications of Section 257 of the PIA, responsible civil society organizations and individuals from oil producing communities have approached the court to provide an interpretation of the contentious section of the PIA. We have sued the National Assembly and the Attorney General of the Federation & Minister of Justice on the following grounds;
- Whether the shifting of personal liability for damage, property injury, vandalism or sabotage to Host Community (other Persons) by the provisions of S. 257 (2,3) of Petroleum Industry Act 2021 is not inconsistent with Sections 43 and 44 of the 1999 Constitution of Nigeria, (as Amended) which protects citizens rights to own immovable and movable properties (including funds/money).
- Whether the penalization of civil unrest in its entirety (which by definition includes lawful protest and peaceful demonstrations) by the provisions of S. 257 (2,3) of Petroleum Industry Act 2021 is not illegal and unconstitutional having regard to Sections 38, 39 and 40 of the 1999 Constitution of Nigeria, which provides for freedom of association, assembly, expression and protest.
- Whether the provisions of S. 257 (2,3) of Petroleum Industry Act 2021 is not prejudicial against the Host Communities in Nigeria and does not violate the principles of Natural Justice, equity and good conscience by placing on Host Community strict liability for vandalism, damage, sabotage carried out by a person or group of persons who are not agents of the Host Community.
We are hopeful that when called upon, our partners, CSOs, media, and all people of good conscience will provide the needed support and collaboration as we seek a more responsible legislation.
Executive Director, We the People