CSO Secures Reforms To Oil Divestment, Host Community Deals

In a significant victory for civil society, the Stakeholder Democracy Network (SDN) has secured key commitments from lawmakers to address long standing issues in the oil and gas industry’s divestment processes and the implementation of Host Community Development Trusts (HCDTs).

The commitments were made during a two-day retreat and training session organised by SDN for members of the House Committees on Environment and Host Communities, held from March 5-6, 2024 in Uyo.

According to the communiqué issued after the event and made available to LEADERSHIP, the House Committees have agreed to take several actions to improve transparency, accountability and fairness in the sector: The communique reads “a motion will be moved to halt ongoing divestments pending an investigation into recent deals to ensure alignment with best practices.

“The Committees will propose amending the Petroleum Industry Act (PIA) to include provisions supporting transparent divestment, with technical support from SDN. The Committees will recommend the integration of SDN’s proposed “National Principles for Responsible Oil Industry Divestment” into the regulatory framework.

“The Host Communities Committee will review and amend the HCDT provisions to penalise companies that delay trust establishment. The Committee will define parameters for fair allocation of the 3% derivative across HCDT communities. “Boards of Trustees will be mandated to publicly report to community councils. Penalties will be imposed on companies that fail to promptly deliver HCDT contributions.
“One per cent of HCDT funds will be allocated to the advisory committee. The Committee will review industry financial reporting and impose penalties for defaults. Amendments will be made to ensure community ownership and shield them from undue financial burdens.

In her opening remarks, Florence Ibokabasi Kayemba, the Country Director of SDN, highlighted the importance of the retreat, noting that divestment of onshore oil and gas facilities and the establishment of HCDTs are among the recent developments in the industry that require urgent attention.

“Divestment of onshore oil and gas facilities has been ongoing for the past few years, and the recent announcement by Shell of their proposed sale of SPDC came as a big surprise because of the lingering and unresolved environment and corporate social responsibility issues in the Niger Delta,” Kayemba said.

She also expressed concern over the provisions in the Petroleum Industry Act (PIA) that undermine host communities, such as the requirement for deductions to be made from the host community in cases of facility damage, without providing the communities with the resources to secure pipelines.

Kayemba emphasised that the processes of the ongoing divestment deals have not been transparent, and host communities have been overlooked in the process. “As a civil society organisation, we recognise these obvious gaps in divestment and the HCDT, and believe that the legislature can solve this problem by taking appropriate legislative actions that will ensure transparency and accountability,” she said.