May 31, 2017

The Niger-Delta Negotiations: A Paradigm Shift- Tolu Aderemi/Tolu Ogidi

During a survey of the effects of diamond mining in an aboriginal Canadian community, a survey participant described the benefits accrued to local communities as beads and trinkets when compared with the fortune made by the miner. This sentiment is often expressed as the social damage inherent in exploration and extraction of mineral deposits. The degradation that frequently results from such activity, depriving locals of their right to a decent living, is just one of the many negative impacts, environmental and otherwise, which the communities are left to contend with. Whilst mining and the related activities are also a feature of developed economies, the presence of responsible authorities/agencies is what makes the difference and sets those countries apart from their developing counterparts; when assessing benefits accruing to locals vis-à-vis the risks to which they are exposed. 

The tragic Deepwater Horizon oil spill in the Gulf of Mexico and the Statoil Statfjord oil spill in Norway, are mentioned as examples of how responsible regulators respond in the wake of environmental catastrophes occasioned by exploration and extraction activity.  Indeed the response to the Norwegian spill has been held up as the standard in the management of oil spillage. The swiftness of the response to that particular spill, the thoroughness of the investigation that followed, the sanctions imposed on the offending parties and the clean-up were all in conformity with international best practices.

The Nigerian spillage case(s) is not different. What is peculiar about Nigeria however is the frequency of the spillages and more importantly, the clean-up response times.

Oil spillage is the release of petroleum substances or products into the waters, poisoning those waters and threatening coastal areas. The oil floats on land and on water surfaces forming an oil slick such that no reasonable commercial activity can then take place there. This paper seeks to review the various structures in place in Nigeria to ameliorate the impact of spillages and the consequence of delayed responses.

The online images of the Niger Delta are often disheartening. The images of oil-slicked fauna, decimated mangroves, drinking water with sheens of oil; generally a hopeless picture. These images appear to corroborate the narrative consistently coming from these regions on the extent of the devastation suffered. Whilst one may argue that some of these agitations are laden with emotions, scientific data detailed in the United Nations Environmental Programme’s (UNEP) report on Ogoniland shows pollution levels are below acceptable international standards. A juxtaposition of the health risk with the social damage further demonstrates that the source of livelihood (which stands at about 70%) is lost to degradation that is often talked about.

The Niger Delta area has had a history of non-performing government institutions. It will be recalled that attempts by the Nigerian Government to tackle this problem frontally birthed, in 1961, the Niger Delta Development Board (NDDB); with the mandate to develop the region. The Board’s activities were funded with a 15% revenue contribution from the Federal Government. It enjoyed relative success by executing about 358 contracts. However, that success was not to live long as it was plagued with inefficiency, mismanagement, political interference and its operations, hampered by militancy.

In 1972, the Niger-delta River Basin Development Authority (RBDA) was established to replace the defunct Niger Delta Development Board, however it was bedevilled with administrative and political schemings. The Oil Minerals Producing Areas Development Commission (OMPADEC) was established by the military government of General Ibrahim Babangida pursuant to under Decree No 23 of 1992 (with emphasis on Section 2 thereof). Section 4a of the Allocation of Revenue (Federation Account) (Amendment Act No 106 of 1992) provided that, 3% of the federation account monies derived from mineral revenue be paid to the Commission and shall be used for the rehabilitation and development of the oil mineral-producing areas on the basis of the ratio of the oil produced in the particular areas, and not on the basis of dichotomy of on-shore or off-shore oil production. Like its predecessors, OMPADEC also failed on what was claimed to be financial sabotage which took three different forms to wit:

a.)   Shortage of funds to the Commission,
b.)    Manipulations of the Commission funds;
c.)     Withholding of its monthly allocations.

In 2000, former President Olusegun Obasanjo submitted to the National Assembly a Bill for an Act to provide for the repeal of the Oil Mineral Producing Areas Development Commission Decree 23 of 1992 and this was to be replaced by the Niger Delta Development Commission (NDDC) in 2000. Again, this did not achieve its establishment purpose as it failed like its predecessors. There have also been several other efforts of government (and indeed the IOCs) to address the issues of degradation and compensation in the Niger Delta. These include: the recent proposal of ‘Host Community Funds’ of the Petroleum Industry Bill (PIB) as well as various bilateral contractual agreements which hitherto were ordinarily designed to achieve relative peace in the region. Some of these contractual agreements may include the Global Memorandum of Understanding (GMOU) etc. Again, it is in doubt how much this has achieved.

The ultimate consequence of the inability of various government structures to achieve relative peace in the Niger-Delta region the continuous vandalisation of pipelines and Nigeria’s inability to meet its OPEC quota. Kudos must however be given to President Buhari and Vice President Yemi Osinbajo’s foresight and wisdom as relative peace (through physical human intervention) has now returned to the Delta region. Albert Einstein once posited that it is ‘insanity doing the same thing and expecting a different result’. Having engaged all the above, it is now time to consider other more result-oriented options.

The Impact Benefit Agreement
An Impact and Benefit Agreement (IBA) is a formal contract outlining the impacts of a project, the commitment and responsibilities of both parties, and how the associated Aboriginal community will share in benefits of exploration through employment and economic development. This, it may be argued, is a replica of the Global Memorandum of Understanding (GMOUs) signed by the International Oil Companies and the communities.
Although not legally required, IBAs have evolved in part to reduce uncertainty and potential delays in developing projects. Companies are seeking to solidify support for the projects, while Aboriginal groups seek community support, recognition, respect, and various economic and social advantages such as employment, investment, and funding among other things. IBAs can help both parties achieve these goals. Though contractual, IBAs may contain certain  regulatory element(s) covering a holistic range of provisions by creating detailed internal structures which helps the indigenous communities overcome marginalization and increasing indigenous control of resources (to the extent permitted by the law) to ensure that the benefits flow to the communities affected by degradation.

IBAs are enforceable contractual documents through which communities can seek redress in court. This is evident in its robust and tested dispute resolution mechanisms. In addition to the above, IBAs limits governmental involvement and are managed by transparent internal bodies with checks and balances. Finally, IBAs can operate on an extremely large scale unlike the proposed ‘Host Community Funds’ and GMOUs as seen in their use in Australia. They are also flexible enough to be implemented with small communities without sacrificing bargaining power and this is key due to tribal tensions that could see individual communities seek to make agreements alone.

Tolu Aderemi is a Partner with Perchstone & Graeys while Tolu Ogidi is currently on internship from the University of Aberdeen, Scotland.

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