Confronting the challenges of economic development, peace and vulnerability of multi–national corporations in Nigeria

By Paul Adepelumi, Executive Director, African Center for Advocacy and Human Development (ACAHD).

An examination of Nigerian statutes would reveal that the major constituents of the laws which touch upon the exploration and production of petroleum date back to the Mineral Oil Act of 1914 which was promulgated to regulate the right to search for win and work mineral oils.

Similarly, under the Income Tax Act of 1959 which has been revised to date as Companies and Allied Matters Act (CAMA) of 1990, regulates the income of the companies that engage in “Petroleum Operation” in Nigeria.
A critical examination of Nigerian Petroleum Law since 1914 to date reveals that apart from the law that guides licenses, leases, contractual arrangements for the exploration and production of petroleum and payment of royalties, there are no real policies under the petroleum law of how oil companies should develop the communities from which they exploited the oil. Over the years this lacuna has caused gigantic problems ranging from the agitation for Independent Biafran State that led to civil war in 1964, the Ogoni crisis that led to the killings of the Ogoni’s including the environmentalist, Ken Saro Wiwa, the regional and states agitation for revenue sharing formula, The Odi Massacre and other abuses of fundamental human rights , violence between neighbouring ethnic groups and communities, which often triggered by disputes over the sitting of oil facilities and distribution of benefits and compensations from oil companies, the on-going violence and kidnapping in the Niger-Delta areas. In a nutshell, this gap in our petroleum law created the economic and security problem we are facing in the Niger-Delta today.

Apart from the gap created by the petroleum law, the Nigerian oil industry provides the most graphic illustration of the role played by the political elites under civil and military administration in the under development of the communities where oil are being explored. In Nigeria it is a common saying that “seek ye the political office, everything shall be added unto you.” Despite its shortcomings, the Petroleum Tax Law provides for the payment of licences and royalties to government, the money accrued under this oil revenue paid by oil companies has not been put into good use. The human cost of corruption has been enormous. A recent a report of the World Bank listed Nigeria as a fragile state. The report also quoted the Executive Director of the United Nations Office on Drugs and Crime, Mr. Antonio Maria Costa as saying that Nigeria lost $400bn to graft between 1960 and 1999, similar report by Nigeria’s Economic and Financial Crimes Commission (EFCC), more than $380 billion in public funds was stolen by those in government between 1960 to date.
Despite earning more than $400 billion in oil and gas revenue since the early 1970s, the majority of Nigeria’s 140 million citizens mostly in the Delta areas live without access to basic services such as clean water, electricity and health care, leading Nigeria to place 159th out of 177 of the most poorest countries on the United Nations Development Programme 2006 Human Development Index.

One reason for corruption in the oil revenue is the poor management of oil revenue. Facts show that government has in the past locked out other bodies in the monitoring of money accrued from oil revenue, whereas public revenue are ending in private accounts, human and community development continue to suffer leaving oil companies prone to series of attack for lack of development in the communities where they explore oil and flare gas.
The Obasanjo led administration reforms which included the implementation of the Extractive Industries Transparency Initiative (NEITI) taken after Norway and publication on government websites and local newspapers of the amount of revenue transferred each month from the federal government to state and local government is a good development.

The initiative has helped in increasing the transparency of oil and gas revenue in Nigeria. The idea has served public interest and allows civil society, like African Centre for Advocacy and Human Development to strategically using this information to promote peace, good governance and accountability in Nigeria.
In fairness to oil companies, their attitude has always been that no laws obliged them to rehabilitate these areas. When they are pressed to enhance the development of the communities where they explore oil, they are masters at public relation rhetoric. They often claim that no law obliges them to do so; rather it is the responsibility of government to develop the communities based upon oil and gas revenue that accrue to them.

Apart from borrowing a leaf from Norway and other similar countries where they explore oil that have comprehensive legislation on petroleum exploration on how to develop the communities where they work and the meaningful impacts they make in those communities (such as provision of employment , electrification, health assistance) and good oil field practices etc. “It is also reasonable that under the concept of corporate and social responsibility , oil industries have an obligation to avoid creating negative social impacts while contributing positively to the communities and societies where they work. This involves doing impact assessments of new projects, consulting with neighbouring communities and non governmental organizations in order to understand what the impact of investment might be and how these can be avoided.” The concept (CSR) also requires financing community projects that reflect community needs and priorities. These assessments can involve good oilfield practices , making sure that people from oil field areas benefit from employment and business opportunities, often through elaborate training, hiring and business development programs.

They should also work the path of peace by building human capacity in conflict resolution through collaborative efforts with NGOs and community leaders. Finding from all community consultations is that people want jobs, community development as compensations for the changes introduced by oil companies to their socio-economic lifestyles.

Note of mention is that, agitation through violence and request for oil companies exist from communities where they operate will not bring lasting solution neither revocation of licenses. The truth of the matter is that with the emergence of new “world economic order”, the revolution witnessed in the twenty first century in technology and globalization; no country can live independent of others.

If men are to live together in a peaceful, productive rational society and deal with one another to mutual benefit, they must accept the basic social principle without which no moral or civilized society is possible.

Man’s rights can be vacated only by the use of physical force. It is only by use of physical force that one man can deprive another of his life, enslave him from social relationships – thus establishing the principle that if men wish to deal with one another, they may do so only by reason, by discussion, persuasion and voluntary uncoerced agreement.

The use of physical force – even its retaliating use, cannot be left at the discretion of individual citizens. The incessant violence; kidnapping and demanding for ransom are not the solution to problems in the Delta areas.
The heart of the economy of Nigeria springs from the oil, and unless these problems are solved diplomatically, the heart of the economy cannot breed.

To achieve a meaningful solution to these problems created over the years in the distribution of oil revenues, the government must fill the lacuna created in our petroleum tax law and create for the development of communities in mineral exploration agreements. Also, oil companies must incorporate the concept of corporate and social responsibility instead of human relations rhetoric; the agitation for community development must be through dialogue, persuasion and acceptance.
It behooves therefore on the government to begin to heed to comments and opinions of erudite legal luminaries who lent a voice to the need to embark on wholesome reform of the Nigerian Petroleum Law and borrow a leaf from Norwegian Petroleum law.

The intractable upheavals in the Niger-Delta region have continued to defy efforts at quelling them. The diversity, complexity and intractability of these conflicts have posed some of the greatest challenges to government and whether Nigeria will survive as a state today. In past, due to a desire of the people of the region to assert their group, environmental and economic rights. It is specifically noted that the incidence of kidnappings and demanding for ransom and extra judicial killings continued within the region. The activities of the task force and security organizations set up by government and the oil companies respectively continued to run against the groan of acceptable human rights.

Therefore, a process or forum where government representatives and those of the various factions and oil companies in the Niger Delta region can dialogue and work out modalities for stemming the violence in the region before an implosion occurs. Government must search for more creative strategies in such previously neglected areas as indigenous or traditional forms of conflict resolution. Such ideas should include building capacity of traditional rulers, youth and women leaders in conflict resolution. Government needs to realize that repression and force will not pave the way for peace in the involved communities. The oil companies need to admit the facts that in term of environmental and community impact, they have taken so much and given little. The various youth and political blocks in the region should understand that they have the right to assert their group and environmental rights, but in a non violence.

The government must institutionalize the Economic and Financial Crime Commission (EFCC), taking a queue from Federal Bureau Investigation (FBI) in United States so that they can perform creditably without any political interference.
The Obasanjo’s Nigerian Extractive Industries Transparency Initiative (NEITI) should be allowed to continue. Membership to NEITI must be rational, oil companies should be allowed to be represented along with those that constitutes the body so that they can have input in the management of oil revenue. The proposed Information Bill Act must be passed to allow public unlimited access to government records.