The resolution by the Nigerian Senate that the Nigerian Liquefied Natural Gas (NLNG) should pay N18.4 billion within two months to communities in Rivers State raises serious concerns about the role of politics and politicians on an industry that is robustly regulated by assigned technocrats in government agencies under a range of laws that are now streamlined into the Petroleum Industry Act (PIA) 2021.
The Senate was led in a decision by its own Ethics, Privileges and Public Petitions Committee, which directed the NLNG Limited to pay N18.4 billion compensation to 73 communities of Obiafu, Soku and Bonny in Rivers State for acquiring their land and loss of use of the affected land to pipeline Rights of Way through the communities. The Senate further directed that the payment should be made within 60 days.
The award of financial penalty against the company, according to the Committee chairman, Patrick Akinyelure, took consideration of acquisition of some landed properties along a 210-kilometre pipeline Right of Way which ended at the export terminal of the NLNG in Finima, Bonny Local Government of the state.
Akinyelure said, “There were over 73 communities and over 200 families whose hitherto agrarian source of livelihood were negatively impacted upon by the said acquisition.
“That after the recent intervention of the Senate and after being given one month instead of 7 days allowed by the Senate to provide evidence of payment to the Committee, the NLNG could only show evidence of payment to some individuals, families and communities.”
He acknowledged that the company paid N74.64 million “for part of the 210 kilometres of land acquired for pipelines Rights of Way,” arguing that “the payment made covered only 39 communities and 73 individuals and families.”
The senator also said “there was no Memorandum Of Understanding signed between the communities and NLNG on future obligations in the name of Corporate Social Responsibility with the impacted communities.”
He summed that the amount paid by NLNG for its pipeline right of way is “not significant when compared to the sum of N18.4 billion approximately demanded by the 73 communities and over 200 families, which the NLNG has never objected to up till now.”
He drew templates from payments made by oil and gas exploration and production companies in the area which, according to him, “paid compensation for the loss of land use to their host communities.
In his report, Akinyelure attributed representatives of NLNG during the investigation as saying that “the payments were made long ago and could not reasonably trace most of the payments documents but promised to look for further evidence to show that it paid stakeholders concerned if given another month to enable it.
“The committee considered their request unnecessary and unreasonably, having granted NLNG one month earlier instead of 7 days allowed by the Senate at plenary to conclude its report.”
It is also very convincing that the committee sought in its best understanding to address a malignant problem and avert possible escalation that might threaten sustainability of operations.
One is therefore not left in doubt that the Senate committee which handled the Enyinna Onuegbu petition is adept enough to apply simple syllogism in determining how such a massive pipeline project reached completion without addressing land acquisition issues.
This writer was unable to obtain a copy of the Senate Committee report on the petition which was filed by Enyinna Onuegbu on behalf of 73 communities of Obiafu, Soku to Bonny, in Rivers State against the NLNG. It also proved difficult to gain a full view documents presented during the Senate deliberations on the matter.
However, every player or observer in the petroleum industry who must have been skimming through the report to know the position of industry regulators would be very disappointed because it is either they were not consulted or their input is not made public.
Read also: The Nigeria we need
The petroleum sector in Nigeria is one of the most over-regulated industries on earth, with multiple regulatory agencies beginning from local government councils through state governments and federal authorities.
And from land use to maritime, security, revenue, standards, environment and resource exploitation, supervisory agencies are in robust abundance.
Besides, every project in the industry, especially pipelines, is subject to the universal requirement of environmental impact assessment (EIA), the report on which is a mandatory determiner for regulators’ approval. And in scanning through an EIA report, regulators normally search for agreements and settlements regarding land acquisition and associated issues.
Therefore, approval for the pipelines that channel feedstock to the processing plants of the NLNG cannot overlook the issues of EIA and all its procedural requirements, including land acquisition and associated land use tenure agreements.
Thus, the petition by the aggrieved communities is primarily an integrity check on the systems and processes for infrastructural development in the industry. The petition primarily questions whether the pipelines met all regulatory requirements regarding land acquisition.
In short, the petition assails the industry regulatory regime with reference to the NLNG. And in the unlikely event breaches were observed, the logical sequence of action for the Senate is to call the regulators to attention.
In a properly structured administrative flowchart, firing a petition to the Senate would be seen as a desperate option for attentions if regulators in the industry are visibly caught up in lethargy. And the goals would necessarily be to compel regulators to action.
But passing direct instruction to player in a regulated industry over a petition by an aggrieved stakeholder appears to bully the process, especially given the immense powers of the national legislature.
Expectations are that such directives which normally should form the outcomes of dispute resolution mechanism of regulatory agencies would have necessarily come from either the regulator which is a crucial public sector supervisor on the industry or a court which becomes the arbiter when issues transcend regulatory roles.
However, the cash award for community stakeholders against a company whose key shareholders form hopes of sustained investments in the Nigerian gas industry appears to float uncomfortable signal of political meddlesomeness in the operating environment. It is a clear threat to operating conditions and commerciality of investments.
In the foreground of the 2023 elections, it is unmistakable strategy for every elected government official to advance evidences of performance as key basis for seeking re-election in the upcoming polls, but such endeavors must not come at the expense of an industry that runs on regulated systems and processes.
Every stakeholder following the development would be interested in knowing whether the acquisition of NLNG right of way followed established regulation in the industry. And expectation in the Senate committee’s inquest is that the legislators should establish whether laid down procedures and processes were followed in securing approval for the pipeline project.
In matters involving and affecting politicians in the country, businessmen and government appointees dread contending with elected officials who control power, influence and decisions that decide the fate of people and businesses.
And in this case, the power of politics might have doused the will of regulators to rise in defence of rules and regulation as it happened during the recent “mis-approval” of the Mobil divestment deal by the Minister of Petroleum Resources.
In that case, which was applauded by the industry, the regulator had stepped up to defend established rules and processes protected by the law.
It is therefore a wonder that no such intervention happened in the recent Senate’s treatment of the community petition over a 22-year-old pipeline ROW.
Our survey of opinions on the penal award against NLNG showed massive industry disapproval; with most of the people who secured our guarantee of anonymity pointing out that the Senate’s intervention in the matter is a retract to political interference which the industry struggle to exit.
A former group managing director of defunct Nigerian National Petroleum Corporation (NNPC) (names withheld) said several investments facilities were guaranteed by the government to enable promoters stake huge funds in Nigerian gas monetization, which, according to him, was a “hard nut to crack” in those days.
The investment incentives which he described as cradle shield formed part of the legal frameworks and commercial incentives built into the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act 1990.
Beyond technical and operational regulations, it would be doubtful if some of the Senate committee’s claimed bases for award of financial penalty hold absolute integrity. One of them is the lack of commitment to sustained corporate social responsibility.
This error becomes very glaring in the foreground of the company’s corporate social responsibility profile in the operating environment.
Figures advanced by the company in most of its conference presentations project over N250 billion spend on social responsibility projects in Nigeria, especially in rural communities. This amount is bigger than the annual budget of most states in the country.
The company has stated in past that it has spent billions on community projects over the years. One of the most recent is the 38-kilometre Bonny-Bodo road, a highway across sinking marshy wetlands to connect the ancient kingdom of Bonny Island to the rest of Nigeria for the first time in history, is in excess of N120 billion.
According to the project details for the Bonny-Bodo road, north section of the road would be 17,365 meters; south section would be 15,806 meters while the rest would be made up of 1000 meter bridge across the Opobo River, 550 meter bridge across the Alfa Creek and other smaller bridges and culverts.
The Bonny Island, which hosts critical oil and gas installations that provide considerable revenues that support government’s fiscal plans, is currently accessible by sea, or by air courtesy of the Finima airstrip provided by NLNG.
The structured commitments for sustained community development of the Niger Delta communities are captured in a string of separate and numerous Global Memoranda of Understanding (GMoU) which collectively negate the claims shaping the opinion of the Senate that the company is not committed to CSR in the areas hosting its facilities.
In fact, there is no other company in Nigeria with the size of corporate social responsibility programme and budget as currently driven by the NLNG, and all of the contributions of the company towards community development are well documented with the regulators of the industry.
All that was required is for the investigating Senate committee to pull in the regulators’ perspective into the disputed claims. In sum, the decision of the Senate concerning the award of pipeline route benefits to the protesting communities is not cast in stone.
Time is beckoning on the Senate to revisit its position on the matter with a view of brokering cordial relationship between the nation’s, nay Africa’s, biggest gas liquefaction company and its community stakeholders.
Mishandling of this matter could trigger a new industry of financial claims that would engage the Senate for a long time to come. Other issues that afflict the operations of the petroleum industry in the Niger Delta started with malignant contentions of this nature.
Tamunotonye, a public commentator, writes Port Harcourt
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
