A Critique Of The Host Communities’ Development Trust Fund Structure Under The Petroleum Industry Act, 2021

Abstract

For well over 50 years, the Petroleum Act, 1969 principally regulated the Nigerian upstream petroleum industry even though it never made any specific provisions for the development of the host communities. All that existed were just some random provisions that required that some Nigerians should be employed in certain managerial cadres in the industry. It never had any provision that specifically aimed at the development of the host communities as the Petroleum Industry Act, 2021 (PIA) does. As a result, the International Oil Companies (IOCs) did not pay any serious attention to the Act more so as it did not have any punitive provisions to compel compliance. The greatest achievement of the PIA, 2021 therefore, is the intentional recognition of the need to develop the host communities and strategic provisions to enforce compliance. In effect, the PIA elevated the traditional issues of corporate social responsibility to statutory obligations. Given that the PIA is still a nascent legislation and less than two years since it came into effect, the doctrinal methodology of research was extensively adopted in which a number of other literatures in the upstream industry were examined to highlight the fact that the current structure of the host communities’ development fund as constituted under the PIA, 2021 is such that it will not achieve its lofty objectives. A good number of the lacuna have been identified in this paper, the major one being the insignificant amount of the sum the IOCs are obligated to contribute into the fund as well as the IOCs’ overbearing control of the Board of Trustees of the Trust Fund. This paper makes a number of recommendations on how best to improve the effectiveness of the Fund in order to position it to achieve its goals. One of such suggestions is the need for an upward review of the amount of the IOCs’ contribution into the Fund and the need for a more efficient management structure for improved service delivery to the host communities.