Niger Delta and oil companies’ social responsibility

By Ifeatu Agbu

The operating environment for oil companies in the Niger Delta region is becoming more hostile by the day. Unfortunately, the situation is not getting any better in spite of the reinforcement of military personnel in the flashpoints. If anything, the massive deployment of security forces has heightened the tension and raised the stakes for oil exploration and exploitation in the region. Indeed, a US congressman who visited the country recently, advised against the use of the military option.

As it were, the oil firms seem to have found themselves in a quagmire. They are faced with enormous security challenges. Even with this burden, they have to literally pick their way through a mine field. Such is the risk they have to take to protect their huge investments and sustain their operations in the oil industry. Even then, the oil companies have shut-in over 25 per cent of their daily production due to the violence in the Niger Delta

It is a difficult road to travel; hence they need all the help they can get. Basically, what is required to create the right atmosphere for safe operations in the region is rapid human and infrastructure development, which will hopefully bring enduring peace. Already, the Niger Delta Development Commission [NDDC] is pulling all the stops to achieve this objective. It will therefore be in the interest of the oil companies to support the commission to carry out its charge of fast-tracking development in Nigeria’s oil-rich region to create the enabling environment for them to continue with their operations

The NDDC recently defended its 2008 budget of N79.4 billion presented to the National Assembly by President Umaru Musa Yar;Adua. In the budget, the oil companies were expected to contribute N36.5 billion as their statutory obligation to the commission. They are required by law to contribute three per cent of their annual budget to the commission for development of oil-producing communities.

In preceding years, some of the oil companies were allegedly not paying the three per cent as required by law, but were rather deducting first charges before calculating the three per cent from the balance. The Managing Director/CEO of the commission, Mr. Timi Alaibe said that local operators in the oil industry had been falling short of their commitment to the commission. He said that a good number of the Nigerian firms appeared to be taking the fact that they are indigenous operators as a license to evade the provisions of the law.

Prominent among the defaulters is the Nigerian Liquefied Natural Gas [NLNG] in Bonny, Rivers State. According to Alaibe the gas company has not paid its dues to the NDDC since its inception in 2001. The NLNG is apparently exploiting an ambiguity in the NDDC Act to argue that it simply gathers gas and pipes it to its processing trains in Bonny. The NDDC is currently taking legal steps to bring the NLNG in line.

The resort to legalism is not in the best interest of the long neglected people of the Niger Delta. Now, more than ever before, all stakeholders need to collaborate to lift the region from the throes of underdevelopment. The challenges of developing the Niger Delta are such that all the stakeholders must sincerely partner to achieve the desired goal.

Apparently in response to the need for synergy, the NDDC set up a clearing house called the Partners for Sustainable Development [PSD] Forum. This important organ brings together representatives of federal and state governments of oil-bearing states, youth and women leaders, traditional rulers as well as the organized private sector, civil society, the mass media and international; development agencies such as the UNDP and the World Bank. Their main function is to ensure that the developmental activities in the Niger Delta by all stakeholders are synchronized.

The PSD offers the oil companies the platform to monitor and supervise the implementation of the projects outlined in the Niger Delta Regional Development Master Plan. The Shell Development Company [SPDC] is taking full advantage of this forum because it has entered into partnership with the NDDC for the execution of several projects, the most prominent of which is the Ogbia – Nembe road being built at the cost of N9-6 billion.

The road in question was first proposed for construction in the 1970s by the Federal Government, but was abandoned apparently due to lack of political will. In order to end the 35 years of frustration that was inevitably engendered in this key oil-producing area, the SPDC sent a proposal to the NDDC in April 2004 to partner with it to build the much-needed road to Nembe – a project several past generations thought was impossible. Now work on the 28 kilometer road, with 10 long bridges across very difficult terrain, has progressed appreciably. This is one feat that demonstrates the virtues of partnership in the development of the Niger Delta.

Other oil companies will be doing themselves a world of good by following in the footsteps of Shell. The recent attacks on the Bonga oil fields and Chevron’s installations are new wake-up calls for the oil companies to fast-track their social responsibility to their host communities. They must seek ways of cooperating with other stakeholders to restore lasting peace to the Niger Delta. Unlike the political leaders in Abuja and the various state capitals, the oil companies are on the ground to contend, on daily basis, with the over-flowing anger of the youths of the oil-producing communities.

The oil companies tell anyone that cares to listen that they are doing their best to be good corporate citizens and that they are socially responsible. Of course, they know that it is in their best interest to have a peaceful relationship with their host communities. However, despite this realization, many of them are not doing enough to show that they are truly committed to the development of their host communities. Building a block of classroom here and another clinic there can at best be described as no more than sheer tokenism. They should embark on gigantic projects like the Ogbia-Nembe one that would leave a lasting impression.

Often the oil companies feel that once they have fulfilled their legal obligations to the Federal Government, whatever else is demanded of them should not be seen as a matter of right. They may be right, but reality dictates that they also have a moral and social responsibility to fulfill. The oil workers are the ones sharing the same neighborhood with the villagers. They cannot in good conscience be enjoying potable water while the villagers around them are drinking polluted water or enjoying uninterrupted supply of electricity while their hosts are in perpetual darkness or for them to live in mansions while the indigenous neighbours live in hovels.

Since they run joint venture projects with the Federal Government, which has majority shares, they should latch on this to drag the central authority along in their ambitious projects. If the government cannot provide basic infrastructure, it will be foolhardy for any oil company to provide such facilities for its staff only. They have a moral duty to share their good life with those around them.

It is even wrong for the oil companies to think that they are doing their host communities a favour by allowing them to share their facilities with them. In fact, such pecks are not enough compensation for the despoliation of their environment. In addition to hand-outs, the oil companies have moral obligations to appease the lands they are destroying.

These days, the message seems to be sinking in. Some oil companies are beginning to concede that operating standards of the oil industry leaves much to be desired. A senior manager of Shell Nigeria Exploration and Production Company [SNEPCO], Mr. Larry Osai, said that the Niger Delta needs massive and sustained development “because too much damage has been done to the people and their environment.” He regretted that the Federal Government that has been taking 95 per cent of earnings on the Joint Venture [JV] operations was achieving little with such huge revenue from oil.

“We are the ones who get our expensive installations vandalized at any point in time. We are the ones who lose our investments through the activities of the oil thieves,” Osai lamented. The import of this should drive the community activities of the oil companies henceforth.

Agbu sent this article via ifeatuagbu@yahoo.com.