A sovereign nation is endowed with inalienable rights, coupled with the machinery of the state to function independently. These are necessary for it to be able to maintain its sovereignty within and outside its geographical and political boundaries. A fundamental component of that statehood is the inherent right over its natural resources. And by extension, the power to enact laws to regulate the sustainable use and exploitation/exploration of those natural resources. It encompasses the freedom to negotiate and enter into investment agreements with investors – domestic and foreign – and simultaneously provides a safe harbour for the expressions of fundamental rights and the pursuit of happiness by civil society. These goals are attainable anywhere in the World. There are a plethora of studies and papers developed over the years by the United Nations as well as Private and Public Institutions, intending to attain those goals.
God blessed Nigeria with the Niger Delta oil and gas and the Kogi-Middle-Belt axis with abundant natural riches. And it is morally demanding on the part of the leadership to explore, exploit, and utilize the natural resources for the use and benefit of present generations, while making reservations for the needs and use of the unborn generations who would have no other land, except the Niger Delta and the Middle-Belt to call their own. It is called the sustainable development of natural resources.
What is required, therefore, is a fundamental framework developed at the instance of the Federal Government to ensure sustainable exploitation and use of natural resources in collaboration with the Federating States, Local Councils, and the host communities.
This fundamental framework involves the integration of human rights and human development initiatives within the body of the various investment agreements negotiated between the Nigerian Government and International Oil Companies (IOCs) or International Mining Companies as the case may be. It also extends to agreements negotiated between the National Government and Local Oil Companies (LOCs) as well as local Miners.
It calls for balancing the investment interests of the investors with those of the host government at the centre, without undermining the human rights and social expectations of the host communities. That is the current trend in the development of mineral resources around the World. Nigeria should not be an exception.
It requires the establishment of Land Reclamation Funds (for instance in the Middle-Belt and North-Central) or Water Restoration Funds (Niger Delta) as the case may be, created at the inception of the exploration agreement. And to be funded by the Federal Government and the investors with a certain percentage of estimated yearly earnings agreed upon by the parties.
The contracting parties must deposit the reserve funds in an escrow account during each calendar year, specifically to offset environmental clean-up, and oil spillage (as presently the case in Bonga Field). It also involves land reclamation and decommissioning costs whenever the need arises or whenever the investors cease operations (Shell). The land reclamation funds, the escrow account, as well as water restoration obligations are essential and mandatory components of the integrated contract.
Also, it recognizes the importance of local content, training, and education of the indigenes of the surrounding communities. Cash incentives only provide temporary relief and should be discontinued where possible. Instead, effort should be made to expand the Petroleum Training Institute, Effurun, with the capacity to absorb and provide necessary machining, technical and mechanical training for candidates within the amnesty pools (former members of MEND), to prepare them for entry-level positions in the energy sector.
Adding to that, it requires honesty, and transparent negotiations between the government, the investors, and the local communities where natural resources are located. These companies should endeavour to engage and interact with the local people regularly by buying local produce and attending community affairs, and cultural festivals. It is called a “social license,” which is more important than any PSA. Also, the divide and rule system - setting up one community against another or one interest group against another as was the case in the trial and execution of Ken Saro-wiwa, is counterproductive and should be avoided by the stakeholders.
In the words of Professor Luke Danielson, a prominent Attorney in the emerging world of sustainable development of natural resources, "Truly successful projects must be successful for investors, local communities, and host national economies. Increasingly, it appears that there is little opportunity for success in one of these dimensions without success in all of them. A project that has terrible results for investors is not going to benefit anyone else very much. A project that burdens the government of a poor country with all kinds of costs of social dislocation and environmental problems while providing little or no revenue to deal with them is likely to have a long list of other problems. The idea that the company is going to be highly successful at meeting its own expectations without meeting the expectations of other key players is increasingly difficult to accept.” Culled from “Sustainable Development in Natural Resource Industries: New Perspectives, New Rules, and New Opportunities.” The above is a perfect picture of the situation in the Niger Delta.
Presently, it cost Shell much more to provide security for its workers and facilities in the Niger Delta, in comparison to what other oil companies, similarly situated, pay to maintain production at the same capacity. The facts are whenever Shell declares force majeure, both Shell and the federal government suffer substantial financial setbacks, running into millions of dollars in revenues, royalties, and taxes. When those are added to the large security budget and the replacement cost resulting from recurring expenses associated with the burning and destruction of petroleum pipelines, you are bound to have much more than enough to finance the demands of the local communities before the protest and demands escalate out of control into kidnapping vandalism.
According to the International Finance Corporation (IFC), “Before disputes escalate to settlement at the international level, companies must ensure that they have in place adequate mechanisms for dispute resolution between its stakeholders and the communities. A grievance mechanism should provide a way for the communities to hold the company accountable, to be sure it takes community inputs seriously, deal with them through a clear and transparent process, follow through with actions, and communicate with the community.”
The interest of the host community overrides all other considerations. You cannot provide bread and butter for the local chiefs, making millions of dollars available to influential politicians to write off your taxes, and expedite the contracting process, while 99.9% of the people do not have clean water to drink, cannot fish, and cannot farm. It doesn’t make sense.
Given the enormity of the environmental hazards and other problems associated with petroleum and exploration activities, the same effort and resources should be devoted to managing exploration and disaster prevention measures and control.
Moving Forward.
Indeed, President Goodluck Jonathan’s (Niger Delta) election as President of Nigeria is important symbolically, but they cannot overcome 50 years of abuse of federal character, quota system, environmental degradations, and the indiscriminate destruction of the aquatic resources that the people of Niger Delta overwhelmingly depend on for their survival by the multi-national oil companies.
They survived 50 years of neglect and deprivation. That is a fact. And Ogoni grieves, and a clean-up came that never was.
They were fishermen, they were into rubber, and they were into the timber trade. They were industrious, self-secure and self-sufficient. They were loyal landlords, until the uninvited quests confiscated their land, took away the riches of their earth, and imperilled their means of survival.
And yes, they produced and drank ogogoro (local gin), but there was no drunkard and no insane delusional or hopeless mind rummaging the swampy landscape scavenging for a piece of the black gold simmering from crevices along the pipelines. IOCs and the Federal Government of Nigeria took their humility for granted and left them economically pulverized.
There was no burning, and there was no looting. There was no kidnapping of white men and not-so-white men for ransom. And there was no lamentation of force majeure by Shell, or BP, or by Chevron. These companies cleaned up their mess in the Gulf of Mexico and elsewhere in the developed and developing world; they must be made to clean up their mess in the Niger Delta.
That is not too much of a demand.
Suffice it to say at this juncture, that, just as Abuja (the Federal Capital Territory of Nigeria) was a national priority during its development phase, the reconstruction and development of infrastructural facilities in the Niger Delta should be a national priority.
Managing Militancy
In Nigeria, the militancy business is big business. It benefits the sponsors of the activities more than the perpetrators of the events in financial terms. Therefore, the perpetrators (the field workers) need redemptions, while those who plan and sponsor the actions should be prosecuted where possible.
First, the government and IOCs should start with the establishment of Schools of Basic Studies or Extramural Classes, where those who dropped out of Grammar Schools those who do not have the mandatory five or six credits required for admission to higher institutions and those who cannot afford to pay to retake the exams over and over again, as it is the case in Nigeria, should be able to register and retake the exams, without the temptation of joining militant activities. These are the dislocated Nigerians – no certificate, no jobs, and no future - who are the easy target for militant recruitment.
Above all, the affected youths should be proactive and look beyond immediate gains from militancy activities and think about their future and the future of their children. The reasonable step right now is to eschew militancy activities and take advantage of the amnesty programs, and everything that it offers. That is one of the most credible avenues to earning a sustainable income and a happy living.
Scholarship
Where the family support system is lacking, the government and oil companies ought to step in and fill the vacuum through community engagements, extra-curricular activities as well as other social and educational incentives. The health hazards inherent in exploratory activities are common knowledge, worldwide. Therefore, a request for healthcare support is not a high demand.
The concerns most often expressed at international forums and in classrooms overseas regarding the establishment of hospitals in local communities and the availability or non-availability of doctors and personnel to manage them when IOCs cease exploratory activities and depart are real concerns. However, they are preventable. The first step is the award of scholarships to deserving students from the immediate localities and the country at large, to attend medical schools.
For instance, Shell has been in Nigeria for close to 50 years; similarly, no other major oil company has abandoned its operation in Nigeria within the first seven years of its exploration activities. (All things being equal, it takes about seven years to train a medical doctor in Nigeria). So, the establishment of the scholarship fund and training of doctors and the establishment of hospitals in the local communities where the multinational operates would go a long way to ensuring a cordial business relationship between the different stakeholders.
The scholarship should be made available on the condition that the beneficiaries, in the first ten years following graduation, must work for the oil company at the company’s own hospitals that are accessible to the villagers. Alternatively, the beneficiaries must, with the support of IOCs, set up their private clinics or hospitals in and around communities specified by IOCs. And where it is not logistically feasible to establish clinics or hospitals (as in the creeks), Mobile Clinics should be provided.
Analysis
The demand for the integration of human rights, human development and sustainable development within the framework of every investment agreement in the extractive sector, is not just an intellectual exercise. It is real and achievable if diligently pursued. Investment Treaties and Stabilization Clauses do not provide the kind of stability that developing some forms of relationship (social license) with the community offers.
The earlier nation-states and foreign investors embrace and acknowledge the interests and concerns of Indigenous people and inculcate those concerns into their final investment agreements, the closer we are to peace and sustainable human development in the mineral-producing areas anywhere in the World. Nothing enriches shareholders' value more than a sustainable income.
Finally, it is our firm belief that any investor who values life, liberty, freedom, and fundamental human rights of others, especially people living in and around mines and rigs or mines; with a genuine concern for living things, creatures, and the environment in and around its facilities; and appreciates peaceful investment climate inherent in cordial business relationship with local communities, should not prevaricate on these issues and the solutions proffered.
We firmly hold that the number one problem facing multinationals in the extractive sector, especially in developing countries, is a failure of corporate responsibility. Political instability is real and potent, but not as egregious as community unrest.
Also, the host nation should hold multinationals liable for any financial loss resulting from the declaration of force majeure unconnected with natural disasters, or unforeseeable catastrophic occurrences. I hold this view believing that most of the unrest at the locations of facilities is preventable.
When your facilities and staff quarters enjoy an uninterrupted supply of electricity, while the community where you are tapping your wealth are in total darkness is criminal.
When the smooth and bumper-free road that extends from the highway to your facilities and the nearby villages suddenly stops at the entrance to your facilities, while the villagers contend daily and endlessly with gallops and pot-holes from your gate to their homes is criminal.
Also, we firmly believe that the health and environmental hazards prevalent in mining and oil-producing areas are preventable, and the economic deprivations and financial losses inherent in oil spillage, pollution, and environmental degradation are compensable. Host nations as well as host communities, working through the right channel, should demand punitive damages where catastrophic occurrences are foreseeable, egregious, and preventable.
Finally, the United Nations, in its Rio Declaration of 1992, stated inter alia:
“Human beings are at the centre of concerns for sustainable development. The right to development must be fulfilled to equitably meet the developmental and environmental needs of present and future generations. To achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it. Indigenous people and their communities and other local communities have a vital role in environmental management and development because of their knowledge and traditional practices. States should recognize and duly support their identity, culture, and interests and enable their effective participation in the achievement of sustainable development.” UN RIO DECLARATION. 1992. And that is the way it should be to be able to sustain a peaceful investment environment in any region of the world.
December 2011
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