NNPC Facilitates N200bn Fund for Oil and Gas Host Communities but Faces Utilisation Hurdles
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has overseen the facilitation of nearly N200bn for the development of oil and gas host communities, a major step in addressing the challenges facing these regions. However, the funds have yet to be fully utilised, largely due to ongoing disputes and litigation, according to NUPRC’s Chief Executive, Gbenga Komolafe.
Speaking in Lagos on Monday during the inauguration of the Body of Neutrals for the commission’s new Alternative Dispute Resolution (ADR) Centre, Komolafe revealed that N60bn was raised in local currency, while $100m was secured in foreign currency.
The NUPRC head expressed regret that the funds remain untapped, highlighting the negative impact that unresolved disputes between host communities and oil companies have had on the sector’s growth. To tackle these challenges, the commission has prioritised the creation of the ADR centre as an alternative to the traditional court process, offering a faster and more cost-effective means of settling conflicts.
One of the key issues, Komolafe noted, is the often tense relationship between host communities and the oil companies operating in their regions. While stopping short of calling it outright hostility, he pointed out that these tensions have hampered Nigeria’s ability to maximise the potential of its substantial oil and gas reserves.
“The Petroleum Industry Act (PIA) has robust provisions to address host community issues,” he stated, explaining that the creation of Host Community Development Trusts is one of the core components designed to ensure a more harmonious operating environment.
Komolafe disclosed that the commission has already implemented regulations for host community development, attracting significant funding. He emphasised that the funds, administered by trustees elected by the host communities, are intended to drive visible improvements in local areas.
“The paradox is that despite this level of funding, it hasn’t yet translated into tangible value for the host communities,” Komolafe explained, citing internal disputes and inefficiencies in fund disbursement as key obstacles.
To mitigate the time-consuming judicial processes that have stalled the release of funds, the newly inaugurated ADR centrewill focus on resolving conflicts more efficiently. Komolafeexpressed optimism that the Body of Neutrals, composed of highly respected judges, lawyers, academics, and professionals, would provide a new path towards peaceful resolutions and unlock the funds for much-needed development.
The commission’s ADR initiative, the first of its kind, will soon be replicated in Yenagoa, Bayelsa State, with further plans to engage the judiciary to ensure that the decisions reached by the ADR centres carry judicial weight.
In his closing remarks, Komolafe noted that once the ADR centres are fully operational, host communities will have a faster route to resolve their disputes, allowing the funds to be released and utilised to foster development, reduce tension, and ultimately improve daily production targets in Nigeria’s oil and gas sector.
Key members of the Body of Neutrals include Senior Advocate of Nigeria Femi Falana, Justice Andrew Omolaye-Ajileye, and Isaiah Bozimo, SAN, among other esteemed legal and professional figures.
