PIA: TRIAL OF A GAME CHANGING LEGISLATION 

 The Managing Director of Indorama Eleme Petrochemical Company Limited Mr Manish Mundra has the magnanimity of the Public Petitions Committee of the House of Representatives with the Chairman as Mike Etaba, to thank for a soft landing in his recent summons by the Committee. The Committee had frowned at his serial refusal to honour their invitation at various times and had recently threatened to order his arrest by the Inspector General of Police (IGP), if he failed to heed their next invitation to appear before them. However in line with their avowed commitment to offer every party in a matter before them, the benefit of fair hearing and treatment, the Committee resolved to exercise the prerogative of grace, by offering him another chance for making his case. His firm Indorama Eleme Petrochemical Company Limited (IEPCL), was required to respond to a petition by the Nsisan-Obari Royal Palace Alesa Council of Chiefs and Elders in respect of the firm’s violation of the provisions of the Petroleum Industry Act (PIA), by not recognising Alesa Eleme as one of the bonafide host communities to its operations. Seen in context the matter between Indorama and Alesa Eleme tends to constitute another test for the PIA, in its mission to change the narrative of the Nigerian oil and gas sector. 

 The PIA has in its provisions designated as a host community, any location on which is located an oil or gas production or processing facility, given the understandably inherent potential hazards of such operations to the location. And according to Alesa Eleme community, this provision of the PIA qualifies them as a host to Indorama, as the company’s pipeline traverses their land. In contesting the claim by Alesa Eleme, Indorama through its Manager of Community Relations Kendrick Oluka argued from the background of history of the project that Alesa Eleme was not part of the complement of six designated Eleme host communities which it inherited at the point of the 2006 acquisition of the former Eleme Petrochemical Company Limited – then a subsidiary of the NNPC, from the Bureau for Public Enterprises (BPE). That complement of six host communities comprised Akpajo, Njuru, Okerewa, Aleto, Agbonchia and the Wakaohu Family of neighbouring Elelenwo community, did not include Alesa as only the owners of the primary site of the plant were considered. These six host communities were therefore the signatories to the relevant Memorandum of Understanding (MOU) in respect of the take-off of the Indorama project. 

However the point of deviation between Alesa Eleme community and Indorama lies in the different legal grounds on which each party’s case is premised. While Indorama is claiming justification for excluding Alesa Eleme from its schedule of original host communities which it inherited from the BPE dispensation in 2006 and which conspicuously excludes Alesa Eleme, the community is premising its claims on the provisions of the PIA which was enacted in August 2021 and includes all locations where oil and gas exploration as well as processing facilities are located. And for good measure it is now the extant, omnibus legislation that drives the nation’s oil and gas sector. 

Envisaged from conception and passage into law to serve as a game-changing dispensation in the nation’s oil and gas sector, the PIA has introduced several novel terms and conditions aimed at promoting equity and sanity in the sector, with some of such featuring in Chapter Three of the Act which deals with the relationship between oil and gas companies and their host communities. Specifically the chapter prescribes statutory financial and organizational protocols for implementation by the relevant oil and gas companies for the development of their designated host communities. This dispensation   which is a deviation from tradition whereby the oil and gas companies enjoyed the liberty of dictating the scope of compensation for host communities, constitutes the difference in strokes for the various parties namely the companies and the communities, as while the communities see the dispensation as a welcome turn in their fortunes, the companies see it as encroachment on their finances.

 By the same protocol the PIA also imposes the obligation of security of the assets of the oil and gas companies on the communities hosting such companies, as damage to same shall be resolved with the funds so provided by the company for the development of the host communities. This provision thus makes the PIA the ultimate ombudsman or facilitator of equity for the stakeholders in the oil and gas sector. By its provisions, therefore the Nigerian government expects problem free interfacing among  the operators in the sector.   

However, from all indications – especially the body language of Indorama it would seem that the firm’s main worry stems from how to part with its money for payment to whom it considers as new generation host communities like Alesa Eleme and others, who extend even into the Orashi region which is traversed by its network of gas and other pipelines.  As by virtue of its expanding operations in the Niger Delta region, Indorama’s activities are not confined to Eleme area alone. The firm is now a leading producer of products such as fertilizers and others for which natural gas in the feedstock. This is just as it has opened up crude oil exploration activities in the Kalabari area of Rivers State. 

 In the final analysis, the message for oil and gas companies including of course Indorama who may be bellyaching over the provisions of the PIA, is simple. The PIA is a law that has come to stay as it was enacted to eliminate the weaknesses in the oil and gas sector of the Nigerian economy. Hence the earlier they address themselves to complying with its provisions the better it will be for them. That is how to be at peace with a game changing legislation like the PIA.