The Commission Chief Executive of the Nigerian Upstream Petrolatum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, on Monday, disclosed that the Commission has facilitated about N60bn and $100m for the development of oil and gas host communities in the country in line with the provisions of the Petroleum Industry Act (PIA), 2021.
When put together, he explained that this is about N200bn based on the current exchange rate.
Under the PIA, the host community development fund is to be funded with a pool of three per cent of the operating companies’ capital expenditure (Capex) in every preceding year. The fund is to be managed by the Host Community Development Trust (HCDT).
Komolafe, however, regretted that despite the fact that the Commission has facilitated this fund for the development of oil and gas host communities, litigations among community actors often affect the utilisation of the fund
He stated this at the inauguration of the Body of Neutrals of the Upstream Alternative Dispute Resolution Centre (ADRC) in Lagos.
Established in 2021, NUPRC’s ADRC offers arbitration, mediation and conciliation services for the oil and gas industry.
“We’re doing everything to add value, to facilitate inclusiveness, to facilitate peaceful operating environment, so that operators can operate to achieve the targeted optimum production to impact positively on federation revenue. But we found out that the unwarranted crises among the host community actors often limit this laudable initiative,” Komolafe said. “In effect, the intended value addition or inclusiveness we seek to drive in the Commission are not impacting optimally as intended.”
The CCE said the Commission often receives avalanche of court cases and petitions concerning host community matters. To address this, he explained that the ADR mechanism is intended to ensure a cheaper and faster way of resolving disputes in the upstream sector.
“Beyond resolving individual disputes, our Centre aspires to foster a broader culture of resolution and cooperation, particularly in relation to host communities. The Commission regularly receives a multitude of court cases and petitions concerning host community matters. The relationship between host communities and settlors, or among host communities themselves, should be guided by equity, inclusiveness, and respect for the various laws governing the oil and gas industry. It is worth recalling that Sections 234 and 235 of the Petroleum Industry Act (PIA) 2021 provide robust provisions for the implementation of host community development under the law,” he said.
While acknowledging that conflict is an inevitable aspect of human interaction, Komolafe noted that it need not be destructive.
“Through this Centre, we aim to cultivate a culture of continuous cooperation and collaboration between the various communities and the entities involved in exploration and production. This will attract more investments and bolster investor confidence, thereby fostering growth and opportunities in the industry for shared prosperity in our nation,” he noted.
Komolafe pointed out that the establishment of the Body of Neutrals is not only the culmination of extensive planning and dedication but also the commencement of a transformative chapter in the realm of dispute resolution in the country’s upstream sector.
“In an increasingly complex and interconnected world, the demand for effective and efficient dispute resolution has never been more critical. While traditional litigation remains necessary and important, it is often accompanied by inherent delays, high costs, and adversarial postures that can exacerbate conflicts and strain relationships, as seen in numerous protracted legal battles between Producers and host communities. These challenges underscore the inefficiencies of traditional litigation and the immense financial burdens and prolonged suffering it imposes on the individuals and communities involved.
“In recognition of these challenges, our Alternative Dispute Resolution Centre was conceived with a vision to provide a seamless approach to dispute resolution—one that emphasis on mechanisms such as mediation and conciliation and other ADR methods,” he stated.
According to him, NUPRC’s mission is to provide and facilitate guaranteed access to quality, cost-effective, and time-efficient resolution of disputes that arise in the upstream sector of the oil and gas industry.
“Our goal is to establish a Centre grounded in fairness, efficiency, and integrity, offering a platform where disputes can be resolved outside the often-cumbersome traditional processes. Our methods enable parties to reach amicable solutions through mediation, conciliation, and other alternative dispute resolution (ADR) methods.
“Our Centre is not merely an institution; it stands as a beacon of hope for those seeking justice in a timely and cost-effective manner. It is also a testament to our unwavering commitment to promoting and institutionalizing efficiency in the oil and gas industry by providing a conducive environment founded on the principles of equity and justice for all stakeholders, regardless of their background or the nature of their operations,” Komolafe highlighted.
The role of the Neutrals, he noted, is multifaceted, adding that they are entrusted with the oversight of disputes and the mediation of matters that fall within the Centre’s jurisdiction.
“One of the fundamental objectives of our Centre is to enhance access to justice in a timely and cost-effective manner. Too often, individuals and corporate entities in the oil and gas industry find themselves entangled in protracted legal battles that deplete resources, waste valuable time, and adversely affect the nation’s oil and gas production output. By offering alternative avenues for dispute resolution, we are opening doors to swift, equitable, and less adversarial processes in our industry. This approach not only benefits the parties involved but also alleviates the burden on our overextended judicial system.
“Our approach is inclusive and adaptive, designed to meet the unique needs of the oil and gas industry. Whether through mediation sessions that foster direct communication or expert determination proceedings that provide binding resolutions, our Centre is equipped to handle disputes of varying complexities and scales. We are committed to ensuring that every individual, entity, or community that seeks our services is treated with dignity and respect, and that their path to resolution is as smooth and supportive as possible,” he affirmed.
While thanking the Neutrals for their willingness to serve, the NUPRC boss expressed confidence that the team will play a pivotal role in transforming the landscape of dispute resolution in the sector.
“Together, we will build a future where disputes are resolved not through contention, but through cooperation and understanding. Let us move forward, knowing that our efforts will make a profound and positive impact on our country and beyond,” he Komolafe concluded.
Members of the team include former President of the National Industrial Court of Nigeria, Hon. Justice Babatunde Adejumo; former Director of the defunct Department of Petroleum Resources (DPR), George Osahon; Human rights lawyer, Femi Falana, among others.
NUPRC Has Facilitated About N200bn For Development Of Host Communities — Komolafe is first published on The Whistler Newspaper
