Blocking Of IOCs Divestment Stifle Investments – NUPRC

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… Says investors have right to free entry, exit

… Insists IOCs divestment must follow PIA provisions

By Yahaya Umar

Nigerian Upstream Petroleum Regulatory Commission’s  Chief Executive, Gbenga Komolafe, has said that any attempt to frustrate the smooth divestment of International Oil Companies assets will scare investors from the country and impact Nigeria’s overall well-being.

Komolafe said this on Thursday at a dialogue session between the NUPRC and a coalition of civil societies led by Social Action of Nigeria.

The visit to the Commission’s headquarters in Abuja was centered on issues surrounding oil sector divestments by IOCs and their impacts on the host communities.

The NUPRC is currently overseeing four divestment transactions of IOCs. In a strategic step, the NUPRC released seven regulations to address the issues surrounding the IOCs divestment, particularly issues relating to host communities.

However, the coalition during the dialogue called for a “halt to the divestment” process by the NUPRC over environmental and host community issues.

In response, Komolafe said, “As a regulator, we only regulate in line with the provisions of the law. Our actions and decisions are expected to be in tandem with the provisions of the Petroleum Industry Act. So, we do not act outside the law.

“So, we always ensure that as a regulator, that we guide our decisions by the express letters of the law. I’m putting up the Petroleum Industry Act as a legal tool that we rely on.It has made copious provisions for some of these apprehensions.

“All we need to do is at least have confidence in the regulator, and you have to agree that the regulator has the capacity to do the right thing, which we believe we are doing without compromise in any regard whatsoever.

“All that is required is for you, as members of the civil society, in your advocacy, to continue to give us support.

“Of course, we would recommend that divestment is a free decision that an investor will take and for us, we believe in the principle, the doctrine of free entry and free exit”.

The Commission’s Chief Executive urged the delegation to be cautious and imbibe the principles that would make the Nigerian oil and gas industry attractive to investors.

“We should not do anything that will stifle investment because that will not be in the interest of the Nigerian state. In our regulatory activities, we believe that there should be the principle of free entry and free exit. It is purely within the right of an investor to choose to divest. It is about the ordering of the portfolio”.

Komolafe’s response was to address concerns raised by the Social Action delegates about the environmental liability and clean-up issues that IOCs would leave behind for local companies.

The Programmes Coordinator of the Social Action of Nigeria, Botti Isaac, in his speech said the divestment raises critical questions about responsibility for the past and ongoing environmental damages due to IOCs operation.

The coalition expressed fears that with assets changing hands, there is a concern about the commitment of the new assets owner to address the legacy of pollution and invest in necessary clean-off and remediation efforts for damages.

Consequently, the group said, “This is an urgent call for a halt to divestment. Given the significant risks and concerns associated with divestment, we call for an immediate halt. The Nigerian authorities should not approve any further investment until a comprehensive and transparent framework acceptable to the government of the Niger Delta States, the affected communities, labour and civil society observers is established and addressing all environmental, industrial relations, and social abilities for the satisfaction of all stakeholders, including affected communities.

“We also demand for a comprehensive resolution of environmental and social abilities. The divestment issues raise significant concerns regarding the accountability of the SPDC and the IOC’s historical environmental damage and the ongoing pollution of oil operations.

“The asset ownership transition must not diminish the local community’s capacity to seek good address and justice. The distressing experience of communities such as Oloibiri, Membe, Oguni land and others underscores the urgent need for a divestment process that prioritizes environmental restoration and social justice”. The coalition also called for the proposal of an environmental restoration fund.

“We propose the creation of an environmental restoration fund with contributions from Shell and other IOCs. This fund will focus on environmental restoration and community development projects in the Niger Delta, with transparent management and active community participation”, Isaac added.

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