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Tuesday, February 7, 2023

Why oil corporations opted for divestment in Niger Delta, by ERA/FoEN report

The Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) has published a policy brief on “International Oil Companies Divestment in the Niger Delta & Local Communities’ Concern” in response to the growing number of oil corporations quitting onshore oil facilities in the Niger Delta region.

IOC Divestment from Niger Delta
L-R: Friday Ogierakhi, former Edo State House of Assembly member; Chima Willaims, ERA/FoEN Executive Director; and Prince Barbs Pawuru, president of the Host Communities Network of Nigeria (HOCON), at a recent Civil Society Roundtable on IOC Divestment from the Niger Delta, in Benin City, Edo State

The report noted that the term divestment in Africa has been distorted by the fossil fuels industry and mis-presented to mean sale of toxic assets and oil facilities in environmental hotspots as against its true meaning.

In the global civil society community, divestment is the pulling out of public finance, loans, and subsidies from extractive industries, particularly oil and gas because of their contribution to environmental pollution and climate change and its impacts. The climate justice community believes that, by reducing extraction by about 80%, such monies running into billions of dollars will be redirected to alternatives, especially renewable sources of energy such as solar, wind and community energy development.

The policy brief, which was made available to the relevant agencies including the Nigeria Extractive Industries Transparency Initiative (NEITI) and the National Oil Spill Detection and Response Agency (NOSDRA), noted that the fossil fuels industry uses the distortion of divestment to evade responsibility.

The report noted that the current divestment process is secretive and usually excludes members of host communities where industry facilities are located, adding that Shell is the first multinational oil company to experiment divestment with its divesting of some of its equity from some oil blocs in the Niger Delta in 2010. This example has been followed by Exxon Mobil, Chevron and other corporations operating Joint Venture partnership with Nigerian National Petroleum Corporation (NNPC).

The report advised the government to ensure that the IOCs clean up their mess and pay up before they are allowed to quit operations or sell off their onshore assets.

ERA/FoEN also urged the Nigerian government to constitute a multi-stakeholders review team on best practices in the divestment process and involve host community representatives, civil society representatives, relevant government ministries, departments, and agencies representatives in the processes.

The report urged the government to compel divesting IOCs to fulfil all their outstanding MOUs and GMOU obligations to community people and their environment before handing over assets to Domestic Oil Companies (DOCs). It asked the government to deal with the political nature of allocation of oil blocks which has been a key grievance issue in the call for resource control by many groups in the Niger Delta.

On the motivation behind the policy brief, ERA/FoEN Executive Director, Chima Williams, said that the Dutch Court of Appeal ruling in 2021 that Shell must pay damages to three out of the four Niger Delta farmers from communities where oil spills caused widespread pollution has set a precedent that IOCs will incur heavy costs in remediation of polluted sites and huge financial compensation hence the flurry in divestment.

Williams pointed out that ERA/FoEN held extensive consultations with communities and civil society in Bayelsa, Rivers, Edo and other states across the Niger Delta and aggregated their concerns on the divestment processes in the policy brief.

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