Corporate Social Responsibility by Nigerian Oil Multinationals to Host Communities in the Niger Delta Region. A Right or A Privilege?

I. INTRODUCTION

One of the major challenges of most corporations is how to achieve integrity and trust from its stakeholders. Meeting the expectations of its shareholders as well as the interest of the stakeholders has been a contested issue for most corporations because of their conflicting prospects. Due to the dependency of business on society, certain responsibilities or obligations are imposed on the business organizations to discharge as part of their CSR . Despite the increased attention given to the issue of CSR, choosing the right form of CSR and successfully implementing same has been a difficult task. This difficulty is often associated with diversified interest of the parties involved. In the Niger Delta region of Nigeria, multinational enterprises are expected to offer social services and welfare programmes as part of their CSR initiatives as they pursue their normal activities. These expectations are not far-fetched as MNCs are now committed to funding community development programmes by way of providing education, scholarship, and road construction . The community development initiative in the Niger Delta is widely criticized by the host communities due to the fact that adequate attention is not directed at tackling the problems that the multinational enterprises accepted to resolve . Therefore, CSR does not seem to be a usable tool to alleviate poverty and other developmental goals as originally envisaged. However it is argued that

CSR approaches by MNCs do not justify such claims . While the MNCs are publicizing their role in the transformation of this region, the host communities feel otherwise.

The general expectations of the people of the Niger Delta region is seeking employment for the youths, reduction in environmental damage to their farmlands (livelihoods), and economic and social development of the entire region. To the host communities, these expectations have not been met which has resulted in a conflicting relationship with the MNCs. In the Niger Delta region, the root cause of hostility between the oil companies and host communities is also linked to the inherent discontent with the governance system of Nigeria. The government is perceived to support the MNCs operation at the expense of the host communities. In addition, the chosen approach to remedy the problems, which has been to provide some basic infrastructural facilities for the communities does not seem to tackle the main issues confronting the region. Therefore, what is being witnessed is the neglect of the role of CSR in improving the living standards of the people and sustaining the livelihoods of the communities. It seems therefore that the CSR initiatives are in the interest of the MNCs who are indirectly sourcing for a conducive environment to maximize their earnings and to be seen as being socially responsible .

Nigeria plays a major role in the global oil and gas marketplace. Nigeria is the seventh largest producer of oil and gas globally, and supplies 20% of total oil imports to the United States. Nigeria is also gradually becoming a major global supplier of liquefied natural gas (LNG) to international markets. Petroleum accounts for about 40% of the gross domestic product (GDP) and 70% of total government income . Oil and gas account for

80.6% of total federal revenues and are the lifeblood of the nation's economy and the sole reason for the nation's continued existence. Over 90% of Nigeria's external income is derived from oil and gas exports . The people of the Niger Delta live in an area where they are solely dependent on the local ecosystem for their existence. Subsistence farming, fishing, and petty trading are the main occupations of Niger Delta citizens and land owners. The Niger Delta ecosystem has been severely degraded due to the activities of multinational oil and gas companies operating in the region . Nigeria ranks as one of the most heavily populated countries in Africa .

The region is one of the richest in the world with an abundance of human resources, mineral resources, animals, and a wide variety of plants (Ojakorotu, 2011). The Niger Delta occupies a land mass of about 110,000 square kilometers, or approximately 43,750 square miles, and in the southern area of the country, per 10,000 square kilometers, there are approximately 6,250 square miles of wetlands in the rain forest areas of Nigeria (Kadafa, 2012; Okolo, 2014). In administrative, developmental, and political terms, the Niger Delta region encompasses all nine states where oil and gas are produced, with a land mass of 110,000 square kilometers. The region has an approximate population of 37 million citizens, which translates to 22% of the national population of Nigeria (Adekola, Mitchell, & Grainger, 2015). The states that make up the Niger Delta region are Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers, and the region brings in 90% of Nigeria's 2.3 million barrels of oil per day.

The oil and gas resources derived from states together account for 80% of the total Nigerian national revenue . Local land owners perceive that oil companies have created an environment of poverty, exposure to health hazards, loss of homes and lands, community clashes, social unrest, and kidnappings. The activities of companies have further compounded the incidences of perennial flooding and severe climate variability and transformation leading to ecological destabilization and increased vulnerability of local communities . The general perception of local land owners in the Niger Delta is that the woes of the host communities are largely to be blamed on the neglect of their needs (by the oil and gas companies in the area) leading to an imbalance against what is exemplified by the management principles of the triple bottom line and CSR expected from the oil and gas companies in the area asserted that multinational oil companies continuously receive billions of dollars at the expense of their host communities who lack food, water, and shelter due to the fact that the environment is ravaged by the effects of oil spillages and gas flaring.

Ejumudo, Edo, Avweromre, and Sagay (2012) recommended that firms that pollute the environment strategically devote sufficient resources to CSR for the benefit of their host communities. Ejumudo et al. specifically recommended an enhancement of the CSR agenda of operating companies in the area in order to redress the economic, developmental, and environmental problems of the area and reduce violence and conflicts. The local landowners' perception is that the oil and gas companies operating in the area fail to effectively use CSR to positively impact their lives and the environment in which they operate . Oil and gas companies perceive that they are providing sufficient resources to communities to alleviate social and environmental problems. The researcher evaluated the perceptions of landowners by conducting interviews with 15 people drawn from both the industry and host communities in order to obtain their lived experiences regarding social economic development in the Niger Delta region.

The aim of this paper is to explore the inclusion of stakeholder's perspective in CSR and the extent to which the host communities' interest on CSR is needful for harmony between the oil companies and people of the Niger Delta region. The article begins with a conceptual analysis of CSR that appears in academic literature and the issue of CSR in the Niger Delta region of Nigeria. This is followed by the interest of the host communities in CSR as well as that of the oil multinationals. The section that follows considers the host communities as stakeholders and the study area and methodology used for the research. After which the major findings from the interviews with the host communities as well as the focus group discussions are analyzed to explain the perception and expectations of the oil industry.

II. THE CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate social responsibility is a world view which holds that companies in a locality should become part of locality where they operate and contribute towards the development of that locality. The status of their contribution has remained controversial, whether it will be obligatory owing to the fact that they make profit and generate burden that negatively impact on the inhabitants of that locality or it will be voluntary. Following this line of argument posited that social responsibility rests upon the idea that business should be conducted with concern for the effects of business operations upon the attainment of valued social goals and companies have an obligation to consider society's long-run needs and wants, and that they should engage in activities which promote benefits for society and minimize the negative effects of their actions.

Corporate social responsibility is also seen as a process to integrate social, environmental, ethical, human rights and consumer concerns into business operations in close corporation with the stakeholders . Melanie (2009) identified features of corporate social responsibility to include:

• CSR is voluntary. That is companies are not mandated by any law to undertake any responsibility. It therefore goes beyond legal compliance.

• CSR focuses on the triple bottom line, which means that economic, social and environmental impacts are integrated.

• CSR is applied to core business activities, not only as an add-on to business activities.

Fiel, Haidvogl and Melanie in Melanie (2009) saw CSR as corporate governance contributions, which is defined as sustained corporate policies and activities that work towards the development or implementation of collectively binding norms and rules or the provision of collective goods. This view suggests that companies can take up governance responsibilities in their host communities where government actors have failed as communities would demand compensation, health services, educational opportunities, infrastructure, and socio-economic development directly from companies as surrogates for an absent or neglectful government (Melanie, 2009). This practice serves as a means through which companies acquire a local social license to operate, hence an investment in their future operation . Following this position, they described corporate social responsibility as an obligation and one of the costs of doing business and not a philanthropy. Newell and Raynard in Idama (2017) advised multinational oil companies to act responsibly by way of giving back to the society especially in their areas of operation if they must succeed as corporate organizations.

2.1 Issues on CSR in the Niger Delta

The Niger Delta region has been faced with several issues as regards the CSR activities by the multinationals operating there. The reliance by the government and oil communities in Niger Delta on MNCs is as a result of inability to encourage social and economic development in the Niger Delta . An enabling environment is found to be an issue for CSR in Niger Delta and this has affected Shell contribution to the development of the region . This issue is closely related to a policy of the environment that ensures that business functions reduce environmental social cost and impacts and also maintains economic gains. The public sector roles imply that both MNCs and CSR require enabling environment for their smooth operation . But the lack of this enabling environment for CSR in Nigeria is an indication that of some level of ineffectiveness with limited level of significance and political support.

The conflict in Niger Delta is multidimensional and the possibility of achieving the needed result is limited. Though, the conceptual linkage to conflict reduction in Niger Delta is based on the assumption that CSR initiative that contributes to sustainable community development will address local grievances and improve livelihood . This does not seem to be the reality on ground. It is obvious that the level of violence in the Niger Delta is alarming, the result to the community members is that lack of employment opportunity, and environmental degradation are the root cause of conflict in the region. The responsibility of government is crucial in CSR development and maturation in Nigeria. Idemudia and Ite (2006) posit that CSR may help in shaping an institutional environment that foster sustainable economic growth.

However, the pursuit of an active distributional and social policy or the provision of motivation for ecological behavior, the critical issue on CSR is the absent of enabling environment. This is due to undermining tendencies of CSR initiative which reduce the positive impact of CSR. The reality is that corporate efforts are not used in meeting the community demands in the face of huge amount of community expectations that are not met due to government failure to meet its fair share of responsibility. Hence, this is a true reflection of situation in the Niger Delta region. These may be due to the variance in interests and expectations associated with the CSR activities.

2.2 Host Community Interest in CSR in Niger Delta

There are high expectations by host communities that CSR should be of immense impact to the development of Niger Delta region. These expectations vary from one community to another. The need to identify the community expectations is necessary to align the corporate expectations of the MNCs in order to sustain the psychological contract between the host communities and the oil companies, and since the community expectations are found to influence the decisions of the community, it is expected that adequate examination of the forces that drive the community expectations will aid in remedying recurrent problem of community expectations . It is believed that the implementation of CSR in these communities would reposition the livelihood of the entire region. Idemudia (2007) also states that there is a considerable low support among host communities and oil companies in donating fund compared to other community expectations. The perception of host communities is that MNCs should be more responsible for development, but the MNCs see the government as playing a principal role in the development of the communities. This is argued that such perception has made the multinational companies to lose their legitimacy with the communities thus making the companies subject to criticism.

Evuleocha (2005) stresses that Niger Delta will rely on the government in negotiating acceptable terms of production with the oil producing communities such as environmental compensation for damages, decision-making involvement in oil production, rule of law, transparency and accountable administration of the money from oil revenue. The researcher further maintains that people in Niger Delta region are able to make their demands and grievances known to the oil companies and to government based on their ability to exercise the fundamental human right without reprisal from the security forces. Oil companies as part of their long term interest is to promote good relations with the communities in the Niger Delta region. This involves compliance with environmental laws and international standards in development to ensure their presence does not aggravate conflict. Also with intervention in areas considered political for decision to be taken, the interest of the host community on CSR is needful. Afinotan and Ojakorotu (2009) emphasize that the prospects of conflict resolving in the Niger Delta region depends on dialogue and negotiation.

A study by Ojo (2012) indicates that CSR is not benefiting the host communities as it ought to. The effort made by government to end ecological devastation in the Niger Delta region is established to regulate the petroleum industry in order to improve the situation. Nigerian National Petroleum Corporation (NNPC) and Department of Petroleum Resources (DRR) have power to impose and exercise political will to regulate the oil sector. CSR is therefore needed to address host communities perceived needs and poverty reduction. CSR has brought about amnesty to the Niger Delta region, oil companies have allocated fund to the amnesty programme as part of CSR.

Facts have shown that oil companies and government have settled the leaders of the ex-militants to keep them off from destroying oil facilities . Though amnesty is considered as an effort to buy shortterm cease fires, with little of government commitment to resolve core issues , the problems of community development have not been addressed and amnesty has become a liability to the CSR in the region. Hence, the common aim of poverty reduction, security and environmental healthcare yet to be achieved through amnesty and CSR initiative in the region. Therefore there is need to consider the interest of the MNC in CSR.

2.3 Oil Companies Interest in CSR in Niger Delta

Multinational corporations all over the world are gradually becoming interested in CSR. There is rising need for companies to offer community development initiative to host communities where the oil companies carry out their operations. The lapses of government to provide adequate infrastructures to the community have put corporations especially the MNCs that operate in oil communities under pressure . The existence of oil exploration in Niger Delta has affected the traditional livelihood of the communities which renders the residents unemployed. The pollution of the waters and the fertile land are affected by the oil spill and gas flaring. It is argued that oil companies should take account of the social, ethical, and environmental perspectives of their operations . The principle of CSR theory assumes that business has a duty in the host community beside its obligation to the shareholders of the corporation. It evidenced that for businesses to grow, they must carry out their function in ways that add value instead of detracting from the economic and social infrastructure of the host communities.

CSR is acknowledged as a way a corporation can incorporate the social and environmental issues into the operations and relations with the public. It is therefore pertinent that business must contribute to society in a way that is socially responsible . CSR has a voluntary responsibility to business community to ensure sustainability of the social environment. Therefore, a corporation must establish a positive environment for its operation to continue. It is obvious that businesses engage in social investment to achieve competitive advantage against rival with less social development to reduce cost and maximize their market share . CSR is relevant in helping multinational organization obtain social license to operate in societies (Hohnen & Potts, 2007). CSR requires comprehensive policies and practices to drive social development in an ethically and legally manner to improve the society. Though there are challenges to accept the onerous task of social responsibility in oil communities, but this is with some level of advantage for the survival of the oil companies.

The CSR of oil companies is established against the ideology of profit first of multinational oil business . The kin interest of oil companies to undertake community development is based on conception that operates at the level of the market that corporations should be free to act solely on the basis of profitability without regard to national or local consequences. Maximizing profit is noted to be the only reason that companies exist and expenditures are resisted when found to be beyond what is expected . Though, CSR is a means of paying back of the community, the use of philanthropy has become the basis of implementing community development in oil communities. Shell as one of the multinational oil companies has combined its CRS investment with its business goal to improve the negative environment. It is noted that a company survival and the level of business success significantly depends on the improvement of the communities . The improvement of lives in the region have made oil companies such as Total, ExxonMobil and Shell to invest millions of dollars in social projects for communities and this has a close competition with government commitment in the region .

Oil and gas transnational corporations such as Shell, Chevron, Texaco, Exxon Mobil, Total, Final Elf, Agip etc. have keen interest in CSR. These companies have contributed to growth of Nigeria economy and to the communities the corporations carry out their operation . For instance, the development of education, scholarship, provision of equipment, health, agriculture, granting of micro-credit schemes to farmers, etc. are various areas that transnational corporations have exhibited CSR. This is confirmed by Eweje (2006) stating that these corporations are performing well in respect of community development. It is worth noting that in today dynamic environment CSR strategies are of enormous benefit not just for the host communities but also to the MNCs. Hence, CSR has become a rational economic decision-making for the development of diverse communities .

Abubakri et al. (2014) opine that effective CSR has the potential of ensuring that corporation adopts community relations. Therefore, viable community relation is needful by transnational corporation as part of their CSR initiative for enhance social and developmental programmes. In addition, the interest of oil corporations in Niger Delta in CSR has been a questionable approach with the host community for enduring peace. Though amnesty is partial means of sustaining peace between the corporation and the oil community; CSR if effectively implemented become a strategic solution to a win-win relations in the region. It is therefore important that the interest of the MNC as well as that of the host communities should have a meeting point. This cannot be achieved without the MNCs acknowledging that the host communities have a stake in their operations and therefore deserve adequate attention and due consideration.

2.4 Corporate Social Responsibilities of Multinational Oil Companies in the Niger Delta Region

Nigeria's oil company, Nigerian National Petroleum Corporation (NNPC), does not have capacity and indigenous expertise to develop Nigeria's oil reserve. The federal government contracts oil production with international oil companies, and takes a percentage of the revenue accrued from oil production. This is done through joint ventures with the Nigerian National Petroleum Corporation (NNPC). The distribution of shares in a joint venture determines the division of investment in all capital projects carried out by the operating company, including exploration, drilling, construction, or environmental improvements; the participating shareholders also jointly own the reserves still in the ground. The multinational companies operate these joint ventures, and take all day-to-day decisions in their management . Human Rights Watch (1999) identifies six major multinational oil companies, which operate the joint ventures in accordance to their joint venture shares to include:

• Shell Petroleum Development Company of Nigeria Limited (SPDC): The joint venture is composed of NNPC (55 percent), Shell (30 percent), Elf (10 percent) and Agip (5 percent) and operates largely onshore on dry land or in the mangrove swamp;

• Chevron Nigeria Limited (CNL): A joint venture between NNPC (60 percent) and Chevron (40 percent) has in the past been the second largest;

• Mobil Producing Nigeria Unlimited (MPNU): A joint venture between NNPC (60 percent) and Mobil (40 percent).

• Nigerian Agip Oil Company Limited (NAOC): A joint venture operated by Agip and owned by NNPC (60 percent), Agip (20 percent) and Phillips Petroleum (20 percent);

• Elf Petroleum Nigeria Limited (EPNL): A joint venture between NNPC (60 percent) and Elf (40 percent); and

• Texaco Overseas Petroleum Company of Nigeria Unlimited (TOPCON): A joint venture operated by Texaco and owned by NNPC (60 percent), Texaco (20 percent) and Chevron (20 percent).

Other foreign oil companies involved in oil exploration and production in Nigeria include B.P, Statoil, Total, Pan Ocean, British Gas, Tenneco, Deminex, and Sun Oil.

Shell Petroleum Development Company (SPDC) is used here as a representative of other multinational oil companies operating in the Niger Delta region in the discussion of corporate social responsibilities of the multinationals. Shell Petroleum Development Corporation (SPDC) and its operations in the Niger Delta have been at the centre of attention . The choice of Shell was informed by the following attributes according to Human Rights Watch (1999)

• Shell is the biggest oil producer in Nigeria with the longest history, dominating the industry for as long as oil has been produced and in the early days enjoying a monopoly and a privileged relationship with government;

• Shell's facilities are largely in or near inhabited areas and thus exposed to community protests;

• All the oil companies undertake similar projects as their corporate social responsibilities. Their areas of coverage include health care, education, infrastructure, agricultural development; youth development, economic empowerment and business development; and

• Shell comes to the mind of everybody first when issues concerning multinational oil companies arises due to its current and historical dominant position in Nigeria.

Shell was given an exclusive right for oil exploration and production in Nigeria in 1937. In 1956, Shell discovered crude oil at Oloibiri in Bayelsa State and began commercial production of oil in . Shell has 90 oil fields, 1000 producing wells, 72 flow stations, 10 gas plants and two major oil export terminals in Nigeria. Its networks of flow lines and pipelines extend more than 6,000 kilometers (Burger, 2011). The discovery of oil changed the prosperity narratives of Nigeria as it becomes the major source of Nigeria's wealth, foreign exchange earnings and determines the annual budget of the nation. These advantages are not without a cost. The cost is expressed by Burger (2011 p4) in the following words:

Exploring and producing oil and gas is a risky business. The benefits of plentiful fuel and power, and the jobs and incomes it provides are substantial. They also come with costs, ones that are not necessarily seen or felt immediately or even during one person's lifetime. They are ultimately economic in nature, but are more completely viewed and appreciated in terms of costs to human and environmental health and safety, and their sustainability.

The prosperity narratives according to Idama (2017) turned into nightmare as socio-economic development expected to be achieved through the oil wealth was exchanged for environmental degradation and consequently, loss of livelihood sources of the oil-bearing communities. This triggered crisis between the oil-bearing communities and multinational oil companies, especially Shell in the Niger Delta region. Attempts towards addressing the problems led to the development of corporate social responsibility initiatives by the multinational oil companies.

Shell developed General Business Principles in 1976 with the current edition revised in 2014, which determines standards for its operations and relationships with its host countries and communities. As part of the Business Principles, Shell claims that it balances short- and longterm interests, integrating economic, environmental and social considerations into business decision-making. To this effect, Shell says that it is her responsibility to give proper regard to health, safety, security and quality environment to society where it operates. Shell went further to declare that "we continually look for ways to reduce the environmental impact of our operations, products and services" and "we manage the social impacts of our business activities carefully and work with others to enhance the benefits to local communities, and to mitigate any negative impacts from our activities." In fulfilling these obligations as enshrined in its General Business Principles, Shell pays all taxes and royalties to Nigeria's Federation Account, contributes 3% of its annual budget to Niger Delta Development Commission (NDDC), an interventionist agency saddled with the responsibility of ensuring sustainable development of the region.

In addition to this, Shell developed a Social Investment Scheme through which it intervenes in the provision of infrastructure and services to uplift and better the lives of people in the region. The scheme focuses on enterprise development (Shell Live WIRE which is Shell's flagship youth enterprise development programme that provides training and finance to young people between the ages of 18-35 to start or expand their own businesses); education (cradleto-career scholarships, university scholarships, school infrastructural development, centres of excellence, professorial share programme, and sabbatical and internship programme); health (health-in-motion community care programme, community health insurance scheme, health care infrastructural development); access to energy (community lighting, power generation, and small-scale grid infrastructure projects); and provision of social infrastructure (water and power supply improvement, construction of market stalls, roads, sanitation and community centres) . Shell in its various reports states that it spent $60.2 million on social investment projects in 2017 and $239 on social investment funds since its inception in 2006. Shell's 2017 Sustainability Report reveals that Shell contributed $109.9 million to Niger Delta Development Commission (NDDC) in 2017.

These amounts may be huge as quoted, but the question remains if the investments were able to cater for the welfare and livelihood needs of the people of Niger Delta. It is against this background that this study was designed to focus on the extent to which Shell is committed towards the implementation of its social investment scheme as an effort geared towards the achievement of the CSR components of its General Business Principles. This will go a long way in examining and establishing the sincerity of Shell towards the development of the Niger Delta communities and resolving oil-instigated crisis in the region.

II. PETROLEUM INDUSTRY ACT AND THE HOST COMMUNITIES ACT

In line with the provision of the Petroleum Industry Act to repeal all extant laws regarding oil and gas in Nigeria, it is expected that the former should seek to further environmental management in the oil and gas sector. This it can do by providing solutions to the current environmental challenges associated with Nigeria's oil and gas industry that existing legislations might have been unable to remedy. Scholars have pointed out some deficiencies that might have inhibited the ability of these legislations to effectively solve the environmental menace of Nigeria's oil and gas sector as including: lack of clarity on core terms within the Acts to convey the message of the Act, very weak sanctions that are not commensurate with the extent of pollution they have been provided against, inability of the Acts to sanction a failure of the agencies they create (as laws) to perform the very purpose for which their individual Acts has created them; hence an inability of the Acts to provide true enforcement of their purpose, etc.. It therefore means the Petroleum Industry Act under normal circumstances ought to address these inadequacies in its structure towards solving Nigeria's oil and gas pollution.

Until the enactment of the Petroleum Industry Act (PIA), the petroleum sector in Nigeria has been governed and regulated by the age-long and near obsolete Petroleum Act of 1969 (as amended). This Act is now repealed by PIA. The former Act became inelastic and insensitive to modern technologies, concepts, good governance and accountability in the oil sector. The repealed legislation also lacked clear provisions and/or policy template for local content development and training programmes for deserving Nigerians in the petroleum development and exploration.

The aforementioned lacuna audaciously prompted the enactment of the Local Content Development Act in 2011 so as to fill the gap perceived in the repealed Petroleum Act. It will be recalled that the new Petroleum Industry Act (PIA) went through two decades and suffered many setbacks dating back to 2000 before it finally came to fruition on 16th August, 2021. Prior to the enactment of the PIA, the Local Content Development Act was enacted in order to re-jig the missing link between the then Petroleum Act and government policy thrust so as to prepare Nigerians to take their destiny in their hands in the oil and gas industry.

Equally, the repealed Act did not contain provisions to tackle, frontally, the socio-economic and environmental challenges of the people of the host communities arising from the negative impact of oil and gas exploration by the international and Nigerian oil companies. This has been against the backdrop that the littoral states paradoxically have, regularly, been collecting 13% derivation payments from the federation allocation without prioritising the developmental needs of the oil bearing and impacted areas in their states.

The Nigerian Constitution equally does not have any provision which directs or ensures that the 13% derivation funds regularly paid to oil producing states is deployed, specifically, or to a large extent, towards the amelioration of the crisis of underdevelopment of the host communities in the littoral states.

As would be expected, the oil companies find the highlighted lacuna as a safe haven to operate their business with careless abandonment under the usually poorly couched memorandum of understandings (MOUs) occasionally entered into between the international oil companies (IOCs) and the host communities. Such MOUs are usually benchmarked on the rubric of corporate social responsibility (CSR), which is another cliché like MoU that is generally not binding in law.

In order to cascade infrastructural development to the people of the host oil bearing communities and other parts of the state, some oil bearing states to wit: Abia, Edo, Delta, Imo and Ondo, respectively, have established State Oil Producing Areas Development Commission with a view to deploying a fixed percent out of the 13% payments in providing amenities and infrastructure in the host communities. Indeed, this is in line with the philosophy behind the United Nations' General Assembly Revolution on the principle of sovereignty of states over their natural resources. The principle states among other things that:

The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the state concerned.

It is against the foregoing principle that the 1979 and 1999 constitutions of the Federal Republic of Nigeria provide for the payment of the derivation funds to the oil bearing states from the federation account. It is on record that some states in the Niger Delta region have, regrettably, failed, refused and/or neglected to establish such state oil and gas producing areas development commissions, so as to tackle the socio-economic and environmental challenges of the people in the oil impacted host communities. As a result, the state's failure or neglect in this direction, has created recipe for violence, criminalities and continued agitations against the Nigerian State as well as cause incessant disruption of oil and gas exploration in the Niger Delta. The situation has equally affected the revenue receipts by the three tiers of governments in Nigeria.

The state oil producing areas development commission, in the aggregate, and as intervention agencies in the oil sector, have engendered much positive impact on the lives of the people in the host communities. Since the establishment of the state oil producing areas development commission there has been relative high level of funding, less corruption and undue executive interference in the performance of the functions saddled with the boards of such commissions. Also, the states' oil producing areas development commissions usually concentrate their development compass mostly on the host communities and the cities and as well as thereby creating sense of equity and confidence between the people of host communities and the other parts of the State.

Clearly, interventionist agencies set up prior to the establishment of the NDDC commenced with the Niger Delta Development Board (NDDB).

Hereinafter referred to “the board” This Board was to last for ten year period but became ineffective and its operation was disrupted by the civil war which took place from 1967 to 1970. The second of such agencies was the Presidential Task Force (PTF), which was set up by President Alhaji Shehu Shagari, to handle the problem of the Niger Delta region and the third body was the Oil Mineral Producing Areas Development Commission (OMPADEC) respectively.

In 2000, a searchlight for a lasting panacea towards the resolution and amelioration of crisis of underdevelopment and environmental degradation of the oil impacted host communities in the Niger Delta region, was launched through the instrumentality of the Petroleum Industry Bill (PIB). The Federal Government of Nigeria (FGN) in conjunction with the National Assembly (NASS) worked on envisioned comprehensive petroleum industry bill, which was aimed at responding to international best practices and to enthrone transparency and accountability in the oil and gas sector as well as to grow Nigeria's economy. This fueled the need to repeal the extant Petroleum Act of 1969 and thereby exterminate its inadequate and obsolete provisions.

The efforts at fashioning out a comprehensive legislation to regulate the oil industry met with cacophony of resistance by stakeholders in the oil industry allegedly have been designed to scuttle the initiative both at the National Executive and NASS levels. Such under-current accounted largely for the delay and/or militated against the passage of the PIB by successive administrations. The antics of such stakeholders rather orchestrated series and vociferous agitations by the youths in the Niger Delta due to crisis of underdevelopment. As a consequence, the FGN decided to set up the Amnesty Programme and the Ministry of Niger Delta Affairs, so as to capacitate and assuage the youths of the Niger Delta region. The Presidential Amnesty Programme was initiated to discourage militant behaviours, douse off the mounting tensions in the region and to train the militanc youths who have elected to denounce militant activities, in skills and education, so as to enable them to become employable and/or employers of labour.

In the passage of time , the long awaited petroleum industry bill was eventually passed and signed into law on 16th August, 2021 as an Act of the NASS. It is, however, perceived as a controversial law due to the manifest conflicting interests of multifaceted stakeholders made up of state and non-state actors. Nevertheless, there is the general consensus, be that as it may, that the said legislation is relatively more comprehensive and it’s a work-in-progress or an amendable legislative experiment. As a case in point, the FGN has just submitted a proposal for its amendment. In the light of the foregoing and due to the novelty nature of the PIA, with regards to the Host Communities Development Trusts provision therein – as a new intervention mechanism in the oil sector, this work, therefore, seeks to examine, analyse and make recommendations towards effective and efficient implementation of the said Host Communities Development Trusts and its Trust Funds created in the Act under reference.

The Petroleum Industry Act of 2021 provides for the establishment of the Host Communities Development Trusts (HCDTs). Each trust is to be established by the settlor or a group of settlers operating in the upstream petroleum over licensed area(s) and inclusive of any oil and gas impacted community appurtenant to the licensed area(s).

This pattern of interventionist (trusteeship) in the oil sector is quite legendry and novel in Nigeria. The HCDT by necessary implication seeks, to formally create a binding memorandum of understanding (MoU) and to legalise the traditional corporate social responsibility (CSR) obligation between the international oil companies on the one hand and the host communities on the other hand. The sum total effect of this model, therefore, is the provision of sustained infrastructure and socio-economic development in line with the core needs of the people in host communities of the Niger Delta region. Also, the model under reference could impact positively on the people in the appurtenant communities where the activities of the settlor directly touch on their lands.

Much as the HCDT model appears relatively better than other intervention agencies, it is, however, doubtful if this model would not create another round of inequity between the subnationals or parts of the states thereof vis-à-vis payment for land already acquired under the principle of overriding public interest pursuant to the Land Use Act. For instance, under the Land Use Act, any land where petroleum or mineral deposit is found, such land area and the oil or mineral deposit beneath or thereupon, automatically falls within the constitutional purview of the federal government. In this case, the community already affected is usually paid compensation by the settlor(s). Therefore, it becomes arguable for a settlor who has paid such compensation for the unexhausted improvements brought on the already acquired lands to be made to subsequently include such appurtenant community in the HCDT. The arrangement or model to this extent appears to produce inequities and inequitable result both to the settlor and the people of the oil bearing host community.

The members of the Board of Trustees of the HCDT are appointed by the settlor from the host communities and other parts of the oil bearing state concerned. The HCDT is to be incorporated pursuant to the Companies and Allied Matters Act. The Board of Trustees is to carry out its functions in line with the direction of the settlor. Equally, the Board of Trustees is empowered in the Petroleum Industry Act (PIA) to appoint a Management Committee, which shall be saddled with the day-to-day running of the functions, programmes and plans of the HCDT on an ad-hoc basis. The settlor is required to fund the HCDT with 3% of its annual expense. The Board of Trustees, therefore, is expected to create a Fund into which the 3% annual expense fund is paid for the execution of projects, programmes and activities of the HCDT in each of the host communities involved.

Each member of the Board of Trustees serves for a term of four years in the first place and such a member could be reappointed for another period of four years and no more. Aside the Board of Trustees and the Management Committee, the PIA requires that the HCDT constitution shall make provision for the appointment of Host Communities Advisory Committee whose membership shall be constituted from each host community by the Management Committee subject to the approval of the Board of Trustees. The Host Communities Advisory Committee shall be saddled with the functions of serving as a watchdog and as intermediary between the host communities, Board of Trustees and the settlor as it affects the developmental needs of the host communities.

Indeed, the HCDT is modelled closely after the NDDC organizational structure except that the mode of appointment, control, supervision, funding and target beneficiaries as relating to the HCDTs model are legendry, plausible and capable of meeting the needs of the Niger Deltans.

Equally, the drafters of the Acts seem to have imported the compensation exemption clause in the Oil Pipeline Act into the PIA to the effect that the law stipulates that wherein any year an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disruption in production activities within the host communities, the communities shall forfeit its entitlements to the extent of the disruption and the damage that resulted...

provided the interruption is not caused by technical or natural cause.

IV. JOINT VENTURE AGREEMENT IN OIL COMPANIES

Oil joint venture agreement is a contractual relationship or arrangement used by host governments or oil countries in acquiring participation interests in crude oil concessions (Smith and Wells, 1969; Nlerum, 2011). The oil joint venture arrangements in Nigeria is an un-incorporated joint ventures under which each co-venturer has an undivided interest in the lease as well as all oil produced and the assets employed in oil production. The joint venture partnerships between NNPC (on behalf of Nigerian government) and international oil companies (IOCs) are public-private partnerships (PPPs), in which NNPC is the public corporation while international oil corporations (IOCs) are the private corporations. Thus, all rights and obligations accruing to the leasee under an oil mining lease (OML) would automatically accrue to all the joint venture partners including NNPC (Adefulu, 2008; Ameh, 2012).

The oil joint venture creates a relationship of co-ownership and co-tenancy between or among the international oil companies (IOCs) where the former produce the operator. Under the joint venture partnerships in Nigeria, joint operating agreement (JOA) or joint venture agreement (JVA) governs the relationship between the partners or parties to the agreement including budget approval and supervision, crude oil lifting and sale in proportion to equity and funding by partners. The joint operating agreement (JOA) spells out the legal relationships between the owners of the lease and lays down the rules and procedure for joint development of the area and joint property. The various joint venture projects are subject to agreements governing the relationship of the contracting parties or joint partners. The Heads of Agreement delimit the several principles intended to govern off-take, scheduling and lifting agreements for the crude oil. The Participation Agreement sets out the interests of the parties, and provides or requires that income derived from the operation is shared in proportion to the equity interests of the parties to the agreement with each party bearing the cost of its royalty and tax obligations in proportion to equity holdings. Allocations are also made from the revenue to carter for operating and technical costs or operating expenditure (OPEX) and capital expenditure (CAPEX) (Ojinaka, 1996; Ogbonna and Ebimobowei, 2012). For the equity holdings in the various joint venture agreement in Nigeria.

Whilst, the memorandum of understanding (MOU) governs the manner in which revenues are allocated between the partners including payment of taxes, royalties and industry margin. In line with the provisions of the joint operating agreement (JOA), the operator usually controls and manages the joint property and operations of the lease by; one, conducting operations in utmost good faith; two, selecting its employees for the purpose of the joint operations; three, entering into any contract or placing any purchase order subject to the limitations of the JOA, for keeping accurate records and books of account; lastly, litigating and settling claim relating to the operation. Also, the operator opens and maintains a joint bank account into which the partners or parties to the Agreement shall deposit all funds required for the joint operations. More so, the operator develops and submits to the other partners or parties the proposed work programme and budgets. These agreements alongside, the oil mining lease (OML) define the relationship under the joint venture arrangements in Nigerian oil industry. Under this arrangement, the bulk of the revenue goes to the Nigerian government, irrespective of the price of crude oil in the market. A fixed margin is allocated for technical costs, while a near fixed margin is allocated to the operator and other joint venture partners (Adefulu, 2008, Ameh 2011).

At the beginning of each year, the operator presents an operating budget to the joint venture partners for approval based on the projection for running the JV for the year. Upon approval of the annual budget, the operator prepares a monthly cash calls statement, which calls on all partners to provide their respective share of the funds required to run the venture for the month in split currency of US Dollar and Nigerian Naira. If the cash is overdue the operator is also empowered to borrow on behalf of the JV charging the defaulter interest for the loan. But if funds cannot be borrowed, the operator has to scale down operations to fit within the funding available from the partners (Adefulu, 2008; Ameh, 2011). For information on cash calls paid by NNPC to joint venture partners.

V. COMPARISON BETWEEN CORPORATE SOCIAL RESPONSIBILITY OF OIL COMPANIES IN NIGERIA AND USA

The oil and gas industry is the strength and centre of the Nigerian economic (Crude Oil) accounting for 98% of its export earnings and 75% of its Federal Government revenue (IMF data as cited in the EIA report of 2012). Therefore, from the above mentioned, it is not an overstatement to mention that the performance of the oil industry in Nigeria (Good or Bad) has an influence on the country and global economy. According to Ikelegbe (2005), the Nigerian government has for decades neglected the social welfare of the people living in the oil producing regions of the country, resulting in conflicts, poverty and crime. Incessant demand for social and infrastructural development, environment concerns, equity, justice, fairness has resulted to unhealthy act such as kidnapping of foreign oil workers, destruction of oil pipe lines and fighting government security forces. The people of the region have accused the government for their abject poverty, environmental pollution, degradation, depletion of their natural environment which is hitherto beneficial for life and economic activities. This is in addition to poor water quality bring about by the activities of oil exploration (Ukiwo 2009). With more than 32 million people, two thirds under the age of 30 and 43% surviving under poverty line, the region represents one of the world's leading development challenges.

Royal Dutch Shell is one of the foremost America's producers of oil and gas. They have large petrochemicals investment in the country. There activities in the deep water Gulf of Mexico alone are amounting to billions of dollars. There exploration activities started in 1912 and build refinery in Orlean, open Louisiana in 1916 and later in Wood River, Illinois in 1918. Acquired California oil field Ltd in 1913 (Plaza and Deisler 2014).

VI. CONCLUSION

In the planning, design and implementation of CSR programmes and activities, there is need to consider the needs of both parties for mutual benefit. This will enable oil MNCs to derive maximum benefits from their CSR initiatives, be less prone to community conflict and gain legitimacy within its host communities. In Akwa Ibom State, ExxonMobil has carried out several CSR activities ranging from road construction to provision of potable water and electricity, environmental protection activities, upgrading of educational and health facilities as well as support to professions and civil society groups. These seem to be good as they have added value to the local communities. However, they are interpreted and perceived from a negative point of view by the host communities. This negative perception is due to fact that the host communities have not been actively involved in the planning of CSR initiatives by the MNCs which to them would have been an avenue to listen and implement those projects that would be directly beneficial to the communities. The host communities feel that the underline reason for such CSR initiatives is profit maximization for the MNCs. The idea of enlightened self-interest seems to dominate the perceptions of the host communities as every effort made by ExxonMobil is seen as an avenue to increase their earnings, boost their image and their social status rather than protecting the interest of the communities. Emphasis in CSR initiatives needs to shift from just infrastructural facility to issues of capacity building and poverty reduction, which are the main concerns of host communities. Since the host communities are at the receiving end of the MNCs CSR initiatives, it is logical that they should be allowed to give meaningful suggestions on what really meets their needs. As stakeholders in the affairs of the MNC, failure to seek their opinion may continually jeopardize oil exploration and exploitation activities in this region and this may always result in strained relationship between the host communities and the oil companies.

VII. RECOMMENDATIONS

The paper therefore, in the bid to contribute to the solution for youth restiveness through community development, recommends as follows:

• The oil companies need to take a second look at the order of importance of the needs of host communities. Education has been identified by these communities as their most pressing need and therefore must be treated as such. Have seen education as sin qua non for personal and societal development. Therefore, if the oil companies tackle the education of their host communities, it is believed that other things will fall in place.

• Give the education system a good standard to compete with the international system, else how do you give a job to a child trained in an ill equipped school and expect him to compete favorably with the one trained in a well-equipped school? Nevertheless, identifying these needs by priority is not enough until it is able to solve the problem of youth restiveness through community development.

• Constraints to the execution of CSR programs have been identified to include youth restiveness, poor company budgeting, traditional beliefs etc.

• Youth restiveness can be solved if the needs of the youths are meet. Give them education, good health, means of livelihood which is not just job but empowerment such as skill acquisition and conducive environment for business, through security.

• Moreover, the shareholder theory is still surfacing in the operations of the oil companies, which is why poor company budget have been identified as a constraint to the execution of CSR projects.

• The oil companies are advised therefore, to follow the Stakeholders theory's tenets which states that if the stakeholders are satisfied, the business thrives to satisfy the shareholders in the long run. Therefore, let the budget of the oil companies include the prioritized needs of the host communities, and executed as part of the business process.

• Finally, the execution of the CSR programs should be done in partnership between the host communities and the oil companies to ensure monitoring and evaluation and transparency. The terms of this partnership should be defined the Memorandum of Understanding (MoU) instituting the CSR program, and must be followed to the later.