A CRITICAL ANALYSIS OF THE LEGAL FRAMEWORK GOVERNING OIL AND GAS REVENUE ALLOCATION TO HOST COMMUNITIES IN NIGERIA

Abstract

The allocation of oil and gas revenue to host communities in Nigeria has remained one of the most contentious issues in the country’s political economy and constitutional discourse. Despite contributing the overwhelming proportion of national revenue, oil-producing communities in the Niger Delta continue to experience environmental degradation, underdevelopment, and social dislocation. This article investigated the Allocation of Oil and Gas Revenue to Host communities in Nigerian and evolving relationship amongst Federal Government, State Government and the oil-bearing communities in Nigeria, and the cause of pipeline vandalism, community unrest and other social vices. The study strived to evaluate the adequacy of existing legal frameworks in addressing these challenges while providing clarity on the extent to which current laws promote and protect allocation of oil and gas revenue to the host communities in Nigeria. The central aim of this article was to examine the allocation of oil and gas revenue to oil bearing communities in Nigeria, with a view to proposing a legal reform. The specific objectives of the work were to examine whether the existing legal frameworks currently governing the allocation of oil and gas revenue to host communities in Nigeria are adequate by the challenges the activities of oil and gas posed to the environment and human beings affected by those activities; investigate what challenges hinder effective implementation of existing revenue allocation mechanisms for oil producing communities. Employing a doctrinal research methodology, the dissertation undertook a thorough analysis of legal frameworks and case law, yielding significant findings. This study finds that the legal instruments currently governing oil and gas revenue allocation to host communities in Nigeria including the Constitution, the Petroleum Act (repealed), the Niger Delta Development Commission (NDDC) Act, and more recently, the Petroleum Industry Act (PIA) 2021 lack coherence and consistency in addressing the long-standing demands of host communities. The article’s comparative insights from international jurisdictions provided valuable lessons on the importance of harmonized laws, transparency, and host communities direct participation in decision making processes in oil and gas revenue allocation. Based on the findings, the dissertation proposed several recommendations aimed at enhancing oil and gas revenue allocation in Nigeria.