Will IOCs Relocate Headquarters to Niger Delta?

GAVEL

Udora Orizu weighs in on the possibility of the international oil companies relocating their headquarters to the Niger Delta in line with the recent resolution of the Senate

The Senate during plenary last week asked International Oil Companies (IOCs) to relocate their headquarters to the Niger Delta region to fast-track the host communities economic development.

The issue of oil companies relocating to the oil-producing Niger Delta region had been debated severally in the past with the companies not heeding to the calls.

Most of the IOCs in Nigeria have their headquarters in Lagos.

The Niger Delta people have long complained that while oil exploration activities have polluted their environment, the IOCs were paying taxes and other benefits to another state.

Aside indigenes, various stakeholders have also tasked these companies to move their base to the region. However, most multinational and Nigerian oil and gas companies operating in the Niger Delta have cited security concerns and restiveness in the region as their reasons for having their base in Lagos.

Since independence in 1960, insecurity has been a feature of the Nigerian state as conflicts in different parts of the country have continued to make life insecure.

In the Niger Delta, violence has been the bane of the region where conflicts have been the order of the day for over four decades.

The Niger Delta region, comprising of nine states, Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers, is the region that produces oil and the lifeline of the Nigerian economy.

However, the discovery of oil in the region, which was expected to improve the lot of the host communities, has become a curse rather than a blessing because of oil exploration activities and its attendant hazards, such as air and water pollution. The region is characterised by poverty and gross underdevelopment in the midst of plenty, due to environmental degradation which has affected the people’s agricultural means of livelihood.

Previous Directive by the Presidency for IOCs Relocation

In March, 2017, Vice President Yemi Osinbajo, directed the then Minister of State for Petroleum, Dr. Ibe Kachikwu, to engage with IOCs on the way forward over repeated calls for the relocation of their head offices to the states where they produce oil.

Osibanjo, who was responding to the requests made by various interest groups in Akwa Ibom State during the town hall meeting he had with the people of the state, said the federal government was proposing a new vision for the people of oil producing communities.

House Members Reject Call for IOCs Relocation

While Osinbajo’s directive was commended in the region, however the members of the 8th House of Representatives faced the heat following their rejection of a motion seeking to compel oil companies to relocate their operational and administrative offices to the region.

In May 2017, few months after the Vice President’s directive, there was a rowdy session at the House of Representatives plenary as members rejected a motion to that effect sponsored by Hon. Goodluck Opiah (PDP, Imo).

In the motion, Opiah had prayed the House to mandate its Committee on Petroleum Resources to liaise with the Nigeria National Petroleum Corporation (NNPC), the Ministries of Niger Delta Affairs and Petroleum Resources to review policies and guidelines of oil companies regarding location of their administrative and operational offices.

He contended that the practice of the companies siting their offices outside their areas of operation is responsible for decisions that are “inconsiderate of the real effects of their exploratory and exploitative activities in those communities, such as pollution, environmental hazards, degradation and under development.”

Another House member, Hon. Kingsley Chinda (PDP, Rivers), while supporting the motion, dismissed the argument that the Niger Delta was insecure hence the relocation of oil companies to other states outside the region as untenable.

On his part, Hon. Aminu Shehu Shagari (APC, Sokoto), in his contribution, described the motion as “ill-conceived and inconsiderate.”

According to him, “I think this motion is inconsiderate; it is ill-conceived and should be thrown out. I think the PIB should be allowed to take care of these oil companies.”

The current Speaker of the House of Representatives, who was House Majority Leader, Hon. Femi Gbajabiamila (APC, Lagos) also threw his weight behind Shagari, warning that the House would be setting a bad precedence if it allowed the motion to sail through.

As the Majority Leader was speaking, he was intermittently interrupted by the Minority Leader, Hon. Leo Ogor (PDP, Delta) with several points of order.

The Minority Leader later argued that it was not good for the offices of the oil companies to be sited outside the Niger Delta where they do business.

Ogor said: “I find it totally unacceptable that the Majority Leader is standing in this chamber and saying we do not have the right to tell these companies to relocate operational offices to the Niger Delta. These companies pay taxes to other states while they operate in the Niger Delta.”

As members debated the motion, the Speaker, Hon. Yakubu Dogara, cautioned that, “there is no need for tempers to flay. I am looking at it from the point of business. I’m not joining the debate but can you tell me as a businessman where to locate my office?”

When the motion was eventually put to vote, those against it carried the day.

Also against the relocation, is the Minister of State for Petroleum Resources, Mr. Timipre Sylva, who said that the continued security concerns in the region may hinder the relocation of these firms.

Renewed Call by the Presidency and Senate

During a recent visit to Akwa Ibom state, Osinbajo said that the IOCs have no excuse not to relocate their administrative headquarters to Akwa Ibom State.

Osinbajo who disclosed this shortly after inaugurating a 21 storey Dakkada Towers in Uyo, on Friday, stated that the problem of office accommodation had been taken care of by the commissioning of the building.

Also berating the IOCs over their failure to relocate to host communities, Rivers State Governor, Mr. Nyesom Wike, described the IOCs excuse of insecurity as a conspiracy theory.

Wike who stated this at the commissioning of the Nigeria Liquefied Natural Gas (NLNG) corporate headquarters in Port Harcourt, Rivers State, pointed out that as long as the negative narrative aimed at perpetuating injustice was not addressed, the country’s corporate existence and stability would continue to be threatened.

The upper legislative chamber also last week added its voice to the call on the IOCs to relocate their operational headquarters as it mandated its committees on Petroleum Resources Upstream, Downstream Petroleum Sector and Gas to liaise with the Ministry of Petroleum Resources and the Presidential Implementation Committee on the Petroleum Industry Act (PIA), to facilitate the relocation of oil and gas companies in Nigeria to their various operational bases in host communities to ensure smooth operations.

The Red Chamber arrived at the resolution after it considered a motion on the “Urgent need to encourage all multinational and Nigerian oil and gas companies to relocate to their operational bases.”

The motion was sponsored by Senator Albert Bassey Akpan (PDP, Akwa Ibom North East) and 23 other senators.

Bassey in his motion said, “The senate note with concern that multinational and Nigeria oil and gas companies have over the years been operating from their respective operational bases until militancy and insecurity in the host communities in the Niger Delta became the order of the day. Also notes that the reason proffered by the oil and gas companies for not relocating to their host communities has always been due to insecurity and hostilities in the host communities. Aware that operating outside the host communities and operational base is the reason for the high cost of production which has been the bane of the country’s oil and gas industry, militating against maximum revenue from crude oil and gas sales to the federation account”

Contributing, Senator Biobarakuma Degi-Eremienyo (Bayelsa East) said the agitations and problems within the oil and gas producing communities was as a result of their inability to easily access the management of the multinational companies to table complaints.

The first time Senator stressed that the full benefits of the Petroleum Industry Act would not accrue to the Federal Government if effort isn’t made to have the multinational companies relocate to the host communities where oil and gas is produced.

Will the IOCs Heed the Senate’s Resolution?

These companies overtime had expressed fears of insecurity, as their reason for not relocating to the Niger Delta region. With the worsening security situation in the country, the possibility of them heeding Senate mandate has become increasingly difficult. Also, as Dogara had pointed out, nobody would tell a businessman where to site his office. It is only by creating an enabling business environment that businesses can be attracted to a particular area and not by threats and resolutions. So, it is not yet certain how the Senate can enforce their resolution.