Chair of Nigerian Senate Environment Committee Launches Amendment to Oil Laws
Mr. President, Distinguished Colleagues, thank you for the opportunity to lead debate on the General...
Arresting this situation is the core objective of this amendment.
The amendment to the NOSDRA Act 2006 aims at:
- Strengthening the institutional and regulatory capacity of NOSDRA to proactively manage oil spill in a much more robust and effective manner,
- creating a clear and specific regime of penalties and responsibilities for oil spills
- providing a consistent guide and procedure for assessing and accessing compensation for oil spill and other civil liabilities.
Nigerian Senator Bukola Sakari & GLOBE Vice President Graham Stuart MP
My dear colleagues, in 2006, this hallowed chamber took the right decision to set up the National Oil Spill Detection and Response Agency a clear sign that the National Assembly was unhappy with the devastation oil spills have wrought on our environment and people. This agency was initially established to provide a reactionary role on the problem. But it is obvious by now that this problem requires a better framework. The agency ought to do more than that.
An effective legislative framework for oil spill management needs to go far enough to ensure that apart from remedying the environment that it can provide enough deterrent for bad environmental behaviour. It should make spilling intolerable. For e.g. the law, which stipulates a fine of not more than one million naira for oil spill, irrespective of the dimension and scope does not encourage environmental good behavior neither does it create an adequate disincentive to oil spilling and environmental irresponsibility. This bill attempts to makes it more economical to respect the environment than degrade it.
REMOVAL & REMEDIATION COST
Oil spillage is not an oil business it is an environmental problem. Oil spill is not a necessary consequence of oil exploration. It is an irresponsible environmental behaviour. The fact that it is as a result of oil exploration does not detract from the impact on the environment. Nigeria has lost over 13million barrels of oil to preventable spills. This is not the entire story. Rather, it is the story of millions of Nigerians struggling to make ends meet, whose livelihood is impacted by what is going on in the affected areas. The story is that of the destruction of the right of communities to live in a safe environment, to live decently and in good health. The full story is that we have ended up now victims of our own blessing because the cost on our people is no longer about economics, now it's about lives.
It will interest you colleagues to know that Nigeria is one of the very few countries in the world not applying the polluter pay principle. There is yet no legal framework for oil spill penalties. The story is that of a people with nowhere to run, because, nowhere is safe. They turn to their waters for food the fishes are filled with carcinogenic hydrocarbons, the turn to their farms the land can no longer produce even weed not to talk of food.
Today, much of the spills we have, has been ignored, neglected and in most cases never cleaned up. Little wonder then that the UNEP report acknowledges that some of the spills of over 40years ago had not been cleaned or remediated till date. By this bill, responsible parties will no longer pass the bulk. They will pay for what they spill and must reimburse such remediation by government as well as pay penalties for not cleaning up in the first place. Which is the international best practice.
Distinguished colleague, it will interest you to know that from 1976 to 2001, report showed that 90% of the oil producing areas experience thousands of oil spills annually, resulting to about 215,000 barrels of crude oil spilled into the already fragile environment each year with no significant negative consequences for the oil companies. In Brazil recently, Chevron and Transocean who already face a penalty of about R$20bn (US$11bn) for a spill of 3,500 barrels have seen prosecutors filed criminal charges against their employees. This charges could see them, face up to 31years in prison. In August 2012 a panel of judges in Brazil upheld this penalty and revoked the license of these companies to operate in Brazil. Here, for a 40,000 barrels spill we beg for clean ups and our government in most cases spend a fortune of public funds to cleanup oil spills for which the responsible parties are identified.
It has been acknowledged by several reports including the UNEP Report that fifty percent (50%) of oil spills in Nigeria has been due to corrosion of oil infrastructure, twenty eight percent (28%) to sabotage and twenty one percent (21%) to oil production operations. One percent (1%) of oil spills is due to engineering drills, inability to effectively control oil wells, failure of machines, and inadequate care in loading and unloading oil vessels. It is the responsibility of the spiller to rehabilitate oil spill sites. It is as simple as that. The number of identified sites is over 2,000. The majority of these sites are sites with identified spillers. This gives an indication of the problem we already have in our hands.
The agency charged with oil spill detection and response in our case has little capacity for oil-spill detection and relies completely on reports from oil companies or civil society concerning the incidence of a spill. The Agency lacks the capacity to attract those with the requisite technical expertise and resources to make it more efficient. The Agency has no proactive capacity for oil-spill forecast. This bill is a bold attempt at really giving the agency the ability to act adequately to protect the environment.
Mr. President Distinguished Senators, the issue of penalties and disincentives to oil spill in Nigeria is now at a stage bordering on the ridiculous. A web based Wall Street Journal Blog had this to say about an oil company operating in Nigeria –
It said and I quote "Thursday after the Anglo-Dutch oil giant said it was taking a closer look at an oil sheen near two of its offshore platforms in the Gulf of Mexico. Later (on the same day) its shares rose and reversed most of the day's losses after the company said the sheen didn't stem from its two nearby platforms, and that the amount of oil was small. Meanwhile, the company's admission that its facilities in Nigeria spilled some 5,300 tons of crude last year up from 700 tons the year before didn't seem to merit a drag on its stock.
While it would be easy to explain the apparent contradiction by pointing to investors unconcerned at the suffering of people thousands of miles away, their rationale in this case that even one spill in the U.S. could cost billions while MANY SPILLS IN NIGERIA PROBABLY WON'T is hard to fault."
Among the several reasons adduced by the writer for this state of affairs is the fact that the U.S. boasts one of the strictest regulatory regimes in the world when it comes to offshore drilling, while Nigeria does not. Shell executives and investors needn't look far to see the consequences of an error in U.S. waters. In the United States for instance, it is criminal to be responsible for oil spill and more criminal to have even tried to falsify the records. The Deepwater Horizon is a case in point where although it may have cost BP a total of over $40bn still has its employees charged for criminal liability over the spill. BP shareholders are still counting the costs of the Deepwater Horizon disaster. The cost of spilling oil in Nigeria may be a stain on the company's reputation but not on its profit margins.
A major highlight of this bill is the very robust penalty regime, which aims at encouraging environmental responsibility and care. The overall principle is that the polluter must pay. The benefit of this penalty regime is to cause operators to take more care to avoid spills and take proactive steps to nip in the buds any impending spill without much ado.
The issue of compensating for damage done to ecological and environmental degradation caused by oil spill is another sore point this amendment has sort to deal with. Even as we speak, the attitude of the average spiller to compensation is that of unwanted irritation because there is no specific framework for compensation for oil spillage. This much represents the recurrent excuse by operators when they are pressured to provide compensation, that they have not breach any law. Instead of receiving adequate compensation, in most cases (if the people even get what is derogatorily termed palliative), they would rather give a few monies to angry youths and settle loud chiefs and pay no attention to the very weak and voiceless in these communities whose farms and livelihood receive the heaviest hit by the spill. For the spill along the Gulf of Mexico, before claims for compensation even started BP contributed $15bn to a joint fund with the US government of about $20bn and it has so far paid out over $13bn to individuals for loss of profits etc. $1.3bn to government and government agencies for lost of revenue. In total it cost BP over $40bn. BP continue to face ongoing cleanup charges under the Oil Pollution Act, compensation claims, and probably a multi-billion dollar fine from the US government. Some might say this is America.
But in Nigeria for a spill of same magnitude or more, the affected individuals and families will get bags of rice, beans, and blankets and bread. Today, Nigeria will lose in the region of over $4bn due to Bonga, but Nigeria will get nothing for loss of revenue. We don't even feel entitled to anything. In fact if we don't pass this amendment bill, the scenario where the federal government would use taxpayers money to clean up and remediate the environment would follow.
The international best practice is to pay fair compensation, which takes into account the political, legal, economic, ecological and intrinsic value of the property that is violated. There is no gain saying in the fact that the idea of compensation is duly recognized by some of the oldest doctrines of the law of negligence and strict liability. This is elucidated in the case of Rylands v. Fletcher an old English case, which held that "the person who brings unto his land something capable of damaging other peoples property and opportunity if such a thing escapes is without more liable for all the damage which is the natural consequence of such escape" (paraphrased).
Under the proposed amendment we have set out a scheme of valuation to ascertain the value of payable compensation to avoid the rancor associated with determination of compensation, which has exacerbated the suffering of victims of spill in our communities.
CONFLICT OF INTEREST
One of the biggest hurdles to environmental protection in areas affected by oil spill in the country is the fact that those whose interest is in the business of oil profit have been saddled also with the regulation and monitoring of the environment. This is an anomaly. The international best practice has shown that it is wrong to place in the hands of the petroleum regulator the charge of policing the environment. Petroleum resources account for 80 per cent of national revenue and 95 per cent of export earnings. The government's assessment of the ministry and its parastatal is on how much earning it has made for the year rather than how many environmental pollution and degradation it has been able to stop or solve. Historically speaking and in 1990, when the ministry, through its Department of Petroleum Resources (DPR), developed the EGASPIN, there was no federal Ministry of Environment. This necessarily made it logical at that time for the Ministry of Petroleum Resources to oversee the environmental aspects relating to the oil industry.
However, there is clearly a conflict of interest in a ministry, which, on one hand, has to maximize revenue by increasing production and, on the other, ensure environmental compliance. One case, clearly typifying this conflict in the recent case of NOSDRA v. PPMC in which the Federal High Court agreed with NOSDRA that PPMC has spilled and degraded the environment and therefore must pay penalties and clean up cost. If this case had been taken up by DPR it will never have the impetus to sue a sister agency in the same industry. Most countries around the world, including the US, Libya, Brazil and the Middle East where oil is the mainstay of the regional economy, have placed environmental regulation within the Ministry of Environment or equivalent. In this context it is noteworthy to mention that after the 2010 Deepwater Horizon incident, it came to light that the US Offshore Energy & Minerals Management Office (under the Bureau of Ocean Energy Management, Regulation and Enforcement) responsible for the development of the offshore oilfield was also the body that issued environmental approvals. President Obama called this a "cozy relationship between the oil companies and the federal agency that permits them to drill".
Consequently, a new Bureau of Safety and Environmental Enforcement, under the US Department of the Interior, was created, which is independent from the department of Energy Resources and answerable to the state department of environment. There is today no genuine reason to continue this territorial poaching as it has only exacerbated the problem than sole it.
For the avoidance of doubt it must be said that the proposed amendment bill, is not aimed at punishing anybody or business. Rather, it seeks to use regulation to encourage good behavior and promote environmental responsibility, which inevitably will improve the business and environmental atmosphere within the oil producer host communities. What this bill seeks to do are things, which we ought to have dealt with yesterday, so we are late on arrival already. This is true because if we had there probably would not have been the level of restiveness we have in the area; the Bonga Spill could have been aborted; there may not have been the need for a UNEP Report on Ogoniland, in fact many devastation that have ravaged our land and waters may never have happened.
Mr. President, Distinguished colleagues, this bill imposes no further financial implication on the federal government. Indeed, this bill has the implication of bolstering the revenue of government and improving the capacity of the agency to meet with its regulatory functions.
Distinguished Senators, brothers and sisters, this amendment bill seeks to do one thing and one thing only, to enable us as a country deal much more decisively with the massive oil spill degradation and ecological disaster going on around the oil exploration sites in Nigeria by strengthening our environmental governance and penalty system. I therefore have no hesitation in commending you to this bill and as that we allow this bill to be passed through Second Reading.