NIGERIA`S OIL POLLUTION COMPENSATION FRAMEWORK: ASSESSING THE IMPACT OF THE PETROLEUM INDUSTRY ACT 2021

Abstract

Nigeria`s oil discovery in 1956 kickstarted a lucrative industry and wealth, but it has also led to unprecedented environmental degradation and damage to private individuals` properties in respect of which compensation is rarely paid or not fairly done. The country has a system for compensating oil pollution damage, but it is inadequate and ineffective, failing to provide prompt, adequate and fair compensation to affected individuals if it ever offers anything at all, leading to recurrent tension and restiveness in the Nigeria`s oil-producing areas. Petroleum Industry Act was enacted in 2021 with the aim of comprehensively and satisfactorily addressing various challenges in the Nigeria`s oil sector, including the long-standing issue of compensation for oil pollution damage. This paper assessed the Petroleum Industry Act`s provisions on compensation for oil pollution damage, benchmarking them against international standards to gauge their adequacy and impact, utilizing a doctrinal research approach of reviewing relevant laws and literature on oil pollution control and compensation to inform its analysis and findings of the Petroleum Industry Act. The findings of the paper revealed that the Petroleum Industry Act failed to address individual compensation, instead focusing on host communities` development through 3% annual profit allocation to a trust fund for the benefit of host oil-producing communities. The paper, therefore, recommended an amendment of the Act to make provisions for explicit for individual compensation, including creation of a specialized administrative body to oversee and implement such compensation in line with international practice of the International Oil Pollution Compensation Fund.