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Towards a new oil spill compensation mechanism for Nigeria

Nigeria’s oil spill compensation system is broken. Individuals and communities whose lives have been ruined by oil spills wait years for payments which often never come. Arguments about impact assessments, false claimants, and legal stalling tactics by the oil companies often mean lengthy litigation that gets lost in Nigeria’s dysfunctional legal system. This leaves legitimate claimants angry and with little faith in the oil companies or the system that is supposed to represent them and their environment.

To help improve situation SDN has been bringing together government regulators, oil companies and civil society groups so that together they can draft a new set of principles and a framework that will ensure oil spill compensation can be paid quickly to the right people when a company is found to be at fault.

Patricia Prohaszka reports on the process so far:

Less than a year ago, SDN embarked on a process to review Nigeria’s inefficient oil spill compensation system. To inform our effort extensive research has been carried out on the current Nigerian compensation system and internationally applicable best practice regarding compensation for oil pollution. A team of expert valuers, who also conducted field research looking into currently applicable compensation rates, made a series of recommendations for improving the current, flawed compensation and valuation system that benefits no parties involved.

SDN recognised that the course of reforming such a complex process requires commitment from and involvement of all stakeholders affected by oil spills, including oil companies, civil society, communities and government regulatory agencies. Therefore, SDN devised a consultation process engaging stakeholders from the beginning of the review project, which culminated in a two day workshop unprecedented in Nigeria.

The workshop has brought together stakeholders with very different interests, often hostile to each other, to collectively work towards a new, fairer oil spill compensation framework. High level representatives from SPDC, Chevron, senior directors from NOSDRA, senior members of the Nigerian Institute of Estate Surveyors and Valuers, internationally recognised lawyers and heads of Civil Society organisations were all present at the meeting representing their individual expertise and knowledge, rather than agencies or institutions.

The participants’ commitment, knowledge and ideas shaped the discussions and greatly contributed to the drafting of a new oil spill compensation mechanism. SDN’s aim is to further develop this draft mechanism through consulting a wider network of relevant stakeholders, to be presented in the form of a White Paper before the end of the year. The first event laid strong foundations for the expansion and continuation of this exceptional piece of work, and SDN keeps building on the success of the multi-stakeholder workshop. A second review event is going to be held at the end of November, where SDN is hoping the secure the support of the Ministry of Environment, the Ministry of Petroleum and more international and indigenous oil companies, as well as those already involved in the review process.

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