The regulator says the trusts are helping channel oil companies’ statutory contributions into schools, hospitals and other projects, despite disputes over some boards

The Nigerian Upstream Petroleum Regulatory Commission has registered 172 Host Communities Development Trusts established by oil and gas companies across Nigeria, as the regulator steps up enforcement of a key provision of the Petroleum Industry Act designed to give oil-producing communities a greater stake in petroleum operations.

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Oritsemeyiwa Eyesan, the NUPRC Commission Chief Executive, disclosed the figure in Abuja during a meeting with the leadership of the Revenue Mobilisation Allocation and Fiscal Commission, where both agencies discussed developments in the upstream petroleum sector and the implementation of the PIA.

The latest progress on NUPRC host community trusts comes at a significant moment for a framework created to address one of the industry’s most persistent challenges: the strained relationship between petroleum operators and communities hosting oil and gas facilities.

Under the PIA, oil companies, known as settlors, are required to establish a Host Communities Development Trust and contribute an amount equivalent to three per cent of their actual annual operating expenditure in the preceding financial year on upstream petroleum operations affecting their host communities. (Nigerian Property Registration)

The law requires the trusts to channel the money into development projects and programmes for the benefit of host communities, while the NUPRC has regulatory responsibility for their administration and oversight in the upstream sector. (Nigeria 2025 Licensing Round Portal)

Eyesan said the commission had developed procedures and regulations intended to make the process more orderly and ensure companies meet their obligations.

“We have laid out procedures for doing things, and we have put regulations in place to streamline the process. So far, we have registered 172 HCDTs, and we have been able to manage contributions by settlors,” she said.

The progress, however, has not been without friction.

Eyesan acknowledged that some trusts have been affected by disagreements over the composition of their boards of trustees, with some disputes becoming matters for litigation.

That challenge has become particularly visible in the case involving Sterling Oil Exploration and Energy Production Company and its host communities in Anambra State.

Earlier in August, RMAFC directed the NUPRC to dissolve a disputed Host Community Development Trust within 48 hours following an investigative hearing into SEEPCO’s operations and the implementation of the PIA’s host community provisions.

The commission raised concerns over the constitution of the trust and the representation of affected oil-producing communities. (Punch Newspapers)

RMAFC subsequently pressed for stronger accountability around the benefits due to host communities and ordered SEEPCO to address compensation concerns linked to environmental degradation. (The Guardian Nigeria)

The dispute illustrates the delicate balance the HCDT framework is expected to maintain. While the trusts are intended to provide communities with a structured route to development benefits, disagreements over who represents those communities can undermine confidence in the system.

Eyesan said the NUPRC was working to resolve such disagreements and ensure that the trusts function effectively.

She also highlighted the NUPRC’s Alternative Dispute Resolution Centre, describing its role in resolving grievances between operators and host communities as “pivotal”.

The commission’s wider regulatory framework provides for grievance mechanisms to address disputes between settlors and host communities, while the 2022 HCDT regulations set out procedures covering trust registration, trustees, governance, community needs assessments and development plans. (Nigeria 2025 Licensing Round Portal)

The potential impact of the trusts extends beyond the establishment of administrative structures.

According to Eyesan, HCDTs have already begun financing critical infrastructure in some communities, including schools and hospitals. She said the projects were helping to improve relations between operators and host communities and had contributed to greater stability around petroleum operations.

That connection between community development and production is central to the government’s broader ambition for the HCDT system.

For decades, disputes involving environmental degradation, inadequate compensation, limited community participation and perceptions of exclusion have periodically disrupted petroleum operations in the Niger Delta and other oil-producing areas.

The PIA sought to create a more predictable mechanism for addressing some of those concerns by making community development a formal obligation rather than leaving it largely to individual corporate initiatives.

NUPRC’s own regulatory material describes the HCDT framework as a means of promoting sustainable development, social and economic benefits and peaceful coexistence between petroleum operators and host communities. (Nigerian Property Registration)

The architecture of the trusts also places restrictions on how their funds are structured. Under the regulatory framework, 75 per cent of funds in the collection fund is allocated to capital projects, 20 per cent to a reserve fund and five per cent to administrative expenses. (Nigerian Property Registration)

The system therefore carries an important expectation beyond simply collecting money from oil companies: the funds must ultimately translate into visible and sustainable improvements in the communities for which they are intended.

At the Abuja meeting, Eyesan also clarified the institutional responsibilities surrounding the funds after RMAFC expressed interest in their management.

She maintained that regulatory oversight of the HCDTs remains within the NUPRC’s mandate and assured the fiscal commission that the upstream regulator would continue enforcing the relevant provisions of the PIA.

Eyesan also promised that the NUPRC would investigate the lingering dispute between SEEPCO and its host community in Anambra State.

For RMAFC, the issue has implications beyond community development. Chairman Mohammed Bello Shehu said the upstream petroleum industry remained crucial to the commission because of its substantial contribution to revenues accruing to the Federation Account.

Shehu commended the NUPRC’s reforms and called for stronger cooperation between the two institutions so that changes in the petroleum sector translate into increased revenue and better development outcomes for Nigerians.

The collaboration could prove important as the HCDT system moves from the establishment of trusts towards the more difficult task of demonstrating results.

The registration of 172 trusts represents a significant milestone under a PIA framework that is only a few years into implementation. But the disputes already emerging around some boards show that incorporation alone will not guarantee effective community development.

The real measure of success will ultimately be whether the three per cent contributions are transparently managed, whether communities have meaningful participation in deciding how the money is spent, and whether projects such as schools, hospitals and other infrastructure continue to improve lives.

For the NUPRC, that makes the next phase especially important.

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Having built much of the institutional framework, the regulator now faces the more demanding task of ensuring that the promise behind the trusts is felt on the ground in the communities that host Nigeria’s petroleum wealth.