Before IOCs Relocate to Operational Base

Merely ordering the oil majors to relocate their head offices to the areas in which they operate in the Niger Delta is not sufficient, it must be accompanied by a commitment to address lingering issues that make the areas unattractive in the first place,

The political correctness of the order by Acting President Yemi Osinbajo that the International Oil Companies (IOCs) operating in the country should relocate their head offices to states, where they produce from is not debatable. But there comes with the success or failure of this initiative many other issues. Osinbajo, who spoke in Uyo, Akwa Ibom State, during a town hall meeting to mark the end of the Niger Delta crisis, was reported to have directed the Minister of State for Petroleum, Dr. Ibe Kachikwu, to engage the oil companies on the way forward over repeated calls by the locals for the relocation of the head offices of IOCs as most of them currently have their headquarters in Lagos and Abuja respectively.

Although the issue of security has always come up as a near-permanent feature on why the oil companies might have refused to have their head offices in the Niger Delta and other oil producing states, it is also becoming less an issue in the face of other allied matters defining the relationship between the oil companies and their host communities.

This is why the latest presidential order on relocation is largely considered a breather because it is the first time that such an order would be handed by the presidency since the return to civil rule in 1999. While the oil companies operate in the oil producing states with the attendant negative health and environmental implications, they maintain their head offices in Abuja and Lagos, mostly for reasons of security.

Therefore, politically speaking, such an order might be the much needed tonic to compel government to do that which is right in the oil zone. The idea of relocating the head offices of the oil companies to their host states is believed to have both psychological and physical connection to the growth and development of the region, because by practice, companies are expected to have their headquarters, where they produce from.

With this development, however, it is still a win-win situation for both the oil majors and the host communities. First, there will be a connection between the companies and the communities where they operate in terms of empathy, relationship, responsibility and environmental concerns and protection. Since the discovery of oil in Nigeria, the major cause of crises between the oil companies and the host communities had been environmental degradation.

The fact is that it is easy for an oil company, whose head office is not in the locality where it operates to take the locals for granted, which is what the oil producing areas have always complained about. The communities, as a result, live at the mercy of the companies, such that, while the IOCs smile to the banks, the locals live in the danger posed by oil exploration. But flip the scenario and what you get is the oil companies sharing the pains and anguish of the people, a situation that compels them to act differently as well as have and nurture good relationship.

Quite frankly, it may seem to many that the very fabric of an intervention of this nature is being damaged by alluding to the fact that most of the oil companies often get away with the devastation and neglect of their host communities through the connivance of the locals, but what it does more is throw light on the age-long complications this association had evolved over the years.

More often than not, such familiar acts of sabotage like illegal refining and illegal oil bunkering, which further degrade the environment and complicate the health of the people, are made possible with the conspiracy of prominent locals, many of whom are believed to have and still benefit from the sleaze. A majority of them are today emergency billionaires at the expense of collective interest and struggle.

Particularly instructive is the issue of tax, which is a key consideration in the call for relocation of head offices of IOCs. It is rudimentary knowledge that the Nigerian laws provide that company tax is payable only where a company has its head office. While the production and revenues of the oil corporations are generated from the oil producing states, the corporations are by law required to pay their taxes where their head offices are domicile. A corollary to this is that members of staff of the oil majors are also paid from the head offices, where their personal income taxes also go. Where does this leave the oil communities? The answer is better imagined.

But as good as the relocation idea sounds, there is need for genuine synergy involving states and local government in the area of provision of infrastructure and security. The issue of security is particularly crucial as no investor would put his money in an unsafe environment.

This is why the ‘rent-seeking’ habit of the locals, especially the youths and the community leaders, who often instigate them, needs to be addressed and tailored to suit the habit that is expected to come with the relocation of major companies. The issue of security therefore also lies in the hands of the people, some of who have the penchant for compelling the oil companies to stoop to their whims, whether or not their demands are tenable. And when this is ignored, they instigate violence and make the locality unconducive for operations, thus forcing the oil companies to stay away at collective detriment.

Unarguably, the relocation order is a good development, particularly the instruction to Kachikwu to interface with the oil majors. It is also imperative for government to talk to the locals so that they can see the oil majors as development partners and not some expatriates that have come to steal their commonwealth and degrade the environment.