NG Gas Flare Penalties Used for Environmental Remediation in Nigeria

• Host communities in Nigeria are demanding transparency in the management of gas flare penalties, which total ₦126.85 billion.
• The Petroleum Industry Act 2021 stipulates that these penalties are environmental restoration funds belonging to host communities.
• Decades of pollution have severely degraded mangrove forests and water sources in Mbo Local Government Area.

The residents of Unyenge, an oil-producing community in Akwa Ibom State, have been at the forefront of a growing movement to demand transparency and accountability in the management of gas flare penalties. These penalties, which total ₦126.85 billion, were collected from oil and gas companies operating within Mbo Local Government Area between 2021 and 2025. The funds are intended for environmental remediation, as stipulated by the Petroleum Industry Act 2021. However, host communities have long complained that these funds are often diverted into the Federation Account through Executive Order 9, leaving them without access to the resources they need to restore their degraded environments. This has led to widespread environmental degradation, including the destruction of mangrove forests and the pollution of water sources.

The Petroleum Industry Act 2021 provides a clear legal framework for the management of gas flare penalties. Sections 103(1) and 104(4) of the Act explicitly state that these penalties are environmental restoration funds belonging to host communities, not general revenue for the Federal Government or the Federation of Nigeria. This means that host communities have a right to demand transparency in the management of these funds and to ensure that they are used for environmental remediation. However, as documents published by the Nigeria Extractive Industries Transparency Initiative show, penalties paid by companies operating within Mbo totalled ₦126.85 billion between 2021 and 2025, with outstanding liabilities owed by Esso E&P and Oriental Energy still pending.

The residents of Unyenge are not just demanding transparency in the management of gas flare penalties; they are also advocating for community-led environmental restoration. This approach, which involves local communities taking ownership of their own environmental remediation efforts, is seen as a key step towards restoring degraded environments and promoting sustainable development. Ebong Ekanem, Chief Operating Officer at Policy Alert, has been instrumental in promoting this approach, which includes community-led mangrove restoration, toxic waste cleanup, and the greater inclusion of women and young people in environmental governance.

Lawyers advising oil-producing communities in Nigeria should note that the Petroleum Industry Act 2021 stipulates that gas flare penalties must be used for environmental remediation, and host communities have a right to demand transparency in the management of these funds.

Source: Original reporting via AllAfrica Nigeria