The Petroleum Industry Act (PIA) was heralded as a landmark piece of legislation, designed to transform Nigeria’s oil and gas sector, protect the environment, and secure benefits for host communities through the establishment of Host Community Development Trusts (HCDTs). On paper, it appears to be a long-overdue reform aimed at correcting historical injustices and ensuring that oil-producing communities reap tangible rewards from the resources beneath their soil. But as with many reforms in Nigeria, the devil lies in the details—and one particular provision threatens to undermine the very credibility of the HCDT mechanism.

This is the regulation that allows an outgoing chairman of an HCDT board to nominate his or her successor. At first glance, this might look like a way of ensuring continuity in leadership. In reality, it is a deeply flawed idea that could become a tool for entrenching corruption, nepotism, and self-serving cliques within the governance structure of these community trusts. In a country like Nigeria, where institutions are weak and corruption is pervasive, such a regulation is not only dangerous but a recipe for failure.

Why This Regulation is Problematic

Conflict of Interest
Allowing an outgoing chairman to select his successor creates an obvious conflict of interest. It gives the incumbent enormous influence over the future direction of the Trust, enabling him to handpick someone who will continue to protect his personal interests rather than prioritize the welfare of the community. Such a system is more suited to monarchies or closed clubs than to transparent governance.

Perpetuation of Corruption
Nigeria has struggled for decades with corruption in governance. From inflated contracts to nepotistic appointments, leaders often prioritize personal gain over public service. By granting outgoing chairmen the power to nominate their replacements, the PIA essentially paves the way for entrenched patronage networks. An unscrupulous chairman may select a loyal ally—or even a family member—to shield him from scrutiny and ensure that questionable decisions are never revisited.

Erosion of Community Trust
The entire point of the HCDT is to build trust between oil companies, government, and host communities. Yet nothing erodes trust faster than the perception—or reality—of backroom deals. If community members believe that the leadership of their Trust is chosen through insider arrangements rather than open, transparent processes, confidence in the HCDT will collapse. Instead of uniting people around development, the Trust could become another battleground for bitter disputes.

Marginalization of Community Voices
The regulation sidelines the very people the HCDTs are meant to serve: ordinary community members. In practice, host communities will have little or no say in who leads them, as the outgoing chairman’s preference will carry the most weight. This is fundamentally undemocratic. It robs the people of ownership of their own development structures and reduces them to passive observers.

Recipe for Stagnation
Leadership renewal is vital for any organization. New leaders bring fresh ideas, energy, and accountability. When succession is controlled by outgoing chairmen, the risk is that leadership becomes stagnant, dominated by a closed circle of elites who recycle themselves in office. This will stifle innovation and prevent the HCDT from adapting to evolving community needs.

Alternative Ways to Ensure Transparent and Credible Leadership Selection

If the HCDTs are to fulfill their mandate, leadership selection must be transparent, credible, and rooted in community participation. Several alternatives to the current regulation would better serve this purpose.

• Community Congress Elections
  The most direct and democratic method is to allow the host community itself to elect the chairman through a congress-style system. Representatives from all segments of the community—youths, women, elders, traditional rulers, and civil society groups—could participate in a general assembly to choose their leader. This ensures broad legitimacy, as the chairman would emerge from the will of the people rather than the whim of an individual.
• Independent Electoral Committees
  To guard against manipulation, an independent electoral committee should be established to oversee the process. This committee could include representatives from the community, civil society, and even neutral observers from outside the region. Their task would be to screen candidates, organize debates or forums, and conduct secret ballot elections under clear guidelines.
• Rotation of Leadership
  Another option is to institute a rotational leadership system across the major clans, villages, or districts within the host community. This prevents domination by one group and ensures inclusivity. If, for example, the chairman comes from one clan, the next chairman must emerge from another. This guarantees that every segment of the community has a fair opportunity to lead.
• Term Limits and Performance Reviews
  To prevent entrenchment, chairmen should serve fixed, non-renewable terms—say, three years. At the end of each term, a performance review should be conducted by an independent panel that includes community representatives. This review should assess how well the chairman has met the Trust’s development goals. Poor performance should disqualify them from playing any role in selecting successors.
• Civil Society Oversight
  Civil society organizations (CSOs), particularly those with a track record of promoting transparency and accountability, can play a crucial oversight role. By monitoring the leadership selection process and publishing reports, CSOs can act as watchdogs, deterring manipulation and building community confidence.
• Oil Company and Government as Referees, Not Umpires
  While oil companies and government regulators have a stake in the proper functioning of the HCDTs, they must not hijack the process. Their role should be limited to providing logistical support, ensuring compliance with the PIA, and serving as referees who enforce the rules. They must not be allowed to impose or veto candidates.

The Way Forward

The PIA’s HCDT framework is one of the most promising reforms in Nigeria’s oil and gas sector. But good intentions are not enough; the structures must be built on solid governance principles. Allowing outgoing chairmen to nominate their successors undermines the credibility of the entire system. It risks transforming the HCDTs into yet another patronage machine, disconnected from the people it is meant to serve.

To avoid this, policymakers, communities, and civil society must push for reforms. Transparent elections, independent oversight, rotational systems, and community-led processes are all viable alternatives. What matters most is that leadership emerges from the community, enjoys legitimacy, and is accountable to the people.

Nigeria cannot afford to repeat the mistakes of the past. For too long, host communities have borne the brunt of oil exploration—environmental degradation, displacement, and poverty—while others benefited from the wealth beneath their land. The HCDTs were supposed to change that narrative. To succeed, they must be anchored on accountability, inclusivity, and trust.

The regulation allowing outgoing chairmen to handpick their successors belongs in the dustbin of history. It is time to build a leadership selection process that reflects the democratic aspirations of host communities and gives them genuine ownership of their future. Only then can the PIA’s promise of justice and development for Nigeria’s oil-producing regions be fulfilled.