More money will not fix the host community trusts

By the regulator’s count, the Petroleum Industry Act is working. The Nigerian Upstream Petroleum Regulatory Commission put the number of incorporated Host Community Development Trusts at 172 at the end of August 2026, up from 163 five weeks earlier. The last cumulative contribution figure the Commission published, in October 2025, was N373bn across 536 projects. Set against a sector that for decades moved money to communities through discretionary memoranda of understanding and little else, a statutory flow of funds with a register attached is a real change.

Then look at what is happening around those trusts this year. In April, communities on OML 26 in Delta alleged a shortfall of N2.4bn and said one remittance had reached the trust since it was inaugurated. In May, a Federal High Court in Warri ordered the regulator to implement the host community chapter on the gazette as it stands. In August, the Revenue Mobilisation Allocation and Fiscal Commission gave the Commission forty-eight hours to dissolve a trust in Anambra over who was sitting on it. In September, five communities in Rivers protested that their trust had produced few visible projects and replaced its chairman.

Those are not funding disputes. Every one of them is a dispute about control, disclosure and legitimacy. Which makes the reform now in front of the National Assembly worth examining carefully, because it is aimed somewhere else entirely.

The wrong dial

On 27 May 2026, leaders of the host communities caucus and members of the House moved to amend section 240 of the Act and raise the operator contribution from three percent of annual operating expenditure to six. The committee chair, Dekor Dumnamene Robinson, put the case plainly: three percent was a good start in 2021, and five years of implementation have shown clearly that it is insufficient.

The instinct is understandable and the political logic is sound. It is also, on the available evidence, the wrong instrument. Doubling the contribution changes the volume of money entering a mechanism whose observed failures are almost entirely about the governance of money already inside it. If a trust cannot presently account for what it received, giving it twice as much does not produce twice the development. It produces twice the amount that cannot be accounted for, and it raises the value of capturing the board.

That is not a hypothetical. It is what the five-year review found.

What the review actually found

In August 2026, BudgIT, Policy Alert and Oxfam published an assessment of the first five years of the host community regime. The headline numbers are mixed rather than damning: more than 1,100 projects funded, alongside roughly 30 percent of licence holders with no incorporated trust at all, over 125 settlors yet to establish one, and 97 incorporated trusts sitting unfunded as of mid-2024. No settlor met the statutory deadline.

The finding that matters most is not a number. It is the mechanism the review describes for how trustees are chosen. Nomination meetings are frequently held without the wider community’s knowledge, and the boards that emerge are populated by former employees of the settlor, political actors and traditional elites. The instrument designed to move decisions closer to the community has, in a meaningful share of cases, moved them to a small group standing between the company and the community, accountable in practice to neither.

Read the year’s disputes through that lens and they stop looking like separate incidents. In Akwa Ibom, a civil society coalition reported in August that four trustees of a trust that has received more than N60bn refused to disclose its accounts and threatened legal action against those asking. In Anambra, the fiscal commission’s intervention turned on who was entitled to represent the community in the first place. In Rivers, the protest was about opacity before it was about projects. The common factor is that the community cannot see inside the vehicle that holds its money, and has no reliable way to change who is holding it.

There is a second, quieter problem underneath. Because the contribution is calculated on operating expenditure, the base is determined by the settlor and there is no independent means for a community to verify it. A percentage of an unverifiable number is an unverifiable entitlement, whether the percentage is three or six.

Enforcement is arriving from four directions at once

Operators should not read any of this as a reason to wait. The five-year mark has produced more institutional pressure on host community obligations than the four years before it combined, and it is coming from bodies that do not coordinate with one another.

The Commission is registering trusts and publicly instructing new licence holders to form them promptly and to use alternative dispute resolution rather than litigation. In May, the midstream and downstream regulator extended the three percent obligation to its own licensees and launched a portal for registration, project tracking and contribution monitoring, which converts a reporting duty into a data trail. The Warri judgment established that community delineation is not the Commission’s to revisit at will. The fiscal commission has now asserted a view on the legitimacy of a specific board. And civil society has moved from advocacy to threatening litigation over disclosure.

Against that, the formal sanction in the regime remains a penalty of about $2,500 per month for non-compliance, and, as Connected Development has noted, no settlor appears to have been sanctioned under it. The gap between a trivial statutory penalty and this volume of institutional attention is the tell. When the written enforcement mechanism is too weak to matter, enforcement does not disappear. It relocates to courts, to commissions with adjacent mandates, to the press, and to the road outside the gate, where it is slower, less predictable and considerably more expensive than a fine would have been.

The divestment wave sharpens this further. Amnesty International and partner organisations published leaked documents in July indicating an internal onshore decommissioning estimate of $10.9bn excluding remediation, and argued that a sale does not discharge the seller’s legacy obligations. Indigenous operators acquiring onshore assets are acquiring the community relationships attached to them, including every unresolved grievance about a trust that never funded anything.

What separates the trusts that work

The same review that documents the failures also documents trusts that function. A trust in Rivers associated with a major operator has delivered more than 500 projects across over 60 communities. A trust in Bayelsa closed its first year with a substantial surplus rather than a scramble to disburse. Neither outcome came from a larger percentage. Both came from design decisions taken early.

Make trustee selection contestable and visible. The single highest-return intervention is a nomination process the wider community can observe, verify and challenge, with published criteria, published minutes and a route to remove a trustee that does not require a court. Where selection is opaque, every subsequent control fails, because the people operating the controls were chosen by the people they are meant to constrain.

Publish the base, not only the disbursement. A trust that reports what it spent, without disclosing the operating expenditure figure the contribution was calculated from, has disclosed the less important half. Publishing the base is what converts the entitlement from a claim into something a community can check.

Separate the settlor’s convenience from the trust’s governance. An operator that staffs a trust board with people it once employed has bought short-term manageability at the cost of the trust’s legitimacy, which is the only asset that makes it useful to the operator in a dispute.

Fund the administration honestly. Trusts that cannot pay for competent financial management, audit and project supervision will not produce credible reporting, and the absence of credible reporting is what the disputes of 2026 are actually about.

Build the grievance route before the grievance. A functioning complaint and resolution process, designed and agreed while relations are good, is what stops a disclosure dispute becoming a protest, a protest becoming a shutdown, and a shutdown becoming a schedule.

The test

There is one question that tells an operator or a trustee where they stand. If a community member walked up tomorrow and asked how much was contributed last year, what the figure was calculated from, who decided which projects were funded, and how that person came to be a trustee, could the trust answer all four in writing, from documents already published? If the answer to any of them is that the information exists but is not available, the trust does not have a transparency problem it can fix later. It has a legitimacy problem it is currently funding.

Six percent of an unverified base, disbursed by a board the community did not knowingly choose, is not twice the development. It is twice the exposure. The percentage was never the binding constraint. Whether anyone outside the room can see what happens to the money is, and that is a design question, answerable now, by the operators and trustees who would otherwise spend the next five years answering it in court.

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Sources: Five Years of the Host Community Development Trust (BudgIT, Policy Alert and Oxfam, August 2026) · 172 host community trusts incorporated so far, says NUPRC (THISDAY, 31 August 2026) · Host community fund rises to N373bn as NUPRC oversees 536 projects (BusinessDay, October 2025) · HOSTCOM leaders, Reps move to amend PIA, seek increase of oil community fund to 6% (Vanguard, 27 May 2026) · Beyond the 3 Percent: transparency in Host Community Development Trust Funds (Connected Development) · Court orders NUPRC to comply with PIA (The Guardian Nigeria, May 2026) · RMAFC intervention on host community trust representation and compensation (The Guardian Nigeria, August 2026) · NMDPRA enforces 3% host community fund contributions (CED Magazine, 25 May 2026) · Delta communities threaten showdown over 3% opex on OML 26 (THISDAY, 22 April 2026) · Leaked documents on Niger Delta onshore decommissioning liability (Premium Times, 29 July 2026)

This article is general guidance, not legal or investment advice.