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CSOs warn Nigeria against acceding to the Energy Charter Treaty

Extractive360 | 10 Octobre 2022

CSOs warn Nigeria against acceding to the Energy Charter Treaty

By Gift Eguavoen

A coalition of Civil Society Organizations (CSOs) have warned Nigeria against acceding to the Energy Charter Treaty (ECT), describing it as a Trojan horse.

The ECT is an initiative of the then-European Economic Community; it is a legal framework for protecting a wide range of energy sector investments, covering oil, gas, coal, nuclear, renewable energy in the entire chain – from extraction and refining to production, storage, transport, distribution, trade, sale, and disposal of associated waste.

In a statement emailed to extractive360, the group raised the alarm that Nigeria is at the verge of joining the ECT, an international treaty that protects international investments in the energy sector, at a time the country is going through serious economic crisis and urgently needs both financial resources and policy space to navigate out of its dependency on crude oil exports.

“The government only recently launched its Energy Transition Plan (ETP), outlining ambitions and strategies for moving the country into a clean energy future. We the undersigned CSOs observe that joining the ECT will cost Nigeria money that is urgently needed to provide services for citizens, pay its enormous debts, and diversify the economy. It also threatens to tie Nigeria’s hands on the energy transition, and prevent the country from taking urgently needed action to protect the environment and communities,” the group said in the statement.

The ECT currently has 53 members, including the European Union and Euratom as well as all individual member states of the European Union, excluding Italy. In the last decade, the Secretariat of the ECT has been putting serious efforts in silently expanding its geographical reach in Africa, Asia, and Latin America.

The ECT’s main objective is to ensure the protection of foreign investors in the energy sector, especially international companies in oil, gas and coal sectors. The agreement grants international companies in the energy sector enormous power to sue host governments at international investment tribunals whenever such governments change or contemplate to change energy legislations and which may cause economic damage to foreign investors.

The group informed that Nigeria and many other African countries are now at various stages of the process of joining the ECT. “Burundi, Eswatini and Mauritania are in the ratification stage; while Kenya, Niger, Chad, Gambia, Senegal and Nigeria are among countries preparing to accede to the ECT. Nigeria has already completed the first three steps of accession to the ECT. By the end of 2019 it had handed in all necessary reports and was nearing the ratification stage of accession. This process was put on hold while the ‘modernization’ of the agreement is ongoing,” the statement said.

According to the group, the ECT is bad for Nigeria because under it, Nigeria will risk spending scarce resources on legal costs and claims settlements, the economic power and political influence of transnational companies in Nigeria will be expanded, while undermining the domestic justice system.

Furthermore, the group warned that the ECT will further dispossess front-line communities as they would be unable to pursue their rights under the mechanism, as well as pose an obstacle to Nigeria’s climate commitments and energy transition efforts.

“The next few years will be critical for Nigeria as the country will need to make crucial decisions to navigate out of the current economic bind. The country cannot afford to constrain policy and fiscal space by acceding to a treaty that will further expose her economic flanks to the arbitrary threat of the ECT,” the statement added.

Signing the ECT would give the transnational companies in the energy sector a weapon to re-colonise Nigeria, as it would also be incompatible with Nigeria’s economic diversification aspirations under its Medium-Term National Development Plan (MTNDP) 2021-2025, its Paris climate commitments as captured in the updated Nationally Determined Contributions (NDCs), the Nigeria Climate Change Act 2021, and its energy transition ambitions as outlined in the recently launched Nigeria Energy Transition Plan, the statement pointed out.

The statement jointly signed by Policy Alert, Civil Society Legislative Advocacy Centre, Spaces for Change, Health of Mother Earth Foundation, BudgIT Foundation, We The People, Environmental Rights Action, Centre for Transparency Advocacy and 17 others, urged the federal government to firmly reject the treaty not only because of its negative economic consequences but also because it will threaten political autonomy, undermine the fight against climate change, block Nigeria’s progress towards ending dependence on fossil fuels, and rip citizens of the benefits of current fossil fuel revenues.

 source: Extractive360