The 3 Per Cent Question: Who Is Checking Nigeria’s Host Community Trusts?

For decades, oil-producing communities in the Niger Delta lived beside wells, pipelines and flare stacks while the benefits flowed elsewhere. Companies filled the gap with community projects and agreements that were voluntary, unevenly delivered and easy to withdraw. The Petroleum Industry Act (PIA) of 2021 set out to end that arrangement by turning community support into a legal obligation.

Five years on, billions of naira have moved into the trusts the Act created. The more important question is not how much has been paid in. It is whether anyone can show what it has changed, and who is placed to check.

What the law requires

Under the PIA, oil and gas companies, known as settlors, must establish a Host Community Development Trust (HCDT) for the communities where they operate and fund it with 3 per cent of their annual operating expenditure. Each trust is run by a board of trustees that includes community representatives, the settlor and government agencies, and the funds are meant to pay for infrastructure, services and livelihoods.

This matters beyond the oil sector. The Act converted what used to be corporate social responsibility into a statutory duty. Civil society analysts say plainly that contributing to the trust is a legal and moral obligation, not a gesture of goodwill. That shift puts community development in the same category as tax and regulatory compliance, which raises the standard of proof.

What has been delivered

The record is not empty, and fairness requires saying so. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), more than $150 million had been deposited into HCDT accounts by the time of a 2025 industry roundtable, and the regulator reported that automated compliance tools such as Host Comply were operational.

A July 2026 analysis by BudgIT Foundation’s Head of Natural Resource and Climate Governance reports that more than 160 trusts have been incorporated, that cumulative contributions had passed N373 billion by October 2025, and that the money had funded more than 1,100 community projects. It cites the Obagi/TotalEnergies trust in Rivers State as an example, with more than 500 projects across over 60 communities, and describes trusts in Akwa Ibom, Bayelsa and Rivers funding solar streetlights, boreholes, electricity infrastructure, scholarships and vocational training.

These are real results, and where they are verified they are worth celebrating. They also show what the model can do when it works.

Where it is slipping

The same analysis, together with regulator and civil society commentary, points to persistent gaps.

• Many settlors have not complied. No settlor met the PIA’s nine-month deadline for setting up a trust, and BudgIT estimates that about 30 per cent of licence holders still have no incorporated trust.
• Some trusts are unfunded. As of mid-2024, roughly 97 incorporated trusts remained unfunded.
• Enforcement is thin. Although the NUPRC can fine or revoke the licences of defaulting settlors, BudgIT reports that no sanctions have been documented so far.
• Figures cannot easily be checked. Where settlors say they have paid their 3 per cent, host communities often have no means of comparing the figure with the company’s actual operating expenditure.
• Disputes have slowed delivery. Litigation over trust boundaries, inclusion and board composition has delayed implementation in places.

NUPRC’s own representative has acknowledged persistent challenges in enforcing funding obligations, building skills, and securing genuine community participation.

The deeper problem: accountability points the wrong way

The most serious weakness is structural. Trusts are largely accountable to the settlors who fund them and the regulator that oversees them. The communities they exist to serve have almost no formal way to monitor compliance, and BudgIT notes that there is no mandated mechanism requiring boards to disclose budgets, accounts or activities to the communities.

Research by Policy Alert, supported by BudgIT and Oxfam Nigeria, found cases where the first meetings to nominate trustees were held without community members’ knowledge. Boards in such cases risk being dominated by former company staff, political actors and traditional elites rather than people chosen by communities. Women, young people and persons with disabilities remain largely absent from trust structures despite regulatory provisions for inclusion.

When the people who control the money are not answerable to the people who should benefit, good intentions are not enough. Even honest trustees cannot prove they are honest if no one is positioned to check.

Allegations that need evidence

This gap is why allegations fall into a vacuum. Former militants in Akwa Ibom have publicly protested over alleged mismanagement and exclusion from trust structures, and a civil society group has demanded accountability over about N60 billion reported to have been disbursed to one trust in the state. Those are allegations, and they are contested. We report them as claims that call for scrutiny, not as findings.

But the pattern is instructive. In the absence of published accounts and independent verification, communities, trustees and companies are left trading accusations and assurances. Nobody can settle the dispute because nobody can see the evidence.

Oversight is stirring

There are signs of movement. A House of Representatives committee warned in June 2026 that it would intensify oversight of PIA implementation from July, including compelling trust administrators to explain how funds are spent. Civil society organisation Stakeholder Democracy Network has also launched an independent digital platform for monitoring, evaluation and accountability of HCDT implementation, designed to provide real-time information on how trusts perform.

Analysts and regulators increasingly agree on the direction of travel. Industry voices at the 2025 roundtable argued that the framework must move from compliance to credibility, building systems communities can trust and engage with. A compliance box ticked in Abuja is not the same as a community that believes its trust is working.

What credible verification would look like

Each party in the system has a practical role.

• Settlors (oil and gas companies): publish annual contributions and the operating expenditure on which they are calculated, and support independent verification of how funds are used.
• Trust boards: hold annual community meetings and publish budgets, audited accounts and project lists in forms and languages communities can read.
• The regulator: publish compliance data openly, including which settlors have and have not established and funded trusts, and apply the sanctions the law already provides.
• Oversight bodies: hold the regulator, as well as the companies, to account for enforcement.
• Communities and civil society: use available platforms to track projects, compare reported spending with what is on the ground, and report gaps.

None of this requires new legislation. It requires disclosure and verification, which are exactly the habits that separate announced impact from proven impact.

What this means for business

For oil and gas companies, the trusts are now part of their licence to operate and a measure of their reputation. A settlor can meet its legal duty on paper and still face community distrust, litigation or reputational damage if nobody can see what the money achieved.

For other sectors, the HCDT model is a preview. Mining, power and other extractive-adjacent industries face growing expectations that community commitments be specific, funded and verifiable. Companies that build disclosure and independent verification into their community programmes now will be better prepared, and better trusted, than those who wait to be compelled.

What to watch

• Regulator enforcement: whether the NUPRC begins imposing sanctions on settlors that have not established or funded trusts.
• Legislative oversight: what the House committee’s expanded scrutiny produces.
• Disclosure: whether trusts and settlors publish accounts and project data.
• Community-led monitoring: whether independent platforms gain traction and data.
• Dispute resolution: whether court cases over board composition and boundaries are settled.

The takeaway

The 3 per cent obligation is one of the most ambitious benefit-sharing reforms in Nigeria’s oil history, and it has produced real projects. But a trust that cannot show where its money went is asking communities to take its work on faith. Faith is not accountability.

The measure of this reform will not be how much has been paid in. It will be whether a family in a host community can see, check and confirm what the money did for them.