None of the enabling statutes provides a framework for assessing the value of any polluted land or what the owner of a polluted land is entitled to claim for any pollution. While some of the statutes provide some heads of claim for compensation for land compulsorily acquired, others are couched in generally vague terms that have created too many disputations between land holding communities and the acquiring authorities. In practice, valuers assess properties to be acquired by following methods prescribed by the enabling statute, though in Nigeria, a curious interpretation has been given to certain
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 45
provisions in the interest of government. Interestingly, the Minerals and Mining Act, 2007 which was enacted long after the LUA, now resorts to open market valuations by a duly registered Valuer and recognises the payment for surface rights in lieu of land value, though the definition of “Surface Rights” was not given. The compensation provisions of the various statutes are shown below in Table 3.2.
Commentators on compensation assessment have stated that while buildings are valued by using the replacement cost method of valuation, economic crops, trees and other structures, are valued by using pre- determined rates commonly called the OPTS (Oil Producers Trade Section of Lagos State Chamber of Commerce and Industry) Rates.(Ogedengbe, 2007a, Akpan, 2007b) (Nuhu, 2008, Kakulu, 2008) and (Otegbulu, 2009). These commentators appear to have taken no cognisance of the Minerals and Mining Act, 2007 provisions. (Omeje, 2006) says that it is the Land Use Act that has made a theoretical distinction between land which is a property of the state and investments in land which are privately owned and that the oil bearing communities are in a vulnerable position as they can only press for compensation for economic investments they might have made on such land, which is usually grossly underestimated. George (2009), reasons that the fixed rates contained in the OPTS rates produce a compensation that is negotiable, though in practice, the bargaining position of the parties to the acquisition are hardly comparable and thus makes negotiations unbalanced.
It is noteworthy that the OPTS is a Trade group in the Chamber of Commerce and Industry with membership drawn from the Oil and Gas multinational Companies. This means that operators in the Industry decide what they should pay as compensation before they even commence an acquisition. Where the government is the acquiring authority, her valuers use predetermined compensation rates produced by the Federal or State Governments. Since reliance is made to the Land Use Act, Section 29 in choosing what method to use for assessing compensation, it is difficult to see where the use of these predetermined rates is provided for as the relevant section(c) only says that:-
“Crops on land apart from any building, installation or improvement thereon, for an amount equal to the value as prescribed and determined by the appropriate officer.”
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 46
In the bid to meet the expectations of citizens of the Niger Delta and other areas, different States produce their own Compensation Rates. There is also the rates produced by the Federal Ministry of Works for the whole country, grouping the constituent States into geo-political zones, and the Niger Delta States typically fall within the South-South geo- political zone. Samples of these various rates are shown in Appendix F. With this plethora of rates, it impossible for claimants in any compulsory acquisition exercise to know with any certainty, what their entitlement would be. Even when the oil multinational companies acquire with these rates as if they are empowered by any statute, but a review of the provisions of the various laws as shown above, does not suggest any empowerment. It is necessary to see what the practice of compensation is in other countries when compulsory acquisition is embarked on. In trying to select comparable countries, it is necessary to consider the World Bank and United Nation’s categorisation of Countries around the globe. Both organisations use a measure of income of the countries whether it is Gross Domestic Product or Gross National Income. A selection of five other countries has been considered, but in addition to the international criteria, the aspect of land policy has been added. The African countries are classified as Low-income Economies while the other Countries are High Income Countries. In Africa, United Republic of Tanzania has a similar land policy like Nigeria. Kenya and Uganda have free market economies, though their land policy differs from that of Nigeria. In the developed world, the United Kingdom was chosen as her laws were the foundations of the laws of most commonwealth countries like Nigeria. Canada was chosen as she has a similar land policy to Nigeria as her minerals are nationalized like Nigeria. The only difference between Canada and Nigeria is that the nationalised minerals are vested in the States in Canada whereas in Nigeria they are vested in the Federal Government. Table 3.2 shows the provisions of various Nigerian Statutes; Table 3.3 compares Nigeria to other African countries, while Table 3.4 shows Nigeria, compared to the High Income economies.
Nuhu (2008) asserts that the compensation provisions of the Cap. L5 metes out an injustice to the land owners. This is confirmed by the heads of claim provided by the enabling statutes in the other low-income countries compared with Nigeria in Table 3.3 This assertion is further magnified when the Nigerian provisions are compared with
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 47
those of the High Income Counties of the United Kingdom and Canada in the Table 3.4 below:-
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 48
Table 3.2: Statutory Provisions for Compensation in Nigeria
LAW LAND STRUCTURE CROPS/TREES INTEREST ON
DELAYED PAYMENTS DISPUTE RESOLUTION REMARKS Public Lands Acquisition Ordinance (CAP, 167, LFN,2004) Open Market Value Open Market Value
Open Market Value Provided For High Court Provision for Severance,
Injurious Affection Public Lands Acquisition (Miscellaneous Provision) Decree No. 33 of 1976, Part A Schedule of Compensation Amounts Provided. Interest on Land Cost for 10yrs (max.)
Replacement Cost Method
As Determined by Appropriate Officer
Provided For Lands Tribunal Provision for Abortive Expenses (survey fees, architect’s fees etc.)
Part B (Resumed State Land) Rent paid in the year Actual Cost as Determined by Appropriate Officer As Determined by Appropriate Officer
Not Paid Lands Tribunal Reclamation works paid for.
State Lands (Compensation Decree 1968 (No 38 of 1968) Rent paid during lease
Replacement Cost Fair Market Value Provided For Silent Value of Unexpired Term.
Petroleum Act (Cap. P10,
Fair and Adequate
Fair and Adequate Compensation
Fair and Adequate Compensation
Provided For State Authority Provides for productive trees, venerable objects.
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 49
Adapted from Otegbulu, 2009.
LFN, 2004) Compensation
Land Use Act 1978 (Cap.L5, LFN, 2004) Rent Paid during the year Depreciated Replacement Cost As Determined by the Appropriate Officer Paid on Value of Structures
Land Use and Allocation Committee Oil Pipelines Act (Cap. 07, LFN, 2004) No Payment for Land
Open Market Value Open Market Value Not Provided For High Court Payment for Disturbance, Severance, and Injurious Affection. Nigerian Minerals and Mining Act, 2007 Surface Rights in lieu of Land Value
Open Market Value Open Market Value Open Market Value High Court Payment for Disturbance, Severance, and Injurious Affection
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 50
Table 3.3: Comparison of Nigeria and other African Countries
Source: Nuhu (2008)
NIGERIA KENYA UGANDA TANZANIA
Main Law: Land Use Act 1978 (Cap. L5, LFN, 2004)
Main Law: Acquisition Act, Cap. 295 and Land Acquisition (Amendment) Act, 1990
Main Law: Land Acquisition Act (LAA), No.14 of 1965
Main Law: Land Acquisition Act (LAA) 1967 and Acquisition of Buildings Act 1971.
Provisions:
Refund of Ground Rent if any
Buildings/Structures valued with Depreciated
Replacement Cost method. Crops/Economic trees
valued by methods
prescribed by Appropriate Officer (Use of pre- determined rates)
Provisions:
Market Value of land taken
Injurious Affection and Severance
Damage from Loss of Profits
15% of Market Value as Disturbance For Way leaves/Easements
Damage to trees, plants, and crops
Damage to permanent improvements on land Periodic diminution in the Profits of land and Adjoining land.
Provisions:
Cost of Land or Cost of obtaining alternative land
Buildings assessed on Depreciated Rep- Placement cost method;
Crops
Severance/Injurious Affection
Loss of Trade removal Expenses
Disturbance at 15% but IF Notice to Quit is LESS THAN 6months; 30% is added; Depreciation of Buildings at 1%-%% p.a., (Usually 2% is adopted) Provisions: Alternative land or equivalent Value NOT exceeding Value of land taken
Market value of unexhausted improvements;
Betterment charged on retained portion where part is taken;
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 51
Table 3.4: Nigeria Compared to Developed Countries
NIGERIA
CANADA
(STATE OF ALBERTA) UNITED KINGDOM
Refund of Ground Rent if any
Buildings and Structures valued with Depreciated Replacement Cost Method
Crops/Economic trees valued with method prescribed by Appropriate Officer (Use of pre-determined Rates)
Entry fee per use
Market value of land rights taken
Value of land to acquiring body of Rights impacted by Right of Way;
General Disturbance
Damages- compensation for loss of crops or pasture and adverse effect of pipeline;
Fees for Professional Representation
Market value of land taken
Market value of land taken
Severance/ Injurious Affection
Disturbance
Fees for Professional Representation.
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 52
3.3.1. Statutory Provisions on Compensation
Several statutes provide basis for the payment of compensation when an acquisition of land occurs. The Department of Petroleum Resources (DPR) identifies more than 31 ‘principal’ and ‘subsidiary’ legislations, including the Oil Pipelines Act of 1956, Petroleum Control Act of 1967, Petroleum Act of 1969, Offshore Oil Revenue (Registration of Grants) Act of 1971, Exclusive Economic Zone Act of 1978, the National Inland Waterways Act of 1997 and the Land Use Act (LUA) of 1978 (though not often listed as an oil-related law). The most relevant statutes are:
Public Lands Acquisition Ordinance (Cap. 167, LFN 2004)
Public Lands Acquisition (Miscellaneous Provision) Decree No. 33 of 1976, Part A.
State Lands Compensation Decree, (No. 38 of 1968). Petroleum Act Cap. P10, LFN 2004.
Land Use Act 1978 (Cap. L5, LFN 2004) Oil Pipelines Act Cap. 07. LFN 2004. Nigerian Minerals and Mining Act 2007.
Commentators on compensation assessment have stated that while buildings are valued by using the replacement cost method of valuation, economic crops, trees and other structures, are valued by using pre- determined rates commonly called the OPTS Rates.(Akpan 2007,Kakulu 2008, Nuhu 2008, Ogedengbe 2007 and Otegbulu 2009). Omeje (2007)) said it is the Land Use Act that has made a theoretical distinction between land which is a property of the state and investments in land which are privately owned and that the oil bearing communities are in a vulnerable position as they can only press for compensation for economic investments they might have made on such land, which is usually grossly underestimated. George (2009), reasons that the fixed rates contained in the OPTS rates produce a compensation that is negotiable, though in practice, the bargaining position of the parties to the acquisition are hardly comparable and thus makes negotiations unbalanced.
The compensation regime obtaining in Nigeria in general and in particular, the Niger Delta has assumed significance due to the importance of land and its scarcity in the Niger Delta due to the nature of the terrain. The compensation problem is compounded by the frequent contamination of the environment surrounding the industrial establishments demanding land in the region. This scenario requires a discussion of the nature of contamination as applicable to land before progressing further.
A Framework for Determining the Compensable Value of Damages due to Contamination on Wetlands Page | 53