In Nigeria, liabilities for oil and gas activities are regulated according to the Polluter Pays
principle (PPP). However, the PPP has been misunderstood, misapplied and misinterpreted in
Nigeria's legal framework as a criminal and civil liability doctrine. Consequently, it is difficult,
if not impossible, for the operators responsible for environmental damage to be held liable for
the pollution prevention, clean-up and remediation obligations traditionally associated with the
PPP in many other legal systems. This inhibits the protection of the environment.
This thesis examines whether the regulatory framework applicable to Nigeria's oil and gas
sector is compatible with the 'traditional' understanding of the PPP as seen in other legal
jurisdictions, such as the European Union (EU). If so, what is the nature, scope, advantage, and
disadvantage of this particular conception of the PPP? In answering this question, the
regulatory potential of environmental Financial Security Requirements (FSRs) is considered.
By requiring operators or their parent companies to provide evidence of their ability to pay for
the environmental obligations that may arise from their activities, FSRs have the potential to prevent and remedy environmental damage arising from oil spills. Such requirements are
present within the EU and the United States' legal frameworks. Measures commonly used to
satisfy FSRs include liability insurance, self-insurance, bonds, letters of credit, and parent-company guarantees.
Without FSRs in the Nigerian oil and gas framework legislation, the efficacy of the National
Oil Spill Detection and Response Agency (NOSDRA) Act 2006 is thrown into doubt. First,
'externalised' liabilities deriving from the operator's activities force the state to undertake the
works by deploying public funds, as evidenced by launching a billion-dollar Ogoni clean-up.
Second, in some cases where the works cannot (or will not) be completed at a public cost, the
damage to the environment remains unremediated. Accordingly, while the first scenario has severe cost implications for public funds, the latter has created significant social and
environmental consequences for oil-bearing communities. This study concludes that policy and
regulations must be designed to capture FSRs so that operators can internalise (include) the
cost of their operations in line with the logic of the PPP.
