The concept of the “host community” has become an established feature of Nigerian natural resource law, which emerged in the oil and gas industry in a response to decades of environmental harm caused to the environment and recognition that project developers owe responsibilities to the communities most directly affected by oil and gas operations. The policy objective places an obligation on settlors to establish Host Community Development Trust (HCDT) to promote sustainable development and foster harmonious relationships with host communities.
A significant extension of the concept beyond the oil and gas industry was introduced by the amendment to the Electricity Act 2023 (i.e. the Electricity Act (Amendment) Act 2024). Similar provisions have been introduced in sub national legislation such as the Lagos State Electricity Law2024. While the policy rationale for protecting host communities remains compelling, the application of the HCDT framework to the electricity sector presents distinct legal and commercial challenges. Unlike oil and gas operations, electricity projects differ significantly in their operational footprint, ownership structures, regulatory framework and cost recovery mechanisms.
