Nigeria presented 65 investment projects worth about US$78.5 billion to investors at the IMF–World Bank Annual Meetings in Bangkok on 14 October 2026. That figure is what the projects need, not money already committed, and a project that looks fundable in a pitch deck is not yet ready to build. Before any of these projects can lawfully break ground, it has to clear Nigeria’s environmental rules: an environmental impact assessment (EIA) under the EIA Act where the project is likely to significantly affect the environment, approval of that assessment, and the permits NESREA and state agencies enforce. For investors, those checks belong in due diligence, before the money moves, not after.
Does Every Project in Nigeria Need an EIA?
Nigeria’s Environmental Impact Assessment Act, Cap E12, Laws of the Federation of Nigeria 2004, requires environmental effects to be considered at an early stage. Under sections 1 and 2, public and private projects cannot simply proceed without prior consideration of their environmental effects. Where a proposed activity is likely to significantly affect the environment, an environmental impact assessment (EIA) must be undertaken in accordance with the Act.
For investors, an EIA is useful only if its findings are reflected in the project’s design, approval process, budget and risk allocation. Section 4 requires consideration of the proposed activity, the affected environment, potential impacts, alternatives and measures to mitigate adverse effects. The assessment must also identify relevant gaps in knowledge and uncertainty.
Sections 7 and 8 provide for comments by government agencies, the public, relevant experts and interested groups before the competent authority makes its decision. The Act also contains mediation and review-panel procedures for certain assessment processes.
Environmental issues can affect project design, land requirements, construction methods, community relationships and operating costs. Identifying them after financing and procurement assumptions have been fixed can leave investors with fewer practical options.
Who Approves EIAs in Nigeria, and What Does NESREA Do?
The National Environmental Standards and Regulations Enforcement Agency (NESREA) is responsible for enforcing environmental standards and regulations within its statutory remit. Its published rules cover activities including construction, quarrying, waste handling, air quality, water quality and energy.
The applicable requirements depend on what a project does. A road, port, mine, power facility and agro-processing plant will not necessarily face the same regulatory checklist. Depending on the location and activity, additional state environmental, planning, land-use or other sector-specific approvals may also be relevant.
There is an important distinction here. The Federal Ministry of Environment identifies its Environmental Assessment Department as responsible for evaluating and approving EIA reports. NESREA’s separate enforcement role includes sector-specific environmental standards, permits and compliance measures. Its enabling Act also excludes certain monitoring, permitting and auditing functions from the oil and gas sector. An investor should therefore establish the competent authorities for the particular project rather than assume that one environmental approval covers everything.
Environmental requirements should be tested during project appraisal, while the site, design, budget and contractual responsibilities can still be adjusted.
What Are the Consequences of Environmental Non-Compliance in Nigeria?
In a statement dated 22 September 2025, NESREA reported sealing 29 facilities in the South-West for environmental violations. Its announcement identified problems including missing environmental documents and non-compliance affecting recycling facilities and construction sites.
That was not an enforcement action against the Bangkok investment pipeline, and it should not be presented as evidence that any of the 65 projects has breached the law. It does, however, illustrate a practical consequence for businesses: regulatory failures can interrupt operations, not merely generate paperwork.
The courts have also stepped in. In Gbemre v Shell Petroleum Development Company of Nigeria Ltd (2005) AHRLR 151 (NgHC 2005), decided on 14 November 2005, the Federal High Court in Benin held that the failure to carry out an EIA before gas flaring in the Iwherekan community breached section 2(2) of the EIA Act, and ordered the companies to take immediate steps to stop the flaring. It was a trial-level decision on its own facts, not a rule that every EIA failure leads to the same result. But it shows that environmental disputes can involve communities and fundamental rights, not just regulators.
For an investor, the costs of a compliance failure may include corrective work, delayed construction, enforcement proceedings, legal expenses and disputes over who must bear the loss. A contractual claim may arise where a contractor was responsible for obtaining a permit, or where a project company warranted that specified approvals were in place.
The financial impact will depend on the type of breach, the work required to remedy it and the resulting delay. Even without a reliable average cost figure, the effect on a project’s financing timetable and contractual obligations is an important risk to assess.
How Can Investors Resolve Environmental Disputes in Nigeria?
A well-drafted investment agreement should deal with environmental obligations before a dispute occurs. Depending on the project, this may include conditions precedent for required approvals, responsibility for permits, environmental warranties, access to audit records, remediation duties, insurance, indemnities and the consequences of regulatory delay. The agreement should also distinguish a contractor’s failure to perform from a regulatory decision, a community claim or the discovery of pee-existing contamination. Where the dispute is contractual, a carefully drafted arbitration clause or mediation provision may help determine the process. Nigeria’s Arbitration and Mediation Act 2023 provides the general statutory framework for arbitration and mediation. Section 26 of the Nigerian Investment Promotion Commission Act also addresses dispute-settlement options for certain investor–government disputes. However, section 26(2)(a) refers to the former Arbitration and Conciliation Act, which was repealed by section 90 of the 2023 Act. The appropriate route should therefore be assessed against the current law, the parties’ status, the applicable investment instrument and any relevant treaty or arbitration agreement.
There is a limit that investors should not overlook. An arbitration clause between a project sponsor and its contractor does not automatically bind an environmental regulator or a community that was not party to the agreement. Regulatory enforcement and public-law challenges may need to be dealt with through the relevant administrative process or court proceedings. A contractual arbitration cannot simply be assumed to dispose of every environmental issue connected with a project.
This is where legal and commercial due diligence need to work together. Before committing capital, investors and Nigerian project sponsors should identify the approval pathway, assess the environmental and community risks, verify who carries each obligation, and choose a dispute-resolution process suited to the actual relationships involved. The appropriate authority, permit sequence and dispute-resolution route will depend on the project’s sector, location, structure and legal obligations.
For projects in Nigeria’s investment pipeline, environmental readiness should be assessed alongside financing, land, permits and contractual risk. A project may attract investor interest long before it is ready for implementation.
Frequently Asked Questions
Does every investment project in Nigeria require an EIA?
No. Under section 2 of the Environmental Impact Assessment Act, environmental effects must be considered at an early stage. A full EIA is required where the extent, nature or location of a proposed project or activity is likely to significantly affect the environment, subject to the Act’s procedures and exemptions.
Who approves EIA reports in Nigeria?
The Federal Ministry of Environment identifies its Environmental Assessment Department as responsible for evaluating and approving EIA reports. Other environmental permits and compliance requirements may fall within the remit of different authorities, depending on the project.
What happens if a project fails to meet environmental requirements?
Depending on the breach and applicable law, a project may face enforcement action, remedial obligations, delay, legal proceedings or disputes over responsibility. NESREA’s September 2025 announcement provides an example of enforcement against facilities for environmental violations.
Can investors arbitrate environmental disputes in Nigeria?
Some contractual or qualifying investor–government disputes may be referred to arbitration under the applicable agreement and legal framework. An arbitration clause does not automatically bind a regulator or community that is not party to the agreement, and it does not replace every regulatory or public-law process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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