This is the concluding part of the contribution of Dr. Olusegun Agagu, former governor of Ondo State to the National Assembly committee on Review of the 1999 Constitution. The first part was published last Friday.
NEBULOUS yardsticks such as school enrolment, terrain, number of hospital beds and developmental efforts should be jettisoned as they constitute avenues for fraud and corruption. Having received its fair share, every state will then be able to conduct its own affairs the way her people want.
They can create as many Local Government Council Areas as they like and recommend remunerations for their staff as they deem fit.
We will then be able to redress situations such as where Lagos State with a population of about 15million people and contributing substantially to the Federation Account will have 20 local government areas while states like Osun with a population of 2.6 million people have 30 local government areas orKatsina with a population of 4.4 million people having 34 local government areas.
Funding of local governments: The funding of the 774 local governments in the country has generated considerable acrimony especially since the onset of the present democratic dispensation.
Accusations, denials and investigations on the diversion of local government funds by state governors have been rife in the polity. A clear provision should, therefore, be made in the on-going constitutional review to clearly redress the matter.
Our recommendation is that the constitution should clearly state that a specific percentage of the total of a state allocation from the federation account, to include statutory derivation, VAT, etc. should be allocated to local governments in the state by a State/Local Government Accounts Committee.
To ensure that grassroot development is well funded nationwide, we recommend a 60/40 sharing ratio between the state government and the local government administration. Only clear indices such as landmass, population and derivation should be used here.
Derivation and fiscal federalism: The debate on the quantum of revenue from natural resources that should be retained by states in which they occur (derivation) has perhaps occupied more space in our political discourse than any other issue.
Control of natural resources
Arguments have raged from those that advocate that states should totally control revenue that is derived from natural resources in their territory and pay only a small percentage to the Federal Government to those who want substantial federal control and relatively even sharing.
As has been the situation in other constitutional review exercises, the issue of derivation is expected to generate a lot of heat during the current exercise.
One expects, however, that good counsel will prevail and a give and take attitude will be adopted by decision takers to ensure equity, unity, peace and reasonable consensus in the nation. It is our view that a number of issues should be highlighted in our search for consensus on this sensitive matter. These include:
(a) Percentage for derivation: The high percentage (50 per cent and more) allocated to derivation under the regional constitutions were workable then as the relatively large sizes of the regions evened out the distribution of valuable resources such that no region was grossly disadvantaged.
To insist on such high percentages now that we have 36 states will clearly create a “few oasis within a large body of deserts”. This certainly will not engender a harmonious relationship among the states nor a peaceful co-existence among our people.
A contrary view that preaches a low percentage for derivation will also encourage violent agitation and the accompanying disruption in production and revenue loss. Between these two extremes, a reasonable balance can be negotiated.
(b) Consideration for oil producing local governments: The progressive increase in the percentages allocated for derivation (from 1 per cent to 13 per cent) that we have seen over the last three decades can be justified, on the basis of equity and the need to remediate the degradation that mining and other production activities impact on the environment and social life of the production areas.
Development of actual producing areas
It is, however, unfortunate that many states that earn huge sums from derivation direct very little of the derivation funds towards the development of the actual producing areas.
Such lack of sensitivity must be addressed in the constitution to ensure that a substantial part of the derivation funds are utilised to develop the actual natural resource producing areas.
(c) Community profit sharing with operators: The proposition in the Draft Petroleum Industry Bill (PIB) that makes for the contribution of five per cent of the profit made by operators from the exploration and production of oil and gas into a Community Development Fund for the development of the host communities is a welcome development.
This is clearly different from derivation funds which are managed by the state Governments.
It must be made clear to all that oil producing communities are the actual localities where production takes place. The people there will naturally have ownership sentiments and a sense of deprivation if such provisions are not made.
The principle of community profit sharing with operators in our production areas should be extended to other sectors as it will go a long way in promoting peace, community collaboration, enhanced production and revenue inflow for the nation.
(d) Onshore/offshore dichotomy: Based on pronouncements being made from the two sides of the divide on this issue, it appears that the controversy on the onshore/offshore dichotomy in oil revenue sharing has not been laid to rest.
Indeed, the on-going debate on the impending constitutional review appears to have further fuelled the controversy.
As the littoral, oil producing states are drumming up their clamour for higher percentages for derivation; the non-oil producing states appear to have found new vigour in insisting that the provision in the 1999 constitution on onshore/offshore dichotomy be implemented to the letter.
Our plea is that the controversy should be modulated since the political solution of 2004 was endorsed by all the states and the Federal Government. The consensus reached on the 200 metre isobath is a reasonable limit beyond which offshore exploration and production activities will not impact negatively on coastal communities.
We cannot, in right conscience, expect our coastal communities to continue to watch the degradation of their immediate environment and annihilation of coastal fishing by oil pollution without asking for compensation.
For the sake of equity, justice and peace, the principle of extending the limit for derivation for littoral states to the 200 metre isobath should this time be properly entrenched in the constitution once and for all.
Conclusion: It is our prayer that the present effort by the National Assembly at amending our constitution succeeds in making our polity more harmonious and efficiently run.
We urge our Senate and our House of Representative leaders to consider the exercise as fundamental and sine qua non for the return of our nation to the path of peace and progress.
We plead that our State Governors and State Assemblies should work closely with the National Assembly in making the exercise incisive, thorough, rancour free and conclusive within the life of the present National Assembly.
What the rest of us should do is contribute ideas that can enrich the present exercise and allow our legislators, who have the constitutional duty of amending our constitution, to do their job without let or hindrance.