August 22, 2017

13% derivation: Oil-producing states receive N7trn in 18 years

Niger Delta youths


By Michael Eboh

Despite claims of neglect and abandonment, investigation has revealed that governments of oil-producing states in Nigeria had over the years, failed to utilize the resources provided them to develop their states and the region.


Data obtained from a series of reports from the Central Bank of Nigeria, CBN, revealed that oil-producing states in Nigeria received N7.006 trillion as payments under the 13 per cent Derivation principle over the last 18 years, from 1999 to 2016.

The oil producing states are Akwa-Ibom, Rivers, Delta, Cross River, Edo, Bayelsa, Abia, Ondo, Imo, Anambra, and of recent, Lagos State.

Analysis of the payments showed that from 1999 to 2003, N360.4 billion was paid to oil-producing states; N1.338 trillion were paid to the states between from 2004 and 2007; 2008 to 2011 saw the states receiving N2.36 trillion, while from 2012 to 2016, the states received N2.947 trillion. Ironically, the 2017 budget of all the states, inclusive of Lagos, stood at N3.165 trillion, about half of the amount received by the states from the Federation Account under the 13 per cent derivation principle.

The huge sum notwithstanding, the Niger Delta region is still suffering from massive infrastructure decay, widespread poverty and environmental degradation, among numerous others.

The 13 per cent derivation fund has been a subject of controversy between the oil-producing communities and their various states government, with the former asking the Federal Government to stop paying the money directly to the communities and not into the coffers of the state.

Alarmed at the lack of development in oil-producing states despite the huge amount pumped into the states over the years, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, disclosed that the Federal Government is considering stripping states of the proceeds of the 13 per cent derivation funds, making sure that the funds are used for the development of oil-producing communities.

He bemoaned the fact that the fund has become a budgeting tool for most of the states, instead of using the funds for the actual purpose they were meant for.

He said, “The biggest problem in the Niger Delta is that as you go from point to point, you really cannot see any infrastructural investment. The Presidency is also reviewing a proposal that we have given him to look at how the 13 per cent derivation is applied.

“Right now it is a budgeting tool for state governments. We are going to be appealing to them to begin to put quite a bit of that into the core areas of the oil-producing communities, and not just to see it as a budgeting number.”

Also commenting on the issue, Facilitator of the Niger Delta Democratic Union, NDDU, Mr. Akpo Mudiaga-Odje, declared that it would be counter-productive if the region are claiming for an increase in the 13 per cent derivation, whilst states of the Niger Delta are unable to show what they have so far done with the funds hitherto received as derivation from December 2000 till date.

According to him, it is on this note that we call for the establishment of State Oil Commissions by all States in the Region, to enable us channel a substantial percentage of the 13per cent derivation and/or its increase, to the oil producing communities for their development and well being, since they are the primary producers of the oil and gas resources upon which derivation is being paid.

He said, “Such Oil Commissions should be duly supervised by the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) as well as the Ministry of the Niger Delta in partnership with Transparency International, International Oil Companies (IOC), Nigerian Content Development Monitoring Board and the Nigeria Extractive Industries Transparency Initiative, NEITI, to ensure service delivery and that derivation funds are not misappropriated or diverted by those who administer these said oil commissions.”

Also, Host Communities Producing Oil and Gas in Nigeria, HOSCON, representing the interest of oil producing communities, had also stated that the governments of oil producing states had been mismanaging the 13 per cent Derivation allocation over the last 16 states.

President of HOSCON, Mr. Mike Emuh, in an interview with Vanguard, had also called on the Federal Government to stop remitting the 13 per cent derivation allocation to the states.

According to him, the law, as amended in the 1999 Constitution, Section 162, Sub-section 2, states that 13 percent derivation should be given to the host communities, adding that there is no law in Nigeria that stated that the fund should be given to a state governor or to a local government.

He said, “It was a gross misplacement of priority that the13 per cent derivation funds were given to governors who lavished the money for the past 16 years without any development – human capital development and infrastructural development.

“Over 10 trillion naira had gone down the drain by those that claimed the money by then and this wrong act is still in practice till now.”

He called on the Federal Government to abide by the laws of the country by paying the money directly to the oil producing communities, since the law said the money belongs to the host communities.

“We are aware that it would not be an easy task because the governors that are holding the 13 per cent derivation will not let it go. But we are saying that we need our money, we need our 13 per cent derivation,” he added.