BY FESTUS AHON, Ughelli

A Warri based Human Rights Activist and lawyer, Dr Akpor Mudiaga-Odje, yesterday, said the retention of 13% derivation to the oil producing States by the National Conference Committee on Devolution of Powers was unacceptable.

Odje in a press release said; “It will be recalled that this same Committee retained the issues of oil, gas, oil pipelines in the Exclusive legislative list of the Constitution for the entire control by the Federal Government through the National Assembly. In addition, they also retained Section 44(3) of the 1999 Constitution as amended which pungently vest all oil and gas resources in both land and water including the Territorial Waters and Exclusive Economic Zone in the Federal Government.

“Consequently, there was a total rejection of resource control by the Committee of Devolution. Having so expropriated our resources to the Federal Government, one would have expected that we will be compensated by an increase in the derivation percentage from 13% to at least 25%, and at most 50%.

Alas and regrettably however we have been short changed again by the Nigerian State. It is disheartening to observe that the people of the Niger Delta that produce the resources that have sustained this nation for over 50years have continued to live in pandemic poverty and arrested development.

“Whereas other areas who actually contribute nothing meaningful to the nation’s revenue, have been fed fat from the resources of our people.

Whilst we do not quarrel about sharing our resources with our fellow brothers from other parts of the nation, we must nevertheless be given priority as producers of the resources in terms of a reasonable percentage as derivation i.e. 25% minimum. Above all, it should be emphasized that the 13% derivation retained by the said Committee in practice and reality is even less than 13%.

“For example, the Federal Government does not pay 13% on Excess Crude Oil Revenue into the Federation Account, which ought to be part of gross earnings from oil sales. Rather the Federal Government pays derivation based on its budget benchmark i.e. 77.5 US dollars as in 2014 budget, which is lower than the current international price of 108 US dollars per barrel.

“In otherwords we get 13% of 77.5 US dollars x 2.38 barrels per day, budget benchmark price, instead of 13% of 108 US dollars x 2.38 barrels per day, the actual price of a barrel of oil in the international market. So there is clearly a reduction of the 13% derivation by this voodoo fiscal policy of the Federal Government.

“Secondly, the onshore/offshore dichotomy is still being applied despite the provisions of the Abrogation Act of 2004.

This is because the Abrogation Act only restricted the above application to 200 metres depth Isobaths. Accordingly, any deep water exploration revenue beyond 200metres depth isobaths does not attract 13% derivation.

Indeed most of the deep water explorations are all beyond 200meters depth isobaths. And that is where the main oil and gas resources are explored, exploited and exported with the Federal Government raking in billions upon billions of US dollars, yet no derivation is paid to us.

“Another voodoo practice is whereby the oil is sold and payment is received in US dollars, and the Federal Government in turn pays 13% derivation in our local currency, the Naira at an exchange rate fixed by it. In converting the US dollars to Naira through a unilateral exchange rate fixed by the Federal Government, the 13% derivation is further depleted significantly.

“Interestingly, there are certain items the Federal Government does not pay their revenue into the Federal Account as provided under Section 162(1) of the 1999 Constitution. Such include signature bonuses, royalties and so on. This prompted five States to sue the Federal Government at the Supreme Court, which action is still pending.

“Consequently, if you deduct Excess Crude Oil Revenue, Deep Offshore Oil Revenue beyond 200 metres depth isobaths, the Unilateral Exchange and /or Conversion of the US dollars revenue of sales of oil to Naira and the exclusion of Signature Bonuses and Royalties revenue from the 13% derivation, it is axiomatic, that what remains is substantially less than even 10% as derivation to our people instead of 13% Net! This is the tragedy of retaining the present 13% by the Committee on Devolution of Powers”.