FG to commence disbursement of 13 per cent derivation fund to Lagos

The Federal Government of Nigeria has set up a committee aimed at disbursing 13 per cent Derivation Fund to Lagos State, following the commencement of crude oil and gas exploration in the state.

Aliyu Mohammed, Chairman of the Indices and Disbursement Committee of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) stated this Wednesday during a courtesy visit to the state to verify crude oil and gas production from Aje Oil Wells.

Mr. Mohammed said the purpose of the visit was to begin disbursement of the Derivation Fund to the State in line with the constitution of the Federal Republic of Nigeria.

“It is also important to state that the commencement of oil production from Aje oil field by Yinka Folawiyo Petroleum Company Limited is the first time oil is being produced outside the Niger Delta basin and therefore of a significance in diversifying the source of crude and gas production in the country,” Mr. Mohammed said.

The 13 per cent Derivation Fund is money paid to crude oil producing states by the federal government.

Since 1999, the nine oil producing states – Akwa Ibom, Rivers, Bayelsa, Delta, Cross River, Edo, Ondo, Imo, and Abia States – have shared about N4 trillion among them.

The committee to determine the location of the Aje Oil Wells comprised of the RMAFC, Department of Petroleum Resources, Office of the Surveyor General of the Federation, and the National Boundary Commission.

Mr. Mohammed said the Technical Committee recommended that for the purpose of the Derivation Fund as spelt out under Section 162 (2) of the 1999 constitution as well as the provision of the Allocation of Revenue Act 2004, numbers 1, 2, 4 and 5 of the Aje Oil Wells fall within 200 metres isobaths and therefore should be attributed to Lagos State.


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He said as a result, the Commission and members of the Inter-Agency Committee had to embark on the working visit to the Oil Wells to conclude the process.

Akinwunmi Ambode, the Lagos State Governor, described the visit by the committee as remarkable in the annals of the history of Lagos, adding that it signals the official step that takes the state to the final destination that makes us to become an oil producing state.

“We are very glad to receive this delegation,” Mr. Ambode said.

“We also want to thank the Federal Government, most especially President Muhammadu Buhari for making this to happen very promptly. I want to say that this has been the quickest action that has been taken by RMAFC since I have known the Commission.

“I used to be a former Account General so I had a lot of transactions and relationship with the institution called RMAFC. Within a span of about 60 days of when we wrote our letter, and even before we wrote the letter, this technical committee was set up. It gladdens me to say that the institution works and is working for the good of Nigeria.”

Mr. Ambode also commended the members of the Department of the DPR and the Boundary Commission, saying that both have contributed immensely to the process of the discovery and production of crude oil in Lagos.

The governor urged other states in the federation to begin to activate the mineral deposits in their domain as a means to boost their Internally Generated Revenue (IGR).

“It would also give us revenue independence in a manner that there would be equal growth from all the nooks and corners of Nigeria,” he said.

“I am happy that RMAFC has taken this step and also to say that they should also encourage other states to engage in such activities that would allow them to be able to activate whatever mineral deposit that we have in the various states in conjunction with the Federal Government, so that we can start to diversify revenue and growth and then create a balanced growth and development for the whole country.”

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