Delta, Ondo oil communities demand control of derivation money

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The communities complain about management of over N8 trillion generated as derivation funds since 1999.

Dissatisfied with the administration of the 13 percent derivation funds accrued to the oil producing states in Nigeria, some oil and gas producing communities in the Niger Delta region have dispatched a memoranda to the ongoing National Conference, seeking for the creation of National and State Derivation Committees to disburse and manage the funds.

The communities in Delta and Ondo States in separate memoranda obtained by PREMIUM TIMES said altogether the nine oil producing states in the country generated over N8trillion between 1999 and 2013, but their communities in the states are still wallowing in poverty because of the manner the funds are administered.

They blamed the governments of the nine states for the mismanagement of the funds and demanded the creation of derivation committees to manage and administer the funds.

The oil communities in Delta state whose leaders signed the memorandum are Itsekiri, Ijaw, Urhobo, Isoko, Ndokwa/Ukwuani and Ika. The 30 leaders listed the flow stations in their communities.

From Ondo state, the 89 leaders of the communities signed according to their flow stations.

The nine oil producing states in the country apart from Delta and Ondo States are Akwa Ibom, Bayelsa, Cross Rivers, Rivers, Abia, Imo and Edo.

The 1999 Constitution provides that communities producing natural resources shall be paid 13 per cent derivation fund.

Section 162 (2) states “…Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen percent of the revenue accruing to the Federation Account directly from any natural resources.”

In the Second Republic, the communities were given 1.5 per cent as derivation fund, but the fund was increased to 3 per cent during the Ibrahim Babangida administration. At the time, it was administered directly by the communities through their leaders and representatives.

However, the 1994/1995 Constitutional Conference organised by the administration of the late Sani Abacha approved 13 percent for the communities.

Oil and gas is currently part of item 39 on the Exclusive Legislative List of the 1999 Constitution and therefore administered by the President.

The leaders of Delta and Ondo oil communities said in their memoranda, which bear similar contents, that upon assuming office in 1999, former President, Olusegun Obasanjo, unlike his predecessors began to allocate the 13 per cent derivation funds to the governors of the oil producing states in trust, with a directive that each of the states should create oil and gas commission for the communities to access the funds for infrastructure development and social welfare services.

“We make bold to state that 13 per cent derivation fund is not Consolidated Revenue to the Niger Delta State Governments. It is neither part of the Joint State/Local Government Account, nor part of revenue to any tier of government. It is standing on its own to the credit of the oil and gas producing communities as a first charge on the Federation Account,” they said.

“The 13 per cent derivation fund is a benchmark for revenue allocation to the oil and gas producing communities of Nigeria and not for the state governments to utilize in the development of their respective state capitals and none oil and gas producing communities leaving the actual beneficiary communities in poverty, hunger and penury.

“The main objective of our memorandum is therefore to redeem the 13 per cent derivation fund from the illegal and unconstitutional allocation and disbursement to the state governments.”

The communities told the Conference that the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, agreed that it had been an implementation error for paying the 13 per cent derivation fund to the respective state governments and that the fund was not part of the State Consolidated Revenue or that of the Joint State/Local Government Account.

They stated that having realised the error, the Chairman of the RMAFC had presented a bill for a new revenue formula and proposed to create State Derivation Boards to administer the fund.

They however regretted that the bill could not be passed by the Sixth National Assembly before its tenure expired.

The Communities further disclosed that since 1999, “derivation fund has generated over 8.282 trillion naira, yet the oil and gas producing communities of Nigeria accentuated by mass unemployment of the world’s poorest region. (UNDP country report in terms of Human Development Index (HDI) for Nigeria’s Niger Delta).”

They stated that Section 162(2) and the Principle of Separation of Powers as contained in the Second Schedule Part 1 in the 1999 Constitution as amended Executive Legislative List place oil and gas under Legislative Jurisdiction of the Federal Government.

“This implies that it is only the President that can legislate on oil and gas matters exclusively and not the state governors. We strongly object to the illegal and unconstitutional implementation of the 13% derivation Fund.”

Warning that tension is building in the Niger Delta because of the subject matter, the communities proposed the establishment of a National Derivation Committee, NDC, and State Derivation Committee, SDC, in all the nine states producing oil and gas to manage and administer the 13 per cent derivation fund.

They proposed that the NDC should directly supervise the fund from the Federation Account to the State Committee.

“The sole function of the NDC is to supervise and monitor the utilization of funds and not to incur expenditure on projects,” they explained.

The communities proposed that members of the NDC should be nominated by the leaders, elders, women and the youth of the oil and gas communities and appointed by the president for tenure of four years and nine members each representing a producing state and one representative from RMAFC should also comprise the committee.

On the hand, they proposed that 10 members of the SDC in each of the nine states should be nominated by the leaders, elders, women and the youth of the oil and gas communities and appointed by the president for tenure of four years.

“These Committees shall form the action points in all the states,” they said. “It shall formulate, design and implement policies, programme and projects sourced from the actual oil and gas producing communities. Two of the nominees shall be executive Chairman and Secretary.”

They stated that by creating the committees, proper attention would not only be given to the needs of the oil and gas communities in infrastructure, health, education, it would also lead to the employment of about 424,600 jobs in the nine states.


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