How FG Paid N367bn Additional Revenue To Delta, Rivers, Six Others From 13% Derivation Fund-Investigations
Facts have emerged as to how the Federation Account Allocation Committee released the sum of N367.17bn to eight oil producing states under the 13 per cent derivation principle.
The amount was paid to the eight states within a period of ten months covering January to October 2020.
The States are Akwa Ibom, Delta, Rivers, Bayelsa, Ondo, Lagos, Edo, Imo and Abia.
Revenue allocation in Nigeria has been one of the most controversial issues among the three tiers of government .
The Federation Account is currently being managed on a legal framework that allows funds to be shared under three major components.
They are statutory allocation, Value Added Tax distribution; and allocation made under the 13 per cent derivation principle.
Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments 20.60 per cent.
The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.
Similarly, extra allocation is given to the oil producing states based on the 13 per cent derivation principle.
The principle of derivation had been contentious in the country’s fiscal federalism since the discovery of oil in 1958.
The derivation principle seeks to allocate oil and gas revenues accruable to the federation account on the basis that is perceived to be equitable, given particular consideration to the resource-producing states and regions.
Since the introduction of the principle, the formula underlying it has undergone numerous alterations, following a pattern that has concentrated revenues with the Federal Government.
The percentage revenue due to producing states has declined from the initial 50 per cent share to one per cent in the 1990’s, and subsequently was increased again to 13 per cent share which.
Stakeholders in the Niger Delta had repeatedly argued that the 13 per cent principle does not reflect full offshore derived revenues.
This has been considered unfair and unacceptable by the producing states especially Akwa-Ibom and Ondo states whose oil is virtually 100 per cent offshore, which technically limits their benefits from the principle of derivation.
This has resulted into the continuously seen agitations by these states for equitable share of natural endowment for its effective development.
Analysis by THE WHISTLER showed that out of the N367.17bn paid to the oil producing States, Delta State got the highest amount of N113.2bn during the ten months period.
A breakdown of the amount showed that the state got N14.3bn in January, while N13.6bn, N14.7bn, N10.1bn, N10.2bn, N7.2bn, N13bn, N9.7bn and N6.8bn were paid between February and October.
Delta State was followed by Akwa Ibom with N82.44bn paid between January and October in the following order N11.4bn, N9.6bn, N9.2bn, N11bn, N7.4bn, N7.7bn, N5.29bn, N9.4bn, N6.35bn and N5.1bn.
In the same vein, Bayelsa followed with N71.53bn, while the sum of N69.08bn, N8.6bn, N9.8bn, N7.8bn and N4.67bn was paid to Rivers, Ondo, Edo, Imo and Abia respectively.
Host communities and stakeholders in the South-South zone have in recent times expressed dissatisfaction on how governors manage the 13 per cent derivation fund.
They alleged that the governors have disappointed the oil producing States with their performance, over the years.
For instance, a former Special Adviser to the President on Niger Delta, Senator Ita Enang, had recently, accused the governors of Niger Delta States of not effectively managed the fund.
Speaking at a webinar on ‘Resolving the Host Communities Question’, organised by Order Paper in partnership with the House of Representatives’ Committee on Niger Delta and the Nigeria Natural Resource Charter, NNRC, Enang also indicted the governors of misappropriating the 13 per cent derivation fund.
He said, “The Governors have not been kind to the Niger Delta and I want to pray that the National Assembly amend the Niger Delta Development Commission Act, as well as amend the constitution so that the 13 percent derivation does not go to the governors; it should go to the host communities and targeted at the development of these communities.
“This is because the governors used the 13 percent derivation to buy aircraft and used the money to develop and build many houses and these monies are found in Banana Island and foreign countries. Let us find a legislative means whereby these monies can be used for the development of the communities.”
Community leaders across the region, who corroborated his claim, said oil communities were not feeling the impact of the 13 per cent derivation because of wrong-headed policies and contemptible implementation.