Oil producing states receive derivation fund monthly but the impact is not felt in many oil producing communities
By Adedigba Adebowale

Since Nigeria’s Fourth Republic began in 1999, the eight oil and gas producing states have received over N9 trillion under the derivation principle sanctioned by the nation’s constitution. The constitution stipulates payment of 13 per cent of oil revenue from the Federation Account to the states as a derivation fund.

In the last three years (2018-2020), in total, the oil-producing states have received N1.5 trillion from the Federation Account under the derivation principle, A PREMIUM TIMES analysis of data from the National Bureau of Statistics (NBS) has revealed.

The analysis, however, reveals that intervention activities and physical developments in the oil-producing communities do not reflect the derivation fund received by their states.

Constitutional Provision
The derivation fund is paid to the states monthly to assist their oil-producing communities in tackling environmental pollution and degradation, provision of basic amenities like healthcare, potable water and paved roads, and economic empowerment of the community people.

Section 162, Sub-section 2 of the Nigerian Constitution stipulates that the fund is for the exclusive use of oil/gas producing communities as compensation for loss of fishing rights and productive farmlands as a result of oil and gas exploration and production activities.

The Nigerian Extractive Industries Transparency Initiative (NEITI) also defines the fund as a financial incentive enshrined in the Constitution for oil-producing communities, based on their production input, to serve as benefits and encourage the community to create an enabling environment for more production of crude oil and gas.

Poorly Funded Commissions
Eight states with a combined population of about 47 million receive the 13 per cent derivation fund, based on their contributions to national oil and gas production. The states are Abia, Akwa Ibom, Bayelsa, Delta, Edo, Ondo, Imo and Rivers.

The states have all created oil-producing area development commissions to execute development projects in their oil-producing and impacted areas. But many of the communities have not been feeling the impact of the commissions for a number of reasons.

One of the reasons is that the state governments commit only small parts of the fund to the intended interventions in the oil-producing communities.


Available budget
For this analysis, this reporter was able to access the budgets of four oil-producing states: Ondo, Edo, Imo and Abia

The Ondo State Oil Producing Areas Development Commission (OSOPADEC) was established by the Laws of Ondo State CAP. 106 in 2001.

In 2018, the state government budgeted N6.2 billion (N6,214,636,800) for the agency for its intervention activities. However, data obtained from the NBS shows that the state received N16.5 billion (N16,537,861,606.40) under the derivation principle for that year. This means OSOPADEC got only 40 per cent of the derivation fund for its activities.


It is a similar case in Imo where the state government in 2019 budgeted N5 billion for the activities of the state’s Oil Producing Area Development Commission (ISOPADEC). But the state received N10 billion that year as a derivation fund.

The same trend is noticed in the other states, including Edo State where its own agency usually gets only 40 per cent of its derivation fund. The commission got N1.87 billion in 2018, N7.5 billion in 2019 and N6.6 billion in 2020, totalling N16 billion. However, NBS data revealed that the state got N51 billion derivation fund in the three years.

Also, the Abia State government budgeted N2.04 billion for its oil-producing development commission in 2019. In that same year, the state got N6.8 billion derivation fund.

Pervasive Issue
As a result of the underfunding of the development commissions, mismanagement of funds and fraud, many oil-producing communities continue to suffer from the negative impact of oil exploration and production.

A case in point is Ayetoro, a coastal community of Ondo State. A rise in the sea level due to oil exploration and global warming has led to floods that have washed away homes, the cemetery and a worship centre in the town.


Sixteen years ago, the NDDC started a multi-billion-naira shore protection project in the community. Although billions of naira have been paid to the contractors, nothing is on the ground to protect the community against ocean surge.

Most of the oil-producing areas development commissions are not transparent with their finances and appointments into them are treated as political compensation.

The agency in Delta State, DESOPADEC, for example, does not have on its website the names and status of its projects in the oil-producing communities. The agency has been accused of breaching the statutory process in the disbursement of its funds, with a large part of the funds committed to recurrent expenditure, including payment for office spaces rented mostly outside the oil-producing areas.

Irked by rampant reports of mismanagement by the state agencies, a former Senior Special Assistant (SSA) to the President on National Assembly Matters, Ita Enang, suggested the derivation fund be allocated directly to the communities and not the state governments.

“There should be an amendment to the Niger Delta Development Commission Act to ensure that the 13 per cent oil derivation fund is paid directly to host communities instead of state governors, as majority of the communities have been accusing the governors of diverting the money, thereby denying their people the basic necessities of life,” Mr Enang said.

Joseph Nwakwue, an oil and gas professional with Zera Advisory and Consulting, spoke in the same vein when he decried the misappropriation of the derivation fund by state governments.

He said: “The derivation is given to the states and not the oil-producing communities and the states have set up an implementing agency that would see to the development of the oil-producing communities. However, the highest amount I have seen given to these development commissions set up by the states is 30 per cent. Basically, the states are spending the money meant for the oil-producing communities.”

Mr Nwakwue blamed the situation on a lacuna in the constitution concerning the use of the fund.

“The constitution did not state how the fund should be deployed and what it should be used for – meaning it gives the states government power over the 13 per cent derivation fund, making the host community underdeveloped despite the monthly allocations,” he said.

But Ken Henshaw, the Executive Director of We the People, a non-governmental organisation in the Niger Delta region, said the lacuna exists elsewhere because the constitution is clear on what the fund should be used for.

“The constitutional provision for 13 per cent derivation states that the fund should be used for the development of the oil-producing communities. The constitutional lacuna is that it makes the money pass through the state. What has happened to this 13 per cent derivation is what has happened to the local government fund paid to the joint account of state and local governments.


“What the states have done is that they have used the13 per cent derivation in form of surplus for all sorts of purposes, none of the states gives up to 60 per cent of the fund to the oil-producing communities. There is this funny sharing quota that deprived the oil-producing communities of growth,” Mr Henshaw said.

“In Abia State, the resources for the oil-producing communities are used routinely for the development of other communities. In Rivers and Bayelsa states, the derivation is ploughed back into the state budget without any consideration of the oil-producing communities that bear the brunt where the oils are extracted from.

“The derivation has not lifted any of these people from poverty; that is why we get depressed when we hear state governments asking for an increased revenue derivation formula. It is good to say derivation has failed in Niger Delta.”

The Ondo state Commissioner for Information, Donald Ojogo, did not return calls and text messages sent to his phone for his comment for this report.

Also, the Imo State information commissioner, John Kalu, did not respond to phone calls and text messages.

DESOPADEC has no phone number on its website and did not reply to emails sent by the reporter.

https://www.premiumtimesng.com/news/headlines/456847-analysis-how-state-governments-cheat-oil-producing-communities-in-use-of-13-derivation-fund.html

Hmmm..Very unfair, after collecting federal allocation

All in the name of Looting

instead of holding their govt accountable, they prefer to parade themselves on Twitter looking for which Savage comments best insults Buhari.
despite the massive allocations going to their states and them having lesser population/workforce and even small landmass.

Edo, Delta, bayelsa are not half the development of Kano and kaduna state.
watin I dey talk sef?
even maiduguri is far better than the afformentioned state despite insurgency.

tomorrow cultist head for portharcourt go touch small, then them go kill one full family, instead of holding their governor wike accountable, they still prefer to blame buhari for deploying military to portharcourt to checkmate their excesses.
Continue dey blame buhari and north make una governor's dey loot una steady.
debt profile of states above 50% According to DMO is dominated by southern states especially that Western own that claims to be the most educated.

When I said this the other time they went for my head
This is actually the main reason most big tribe in niger Delta don't want restructuring or division because they know they produce little or no oil compared with the minority in the states

Typical example is awka ibom n rivers

Annag and ibibios are two most dominate ethnicity ....but they produce little oil ...

People who produce this oil are the ibono ,oron and eket but they get relatively nothing compared to ibibios and annag imagine

Uyo ( ibibios ) to ikot ekpene ( annag ) is smooth as hell ...uyo (ibibios ) to abak ( (anang ) is smooth

Uyo to oron( oil rich town ) not so good
Uyo to eket ( oil town ) not so good
Eket to ibono ( two oil towns one hosting mobile Nigeria ) road uncompleted for 12 years

So ibibios n anang man don't want to hear restructuring or biafra because they know they would each have their province

Same thing happens in Rivers State ...ikwerri produce little or no oil but gets most development

Oyigbo produce oil but neglected
Egbema produce oil but neglected
Ogoni produce oil but neglected
I can keep going on and on
Reason why when u mention restructuring they are against it or only play lips service

Corruption everywhere.
What a shame!

sylve11:
I am just too happy for this post. I want the youths to channel their rightful grievances to their community leaders, then from there to local government chairmen before they proceed to their reps and governors. If they can do this, trust me, they will get a positive outcome and they will live a more better life.


Youths, hold your leaders accountable...........

Wise man.

Na today?

Just Wow!!!
Though I'm not surprised because we have LOOTERS not LEADERS from time immemorial in Nigeria!!!

Come 2023 there must be a paradigm shift to having Visionary Youths as leaders in our politics Lithosphere!!!

@Seniorwriter

The derivation has not lifted any of these people from poverty; that is why we get depressed when we hear state governments asking for an increased revenue derivation formula. It is good to say derivation has failed in Niger Delta.”

Hmmmmm, this is deep!

erico2k2:

this is why the FG should deal directly, these state-level people gat no joy

You are 100% right with this.

And they all blamed innocent Buhari for their backwardness

I am just too happy for this post. I want the youths to channel their rightful grievances to their community leaders, then from there to local government chairmen before they proceed to their reps and governors. If they can do this, trust me, they will get a positive outcome and they will live a more better life.


Youths, hold your leaders accountable...........

APC will rush and implement this knowing that this will starve most PDP State of oil derivation funds for 2023 elections.
Since this pantami-gate , I just dey over-reason any naija matter. Conspiracy cruise

Deep shit,

nigeria nor balance

Liposure:
Oil producing states receive derivation fund monthly but the impact is not felt in many oil producing communities
By Adedigba Adebowale




https://www.premiumtimesng.com/news/headlines/456847-analysis-how-state-governments-cheat-oil-producing-communities-in-use-of-13-derivation-fund.html

U forgot to use the popular narrative that North is the reason for south under development.

If north can develop with the little resources they received from FAC which is even lowest compared to what southern states received from fAC without the 13 percentage derivation, I wonder the kind of development the north will see when mining become well organized and they started receiving similar bonus money.

Edo State collected #51B and gave out #16B. Where are the rest?

Thought they said Igbos are not producing Oil

Non sense write up no need to read you are talking about 13% from 100% ? Where is the 87% FG is collecting Non sense !!!

this is to justify why we shouldn't blame the north.

maxzzo1:
Non sense write up no need to read you are talking about 13% from 100% ? Where is the 87% FG is collecting Non sense !!!

The 87 is shared amongst the government and still your states get the largest shares out of it. Untill u face ur problem head on u will always think ur problem is spiritual.

post=101046157:

Hmmmmm, this is deep!

this is why the FG should deal directly, these state-level people gat no joy

It is well o

Positivepoint:



U forgot to use the popular narrative that North is the reason for south under development.

If north can develop with the little resources they received from FAC which is even lowest compared to what southern states received from fAC without the 13 percentage derivation, I wonder the kind of development the north will see when mining become well organized and they started receiving similar bonus money.

Deceive yourself, I can tell you 50% or more is shared by the Northern states or don't they, in turn, have FG allocation? are these allocations from what they produce or contribute?

Amaechi2023:
instead of holding their govt accountable, they prefer to parade themselves on Twitter looking for which Savage comments best insults Buhari.
despite the massive allocations going to their states and them having lesser population/workforce and even small landmass.

Edo, Delta, bayelsa are not half the development of Kano and kaduna state.
watin I dey talk sef?
even maiduguri is far better than the afformentioned state despite insurgency.

tomorrow cultist head for portharcourt go touch small, then them go kill one full family, instead of holding their governor wike accountable, they still prefer to blame buhari for deploying military to portharcourt to checkmate their excesses.
Continue dey blame buhari and north make una governor's dey loot una steady.
debt profile of states above 50% According to DMO is dominated by southern states especially that Western own that claims to be the most educated.

akuya, you forgot to mention how Maiduguri is more developed than; Abuja, kano and Kaduna and rest of the northern states. too bad I share a country name with filthy animals like you infidels.

maxzzo1:
Non sense write up no need to read you are talking about 13% from 100% ? Where is the 87% FG is collecting Non sense !!!

You lack wisdom. The 13% that ND states are receiving what have they done with it? Nothing to show for it. Even if they're given 100% they'll still waste the money and continue complaining that the North is their problem. BTW, I'm from delta state, before you accuse me of being hausa or yoruba.

Positivepoint:



The 87 is shared amongst the government and still your states get the largest shares out of it. Untill u face ur problem head on u will always think ur problem is spiritual.

Exactly. They get 13% and still share from the remaining 87 yet nothing to show for it.

killALIEN:

akuya, you forgot to mention how Maiduguri is more developed than; Abuja, kano and Kaduna and rest of the northern states. too bad I share a country name with filthy animals like you infidels.

lol!!
I've always said it when illetrates buffons like you have no point to debate on na to begin attack the poster.
if the check your location now na for one northern region you dey dey hide.
or even if you manage no see chance run from your erosion region due to poverty, you still dey call that your uncle for kaduna dey beg am for money when he hustle from him aboki master.
yeye dey form.
rubbish.
tell esm make Dem close south east border sober no go do business again.
broke ingrates..