13% Derivation: Oil Producing states shared N454bn in one year

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    …expert kick against sharing derivation to states

    Oil producing states in the country received a total of N454.35 billion from the Federation Account in 2020, under the 13 per cent Derivation Principle, according to data  from the Central Bank of Nigeria, CBN.

    The oil producing states in Nigeria are Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, Abia and Lagos. The 13% Derivation allocation which is paid monthly, was in addition to the general and larger monthly allocations received by the states, also from the Federation Account.

    Central Bank of Nigeria, CBN, in its Quarterly Economic Reports, disclosed that the amount received by the states from the 13% Derivation allocation in 2020, was 13.46 per cent lower than the N525.03 billion received by the nine states in 2019.

    Giving a breakdown of the allocation to the states, the CBN disclosed that the states received N139.47 billion, N113.17 billion, 102.23 billion and N99.48 billion in the first, second, third and fourth quarter of 2020, respectively, compared to N132.54 billion, N126.17 billion, N124.85 billion and N141.47 billion received by the states in the first, second, third and fourth quarters of 2019, correspondingly.

    In 2020, the CBN stated that total federally-collected revenue stood at N9.314 trillion, while gross oil revenue stood at 4.733 trillion.

    For the fourth quarter figures, the CBN said: “At N2.208 trillion, federally collected revenue in the fourth quarter of 2020 fell by 13.1 per cent and 8.3 per cent below the budget benchmark and the level in the preceding quarter, respectively, and was also 16.8 per cent below the collections in the corresponding period of 2019.

    “Oil receipts accounted for 44.6 per cent of the total collection, while non-oil constituted the balance of 55.4 per cent. The relatively low receipts recorded in the review period underscored the lingering effect of the COVID-19 pandemic on domestic and global economic activities.”

    It would be recalled that during the launch of the 13-storey head office building of the Niger Delta Development Commission, NDDC, in Rivers State, March 13, Minister of Niger Delta Affairs, Chief Godswill Akpabio, had accused governors of oil producing states of not been able to properly account for the 13 per cent Derivation money allocated to them over the years.

    This, of course angered the governors, with Governor Nyesom Wike of Rivers State leading the attack against Akpabio. This came against the backdrop of a report by ACIOE Associates, which stated that eight oil-producing states in the country received N6.589 trillion from the 13% Derivation allocation, between 2009 and 2019, with the funds having little or no impact on the lives of citizens of the various states.

    The report had listed the states as Abia, Akwa-Ibom, Bayelsa, Delta, Edo, Imo, Ondo and Rivers states.

    The report, among other stakeholders, including the Deputy Senate President, Senator Ovie Omo-Agege, had indicted the governors of the states of mismanaging the funds, and called on the Federal Government to pay the money directly to the oil-producing communities, instead of the governors.

    It will be recalled that Energy Frontier reported expert opinion faulting the continued payment of 13 per cent Derivation to state governments of Oil producing areas or regions as there is nothing to show for in terms developments in the regions.

    Omowumi Iledare, a Professor of Energy Economics, who is also Professor Emeritus, LSU Energy Studies, Baton Rouge, Louisiana, USA; so also the Executive Director, Emmanuel Egbogah Foundation Abuja, Nigeria and Director, Africa Region and Society of Petroleum Engineers International, Dallas made this assertion while speaking at a recent Stakeholders forum in Lagos.

    “13 per cent derivation should not go to the state governments of the oil producing regions, instead it should go to Sovereign Wealth Funds or Host Community Trust Funds,” he said.

    In United States of America according to him, they don’t give you cash instead they tie the money to developmental project in the community.

     

    Iledare

    The Professor Emeritus decried the lack of development in the Niger Delta region especially in Warri. “Warri’s economy collapsed when Shell left Warri. The place has become a shadow of itself since Shell left Warri. Decades ago Warri was full of life, It was bubbling and people were enjoying themselves and the place was busy. But now it has become a shadow of itself,” he noted.

    He stated that the quantum of money given to the Oil producing States has not impacted on the areas, communities and the people. It only succeeded in making some people millionaires in the place.

     

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