13 percent Derivation should not go to state governments of Oil producing areas -Expert



    Expert has faulted 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 Petroleum 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.

    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.




    Speaking on utilisation of Host Community Trust Fund, he said, “undertake infrastructural development of the Host Community, facilitate employment opportunities, advance and propagate education and learning, provide medical facilities and personnel, undertake training, skill acquisition& other empowerment programmes”.

    “Support local initiatives on environmental protection, support local initiatives on enhancement of security, invest certain part of available fund for future generations, secure funds and loans for specific projects and any other project for benefit of the Host Communities”, stated Iledare.


    Iledare further listed sources of Host Community Trust fund to include 2.5% of actual operating expenditures in the immediately preceding years, tax deductible for preceding year? Less likely than not to be a net loss to government or companies, grants, Interests and donations.


    Please enter your comment!
    Please enter your name here