Derivation Fund: Oil Communities Allege N7tn Misappropriation

Oil-producing communities in five states of the federation have accused their respective state governors of misappropriation of about N7.282 trillion. It was alleged that the governors received the amount as payments for the 13 per cent derivation for the past 13 years. The states include: Akwa Ibom, Rivers, Edo, Bayelsa and Ondo

The communities, in a joint letter to the Nigerian Extractive Industries Transparency Initiative (NEITI), appealed to the agency to support their efforts to halt the illegal and unconstitutional payment of 13 per cent derivation into any state government account. They maintained that: “The illegal and unconstitutional payment of 13 per cent derivation fund through the state governments have left the actual oil and gas producing communities in abject poverty. The situation has caused monumental fraud against the oil and gas producing communities.

The communities also charged NEITI to visit the oil and gas communities to undertake physical audit in order to see the degree of poverty, lack of infrastructure and means of livelihood as well as the level of devastation, environmental degradation, pollution and health hazard while carrying out the financial audit on the 13 per cent derivation.

NEITI to Audit Excess Crude Account, Derivation Fund

The Nigeria Extractive Industries Transparency Initiative (NEITI) will commence a comprehensive and independent audit of the fiscal allocation and statutory disbursements of the extractive industries revenue funds from the federation account to Nigeria's three tiers of government.

The audit will amongst other objectives establish how funds from the account were distributed and received by the federal, state and local government councils.

A statement from NEITI in Abuja stated that the Federal Executive Council (FEC), presided over by President Goodluck Jonathan, approved the project at its last meeting on Wednesday, November 28.

NEITI said in the statement that the audit was equally designed to provide base line information and data to the three tiers of government on the basis of computation of who gets what, how and why.

It added that the exercise would also explain if each of the three tiers gets from the funds their actual due.

NEITI also noted that the audit is expected to review policies and procedures in the disbursement and utilization of extractive revenue funds by the three tiers of government and that major agencies to be covered by it include the Niger Delta Development Commission (NDDC), Petroleum Development Technology Fund (PDTF), Central Bank of Nigeria (CBN) and the Federal Government's share of derivation and ecology funds.

Seven states to refund N17.5 billion to Rivers State

Seven states have been ordered by the Federal Government to refund N17.5 billion to Rivers State. The amount, it was learnt, represents the sum the affected states, namely Akwa Ibom, Delta, Bayelsa, Imo, Edo, Abia and Ondo had received as part of their 13 percent derivation revenue from two oil wells, which the Rivers State Government had successfully proved belong to it.

The Federal Government ordered the refund to Rivers State, following a protest by the state that its revenue from the affected oil wells located in respect of Nda and Okwori oil fields with effect from 2007 had been shared to oil producing states by the Federal Government. In response to the directive, Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, wrote the Accountant General of the Federation, Mr. J.O Otunla on January 17, 2012, to effect the reduction of the money from the allocations of the seven states with immediate effect.

13% Derivation Fund: Ijaws Threaten to Shut Down Flow Stations

Host communities of core Ijaw oil-producing areas of Egbema, Gbaramatu and Ogulagha Kingdoms in Delta State have threatened to shut down oil flow stations unless they were directly paid their alleged share of 27 per cent of the 13 per cent derivation fund which accrues to the state. The communities, in a letter to President Goodluck Jonathan signed by 28 chiefs and members from each of the communities in the three kingdoms said urgent intervention was required to avoid crisis that may lead to the closure of the flow stations in their kingdoms.

The communities said they no longer have faith in the Delta State Oil Producing Development Commission, (DESOPADEC), which they alleged, have been hijacked by politicians. The group alleged that the monthly allocation of 50 per cent of the state derivation fund was either not paid to DESOPADEC as at when due and there were often shortfall in payment, a situation which had led to contractors not being paid for jobs certified done.

13% oil derivation should be spent on host communities – RMAFC

The Chairman of the Revenue Mobilization Allocation and Fiscal Commission, Engr. Elias N. Mbam, has stated that the 13 per cent derivation from monthly allocation paid to oil-producing states should be exclusively spent on oil-producing communities. Mbam said this should be the case because the oil- producing communities suffer most from the impact of environmental degradation occasioned by oil exploration in their domain.

Mbam observed that the clarification became necessary in view of the fact that a larger percentage of the 13 per cent derivation fund meant for the development of host communities is unjustifiably spent in the development of state capitals and other urban centres thus negating the principle behind derivation.

Mbam lamented that the law establishing States and Local Governments Joint Account is an encumbrance on the successful operations of the 13 per cent derivation principle since the law confers absolute control of the Fund on governors rather than local council chairmen who govern the host communities.