Vanguard (Lagos)

11 December 2012

Nigeria: Communities Call for Control of 13 Percent Derivation

The just concluded constitutional amendment, carried out by the National Assembly throughout the country, provided the enabling environment for renewed agitations by oil and gas producing communities, to have a direct control of the revenue accruing from the resources being exploited from their areas.

This stems from the communities' apparent displeasure with the way and manner governments of the oil and gas producing states are managing the funds paid to them as 13% derivation.

In this regard, oil and gas communities in Delta, Edo and Akwa Ibom states, recently presented a Memorandum of Understanding, MoU , while also, complaining about the neglect of the communities, while government used their resources to develop other areas in the country.

They said, "The 13% Derivation Fund currently being managed by the state governors in the oil and gas producing states is an aberration. The oil facilities, flow stations etc, are located in the oil and gas producing communities where oil exploration, exploitation and production are being carried out, causing monumental environmental degradation, pollution and health hazards etc."

In the memorandum, the communities noted that the 13% Derivation Fund, is the First Charge on the Federation Account, as provided for by Section 162 [2] of the 1999 Constitution, thus suggesting that the Fund is independent of the income/funds of state governments. The document also reminded stakeholders that the granting of the 13% Derivation Fund was a fall-out of "The great pressure mounted by the oil and gas producing communities during the 1994/95 Constitutional Conference."

Citing Section 162 [6] of the 1999 Constitution, where states are mandated to maintain a joint account with the local governments for funds accruing from the Federation Accounts, "From this section of the Constitution, it is clear that 13% Derivation Fund is not mentioned in the State Joint Local Government Account. It is clearly an implementation tragedy to pay the 13% Derivation Fund into the account of any state government." In fact, the memorandum described the state government as a "third party".

To correct this anomaly, the communities called for the establishment of a National Derivation Board that will manage the proceeds from the fund. "The 13% Derivation Revenue accruing to the Federation Account directly from any natural resources be paid as First Line Charge from the Federation Account to the oil and gas producing communities through the board."

It is envisaged that the Board, whose members shall be appointed by the President will be composed of an Executive Chairman, Secretary and members including one from Revenue Mobilisation and Fiscal Committee, RMAFC. They also suggested that the Board's Chair should rotate amongst member states every four [4] years.

It will be the responsibility of the Board to receive and distribute the 13% Derivation Fund directly to the respective State Implementation Committees, SIC, whose members shall solely be nominated and appointed by leaders of oil and gas communities.

Based on such agitations, Sweetcrude began a series on the use of the derivation fund, to enable the concerned states to show the people what they have done with the funds.

However, only two of the nine derivation states have so far responded, even as some of the states already have a special commission to manage the income. For instance, Abia State in particular gives 30% of this fund to the Abia State Oil Producing Area Development Commission, ASOPADEC, while the rest are ploughed into the provision of social amenities for all communities in the state.

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