allocation, FAAC, disbursement, states, governments, Buhari inaugurates new NEC, Monthly allocation, FAAC disbursed the sum, FG to review revenue sharing formula, Nigerian Oil Producing States

Data obtained from the National Bureau of Statistics (NBS) has shown that the nine (9) Oil Producing States in Nigeria shared a total N302.8 billion from the federation account through the 13% derivation formula.

According to the Federal Account Allocation Committee (FAAC) reports obtained from the bureau, the 13% derivation allocation to the oil-producing states hits 7-months low in July 2019.

Specifically, the 9 oil-producing states shared N45.5 billion in January 2019, while the sum of N38.6 billion was shared in July. This means the 13% derivation dropped by 17% within the period.

Number Breakdown: Specifically, Nigerian Oil producing states include Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, Abia and Lagos. Note that since 2016, Lagos state has been officially declared an oil-producing state in Nigeria, however, the state still earns low from the derivation fund.

  • On the list, Delta State ranks first, with a total of N94.4 billion, which represents about 31% of the total 13% derivation shared so far in 2019.
  • Akwa Ibom closely followed Delta having received a total of N70.8 billion as 13% derivation revenue shared. This means the state received 23% of the total disbursement during the period.

  • Other states include Bayelsa (N56.2 billion), Rivers (N54.1 billion), Edo (N10.5 billion), Ondo (N7.68 billion), Imo (N5.02 billion), Abia (N3.9 billion) and Lagos (N3.8 million).
  • A quick check into the Central Bank of Nigeria 2018 annual report shows that all the states received a total of N640.0 billion as the oil-producing states.
  • This means, in the last 19 months, the oil-producing states shared N942 billion altogether.

Some Concerns: Despite the 13% derivation received, most of the 9 states (if not all) are among the most highly indebted states in Nigeria. For instance, in an earlier publication on Nairametrics, it was disclosed that Lagos state leads the debtors’ club with a total debt of N980 billion.

  • States among the oil-producing states with the biggest debt profile as at March 2019 include Rivers (N249 billion), Akwa Ibom (N213 billion), Edo (N171.2 billion), Bayelsa (N150 billion).
  • Despite the huge sum notwithstanding, the Niger Delta region is still suffering from massive infrastructure decay, environmental degradation, among many others.
  • On the other hand, the 13% derivation fund has been a subject of controversy between the oil-producing communities and various state governments, with the communities asking the Federal Government to stop paying the money directly to the communities and not into the coffers of the state.
  • Recently, the National Chairman of Host Communities of Nigeria Producing Oil and Gas (HOSCON), Mr. Mike Emuh, disclosed that Federal Government is currently working with oil-producing communities in the country to review the template for the payments of the 13% derivation of revenue generated from oil and gas directly to host communities.

Emuh reportedly disclosed: “President Buhari also gave us approval for pipeline surveillance, and gave approval for the review of 13% derivation template, based on the amended 1999 Constitution of Nigeria, which states that the money is the right of the host communities that produce oil and gas, and this is being extended to other minerals including solid minerals. As we are talking now, we are working on the template.”

A new call: Meanwhile, there has been renewed call by the oil-producing states for the federal government to review the 13% derivation disbursement. Essentially, the states’ government alleged that there has been an underpayment in the true value of entitled 13% derivation fund.

While the disbursement may eventually increase going by the recent development, the state  governments will have to do more to develop the oil-producing local communities as development at most of these localities is at low ebb.

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