13% derivation funds: Governors of oil-producing States alarmed as Wike opens a Pandora’s Box

Nyesom Wike, the governor of Rivers State, made a controversial comment about 13% derivation funds recently, which caused some uproar and unease among oil-producing states. This forced Governors who had benefited from the statutory allocation to come out of hiding and explain to their constituents how they used the contentious funds.

Following criticism they received after Nyesom Wike, the governor of Rivers State, revealed that the majority of the infrastructure projects he has carried out over time were financed with accumulated funds that all the states were owed, some governors of the oil-producing states that have benefited from the accumulated 13% derivation funds, released by President Muhammadu Buhari, have come forward to explain how they use the contentious allocation.

The Rivers State Governor said that the 13 percent derivation fund dollars had greatly benefited his infrastructural progress in the state on Friday during the opening of the Alabo Graham Douglas campus of the Nigerian Law School in Rumueme, Port Harcourt.

According to Section 162, Sub-section 2 of the Nigerian Constitution, the oil-producing states in Nigeria receive the 13 percent derivation from the Revenue Mobilization Allocation and Fiscal Commission as a benefits transfer plan.

Eight oil-producing states, including Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, and Abia, got N144.31 billion from the federation account in the first quarter of 2022, according to recent statistics from the National Bureau of Statistics (NBS).

According to analysis, Delta received the most money, totaling N45.46 billion, or 31% of all payments made during the time period.

Akwa Ibom, at N32.18 billion, or 22 percent, follows closely behind Delta.

Other states are Abia (N3.42 billion), Rivers (N25.17 billion), Edo (N4.95 billion), Ondo (N3.84 billion), and Bayelsa (N27.61 billion) (N1.69 billion).

The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) recognized Anambra State as an oil-producing and petroleum-bearing State on July 27, 2021, at its 139th plenary session.

The state afterwards received its initial net payment of N268,232,939.16 (Two Hundred and Sixty-Eight Million, Two Hundred and Thirty-Two Thousand Nine Hundred and Thirty-Nine Naira and Sixteen Kobo only).

The governor of Rivers asserted that the money Buhari approved was money owed from the derivation fund and that it was intended for the states of Rivers, Delta, Akwa Ibom, Edo, and Bayelsa. He insisted that the money was not a payment from the Federation Account Allocation Committee (FAAC).

Speaking at the formal groundbreaking ceremony for Kolmani Oil Prospecting Licenses (OPLs) 809 and 810 at the Kolmani field site in the Gongola basin, Senate President Ahmed Lawan raised concern over the improper use of NDDC resources and the misuse of the 13 percent derivation.

Therefore, he argued that the Constitution should be reviewed to allow the use of the statutory 13 percent derivation for states that produce oil.

Source: Energy Day Nigeria.

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