13% derivation funds: Wike opens Pandora Box, oil producing State Governors rattled

Oredola Adeola

The adrenaline-fueled Rivers State Governor, Nyesom Wike’s recent comment on 13% derivation funds has caused some furore and disquiet among oil producing states, forcing Governors, who have benefited from the  statutory allocation, out of the shells to explain to their people how they spent the controversial funds.

Some Governors of the oil-producing states that have benefitted from the accumulated 13% derivation funds, released by President Muhammadu Buhari, have come out to explain how they utilise the controversial allocation, following the backlash that they received after the disclosure made by Nyesom Wike, Rivers State Governor, revealing that most of the infrastructural projects which he has executed overtime, were financed with accumulated funds that all the states were owed since 1999.

The Rivers State Governor had on Friday during the inauguration of the Alabo Graham Douglas campus of the Nigerian Law School in Rumueme, Port Harcourt, disclosed that the 13 percent derivation fund funds have significantly aided his infrastructural strides in the state.

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

EnergyDay’s analysis based on recent data obtained from the National Bureau of Statistics (NBS) showed that eight oil-producing states including Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, and Abia, received N144.31 billion from the federation account in the first quarter of 2022.

The amount is a statutory allocation of the 13 percent derivation formula as enshrined in section 162, sub-section 2 of the Nigerian constitution.

The states said this in the latest federation account allocation committee (FAAC) reports.

Analysis showed that Delta received the highest with a total of N45.46 billion, representing 31 percent of the total disbursement during the period.

Delta is followed closely by Akwa Ibom with N32.18 billion, representing 22 percent.

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

Anambra State was officially recognised by the Revenue Mobilization Allocation and Fiscal Commission (RMAFC)  at its 139th plenary session as a petroleum-bearing and oil-producing State on July 27, 2021.

The state went on to receive the first net receipt 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).

According to Rivers governor, the money approved by Buhari were funds owed from the derivation fund, insisting that the fund was not from Federation Account Allocation Committee (FAAC) disbursement and that It is the money that was supposed to be for Rivers, Delta, Akwa Ibom, Edo, and Bayelsa states.

Douye Diri, Bayelsa State Governor, in a statement released, Tuesday, clarifying how the state utilised its allocations, disclosed that he had received funding and had been deploying the same to capital projects, citing that Bayelsa discounted the funds.

“For people who are talking about the 13% derivation funds due to the state, I want to state that for one reason or the other, we were underpaid. When we discovered that, we followed the due process from the State Executive Council to the State House of Assembly. Approvals were given and the funds were discounted.

“I do not play politics with this kind of thing. For anybody who wants to see how we use our money, our monthly transparency briefing on our financial income and expenditure is available.”

He noted that It is costlier to build a one-kilometer road in Yenagoa than four kilometers elsewhere.

Governor Ifeanyi Okowa of Delta Government, on his part, disclosed that, unlike other oil-producing states that have discounted the share of the derivation, his administration saved part of the N44.7 billion out of the N240 billion due it, from the 13 percent derivation fund owed by Federal Government.

The Delta State Governor made this assertion through a statement by Mr. Fidelis Tilije, Commissioner for Finance, made during a press briefing on the matter at Government House, Asaba on Tuesday, held in the company of Chief Henry Sakpara, Commissioner for Special Duties and Mr. Oilsa Ifeajika, Chief Press Secretary to Gov. Ifeanyi Okowa.

Tilije noted that Gov. Okowa’s administration was transparent and open to the people with its finances, programmes, and projects.

He added that the N240 billion was Delta’s share of the payment approved by President Muhammadu Buhari for the nine oil-producing states from 2004 to date.

He said that the state government had initially applied for N150 billion bridging finance which it later turned down to N100 billion from the expected Refund of N240 billion to meet payment of its legacy projects in the state.

He said that the benefiting states had agreed that the Federal Government defrayed the payment over a five years period, adding that Delta Government had so far received N14.7 billion for three quarters from the N240 billion.

According to Tilije, the state government has also accessed the sum of N30 billion from the N100 billion bridging finance facility.

“So, in a way, the state has accessed and utilised the N14.7 billion paid by the Federal Government and the N30 billion from the bridging finance for payment for ongoing projects,” he said.

Tilije said that the legacy projects included Kwale Industrials Park; Leisure and film village, Asaba; Koko interchange and flyover; Ughelli-Asaba dual carriage; and three new state universities, which were at various stages of completion.

He said that the state government also appropriated the sum of five billion nairas to address the issues of payment of pensions for both the state civil service and the Local Government workers.

He noted that Delta had many cities big enough to be capital, adding that the state government has appropriately addressed their needs; unlike other states with only one capital city.

“It is true that the funds that we are referring to have actually been approved for payment by the Federal Government since 2004.

“The payment came about because the current commissioners of finance from the nine benefiting states looked into the books of the Nigerian National Petroleum Company (NNPC) and found out the indebtedness that the company failed to deduct to the credit of the oil-producing states.

“These fund has to do with the subsidy that the Federal Government has been paying overtime and also with the investment in other oil frontiers in the nation(priority projects).

According to Tilije, when the NNPC book was cross-checked it was found that 13 percent derivation was not deducted from all oil subsidies and priority projects that were paid by NNPC.

” As at the time we figured it out in September 2021, we were able to convince the plenary of the Federation Accounts Allocation Committee (FAAC) and also to National Executive Council (NEC) that the monies were credible and must be paid.

“The total amount owed Delta concerning the deductions was N240 billion. The Federal Government agreed to pay the money in five years quarterly and as we speak, Delta has received N4.9 billion in three quarters which amounts to about N14.7 billion,” he said.

He said that, unlike other oil-producing states that had discounted their funds in full, the Delta government had decided not to discount and access the entire N240 billion but to save some money for the next administration.

Tilije said that the state government was committed to laying a solid foundation for the next administration, adding that the coming administration would have access to as much as N12 billion quarterly on account of the N240 billion secured.

On his part, Ifeajika said that Gov. Okowa-led administration had been transparent, adding that the opposition party was economical with the truth to say that the government had nothing to offer.

He said that the state government was committed to completing all legacy projects before the end of the administration.

Senate President, Ahmed Lawan, while speaking at the official groundbreaking ceremony of the Kolmani Oil Prospecting Licenses (OPLs) 809 and 810 at the Kolmani field site in Gongola basin, expressed worry over the mismanagement of the 13 percent derivation and the application or misapplication of the resources of NDDC.

He, therefore, advocated for the review of the Constitution to include the utilisation of the statutory 13 percent derivation for oil-producing states.

He said, “On 13 percent derivation, I think we should have a constitutional review on how you apply the derivation. That’s the reason why we have to go for three percent to host community development.

“I believe that the host communities here will soon see a lot of activities and will also deserve more resources for their development. I, therefore, advocate that not only the Community Development Funds, but even the 13 percent in the Constitution should also have a serious bearing on the lives of host communities that bear the brunt of oil exploration,” the Senate President said.