13% derivation, other refunds and ripple effect across states – New Telegraph

Controversy recently erupted over leakage of released backlog of allocations from 13% derivation, SURE-P, withheld NNPC remittances to the Federation Account, among others, from 1999 to 2021 by President Muhammadu Buhari’s administration to the eight states of the Niger Delta. PAULINE ONYIBE, takes a look at how many states are dealing with the disclosure and the people’s reactions to the development

Since 1956 when crude oil was discovered in Oloibiri, a sleepy and small community in Ogbia Local Government Area of Bayelsa State, it has brought poverty to the locals instead of the anticipated development till now.

How it all started

Oloibiri oilfield was discovered on Sunday January 15, 1956 by Shell Darcy. The discovery however ended 50 years of unsuccessful oil exploration in the country by various international oil companies. The discovery of crude oil in the Niger Delta unexpectedly did not bring succour to the people, instead it came with lots of pain. For instance, the people of the region cannot comfortably farm, fish, breath fresh air or live peacefully among themselves, because the oil companies have subtly introduced divide and rule syndrome, while there are lots of oil spill and environmental pollution everywhere.

It is said that Bayelsa State has one of the largest oil and natural gas deposits in Nigeria and currently the state produces 514,800 barrels of oil (23.4%), out of the 2.2 million barrels produced in the country daily. This makes Bayelsa the second largest oil producing state in the country. Oil proceeds from Niger Delta accounts for about 90% of the nation’s wealth of which Nembe and Gbarain oil fields in Bayelsa contribute majorly and Ogoniland in Rivers State with about 52 oil wells is said to be one of such. Nigeria is said to have about 159 oil fields and 1401 oil wells in operation, according to the Department of Petroleum Resources with the most productive ones being around the coastal Niger Delta which encompasses 78 out of the 159 oil fields and producing about 1.2 million barrel per day by 2019 and as at the third quarter of 2022 yielding an average of 47 billion dollars yearly and it climbed to about 1.5 million barrels by December 2022.

With the discovery of oil in Bauchi State of Northern Nigeria in 2022, Nigeria may be earning up to N32 trillion or 73 billion dollars, at an average of 73 dollars per barrel benchmark used for the 2023 budget proposal. With all these funds accruing from crude oil, host communities unfortunately are still living in abject poverty and wallowing in pains, because of the environmental degradation associated with oil exploration and exploitation.

From that, boom is expected, but agitation has started from all angles. Initially, when oil was discovered in Ogbia, Shell was able to part away with some meager amount of money and some bottles of J K hot drinks which they gave to community elders who didn’t know what was discovered in their land. However, with awareness, agitation for inclusivity followed, the agitation soon snowballed into militancy, oil bunkering, kpo fire and breaking of pipelines, which in turn gave birth to 13% derivation for oil producing states.

This also gave birth to the Oil Mineral Producing Areas Development Commission (OMPADEC) and later Niger Delta Development Commission (NDDC), Amnesty Programme for repentant militants and later the creation of the Ministry of Niger Delta. The agitation for better life for people of oil producing regions has also given birth to the Petroleum Industry Act which was passed in August 2021 and later signed into law by President Muhammadu Buhari, after about 16 years or more of pushing.

The 13% oil derivation fund which is meant for oil producing communities is enshrined in section 162, sub section 2 of Nigerian constitution of 1999. This derivation fund is actually different from the 3% that is supposed to be provided by the oil companies as operating expenses for those operating in the domains, but incidentally these host communities don’t asses these funds, as the 13% goes straight to the coffers of the state governments of these Niger Delta.

How the fuse about the 13% lump payment blew

open Since 1999, the time of President Olusegun Obasanjo to the current President Buhari the 13% derivation has been a challenge. However, lately Buhari decided to release the accumulated funds from the 13 percent derivation, subsidy and SURE-P refunds to the Niger Delta states from 1999 to 2021, amounting to N625.43bn, without making noise about it, as nobody was aware that the monies were coming to Abia, Akwa Ibom, Bayelsa, Delta, Edo, Rivers, Ondo, Imo, and Cross River states. A reliable source confided in this reporter that the Niger Delta governors agreed to keep it a top secret until they angered the Rivers State governor, Nyesom Wike who opened up about it. A source said, the monies had been coming since 2012, although they were paid in tranches, nobody got wind of it until Wike opened up because of their misunderstanding with other South-South governors.

Presidency confirms Wike’s revelation

To confirm Nyesom Wike’s disclosure, Garba Shehu in a statement said data obtained from the federation account department, office of the Accountant General of the Federation showed that a total of N477.2bn was released to the nine states as refund of the 13 percent derivation fund on withdrawal from excess crude account (ECA) without deducting derivation from 2004 to 2019, leaving an outstanding balance of N287.04bn.

He said the states also got N64.8bn as refund of the 13 per cent derivation fund on deductions made by NNPC without payment of derivation to oil producing states from 1999 to December 2022. Shehu said the benefitting states still have an outstanding balance of N860.59bn windfall from the refunds, which was approved by President Buhari. According to the figures, under the 13 per cent derivation fund on withdrawal from ECA without deducting derivation from 2004 to 2019, Abia State received N4.8 billion with outstanding sum of N2.8bn, Akwa-Ibom received N128bn with outstanding sum of N77bn, Bayelsa with N92.2bn, leaving an outstanding of N55bn.

He continued: “Cross River got a refund of N1.3bn with a balance N792m, Delta State received N110bn, leaving a balance of N66.2bn, Edo State received N11.3bn, with a balance of N6.8bn, Imo State N5.5bn with an outstanding sum of N3.3 billion, Ondo State N19.4bn with an outstanding sum of N11.7bn while Rivers State was paid N103.6bn, with an outstanding balance of N62.3bn.

“The states were paid in eight installments between October 2, 2021 and January 11, 2022, while the ninth to twelfth installments are still outstanding. “On the 13 per cent derivation fund on deductions made by NNPC without payment of derivation, the nine oil producing states were paid in three installments this year, with the remaining 17 installments outstanding. “Under this category, Abia State received N1.1bn, Akwa-Ibom, N15bn, Bayelsa, N11.6bn, Cross River, N432m, Delta State, N14.8bn, Edo State, N2.2bn, Imo State, N2.9bn, Ondo State, N3.7bn, and Rivers State, N12.8bn. “Meanwhile, the benefitting states shared N9.2bn in three installments in April, August and November 2022 as refunds on the 13 per cent derivation exchange rate differential on withdrawal from the ECA. The three largest benefitting states were Akwa Ibom (N1.6bn), Delta State (N1.4bn) and Rivers State (N1.32bn).

“Similarly, all the nine states received N4.7billion each, totaling N42.34bn as refunds on withdrawals for subsidy and SURE-P from 2009 to 2015. The refund, which is for all the states and local government councils was paid on 10th November, 2022. “The federation account also paid N3.52billion each as refund to local government councils on withdrawals for subsidy and SURE-P from 2009 to 2015 on the same date in November.”

Wike gives account of his derivation

income The Rivers State governor, Nyesom Wike, after opening up and causing a very big uproar disclosed that he was executing projects in his state with the arrears of derivation funds released by the Federal Government. Wike said he used his share of 13 percent refunds to fix infrastructure, including building 12 flyovers in Rivers, he said: “For me, it will be unfair not to tell the public that it is not from FAAC money. It is the money that came to me as River State, Delta State, Akwa Ibom State, Edo, Bayelsa State and I can say it that is since 2019 till now we have been working. “Yesterday (in November 2022), we commissioned the 9nth fly over. In December, we will commission the 10th fly over. By next year, we will commission the 11th and twelfth flyover. “I want to sincerely from the depth of my heart and the people of Rivers State thank Mr. President for this, because as an opposition government, he can as well say don’t pay. You can’t do anything after all since 1999, the money has not been paid. And we didn’t do anything, so I want to sincerely thank him.

Delta, Edo react

Defending himself, Delta State governor, Ifeanyi Okowa, speaking through his Commissioner for Finance, Fidelis Tilije, said that Delta had only received N14.7bn in three quarterly installments of N4.9bn. “He resorted to discounting only N150bn out of the N240bn expected receivables, but later pruned it down to N100bn. “So far, we have got N14.7bn in three quarterly installments and we have also accessed N30bn out of the N100bn we applied for as bridging finance.” Also speaking through the Commissioner for Communication and Orientation, Chris Nehikhare, Edo State Governor, Godwin Obaseki said: “Edo State’s share of that figure was N28bn, a small figure, out of the N1trillion, which was what got to us. “So we have received three quarterly releases so far, N700m, N700m, N700m, totaling N2.1bn, that has come into the state’s coffers and it is verifiable in the bank, and the office of the Accountant General have the records. “Our share was N28bn, the net is to be distributed over five years, quarterly, that will be 20 quarterly installments releases. We stand by the figures we released, validated by the State House, and Edo people have no reason to worry.

We have nothing to hide –Bayelsa

Even though he didn’t initially reveal the actual amount that came, the governor of Bayelsa State, Douye Diri, said the state prudently spent the 13 percent oil derivation funds accruing to it, mostly on infrastructure development. The Bayelsa State helmsman insisted that insinuations in some quarters that the government did not disclose the receipt of the funds is false and urged the people to pay attention to the transparency briefings as the financial books of the state were always open. He further explained that statutory allocations to Bayelsa and its internally generated revenue were not more than N3bn monthly, saying it is the derivation funds that make it possible for the state to embark on the big projects as well as pay workers salary regularly.

Speaking through his Chief Press Secretary, Daniel Alabrah at the heat of the matter, the governor insisted that the administration had nothing to hide and that the state’s monthly allocations from the federation account had always been made public during its monthly transparency briefings. The governor further stated that the cost of construction in a difficult terrain like Bayelsa was three or more times than elsewhere, stating that the cost of constructing a road project in the state was more than the cost of three or four flyovers in some other states even in the Niger Delta.

“For people who are talking about the 13% derivation funds due the state, I want to state that for one reason or the other, we were under-paid. When we discovered that, we followed 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. Anybody who wants to see how we use our money, our monthly transparency briefing on our financial income and expenditure are available. “One kilometer road we build in Yenagoa is more than three or four-kilometer road built elsewhere. “Some of the ongoing big-ticket projects to include the 42km Sagbama-Ekeremor Road, which costs N34.4 billion with seven bridges and five already done by this administration. The 22.2km Yenagoa-Oporoma Road will gulp N31.4 billion as well as the 21km Igbogene-Elebele Road expected to gulp N54.56bn. “Our administration has also embarked on the first phase of the Nembe-Brass Road with 10 bridges at a cost of N54bn, as well as the 10.2km dual carriageway Glory Drive Road from the ecumenical centre at Igbogene to the Tombia-Amassoma Road.

“Some other infrastructure projects embarked upon by the administration include the 4.5km Igbedi road, the media complex, Elebele Bridge, Nembe Unity Bridge, phase one of the Igbogene-Elebele Ring Road, lecture halls and laboratories at the Bayelsa Medical University, which were all completed and inaugurated during the administration’s second anniversary in February this year. “No fewer than 500 of our youths and women have been trained at the CSS Integrated Farms in Nasarawa State. “This administration initiated a social welfare scheme that captures small businesses in rural communities. Under this scheme, 210 different beneficiaries from each of the 105 wards in the state get N200,000 each every month to grow their small businesses.” The governor also revealed in his 2023 new year broadcast that his administration has continued to address the deficits that impact Bayelsans in order to accelerate the pace of development. He said “We are addressing the deficit in infrastructure, including roads, health, education, human capacity development, and security.

“Similarly, there is high expectation that by the third anniversary of this government of prosperity in February, the remaining portion of the Bayelsa West Senatorial Road to Ekeremor, including six newly built bridges, would have been completed. “The 21km Nembe-Brass Road in the Eastern Senatorial flank has been cleared and sand-filling will commence shortly. Ultimately, these roads will give the state direct access to the ocean, where the rich treasures of the blue economy abound. “As you are aware, these projects have taken a heavy toll on the state’s finances. But no cost is too high to lift our people out of poverty and inaccessibility. Other major road projects, designed to effect urban renewal and open up Yenagoa, the capital city, are also ongoing.

“They include the Gateway Glory Drive Road from Igbogene to Onopa, which has now reached the Tombia-Amassoma Road as well as the Igbogene-Elebele outer ring road project and multiple internal road arteries. “We are deepening our focus in technical and vocational education by completing the construction of technical schools in the eight local government areas. This year, most of the structures will be completed. “This government has ensured the prompt payment of monthly salaries and gradual payment of outstanding pensions, gratuities and death benefits.

Niger Delta group

kicks not satisfied with the explanations dished out by some of the governors, especially considering the amount of money that comes into the South South states as federal allocation, including the internally generated revenue, a body known as Good Governance Advocates in Akwa Ibom State, petitioned the Economic and Financial Crimes Commission (EFCC) to probe the utilization of the funds by their governors. The group claimed that the governors kept mute on the funds until Wike raised the alarm. They expressed shock that such huge income was received by the state governments besides the monthly federal allocation and internally generated revenue (IGR), without their knowledge. The group in an pen letter and signed by Bassey Samuel, Kufre Obot and three others, petitioned the chairman of EFCC, Abdulrasheed Bawa, the group called for investigation against alleged financial improprieties by the Akwa Ibom State government. According to information got online by this reporter, they also copied the Inspector General of Police, Usman Baba Alkali, alleging that the state has nothing to show for the receipt of the money. Also the national coordinator of Akwa Ibom Human Rights Community, Clifford Thomas, said there was no justifiable reason why Governor Udom Emmanuel never mentioned to Akwa Ibom citizens the amount he legitimately collected on behalf of the state as arrears of the derivation fund. He said, “It’s just a matter of showing us how much you have collected. Proper disclosure presupposes that you are transparent and accountable to the people.

SERAP calls for audit

Also a Lagos based rights group, Socio Economic Rights and Accountability Project (SERAP), instituted a legal war against the oil producing states over their failure to account for the spending of the oil derivation refunds of N625bn, including details and locations of projects executed with the money. In the legal offensive marked FHC/ABJ/ CS/2371/2022 filed at Federal High Court, Abuja, SERAP is asking the court to direct and compel the governors to disclose and widely publish the details of spending of the oil derivation refunds, subsidy, and SURE-P refunds. The human rights group is further praying the court to compel President Muhammadu Buhari to direct anti-corruption agencies to thoroughly investigate the spending of the public funds collected by the governors and where appropriate, ensure the prosecution of suspected perpetrators of corruption and the recovery of proceeds of corruption.

Bayelsans worried

Surprised with the revelation, one Poweide Debekeme had also said: “It is shocking that from October 2021 to January 2022, Bayelsa State got about eight tranches which amounted to N92.1 billion and here in our state, it was under secrecy for a state that claims to be transparent. “Where are the roads that they said they are doing? You will cross one beam, you will call for celebration. All that Bayelsans are saying is use our commonwealth to develop our state. Also Ben Okosogbe said: “In a state where you have eight local governments, small land mass with constant monthly allocation and 13 per cent derivation, all we hear as excuses is terrain. Is Bayelsa State the only terrain challenged state? “Coming to 13% arrears that were paid, if not for Governor Nyesom Wike, nobody would have heard about it.

They were silent about the money. “We also heard that Sure P arrears have been paid to the state, but there is nothing to show for it. If it is roads, where are the roads, where are the schools that have been built by this administration?” But, the Bayelsa State government has insisted that it was spending about N120.36 billion on the three senatorial roads, which it said would link all the riverine communities to the state capital by road. David West an activist with the Civil Liberties Organization (CLO), has said, “That explanation given to us by the Chief Press Secretary and the governor is just too elementary and watery.

He didn’t mention or tie the amount to any project. “As a matter of fact, His Excellency didn’t mention the figure. He only told us the money was tied to projects. What and what projects? We are the second poorest state. It is an embarrassing situation for Bayelsa State to be competing with Sokoto State, a state that is collecting 13 per cent derivation, aside the normal allocation, ecological funds and every other revenue that comes to the state. “The governor and Commissioner of Finance and S.A on Treasury should tell us what is really happening to this 13 per cent derivation fund.”




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