Oil communities kick as commission reviews sharing formula

14 July 2013, Abuja – As the constitution amendment gathers steam, oil and gas producing communities are insisting on the retention and payment of 13 percent net derivation direct to the communities as contained in the constitution.

In a memo to the Chairman, Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, Engr. Elias Mbam, the communities wrote that the provisions of the 1999 Constitution is clear enough on where and who to pay the 13 per cent derivation fund to.

The letter was signed by 13 leaders of the oil and gas producing from Akwa-Ibom State who took their protest to the RMAFC.

According to the memo, “We do not need an amendment of the constitution for administrative implementation of that provision of the constitution, it is clear that 13 per cent derivation fund is first line charge of the Federation Account.”

The fund, they argued, has been in existence before any revenue formula in the country. “The amount due to 13 percent net derivation fund is constitutionally set aside before any FAAC meeting to share the balance of the total oil revenue of 87 per cent.”

The group from Akwa-Ibom which presented the letter to RMAFC reminded the commission that “Revenue Act 1 of 1982 stated clearly that 1.5 per cent derivation fund was for the development of mineral producing areas across the country, the derivation fund would be administered and managed by the Federal Government.”

This, they claimed, was the practice and procedure and wondered why RMAFC changed this and decided to pay the 13 per cent derivation fund “into state government accounts without recourse to procedures, practice and records.”

They emphasised that it was the efforts of oil and gas producing communities during the 1994/95 constitutional conference that led to the increase of derivation fund to 13 per cent thus having it enshrined in the 1999 Constitution.

They alleged that for 13 years, the governors of oil-producing communities have received the 13 per cent derivation fund meant for the development of oil and gas producing areas, but have used the funds to develop their state capitals and non oil producing communities, leaving the actual oil and gas producing communities in abject poverty, hunger and penury.

– Nduka Chiejina, The Nation.

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