Northwest seeks slash of Niger Delta oil funds

Nigeria oil worker24 September 2013, Kaduna — States in the Northwest yesterday opposed any changes to the revenue allocation formula that could funnel more oil funds to the Niger Delta.

Five of the seven states in the zone-Kano, Kebbi, Jigawa, Zamfara and Sokoto-also sought for the return of the onshore/offshore dichotomy in the application of the 13 per cent oil derivation, which will in effect slash the total revenues received by the oil producing states.

The states made their positions known at the zonal hearing on the review of the revenue allocation formula, organised by the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) in Kaduna.

Presenting a memo on behalf of the Kano State House of Assembly, Speaker Gambo Sallau called for the return of the onshore-offshore dichotomy such that the oil producing states would get 13 per cent derivation only from oil produced on shore. At present, the 13 per cent derivation covers oil produced both onshore and offshore. He said in the last 14 years the implementation of the 13 per cent derivation created an “unacceptable gap” between the oil producing states and the larger part of the country.

Sallau added that the monies for the oil states were not utilised for the purpose earmarked for, adding: “In view of the above, we do not support any further increase on the 13 per cent derivation.

“We will rather opt to submit for return of the onshore-offshore dichotomy and the nullification of the current law which abrogated the onshore-offshore dichotomy in the sharing of derivation revenues from oil.

“We believe that the states in the Niger Delta have been fairly compensated through the following initiatives: 13% derivation, NDDC, Amnesty Programme, increased budgetary allocations to the Niger Delta under the present administration and creation of a whole Federal Ministry for Niger Delta.”

During their submissions, representatives of Sokoto, Zamfara, Kebbi and Jigawa states said they concurred with positions canvassed in the Kano Assembly’s presentations.

Speaker of the Kebbi State House of Assembly Aminu Musa Habib Jega, Zamfara Attorney General Garba Mohammed, Permanent Secretary in the Jigawa State Ministry for Local Government Adamu Muazu and other state representatives said they supported the recommendations made by the Kano legislature.

Another key area on which the Northwest states agreed is on the need for what they called a more equitable revenue formula that would reduce Federal Government’s share of statutory allocation and increase that of the states.

The Kano assembly suggested a new revenue formula which would reduce the Federal Government’s share from 52.68 to 41 per cent, increase states’ share to 34.5 per cent from 26.72 per cent and that of local government from 20 to 24.5 per cent.

In making a case for more monies to states, Sallau said “desertification and draught have negatively affected the fertility of our lands thereby diminishing their agricultural productivity.

“Increase in population in the last 20 years in Nigeria, and particularly in Kano State, has seriously overstretched our resources and infrastructure because of the rising demand for water supply, health services, education, better road network etc.

“The current security challenges have taken much of the state and local government finances, especially when government is compelled to fund security organisations such as the Joint Task Force (JTF) in addition to other Federal Government agencies like the Police, SSS, etc.

“In the light of the foregoing, we believe very strongly that the Federal Government should carry less weight and more weight should be given to the responsibilities of states and local governments in terms of funding.”

On the horizontal revenue allocation formula, Sallau recommended changes on population from 30 to 40 per cent, social development factor (10 to 3 per cent), education (4 to 1 per cent), health (3 to 1 per cent), water supply (3 to 1 per cent), land mass and terrain (10 to 5 per cent), land mass (5 to 3 per cent), terrain (5 to 2 per cent) and IGR (10 to 2 per cent), equality of states and local government formula is to retain 40 per cent.

“(The assembly) is of the view that the present horizontal allocation formula is not only unjust to state like Kano, which has the highest population in the country, but also it has given undue advantages to comparatively less important indices. Our belief is that the whole idea of development revolves around man,” he said.

In its memo, the Kebbi State Assembly recommended “correct application of Onshore/Offshore Abrogation Act, 2004. It is imperative to re-visit the dichotomy between onshore and offshore oil earnings. Derivation principle should only be applicable to revenues from the territorial landmass of the country, onshore accruals.

“Nigeria’s international offshore boundary is defined only for the Nigerian nation, not for any state: there are no sea boundaries for, or between, the littoral Nigerian states. We agreed with the provision of 13 per cent derivation as enshrined under Section 162(2) of the 1999 Constitution of Nigeria (as amended). However, our concern is on the way and manner it is applied.”

It also recommended that Kebbi State should be considered for derivation as a result of location of about 70 per cent of Kainji Dam in part of its land in Yauri Local Government Area.

Sokoto State, in its presentation, recommended the review of vertical allocation to 40 per cent for FG, 35 per cent for states and 25 per cent for LGs. It urged for review of horizontal formula on equality of states to 25 per cent, population to 35 per cent, landmass to 15 per cent, terrain to 15 per cent, population density to 3 per cent and internal revenue generation to 7 per cent.

In his submission, Kano State Deputy Governor Abdullahi Umar Ganduje advocated for the creation of a ministry of Northern affairs to tackle societal problems created by insecurity.

In his keynote address, Kaduna State Governor Mukhtar Ramalan Yero said the state was “in total support of devolution of power” to the states “which will in turn result to higher responsibilities with commensurate allocation of resources to states and local governments.”

– Daily Trust

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