A Review of the Nigerian Energy Industry

Derivation: Committee recommends retention of status quo

Oil-rig workers15 May 2014, Abuja – After weeks of disagreements on resource control and derivation, the National Conference Committee on Devolution of Powers, yesterday, recommended that the status quo be maintained. 

This is even as a member of the committee, Ms Ankio Briggs, disagreed, saying the retention of the 13 percent derivation was completely unacceptable to the people of the Niger Delta.

Rising from a seven-hour meeting, the committee said every matter regarding reintroduction of onshore-offshore oil dichotomy, increase or decrease in derivation principle and resource control were resolved in a manner that there was no victor, no vanquished.

As it is now, derivation principle still stands at 13 per cent as contained in the 1999 Constitution for every mineral producing area; while the issue of resource control can only be reviewed upward after amendment of Section 44(3) of the 1999 Constitution.

The section states that “Notwithstanding the foregoing provisions of this section, the entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of Nigeria shall vest in the Government of the Federation and shall be managed in such manner as may be prescribed by the National Assembly.”

However, barring any change of position when the decision gets to the plenary, the committee resolved that on a monthly basis, 4.5 percent of federal revenue would be set aside for the development of natural resources in all the states of the federation. It is to be called Fund for Solid Mineral Development.

Co-chairman of the Committee, Obong Victor Attah, explained that during the close-door session, every delegate was given opportunity to state his position on the issues and that at the end, there were contrary positions on all the issues without any party agreeing to shift grounds.

He said while the issue of resource control attracted passionate arguments from a section of the delegates and an equally passionate opposition from others, it was finally resolved that with the amendment of Item 39 of the Exclusive Legislative List, certain aspects of resource control have been taken care of.

The amendment states that in the mining of the natural minerals in all the states of the federation, while the rights of licensing remains that of the Federal Government with the National Assembly as the legislative body, such mining would be carried out with the active involvement of the states where the mineral resources are found.

Based on this, Attah, a former governor of Akwa Ibom State, informed journalists that when included in the Constitution, the amended item empowers every part of the country to develop and mine its resources in accordance with Federal Government licensing and use the resources to develop the people.

With this, he said every state of the federation would now benefit from the derivation principle instead of believing that anytime derivation benefits are discussed, they are meant for the oil-bearing areas alone.
It was his belief that with such arrangement, it would be easier for every part of the country to agree unanimously on the need for upward review of the derivation principle because everyone will stand to benefit.


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