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Recently, Governor Nyesom Wike of Rivers State revealed that the projects executed by his administration were financed through the state’s share of the arrears of the 13 per cent derivation fund paid to oil-producing states by the Federal Government. The oil-bearing states get the 13 per cent derivation fund from the Federation Account as enshrined in section 162 (2) of the 1999 Constitution (as amended).
Wike’s disclosure might have put other state governors in the Niger Delta on the spot, and challenged them to account for how they utilised the backlog of the derivation fund they received from the Federal Government. President Muhammadu Buhari was reported to have reached an agreement with the governors of the oil-producing states, a few years ago, to pay the arrears of the funds in 20 tranches over a five-year period. According to the National Bureau of Statistics (NBS), oil-producing states shared a total of N450billion in 2021 as 13 per cent derivation fund.
Also, figures released last week by the Minister of Finance, Budget and National Planning, Zainab Ahmed, showed that the oil-producing states received the sum of N6.4trillion in Federal Allocation and 13 per cent derivation. Of this amount, the Federal Government disbursed a total of N1.98trillion as share of the total 13 per cent derivation to the oil-bearing states. The governor’s disclosure has expectedly elicited comments from other oil-bearing states on the utilisation of the derivation fund. For instance, Akwa Ibom State government has confirmed that it received N186billion from the 13 per cent derivation, while N600bn is outstanding. On its part, Delta State received only N14.7billion, leaving a shortfall of N250billion. Edo State received N2.1billion out of N28billion due to it. Bayelsa State got received N104billion, with N209billion outstanding. Other states are yet to disclose exactly how much they received and how they utilised the funds.
It is good that Wike has disclosed how he utilised the derivation fund. How the governors of the other oil-bearing states manage the fund is a matter of public interest and concern. We call for transparency and accountability in the management of the derivation fund. This is the time to begin to scrutinise how the derivation fund is used by the affected states. At all tiers of government, our political leaders must be accountable to the people. The 13 per cent derivation fund is specifically meant for the development of the oil-bearing communities that are bearing the brunt of the effects of oil exploration. The derivation fund should be used to address the environmental pollution, destruction of farmland as well as enhance the living condition of people in oil-bearing communities. It can also be used to build hospitals, schools and provide potable water for oil-producing communities. It is sad that some of these communities lack adequate power supply and good roads. The agitations in these areas persist because those who are supposed to benefit from the derivation fund are not getting the benefits. Some of them resort to oil bunkering, without minding the risks involved.
In spite of the huge amount the oil-producing states have received, it is ironical that many of them are in serious debt overhang. According to data from the Debt Management Office (DMO), the total debts of oil-producing states rose from N2.04trillion in December 2015 to N3.35trilion as of June, 2022. This revealed that a total of N1.3trillion was borrowed by them within the last seven years.
There is need for prudent management of the derivation fund. The governors of the oil-producing states must ensure that the people and communities that bear the brunt of oil exploitation benefit immensely from the derivation fund. The people of the oil-producing states should hold their governors to account. Good governance entails that the resources of a state must be channeled to ensure the welfare of the citizens and sustainable development. The governors of the oil-producing states should judiciously utilise the 13 per cent derivation funds that accrue to the states.
Let them realise that the money from the 13 per cent derivation fund principle should not be used as they deem fit, but for the development of the oil-producing communities. The people in these communities should be made to feel the impact of the resources from their areas. It will be appropriate if a monitoring mechanism is set up in these states to oversee how these funds are being utilised.
