13% derivation: Eight oil-producing states received N144bn in Q1 2022

Eight oil-producing states in Nigeria received N144.31 billion from the federation account in the first quarter of 2022.

The amount is a statutory allocation of the 13 percent derivation formula as enshrined in section 162, sub-section 2 of the Nigerian constitution.

The states were Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, and Abia.

The National Bureau of Statistics (NBS) said this in the latest federation account allocation committee (FAAC) reports.

Analysis of the reports by TheCable Index showed that Delta received the highest with a total of N45.46 billion, representing 31 percent of the total disbursement during the period.

Delta is followed closely by Akwa Ibom with N32.18 billion, representing 22 percent.

Other states include Bayelsa (N27.61 billion), Rivers (N25.17 billion), Edo (N4.95 billion), Ondo (N3.84 billion), Imo (N3.42 billion) and Abia (N1.69 billion).

It was not yet clear why Lagos did not receive the statutory allocation in the period under review.

But The Nation had reported that the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) declined to clear Lagos among beneficiaries of the 13 per cent oil derivation fund.

Olalere Odusote, Lagos state commissioner for energy and mineral resources, did not reply to enquiries sent by TheCable.

Despite 13 percent derivation, oil-producing states still battle high debt while critical infrastructures suffer.

According to Debt Management Office (DMO), Rivers leads with a total domestic debt of N225.51 billion at the end of Q1 2022.

Imo and Akwa Ibom followed with N204.61 billion and 203.11 billion domestic debt, respectively.

Delta has a domestic debt of N163.48 billion, followed by Bayelsa, Edo, Abia and Ondo states with N151.41 billion, N112.25 billion, N91.43 billion, and N62.32 billion, respectively.

MOST OIL-PRODUCING STATES IGNORE ROBUST REVENUE GENERATION

Ikemesit Effiong, head of research at SBM Intelligence, said oil-producing states ignored workable revenue initiatives because of crude oil income.

“Because oil-producing states command a healthy portion of the national income, they are not motivated to build the durable revenue generation and infrastructural structures that would ordinarily guarantee sustainable economic development, simply because crude oil income is available for them to spend,” Effiong said.

“There is also the situation where a lot of the players in the oil and gas sector which operate in these communities offer to stand in the gap in meeting some of these infrastructural needs, but host communities stand as a roadblock by demanding even more income rent from them.

“This leaves state governments with the lion’s share of responsibilities in meeting the infrastructure needs that major O&G players would have taken care of, further driving up subnational commitments.

“In the end, crude income is easy money, and easy earnings are also easy to spend, so these states are too relaxed to look for creative ways to build robust revenue generation structures.”