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The 13% derivation fund in Nigeria is a benefit-sharing system that provides funds to oil-producing communities to help them address the effects of oil and gas exploration in the areas of Infrastructure. The fund helps communities address infrastructural decay and degradation.
The fund is also meant for oil producing communities access to healthcare, potable water, and paved roads. The fund is also supposed to assist with the provision of economic empowerment, compensate oil producing communities for losing their proprietary rights, fishing rights, and productive farmlands.
The 13% derivation fund is based on section 162 (2) of Nigeria’s 1999 constitution. The fund is paid to the oil-producing states on a monthly basis. The tables below show the percentage share of 13% Derivation Fund in FAAC Allocations to Delta State between 2015 and 2023. Although not all the figures are captured from the National Bureau of Statistics website, on request, the figures weren’t made available by the government.
In his press statement titled: Okowa and EFCC: The facts, the fiction, and the fairy tale, following Okowa’s arrest and detention by EFCC, Olisa Ifeajika, his Chief Press Secretary (2019-2023), threw light on the funds received and disbursed by the Delta State government, excluding the loans taken in the eight years of the administration.
In the statement, he said: “…..For the avoidance of doubt and for the benefit of the public, we wish to bring to the fore some salient information from the audited accounts of the Delta State Government for the eight years that Okowa presided over the affairs of the state. Total Revenue (FAAC, IGR, Other receipts) = N2.65 trillion, Salaries = N628.5bn, Pensions/Contributory Pensions/Social Benefits = N141.22bn, Overhead/ Consolidated Revenue Charges = N489.83bn, Grants/Contributions = 107.88bn, DESOPADEC = N221.2bn, Internal Loans Repayment/Public Debt Charges = N200.38bn, FAAC Deductions for Loan Repayment = N150.63bn, Total Capital Expenditure = N729.2bn.
In his statement, Ifeajika quoted from the audited accounts of Delta State government for eight years. It is interesting to note that DESOPADEC, which by law is meant to receive 50% of the 13% Derivation Fund disbursement to Delta State, only received the sum of N221.2bn in eight years.
Now, let’s analyse the percentage of 13% Derivation Fund from the total FAAC allocations to Delta State in eight years.
Of the gross allocation received from FAAC, on average, the 13% Derivation Fund makes up about 79%, whilst statutory allocation represents 21%. If we go by the incomplete 13% derivation fund of N1.09 trillion, DESOPADEC should have received 50%, amounting to N545 billion for the development of oil producing communities.
From the figure released by Olisa Ifeajika as contained in the audited accounts, DESOPADEC received only N221.2 billion. The salient question to ask is, how did the Okowa administration utilize the N323.8 billion (i.e. N545 billion – N221.2 billion) meant for the development of oil producing communities?
Without gainsaying, the utilization of the 13% Derivation Fund is meant for the development of oil producing communities. Based on the DESOPADEC Law, the State withholds 50%, and the other 50% meant for DESOPADEC was not fully disbursed in the eight years of Gov. Okowa.
It should be made abundantly clear that the governors in receipt of the 13% Derivation Fund, by law, do not have the right or prerogative to utilize the funds as they deem fit. If they do so, it will amount to misappropriation and mismanagement of the fund specifically meant for the development of oil producing communities. Without the oil exploration and exploitation from those communities, Delta State wouldn’t be one of the beneficiaries of the 13% Derivation Fund and would only be stock with the statutory allocation component of FAAC allocations. It is unjust and inhuman to deprive oil producing communities of their rightful entitlement.
We are requesting Olisa Ifeajika to use the same medium used in the defence of the arrest and detention of Gov. Okowa to publish the 13% Derivation Fund and Statutory Allocation breakdown of FAAC Allocation received in the eight years of Gov. Okowa, for the sake of transparency and accountability on the part of the state government, and to know if oil producing communities were fairly treated. It is not wise to use unprintable words on those asking questions for clarification sake, and seeking equity and fairness.
We await the information on the breakdown of the question of FAAC Allocation asked above. We are at the point where the voices of all genuine advocates of fairness, equity and justice must be heard, even if it involves taking legal action(s) to interpret the utilisation of the 13% Derivation Fund received by Delta State government.
Olorogun Dieseruvwe is an Urban & Regional Planner.
