NEC Concedes Natural Resource, Ecological Funds to States, LGs

  • Puts balance of both funds at N104.5bn, ECA at $2.2bn  
  • Says security agencies have begun crackdown on armed herdsmen 
  • A’Ibom joins Rivers, Bayelsa to challenge oil revenue sharing formula for PSCs at S’Court

Omololu Ogunmade and Alex Enumah in Abuja


The National Economic Council (NEC) rose from its monthly meeting held thursday in the Presidential Villa, Abuja, with cheery news that states and local governments would henceforth keep their share of the natural resource and ecological funds.

Briefing journalists at the end of the meeting, the governor of Anambra State, Mr. Willie Obiano said the states and local governments’ share of the funds would now be used by the affected states and local councils for emerging interventions.

Obiano also disclosed that the Accountant General of the Federation (AGF) told the council that the natural resource fund balance as of March 31, 2017 stood at N70.9 billion while that of the ecological fund was put at N33.6 billion.

He also disclosed that the council constituted a committee comprising the Ministers of Finance and Environment and some states – Oyo, Borno, Imo, Kaduna, Akwa Ibom and Benue – to audit the ecological fund and come up with recommendations on how the its proceeds would be shared.

Obiano also said the Minister of Finance, Mrs. Kemi Adeosun, told the council that the balance in the Excess Crude Account (ECA) as of April 26, 2017 stood at $2.2 billion, adding that the Efficiency Unit set up in her ministry had thus far saved N17 billion since inception.

“At the 76th NEC meeting held today at the council chamber and chaired as usual by the vice-president, the following resolutions were arrived at: First, on the natural resource fund and ecological fund, the Account General of the Federation (AGF) briefed the council on funds as follows:

“Natural resource fund as of 31st March was N70.9 billion. Ecological fund as of that date was N33.6 billion.

“States and local governments are now to keep their share of natural resource and ecological funds for use for interventions as the need arises in their respective jurisdictions.

“Council decided that an audit of the ecological fund be carried out. A committee comprising Oyo, Borno, Imo, Kaduna, Akwa Ibom, Benue and Ministers of Environment and Finance has been set up to do the audit and come up with recommendations on how the fund shall be managed.

“The Minister of Finance gave an update on the disbursement of the Paris Club refunds and preparations for the next round of payments to states after the first disbursement.

“Governors expressed appreciation to the president for the previous disbursement of the refunds and noted that there are expectations for the next rounds of disbursements from the federal government to the states.

“The Minister of Finance told the council that the balance in the Excess Crude Account as of April 26, 2017 stood at $2.2 billion.

“The Minister of Finance made a presentation to the council on the operations of the Efficiency Unit in the ministry. She informed the council that the unit has been efficient. It has saved N17 billion since its creation,” he said.

The governor also said the council expressed its appreciation to the minister and advised governors to emulate her by equally establishing Efficiency Units in their respective states with a view to entrenching systems that will improve efficiency, reduce cost and block leakages in line with the fiscal sustainability plan.

He said Vice-President Yemi Osinbajo also updated the council on the progress of four of the Social Investment Programmes (SIPs) of the administration, which he listed as N-Power, Conditional Cash Transfers, Homegrown School Feeding Programme, and the Government Economic and Empowerment Programme (GEEP) for micro-credit.

He said the council was informed about certain factors hindering the implementation of the programmes, adding that the states and federal government resolved to collaborate and eliminate the obstacles to the successful implementation of the SIP.

Obiano said the council therefore resolved to upgrade the states’ coordinating units of the SIP to governor’s offices for better and more effective collaboration.

Also briefing newsmen, Plateau State governor, Simon Lalong said the Minister of Health, Prof. Isaac Adewole, told the council that there were 9,646 suspected cases of Meningitis in six states.

He listed such states as Zamfara, Katsina, Sokoto, Niger, Kebbi and Kaduna, adding that as of April 25, 2017, about 767 deaths, representing 9 per cent of victims of the disease had been recorded.

“About N46.7 billion is required to vaccinate the valuable population. Council expressed grave concern over the ravaging effects of the meningitis outbreak in parts of the country and directed the Federal Ministry of Health to intensify its intervention efforts to contain the embarrassing epidemic while advocating for increased funding for the health sector.

“The minister in his presentation called for the establishment of a National Health Emergency Fund to be domiciled in the presidency under the supervision of NEC Chairman,” Lalong added.

In his briefing, the National Security Adviser (NSA), Major-General Babagana Monguno (rtd.) said he briefed the council on the security situation in the country, especially on the protracted conflict between armed herdsmen and farmers, notably in places such as Kaduna, Taraba and Benue States, among others.

He said the council was informed that the security agencies had commenced a nationwide crackdown on armed herdsmen, gunrunners, cattle rustlers, militants and other perpetrators of violence.

“Governors gave a robust response to the presentations, commending efforts of the federal government so far in tackling the security challenges and advocated for more collaboration between the federal government and states.

“Council resolved that there is need to have an extraordinary session dedicated to discussing security issues in the country as a means of deepening the issues and effectively addressing the menace,” he said.

Meanwhile, the Supreme Court yesterday fixed November 14, 2017 to hear a suit instituted against the federal government by Rivers and Bayesla States challenging the outdated oil revenue sharing formula for oil and gas assets operated under Production Sharing Contracts (PSCs).

Justice Bode Rhodes-Vivour led other six justices of the Supreme Court to announce the date after a preliminary session on the suit.

Bayelsa and Rivers States had approached the Supreme Court last year to interpret various constitutional provisions and the Deep Offshore and Inland Basin Production Sharing Contracts Act.

However, Akwa Ibom yesterday applied to join Bayelsa and Rivers States, hence necessitating the adjournment of the suit to November 14.

The three states are challenge the loss of N500 trillion oil revenue to oil companies operating in Nigeria due to negligence in the execution of the Deep Offshore and Inland Basin Production Sharing Contracts Act.

According to the News Agency of Nigeria (NAN), the Attorney-General of the Federation (AGF) is the sole defendant in the suit.

The plaintiffs are urging the court to invoke its jurisdiction by interpreting Sections 80(1), 162(1), (2) and (10) of the 1999 Constitution. They also called for the interpretation of Section 16(1) of the Deep Offshore and Inland Basin Production Sharing Contract Act of 2004.

The plaintiffs said the suit relates to fiscal responsibility of the defendant regarding alleged unaccounted oil revenues due to them.

According to them, the suit also deals with the mandatory stipulations in Sections 16(1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act.

The plaintiffs averred that the defendant is vested with the ownership and control of all crude hydrocarbon petroleum oil and gas in the country.

They said this ownership power vested on the defendant includes the collection of revenue into the Federation Account and Consolidated Revenue Fund.

They further said the oil revenue is held in trust for the federal government and its component federating states.

“In furtherance of the statutory responsibilities imposed on the defendant, it established various Production Sharing Contracts over various concessions in the inland basin and deep offshore areas, some of which fall into the plaintiffs geographical areas.

“These Production Sharing Contracts became necessary as the country was almost bankrupt in the mid 1980s to late 1990s.

“The country could not afford its counterpart funding for further exploration and production in the oil industry, then shifting to the rich and prolific offshore reserves.

“The necessity for juicy concessions to oil giants with fiscal incentives, attractive waivers and pegged negligible taxes were offered in exchange for their sourcing or applying own funds in exchange for shared profit oil funds,” they averred.

They further argued that the Deep Offshore and Inland Basin Production Sharing Contract Act expressly states that the “profit oil” is the remainder of the available crude oil after deduction of royalty oil, tax oil and cost oil.

They averred that the Deep Offshore and Inland Basin Production Sharing Contract Act provides that “profit oil” shall be shared between the defendant and the oil companies in the manner specified in the contract.

According to the three oil producing states, the Deep Offshore and Inland Basin Production Sharing Contract Act further put a ceiling on the said profit oil sharing formula to the extent that the price per barrel of crude oil does not exceed $20 per barrel.

The plaintiffs are therefore asking the court to decide among others, whether by virtue of Sections 162(1), (2) and 10(a-b) of the constitution, in view of the alleged irregularities, they were not underpaid and short-changed in real terms.

The plaintiff are also seeking a consequential order compelling the defendant to adjust the share of the Government of the Federation as approved by the defendant from the respective times the price of crude oil exceeded $20 per barrel.

They said the shortfall should be calculated with effect from August 2003. The plaintiffs, therefore, said all outstanding statutory allocations due and payable to them arising from the said adjustments should be settled.

Counsel to the plaintiffs, Mr. Lucius Nwosu (SAN) said the suit was not a hostile litigation against two warring parties.

“It is more like a litigation intended to interpret the provisions of sections 16(1) of the Deep Offshore and Inland Basic Production Contracts Act. “And this requires that at any time that the price of crude oil exceeds $20 per barrel in real terms, that the share of the profit oil revenue should be reviewed,” he said.

According to him, such a review will make it more economically advantageous to the federal government.

However, the counsel to the defendant, Mr. Tijani Gazeli, said the AGF was yet to file his process, as the required information needed from agencies of government in the oil sector was still trickling in.