Omo-Agege Flays Diversion of 13% Derivation Funds by Oil-producing States

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Ovie Omo-Agege

By Deji Elumoye in Abuja

The Deputy President of the Senate, Senator Ovie Omo-Agege, has expressed concern over the diversion of 13 per cent derivation funds by the oil producing states.
He, however, made case for the utilisation of the entire funds for the development of the oil bearing communities in the affected states.

Omo-Agege spoke on Thursday while playing host to a delegation of Oil and Gas Host Communities of Nigeria (HOSCON), led the Amayanabo of Twon-Brass in Brass Kingdom and Chairman, Bayelsa State Traditional Rulers Council, Chief Alfred Diete-Spiff.
The deputy Senate president, who doubles as the Chairman of the Senate Committee on Constitution Review, said it was regrettable that the utilisation of the 13 per cent derivation funds has become a political tool in the hands of state governors in the region.
According to him, the diversion of the funds has contributed gravely to the underdevelopment of the region as the affected communities can hardly boast of having access to the basic necessities of life.

He, therefore, made a case for 100 per cent utilisation of the funds for oil-bearing communities, as against the practice where states release only 50 per cent of the money to the development commissions in their states.
The ranking senator noted that since the host communities bear the burden of environmental degradation from the oil industry, it is only fair that all funds be channeled into the development of the affected areas.
He said: “I have been discussing this matter with Chief (Wellington) Okrika even before I became a senator. It is fair that the 13 per cent derivation is meant to ameliorate the conditions of the people who are most impacted by oil exploration and exploitation. That is the only reason this fund was set aside as a consequence of your agitation which you led for so many years.
“These funds are not meant for the state governments. The state governments are meant to be purveyors to host communities. Even in states that have development commissions, they only earmark 50 per cent of the funds to the commission to manage on behalf of the host communities. So what happens to the other 50 per cent? We have always taken the position from the outset that 100 per cent of the funds is meant for the development of host communities because it is not every area that suffers from oil exploration and degradation. But for some reasons, it has become a political tool.”
He reiterated his call for gas flaring penalties in the Petroleum Industry Bill (PIB) to be paid to the host communities and not to the Federation Account, stressing that the annual contribution of 2.5 per cent actual operating expenditure by oil companies to the Host Community Development Trust Fund should be increased to, at least, 5 per cent.
According to him, the penalties from gas flaring would be used to ameliorate the living conditions in Niger Delta communities, as they suffer from the environmental impact of oil exploration.
He said: “The reason we are insisting on at least 5 per cent of operational expenses of oil companies for the host communities is because of the stability as their operational expenses will always remain stable. The moment you say it should be profit after tax, we know what they will do. They will claim all the exemptions that, at the end of the day, you end up with nothing. But they must have their expenses. So we are insisting that we should be given at least 5 per cent of that.
“We say this because in the cause of our interaction with the Economic Management Team of the federal government, some of us wanted answers to certain questions, most especially why they were making less revenue from oil. And one of the reasons they raised at the time was that the cost of oil per barrel was very high because of the security cost to the oil companies.
“Under this PIB, if you give us what we are now asking for by way of enhanced contribution of 5 per cent operational expenses to the Host Communities Trust Fund, what it means is that the communities will now assume responsibilities for the protection of the oil facilities in their host community. And if that is the case, the portion of the funds that the oil companies were spending as security cost should now be transferred to us.”
Earlier in his remarks, the Senior Special Assistant to the President on Niger Delta Matters, Senator Ita Enang, called on the Deputy President of the Senate to intervene in the N98 billion gas flare fund, the controversy surrounding the Pipeline Surveillance Contract, 13 per cent derivation payment to oil producing communities and the need to pass a bill for the establishment of a Derivation Commission.
According to him, the Niger Delta people should be engaged in the surveillance contract to give them a sense of belonging.
He also lamented the absence of development commissions in Rivers, Bayelsa and Akwa Ibom States.