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The politics of the derivation principle in Delta State |
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David Edevbie
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A great deal of my time and energy has been spent since assuming office in June last year fighting for the rights of Delta State to an equitable share of the revenue accruing from the massive exploitation of our oil and gas resources. In a true federation, each of the federating units should have adequate control of its resources. An arrangement could then be reached that would enable the whole federation to benefit from the resources but not at the expense of those producing it. This is the fundamental principle that our nation has failed to uphold since 1914. The closest that we have come to accepting it appears to be the adoption of the principle of derivation in the allocation of centrally collected revenue. While accepting the inherent logic behind the derivation principle, we have continuously played politics with the weight that should be attached to it. At independence, when the mainstays of the Nigerian economy were groundnut from the north, cocoa from the west and palm produce from the east, derivation had a weight of 50 per cent. Incidentally, the distribution of these resources fitted the tripodal power equation of Nigeria between the three main ethnic groups. The discovery and exploitation of oil in the south-south region comprising minority ethnic groups, the increasingly almost total dependence of the Nigerian economy on oil mineral revenue ever since, and the advent of military rule saw the gradual devaluation of the derivation principle in favour of other allocation principles such as equality of states, population and landmass. This was ostensibly done to ensure even development across the whole country. In practice however, principles such as population and landmass favoured certain ethnic groups at the expense of others. By 1995, it was very clear to the members of the Constitutional Conference that a greater emphasis on the principle of derivation was the minimum acceptable condition for holding the country together. Hence the adoption of a weight of 13 per cent as minimum derivation factor compared to the one per cent on application then. To us in the Niger-Delta, this was a step in the right direction because it sought to address the issue of future development. However, the issue of reparation for past pollution and destruction of the oil producing areas remains an issue until the faithful implementation of the NDDC Act, which was recently passed into law by the National Assembly. It is now common knowledge that the Federal Government is not complying with the Constitutional provision that a minimum of 13 per cent must be reflected as derivation principle in any revenue allocation formula. The Federal Government has sought to whittle down this important provision by applying a non-existent dichotomy between on-shore and offshore production. It remains our view that the 60:40 per cent ratio of on-shore/off-shore production recently adopted in revenue allocation is completely arbitrary and is a brazen attempt to subvert the spirit of the minimum 13 per cent derivation provision in the 1999 Constitution. In addition, the funds owed the oil producing states in respect of derivation related revenue for the period May 29, 1999 to December 31, 1999 remains an outstanding issue. There is no conceivable reason that can justify the delay in implementing the derivation principle, therefore, this is a debt that must be paid. We in Delta State shall continue to persuade the Federal Government to respect the law as it is and not as it would want it to be.
Before addressing the specific issue of who in Delta State should control the revenue arising from the implementation of the derivation principle, readers must understand that this debate is really an extension of a wider battle being fought in Delta State - a battle between the old brigade and the new. The former represents entrenched interests who are only really concerned about themselves and do not really give a damn about the people they claim to represent. His Excellency, Chief James Onanefe Ibori whose sole aim is to improve the lot of the common Deltan, represents the new brigade. In the last election, the people voted massively for the latter largely because for close to 40 years, the old guard were directly or indirectly in charge and did absolutely nothing for the people. Returning to the debate at hand, as noted earlier, the principle of derivation has always been applied in various revenue allocation formulae with the regional governments (later States) receiving the proceeds and utilising it for the development of the regions or States. Indeed until March 2000, the States were receiving revenue allocation based on the derivation principle. The only difference was that it was one per cent. With the partial implementation of the 13 per cent derivation principle, the State Government has received all sorts of calls to the effect that the revenue should be transferred to the oil-producing local government areas, or that it should be spent to develop only the oil-producing local government areas. The attitude of the State Government has been to see such calls as suggestions on how best to utilize the revenue for the upliftment of the lot of our people. This is what the State Government is determined to do and in strict adherence to the Constitution and the laws of the Federation. The right of the State Government to receive statutory allocation arising from the application of the principle of derivation is derived from several legislation dating as far back as 1960. An example is Section 2, Sub-sections 2 and 3 of the Allocation of Revenue (Federation Account, etc.) Act, 1982 as subsequently amended and the combined effects of Section 162(2) and Section 313 of the 1999 Constitution. Section 2(2) of the Allocation of Revenue (Federation Account, etc.) Act, 1982 is very clear and unambiguous in the provision that "The 3.5 per cent specified in Sub-Section (1) above shall be sub-divided and allocated as follows, that is 2 per cent shall be paid directly to the States concerned in direct proportion to the value of minerals extracted from the territory of the States and the balance of 1.5 per cent shall be paid by the Government of the Federation into a fund to be administered by the Federal Government for the development of the mineral producing areas in Nigeria, which fund shall be managed in accordance with such directions as may be issued in that behalf from time to time by the President having due regard to the value of minerals extracted from and around the particular areas." With the formation of the Oil Mineral Producing Area Development Commission (OMPADEC) in 1992, the principle of derivation for the purposes of direct revenue allocation to States was reduced from 2 per cent to 1 per cent while oil mineral producing communities received the direct benefit of 3 per cent through OMPADEC. OMPADEC funding therefore replaced the previous 1.5 per cent formerly controlled directly by the President. The implementation of the 13 per cent derivation principle as provided for in Section 162(2) in the absence of a new Revenue Allocation Act, derives from the provisions of Section 313 of the 1999 Constitution which states that "Pending any Act of the National Assembly for the provision of a system of revenue allocation between the Federation and the States; among the States; between the States and Local Government Councils and among the Local Government Councils in the State, the system of revenue allocation in existence for the financial year beginning from 1st January, 1998 and ending on 31st December, 1998 shall, subject to the provisions of this Constitution and as from the date when this section comes into force, continue to apply". REVENUE ALLOCATION AMONG VARIOUS TIERS OF GOVERNMENT IN NIGERIA
As the above table illustrates, the revenue allocation formula inherited on May 29, 1999 which provides for three per cent funding of OMPADEC has been retained. The only thing that has changed is the adjustment of the one per cent direct allocation to States as derivation principle which had to be changed to 13 per cent to comply with the proviso to Section 162(2) which states inter alia "Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenues accruing to the Federation Account directly from any natural resources". In the absence of the long awaited new law by the National Assembly concerning revenue allocation, the 13 per cent derivation principle is only a replacement of the one per cent directly payable to States from whose territories the oil mineral is extracted. Indeed the advent of the Niger Delta Development Commission (NDDC) Law, which provides for direct funding of development of oil producing communities through the Commission replaces the OMPADEC and further re-enforces the form and intent of the provisions of Section 162(2), that the 13 per cent derivation principle does not eliminate the funding of OMPADEC or its successor, the NDDC. However, we note with some concern that the Federal Government has for some inexplicable reason quietly stopped setting aside funds from the Federation Account for the funding of OMPADEC or its successor, NDDC. The possible implication is that by the time NDDC becomes operational, it may have lost a significant amount of funding statutorily due to it. I urge our members in the National Assembly to monitor this issue closely to ensure that the contrived delay by the Federal Government does not again deprive the people of the Niger Delta their dues. The next issue, which agitates the minds of most commentators on the 13 per cent derivation issue, is how the Delta State Government intends to spend the money. Fortunately, this is a constitutional government made up of elected leaders representing every section in the State. In accordance with the provisions of Section 120 of the 1999 Constitution, the money was paid into and forms part of "one Consolidated Revenue Fund of the State" from which "no moneys shall be withdrawn" "unless the issue of those moneys has been authorised by an Appropriation or Supplementary Appropriation Law of the House of Assembly of the State". For us in Delta State, the Governor held widespread consultations with genuine representatives of the constituent parts to ensure that the 2000 Supplementary Appropriation Bill, which he caused to be prepared and laid before the State House of Assembly in accordance with Section 121(4) of the 1999 Constitution, reflected the wishes and aspirations of the people. To the best of my knowledge and information no budget of the State since its inception has had the kind of exhaustive input from all segments of the State as the Supplementary Appropriation Bill, 2000. It is therefore rather sad and bewildering that rather than give the elected Governor the opportunity to exercise the mandate of the people, arm-chair critics and city-based opinion leaders who had positioned themselves to carve up the oil revenue into their private pockets now institute all forms of frivolous legal road blocks to stop the march of progress in our State. Surely, God and history will judge such enemies of progress. As our laws are currently conceived, no one without dubious motives can claim that the State is receiving the 13 per cent oil mineral revenue for onward distribution to either local government councils or oil producing communities. As Governor James Ibori has said before, this money is meant for the development of the State taking into cognisance the varied circumstances of all the constituent parts. However, in doing so special attention will be paid to the oil producing communities. By the grace of God, he has the mandate of the people to ensure that this is done. Development projects and programmes that uplift the standard of living of our people are what the masses desire and that is what they will get from this administration. It is evident that those clamouring for the derivation revenue to be paid to Local Government Councils are positioning themselves to overawe the councils and appropriate the fund for themselves. The principle of federalism with our three tiers of government clearly specifies the powers and functions of each tier. For instance, the Second Schedule, Part 1 of the 1999 Constitution contains the Exclusive Legislative List which clearly defines the functions and powers of the Federal Government, that of the States are specified under the Concurrent Legislative List in Schedule 2, Part II; while the functions of Local Government Councils are clearly specified in the Fourth Schedule of the Constitution. It is not only unconstitutional to seek to transfer the revenues of the State Government to the Local Government Councils but is illogical to do so without changing the constitutional functions of the Councils. As a matter of fact, I am not particularly concerned about who exercises control over the oil revenue. My concern is that such control must enhance the overall well being of our people and should comply with the laws of the Federation and State for the time being in force. If releasing the funds directly to the Local Government Councils or the traditional rulers is in the unlikely event deemed the most effective and efficient way of managing it for the benefit of our people, the State Government should be willing to accede, but the laws and the Constitution must first be amended to reflect this desire. When on December 20, 1999, Governor James Ibori presented the Appropriation Bill 2000, he promised that the State Government would present a Supplementary Budget by mid-year, once the long awaited 13 per cent derivation principle had been implemented. He said that emphasis would be on the funding of more capital projects. This was widely reported and at that time no one challenged his powers to determine how to utilize the revenue. Evidently, with the reality of the partial implementation, these so-called leaders now want the money to be given to them so that they may line their pockets and maintain the 'no development' status quo while claiming to represent the people. In a true democracy, once representation has been vested through the process of elections in certain persons, it is only proper to support such persons such as the Governor and members of the House of Assembly as the case may be, with the authority to preside on the peoples behalf. Other than in exceptional circumstances, the people must then wait patiently to see how well their mandate is exercised. After all, the mandate is for a specified period, after which such representatives must return to give an account of their stewardship to the people before seeking a fresh mandate. Let us therefore come to terms with the true precepts of democracy. On assumption of office on May 29, 1999 the Ibori administration inherited a budget size of N6.4 billion and a government that lacked basic infrastructure such as offices and residential accommodation, transport facilities, basic furniture and office equipment. We could only realistically prepare a Supplementary Budget of N2.18 billion to augment what we met on the ground, following the refusal of the Federal Government to immediately begin the implementation of the minimum 13 per cent derivation principle. In spite of these daunting problems the achievements of the Ibori administration in every sphere in 1999 alone is unsurpassed in the history of Delta State. From the construction and repair of roads to rehabilitation of schools and hospitals all over the State, our achievements, with the little we had speaks eloquently for us. My plea therefore is for Deltans to continue to put their trust in Governor Ibori to use the same wisdom he applied in 1999 to administer the enhanced revenue for the benefit of our long-suffering people. We must not allow the selfish aspirations of a few rent-seekers purporting to speak for the people, to derail the march of progress in our State. 
David Edevbie |
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