'Payment Of 13% Derivation Fund To States Illegal'

Oil and gas producing communities in the country have argued that “it is clearly an implementation tragedy by the Federal Government to pay 13 per cent Derivation Fund into any account of state government.”

In their memorandum to the Senate Committee on the amendment of the 1999 Constitution which sat in Calabar, the Cross River State capital and made available to THISDAY in Benin City, the communities traced their struggle to win the 13 per cent derivation concession from the Federal Government to the 1994/95 Constitutional Conference through to the drafting of 1999 Constitution when the issue was captured in Section 162 (2) of the constitution.

The communities told the Senate Committee that 13 per cent Derivation Fund was not part of “State Joint Local Government Account” provided for by Section 162 (6) of the 1999 Constitution and contended, therefore, that: “lt is illegal to pay 13 per cent Derivation Fund through a third party.”

The communities urged the Senate Committee to amend Section 162 (2) to read “that 13 per cent Derivation Revenue accruing to the Federation Account directly from any natural resources be paid as first line charge from the Federation Account to the oil and gas producing communities through a National Derivation Board, whose members shall be recommended for appointment by the President on the advice of leaders of oil and gas communities.”

In addition, they recommended that the National Derivation Board should have Executive Chairman, Secretary and members, including a member from the Revenue Mobilisation Allocation and Fiscal Commission (RAMFC). Besides, the oil communities proposed that the chairmanship of the Derivation Board should rotate amongst Oil and Gas Producing states every four years.

They further proposed that the board should receive and distribute the 13 per cent Derivation Fund directly to respective state implementation committee, whose members shall be solely nominated and appointed by leaders of oil and gas communities for the purpose of proper direction, distribution and judicious utilisation of the fund.