13% Derivation: RMAFC Shuts Out Lagos, Okays Anambra, Kogi

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has refused to list Lagos State among beneficiaries of the 13 per cent oil derivation fund, some six years after the state became oil-producing state.

A source at the RMAFC said Lagos State has not been added to the list of states benefiting from the 13 per cent derivation “due to some irreconcilable differences” with the state.

Two states- Anambra and Kogi, which are now oil-producing states, benefit from the 13 per cent derivation fund. They joined Delta, Akwa Ibom, Bayelsa, Rivers, Edo, Ondo, Imo and Abia.

Lagos State became an oil-producing state when crude oil was found in commercial quantities in 2016. Yinka Folawiyo Petroleum Company Limited, an indigenous firm and operator of OML 113 offshore Lagos in 2016 announced the commencement of production of crude oil from the field. Other partners are New Age Exploration Nigeria Limited, EER (Colobus) Nigeria Limited, Pan Petroleum (Panoro Energy) Aje Limited and PR Oil and Gas Nigeria Limited.

But Lagos State cannot join states receiving 13 per cent derivation without clearance from RMAFC.

A source at RMAFC said the state has not started benefiting from 13 per cent derivation fund because the government was playing a “hide and seek game”.

RMAFC is disputing information provided by the government in respect of the state’s position on oil production as an oil producing state.

“They are making profit as oil-producing state but don’t want to come clean. Their case is being investigated by the oil and gas committee of the commission, and we are waiting for the outcome of the committee’s investigation,” the source said.

Besides the statutory monthly allocation that goes to each state as share of revenue allocation from the federation account, oil producing states get an extra 13 per cent derivation fund. The extra fund enshrined in the constitution is meant to take care of effects of degradation suffered by oil-producing communities.

Figures from StatiSense showed that in 2021, the 13 per cent derivation proceeds was shared as follows: Delta State, N141.9 billion; Akwa Ibom State, N91.2 billion; Bayelsa State N87.2 billion; Rivers State N83.1 billion; Edo State N17.1 billion; Ondo State N11.5 billion; Imo State N9.98 billion and Abia State N4.78 billion.

An RMAFC source told The Nation that the “legal unit of RMAFC has confirmed that Kogi and Anambra states are now receive 13 per cent oil derivation”.

Obiano had earlier written to RMAFC to request the state’s “due share of revenue accruing to the nation from oil and gas production activities in Anambra State”.

RMAFC, in granting the approval highlighted that Anambra and Kogi states would start benefiting from the 13 per cent derivation fund “once the proceeds from the oil wells are contributing to the Federation Account”.

The approval letter addressed to Obiano and signed by the RMAFC’ Secretary Mr M.B. Shehu, conveyed the Commission’s “attribution of 11 oil wells wholly to Anambra state”.

The commission also “approved the attribution of Anambra River One, Two, and Three oil wells, to be shared equally (50-50 per cent basis) between Anambra and Kogi states, pending the final delineation of boundaries of the two states”.

The 11 oil wells wholly attributed to Anambra State included Ameshi One, Two, Three and Four oil wells, and Enyie One, Two, Three, and Four oil wells. Others are Nzam-One oil well, Alo- One oil well, and Ogbu- One oil well.

However, RMAFC added a caveat, saying “for the states to benefit from the 13 per cent derivation fund, the proceeds from the operations of the oil wells should be contributed to the Federation Account”.