Dispute with RMAFC gone on for 6 years
By Jeph Ajobaju, Chief Copy Editor
A dispute between Lagos and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has prevented the state from accessing for six years its share of 13 per cent derivation ring-fenced for oil producers.
Lagos does not receive its extra fund “due to some irreconcilable differences,” a source in the RMAFC confirmed to The Nation.
The RMAFC disputes information Lagos provides on its oil production.
“They are making profit as [an] 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 awaiting the outcome of the committee’s investigation,” the source said.
Money in the Federation Account is shared among the federal government (52.68 per cent), states (26.72 per cent), councils (20.60 per cent), and derivation for oil states (13 per cent).
Oil states share an additional 13 per cent to their statutory allocation to compensate them for contributing more funds to the treasury through exploration of the liquid gold which damages their environment.
Anambra and Kogi, new oil producers, benefit from the 13 per cent derivation together with Delta, Akwa Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, and Abia.
Lagos became an oil producer when crude was found in commercial quantity in its domain in 2016.
Yinka Folawiyo Petroleum Company, operator of OML 113 offshore Lagos, announced production of crude from the field in 2016, partnered by New Age Exploration Nigeria, EER (Colobus) Nigeria, Pan Petroleum (Panoro Energy) Aje, and PR Oil and Gas Nigeria.
But Lagos cannot join states receiving 13 per cent derivation without clearance from the RMAFC, where a source said Lagos is not benefiting from 13 per cent derivation fund because it is playing a “hide and seek game.”
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RMAFC disputes Lagos oil data
The 13 per cent extra allocation from the Federation Account is entrenched in the Constitution as necessary to mitigate negative environmental effects of oil production on host communities.
Figures compiled by StatiSense show the 13 per cent derivation was shared in 2021 as follows:
- Delta – N141.9 billion
- Akwa Ibom – N91.2 billion
- Bayelsa – N87.2 billion
- Rivers – N83.1 billion
- Edo – N17.1 billion
- Ondo – N11.5 billion
- Imo – N9.98 billion
- Abia – N4.78 billion
How Anambra, Kogi joined oil states
A source in the RMAFC told The Nation the “legal unit of RMAFC has confirmed that Kogi and Anambra States are now receiving 13 per cent oil derivation.”
Former Anambra Governor Willie Obiano had written to the RMAFC requesting the state’s “due share of revenue accruing to the nation from oil and gas production activities in Anambra State.”
In response, the RMAFC explained that Anambra and Kogi 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, signed by RMAFC Secretary M.B. Shehu, conveyed the Commission’s “attribution of 11 oil wells wholly to Anambra State.”
The RMAFC 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 include Ameshi One, Two, Three and Four; Enyie One, Two, Three, and Four; Nzam (one); Alo (one); and Ogbu (one).
However, the RMAFC insisted that “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.”
