Obasanjo Backs Higher Oil Derivation, Says 13% Is Only the Beginning

Obasanjo Backs Higher Oil Derivation, Says 13% Is Only the Beginning

Former President Olusegun Obasanjo has backed calls for an increase in the 13 per cent oil derivation fund allocated to oil-producing states, saying the existing arrangement should be regarded as a starting point rather than a final settlement.

Obasanjo made the position known on Monday during the inauguration of the Crude Distillation Unit (CDU) of the $1 billion Azikel Refinery at Obunagha in Yenagoa Local Government Area of Bayelsa State.

Addressing Bayelsa State Governor Douye Diri, the former president acknowledged that oil-producing states and communities had yet to receive what he considered a fair share of the benefits from the exploitation of their natural resources.

“You are right that the states and oil-producing communities have not got a fair deal so far. Thirteen per cent is the beginning. You can continue to talk,” Obasanjo said.

His remarks reinforced renewed demands for a review of Nigeria’s revenue-sharing arrangement, particularly from the Niger Delta, where crude oil production has remained central to the national economy.

Under the existing constitutional framework, oil-producing states receive at least 13 per cent of revenue accruing to the Federation Account directly from natural resources, in line with the principle of derivation.

However, the allocation has remained a source of debate, with stakeholders in the oil-producing region arguing that the revenue does not adequately address the environmental damage, infrastructure challenges and economic difficulties associated with petroleum exploration.

Diri also criticised the existing arrangement, insisting that communities where crude oil is extracted should have a greater say in how the resources are managed and how the resulting wealth is distributed.

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The governor argued that the region had endured years of agitation over what residents perceive as an imbalance between the resources extracted from their communities and the benefits they receive.

He also faulted the Land Use Act, arguing that the distinction between state control of surface resources and Federal Government control of resources beneath the ground places oil-producing communities at a disadvantage.

Diri maintained that the Niger Delta was not demanding exclusive ownership of the proceeds from petroleum production but wanted to become a more active participant in decisions affecting the industry.

“We do not want to take all to ourselves. We just want to be co-players in determining how it is done. Thirteen per cent is not enough for the states,” he said.

The governor urged young people in Bayelsa to acquire relevant technical and professional skills to benefit from industrial investments, including the refinery project.

He warned that the presence of major oil and gas facilities would have limited benefits for local communities if residents lacked the expertise needed to secure employment and participate in their operations.

The refinery project, owned by Azikel Petroleum under the Azikel Group, is expected by its promoters to produce about 2.5 million litres of petrol and two million litres of diesel daily, alongside other petroleum products, when completed.

The installation of the crude distillation unit marks a significant stage in the development of the facility, whose foundation was laid by Obasanjo about eight years ago.

The former president commended Azikel Group President, Azibapu Eruani, for sustaining the project and urged him to complete the refinery within the next 12 months.

Obasanjo also acknowledged the contributions of the African Finance Corporation and the African Export-Import Bank (Afreximbank), calling for continued support to bring the investment to completion.

He praised Diri for supporting the project and commended the Bayelsa government for what he described as the productive use of the state’s available revenue.

Eruani said the refinery was conceived to position Bayelsa and the wider Niger Delta as active participants in the petroleum industry rather than merely suppliers of crude oil.

He expressed confidence that the project would support industrialisation, create economic opportunities and strengthen local participation in the oil and gas value chain.

The refinery initiative comes amid continuing debates over resource control, revenue allocation and development in the Niger Delta, with calls for oil-producing communities to receive greater economic benefits from the natural resources extracted from their territories.

Obasanjo Backs Higher Oil Derivation, Says 13% Is Only the Beginning