Reps seek upward review of 13% derivative fund from natural resources to 50%

July 22, 2020

The House of Representatives is expected to commence debate on a bill which seeks to increase the percentage of derivation fund of the revenue accruing to the federation account directly from any natural resources from 13 per cent to 50 per cent.

The bill which seeks to amend Section 162(2) the 1999 Constitution (as amended), was sponsored by Hon. Awaji-Inombek Abiante and 13 others, was scheduled for Second Reading on Tuesday but was stepped down for more legislative deliberation.

The bill was aimed at bringing even development to neglected areas where mineral resources are being extracted for the development across the country.

According to the sponsor of the motion, over 40 million tonnes deposits of talc have been identified in Niger, Osun, Kogi, Ogun, Kano and Kaduna states; and Lagos State has also become oil-producing by recent reports.

He also observed that there has been a discovery of one billion barrel of crude oil and gas in North-Eastern part of the country along the Chad Basin in neighbouring Bauchi and Gombe states; there are Goldfields in Zamfara, Niger, Osun, Kwara, Ebonyi, Kaduna, Edo and Bauchi states and also the FCT; Tin mining in Plateau and the Nasarawa States; and Gemstones mining (including sapphire, ruby, aquamarine, emerald, tourmaline, topaz, garnet, amethyst; zircon, and feldspar which are among the world’s best) in Plateau, Kaduna and Bauchi states, respectively.

He added that there are very huge deposits of bitumen, about 42 billion tonnes in Ogun, Lagos, Edo and Ondo States, Coal in Enugu, Benue, Nasarawa, Zamfara, Ondo, and Plateau states; Zinc in Akwa Ibom, Abia, Benue, Anambra, Kano and Taraba states; Kaolin in Delta, Adamawa, Bornu, Katsina, Ekiti, Kaduna, Kogi, Sokoto, Ogun and Plateau states and the FCT.

Accordingly, Paragraph 2 of Section 162(2) of the Constitution should be altered by deleting the words ‘not less than thirteen per cent’ inline-three and insert ‘not 13 than 50 per cent’. It is in response to the clamour of the present administration to right the wrongs of previous regimes and pure federal system, we are lending our voice under this regime of change to review quickly and to amend the formula to not less than 50% according to the Independence Constitution of 1960 and the Republican Constitution of 1963 in Sections 134(1a & b) and 140(1a & b).

“The truth is, every state in Nigeria is endowed with mineral resources and this bill seeks to ensure that states and regions where these minerals are extracted from also have their revenues allocated according to the 50% derivation formula,” Hon. Abiante noted.

The lawmaker who stressed the need to address various concerns raised by Nigerians over the years observed that the issues of revenue; concerns of compatibility; concerns of domination and accommodation of the various minority groups were topmost in the matters raised, discussed upon with seeming understanding, concessions and resolutions reached before independence.

“Also worthy of mention is the provision and documentation of these agreements in the foundational instrument, the Independence Constitution of 1960 as well as the Republican Constitution of 1963.

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“These amongst other provisions include in particular the 50% derivation from the mining of mineral and the establishment of Niger Delta Development Board which can somehow be equated to the Niger Delta Development Commission of today. If I may, we know that the Philipson Commission of 1946 to 1951 based on the revenue sharing formula on 3 factors the principle of derivation, even development and population. There was also the Hicks-Phillipson commission of 1952 to 1954 which also based its formula on derivation, need, population and national interest.

“Subsequently, the Chicks Commission of 1953 gave full autonomy to the regions and formally established a federal structure of the country while The Raisman Commission of 1958 resolved that the personal income tax be made a regional tax which was the federating units then and now States-this is still the practice till date) and had the centre coordinate the laws.

“Also, this commission created a Distributable Pool Account (DPA) to facilitate collection and sharing of revenue, this is the equivalent of the Consolidated Revenue Fund as captured in Section 80 of the current Constitution of the Federal Republic of Nigeria 1999 (as amended).

“Worthy of note is that the Independence Constitution of 1960 and the Republican Constitution of 1963 in Sections 134(1a & b) and 140(1a & b) respectively recognizes payment of 50% of proceeds of any royalty received by the Federation in respect of any minerals extracted mining rents derived in any region in the country.

“It is also informative to state that Section 14 of the Independence Constitution of 1960 also recognized the establishment of the Niger Delta Development Board with the main aim of promoting physical development of the Niger Delta, hence the creation of Niger Delta Development Commission (NDDC) on 5th June 2000 was not new to the Constitution of the Federal Republic of Nigeria.

“But the very unfortunate military intervention disrupted the people’s participation and keeping faith with agreements reached before independence and unilaterally shifted the bulk of Collectible Revenue to the Federal Government on the premise that it needed resources to prosecute the war and maintain Nigeria’s unity.

“The military also put in place a decree that gave the federal government 100% right of off-shore rents and royalties. The provisions of Decree 13 of 1970 made it mandatory that 80% of all onshore mining rents should be transferred to the DPA, leaving 20% for the states to be shared on the basis of the principle of derivation,” Hon. Abiante noted.

He maintained that the current ‘not less than 13 per cent’ derivation entrenched in the 1999 Constitution of the Federal Republic of Nigeria is grossly inadequate and a misrepresentation of the Spirit of pre-independence negotiations and agreements.

“Even in the intent and desire to ensure the rehabilitation and development of the damaged environment where mineral resources are derived for the sustenance and development of the whole country does not also seem achievable with the current practice of 13%.

“In order to ensure justice and equity in the polity, and also fast-track the development and protection of the region and indeed any part of the Federation as presently is where mineral resource or any revenue is gotten for the running of the business of Governance, there is the urgent need to increase the derivation fund from ‘not less than 13 per cent’ to ‘not less than 50 per cent’.”


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