Omo-Agege laments diversion of 13% derivation fund by oil producing states
NEWSMAN, Abuja – Deputy President of the Senate, Senator Ovie Omo-Agege has decried the diversion of the 13 percent oil derivation funds by oil producing states.
Omo-Agege stated this on Thursday while playing host to a delegation of Oil and Gas Host Communities of Nigeria (HOSCON), led the Amayanabo of Twon-Brass in Brass Kingdom and Chairman, Bayelsa State Traditional Rulers Council, Chief Alfred Diete-Spiff.
According to a statement by the Special Adviser, Media and Publicity, to the Deputy President of the Senate, Yomi Odunuga, Omo-Agege specifically made a case for 100 percent utilisation of the funds for oil bearing communities, as against the practice where states release only 50 percent of the money to development commissions in their states.
“It is fair that the 13 percent derivation is meant to ameliorate the conditions of the people who are most impacted by oil exploration and exploitation. That is the only reason this fund was set aside as a consequence of your agitation which you led for so many years.
“These funds are not meant for the state governments. The state governments are meant to be purveyors to host communities. Even in states that have development commissions, they only earmark 50 percent of the funds to the Commission to manage on behalf of the host communities. So, what happens to the other 50 percent? We have always taken the position from the outset that 100 percent of the funds is meant for the development of host communities because it is not every area that suffers from oil exploration and degradation. But for some reasons, it has become a political tool”, he said.
He reiterated his call for gas flaring penalties in the Petroleum Industry Bill to be paid to the host communities and not to the Federation Account, stressing that the annual contribution of 2.5 percent actual operating expenditure by oil companies to the Host Community Development Trust Fund should be increased to, at least, 5 percent, adding that the penalties from gas flaring would be used to ameliorate the living conditions in Niger Delta communities, as they suffer from the environmental impact of oil exploration.
“The reason we are insisting on at least 5 percent of operational expenses of oil companies for the host communities is because of the stability as their operational expenses will always remain stable. The moment you say it should be profit after tax, we know what they will do. They will claim all the exemptions that, at the end of the day, you end up with nothing. But they must have their expenses. So we are insisting that we should be given at least 5 percent of that.
“We say this because in the cause of our interaction with the Economic Management Team of the Federal Government, some of us wanted answers to certain questions, most especially why they were making less revenue from oil. And one of the reasons they raised at the time was that the cost of oil per barrel was very high because of the security cost to the oil companies.
“Under this PIB, if you give us what we are now asking for by way of enhanced contribution of 5 percent operational expenses to the Host Communities Trust Fund, what it means is that the communities will now assume responsibilities for the protection of the oil facilities in their host community. And if that is the case, the portion of the funds that the oil companies were spending as Security Cost should now be transferred to us,” he added.
On the proposed boards and management of Host Communities Trust Fund in the PIB, he emphasised the need for those in the host communities to be carried along.
He called on the people in the region to show more than passing interest in the development of the area and hold their leaders accountable.