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Deputy Senate President chides oil producing states over diversion  of 13% derivation fund.

The International Energy Agency requires its members to hold emergency oil stocks equivalent to at least 90 days of net oil imports GETTY IMAGES NORTH AMERICA/AFP

Chinazor Megbolu


The Deputy President of the Senate, Hon. Ovie Omo-Agege has chided the oil producing States for diverting the 13 per cent oil derivation funds.

He said this in a statement by his Special Adviser on Media and Publicity, Mr. Yomi Odunuga, when he hosted a delegation of Oil and Gas Host Communities of Nigeria (HOSCON), which was led by the Amayanabo of Twon-Brass in the Brass Kingdom and Chairman, Bayelsa State Traditional Rulers Council, Chief Alfred Diete-Spiff.
Omo- Agege  added that what is obtainable in such States is that they release only 50 per cent of the money to development commissions in their states.
The Senate number two man representing Delta Central pointed out that since host communities bear the burden of environmental degradation from the oil organisations, it would be fair that all funds be channeled into the development of the affected areas.
Omo-Agege further decried the utilisation of the 13 per cent derivation funds, adding it has become a political tool in the hands of State Governors in the areas.
He averred that the diversion of the money has contributed to the underdevelopment of the region, stating that the affected communities can hardly boast of having access to the basic necessities of life.
“I have been discussing this matter with Chief (Wellington) Okrika even before I became a senator. It is fair that the 13 per cent 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 per cent of the funds to the Commission to manage on behalf of the host communities.
“So what happens to the other 50 per cent? We have always taken the position from the outset that 100 per cent 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 reason, it has become a political tool,” Omo-Agege said.
He, however, called for gas flaring penalties in the Petroleum Industry Bill (PIB) to be paid to the host communities and not to the Federation Account.
Omo-Agege added that the annual contribution of 2.5 per cent actual operating expenditure by oil companies to the Host Community Development Trust Fund should be increased to a minimum of least 5 per cent.
He posited that the penalties from gas flaring would be used to boost the living conditions in Niger Delta communities, as they suffer from the environmental impact of oil exploration.
According to him; “the reason we are insisting on at least 5 per cent of operating 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 per cent of that.
“We say this because, in the course 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 per cent 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 called on the people in the region to show more than passing interest in the development of the area and hold their leaders accountable.

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