Every State is Entitled to 13% Derivation Revenue – RMAFC

rmafc-chairThe Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has disclosed that every state in Nigeria is entitled to derivation revenue from their natural resources if properly harnessed for economic development.

The Chairman of the Commission, Engr. Elias Mbam added that states in the North can begin to enjoy the benefits of the 13 percent derivation principle currently being enjoyed by the 11 oil producing states if they look inward in developing those potentials.

Engr. Elias made the disclosure while receiving Governor Umaru Tanko Al-Makura of Nasarawa state, in his office in Abuja. He said the law has guaranteed the disbursement of 13 percent derivation to all solid minerals producing states, like their oil producing counterparts.

Most of the solid minerals producing states in the country are in the North.

Section 162 of the Constitution empowers the National Assembly to determine the formula for the distribution of funds in the Federation Account while sub-section (2) provides that “the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.”

The ability of the solid minerals producing states to benefit from 13% derivation is subject to their contributions to the Federation Account through their endowed natural resources as provided in the Constitution of Nigeria.

Under the constitutional arrangement as Mbam tried to explain therefore, states like Nasarawa which are blessed with deposits of several solid minerals would be entitled to the 13 percent derivation from the proceeds realised from such deposits, as they are statutorily entitled to it under the Constitution.

He further assured the Governor Al-makura that the 13 per cent derivation principle will be applicable to solid minerals producing states as applicable to oil producing states, once they start to extract such minerals and the revenue accrues into the Federation Account.

The 13 per cent derivation was introduced in 1999, as part of measures aimed at redressing historic grievances of oil-producing states of the Niger Delta.

Currently, the revenue allocation is based on a sharing formula which cedes 52.68 per cent to the Federal Government; 26.72 per cent to states and 20.6 per cent to local governments. Thirteen percent is also given to the oil-producing states as derivation.

To actualise the derivation principle cause for the solid minerals producing states, Mbam said the Office of the Accountant General of the Federation (OAFG) has opened a special account with the Central Bank of Nigeria (CBN) for the purpose of receiving deposits of revenue accruals from solid minerals.
He tasked states on the imperatives of expanding their internal sources of revenue away from the monthly allocations from the Federation Account, if they were desirous of meeting the quests of their citizens for improved service delivery.

On the new revenue formula, Mbam promised that the commission will be just, fair, objective, but said the allocation will be proportional to responsibility and cautioned against politicizing the revenue formula as doing that “will not help the process but will over heat the polity.”

Mbam advised Nasarawa state to take the advantage of the opportunity provided by the ecological funds to address the challenges posed by erosion in the state.

Meanwhile the Chairman of the Commission in another development called on the management of Nigerian National Petroleum Corporation (NNPC) to ensure improved transparency in the management of oil and gas business. He said this would ensure increased accruals into the federation account for the three tiers of government to spend.

Mbam made the call when Group Managing Director of NNPC, Austin Oniwon led other management staff of the corporation on a visit expressed willingness to partner with the NNPC in ensuring transparency and accountability in revenue generation and remittance into the federation account.

He noted that revenue from the sales of oil and gas remains the biggest contributor to the federation account and as such all efforts must be made to ensure transparency and accountability in the remittance of revenue into the federation account by plugging leakages arising from oil theft by hoodlums, who siphon crude oil and refine in illegal refineries.

He added that such activities were capable of draining revenue derived from the oil industry and must therefore be effectively checked if Nigeria must derive the maximum benefits from the industry.

Oniwon had earlier observed that the oil and gas industry has in the recent past come under heavy scrutiny by the critical public because of it’s strategic role in national development as the biggest revenue earner in the country.

He noted that the interplay of politics, security, economics and environment plays decisive role in determining global price index and investments in the sector are predicated on sound economic policies, secure political environment and international best practices.

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