RMAFC suspends Jumbo Concession to Bayelsa from Derivation Funds

Oil Well Offshore
The newly appointed members of the Revenue Mobilisation Allocation and Fiscal Commission at an emergency plenary session in Abuja has suspended special concession granted to Bayelsa State for  derivation fund from three oil wells.

 

The Economic Confidential, the online economic journal gathered that the decision to suspend the special monthly grant which has so far accrued over N15 billion into the account of Bayelsa State in the last three month was due to series of complaints and requests from other stakeholders including oil producing states.

The emergency meeting which was chaired by the new Chairman of the Commission, Engr. Elias Mbam with full attendance of other members was held on December 30, 2010 a day before another Emergency meeting of the Federation Account was held where a total sum of $1 billion was shared to three tiers of government.

The N15 billion that had accrued to the Bayelsa within the period was over and above what would normally have accrued to it before the concession was granted in August 30, 2010 by the Presidency.
A source informed the Economic Confidential that the decision to suspend further payment of the so-called special concession and compensation was for equity, fairness and justice as various states are laying claim to similar agitations of having oil well beyond the 200 metre isobaths offshore including Lagos and Ogun States.

A special committee is said to be set up by the Commission to consider the problems and complaints from other states before any further actions could be taken.

The Economic Confidential had reported in December 2010 that the contentious concession granted to Bayelsa State to enjoy special derivation funds may form the agenda of meeting of the newly appointed members of the Revenue Mobilisation allocation and Fiscal Commission (RMAFC). It reported that The Presidency is concerned that President Goodluck Jonathan might have been misled into approving the special derivation funds that had been allocated to Bayelsa in the last three months.

The presidential concession granted to Bayelsa State made the state to earn derivation fund from oil wells lying beyond the 200-metre isobaths, an action that is in breach of the Offshore/Onshore Dichotomy Abrogation Act 2004 in the application of the 13 percent derivation principle.

The Economic Confidential is reliably informed that the recommendation to the President for the special concession was engineered by some agencies of government which include the National Boundary Commission, Office of the Accountant General of the Federation and the Revenue Mobilisation Allocation and Fiscal Commission.

Following the approval of President Goodluck Jonathan on August 31, 2010 the Economic Confidential confirms that Bayelsa State is now the leading oil producer and highest recipient of derivation funds among the oil producing states. Based on the new indices that favours the state, at the Emergency meeting of the Federation Account Allocation Committee on the eve of the new Year (December 31, 2010) where a total sum of $1 billion was shared, from the derivation component alone which did not include other factors, Bayelsa State received $40mn, followed by Akwa Ibom $30mn, Rivers $28mn, and Delta $21mn. Other recipients from derivation funds include Ondo $4mn, Abia $1.3mn, Imo $1,26mn, Edo $1.2mn and Cross River $1mn.

The RMAFC is constitutionally empowered to determine the remuneration packages of public officers as well as revenue allocation to all tiers of government including indices for the disbursement to each states and local councils in the country. The question in the mind of observers is whether the RMAFC with the suspension will ask for the refund of the revenue granted to Bayelsa State fr5om seeming illegal action.

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