Poverty envelopes Oil-producing communities despite 13% derivation principle – Report

November 30, 2019

15.5 min readCategories: News

Despite the receipt of over N10t from the 13 per cent derivation principle between 2000 and 2018, by Niger Delta states, the deplorable living conditions in oil-producing communities remain nauseating, raising questions about the application of such large sum by state governments.

Section 162, Sub-section 2 of the 1999 Constitution (as amended), explicitly states that no less than 13 per cent derivation should accrue to oil-producing states.

The Guardian Newspaper reported that the evaluation of the revenue receipts of oil-producing states, particularly, Rivers, Akwa Ibom and Delta since 2000 indicates that the 13 per cent derivation formed the lion share of their earnings over the period under review.  

The Nigerian Extractive Industries Transparency Initiative (NEITI) in its report defines 13% derivation as, “the financial incentive that is enshrined in the Constitution to be distributed to oil producing communities, based on the production input to serve as benefits and encourage the community to create enabling environment for more production of crude oil and gas.”

It is on this basis that Akwa Ibom, Rivers, Delta, Bayelsa, and Edo states have since December 2000 received over N9t as 13 per cent derivation, which ought to serve as a catalysts for the transformation of the oil-producing communities.

While oil money continues to flow into the coffers of these states, paradoxically, most oil-producing communities remain poverty-stricken, plagued by unemployment, and are devoid of basic social amenities like potable water, hospitals, electricity, motorable roads, and conductive learning environment in their schools. 

Available data from NEITI, Federation Account Allocation Committee, and the National Bureau of Statistics (NBS) revealed that between 2000 and 2018, Akwa Ibom received over N2, 637, 953, 892, 850t; Rivers got from 2000 to 2017, over N2, 512, 958, 965, 608t; Delta got between 2000 and 2018, over N2, 220, 952, 447, 827t. From 2000 to 2016 the rest got as follows: Bayelsa N1, 707, 765, 122, 689t and Edo State N528, 131, 627, 879, all of which amount to over N9, 607, 762, 056, 853t. 

But despite all these accruals, governors, who dwell in mansions in state capitals have continued to neglect oil communities, and this has led to increased levels of frustration and dissatisfaction in the region.

One of the most recent show of disenchantment by an aggrieved community was the shutdown of Oil Mining Lease (OML) 25 Belema Flow Station, in Rivers State for two years, which cost the country over $1.7b. 

Groups like the Host Communities Producing Oil and Gas in Nigeria (HOSCON); Movement for the Survival of Ogoni People (MOSOP), and the Youth Council (IYC), among others that are worried that oil exploration could create an ecological disaster, which could develop into a humanitarian catastrophe in oil communities, are increasingly voicing their dissatisfaction with the lack of socio-economic transformation and uplift of lives in oil communities because of the failure of the state governments to utilise the 13 per cent derivation judiciously.

While infrastructure such as motorable roads, flyovers, hospitals, schools are mainly concentrated in State capitals such as Uyo, Port Harcourt, Benin, Asaba and Yenagoa. But basis social amenities have continued to elude oil communities where the people live in appalling abject poverty.

Recently, the Board of Trustees of HOSCON led by its Chairman, King Alfred Diete-Spiff, visited President Muhammadu Buhari, to complain that their communities lack social services and plagued by social deprivation despite the 13 percent derivation received by the State governments. The President in turn had said: “the derivation fund is constitutionally enshrined and hence all affected oil communities must partake in it. The relevant constitutional laws regarding the 13 per cent derivation fund must be duly observed by the affected State governments in the Niger Delta region.’’

WHILE the people await the translation of this to action, some of the most striking cases of neglect in the region are of Uquo and Upenekang communities in Esit Eket  and  Ibeno Local Government Areas of Akwa Ibom State respectively. In spite of Ibeno having one of the most prolific fields in the Niger Delta, these towns are beset by chronic levels of poverty, unemployment, underdevelopment,shanty communities.

A community activist and leader of Ibeno Women Leaders Forum, Rhoda Peters, told The Guardian that Ibeno LGA comprised of 26 villages and they all used Secondary Grammar School, Upenekang owned by the state government. Students there sit on bare floor to learn. Potable drinking water and hospitals are in non-existence.

“With the God given resource in Ibeno we are not supposed to lack water, electricity, employment. But as I speak with you this community does not have one bole hole water. We have over ten abandoned water projects.There is no electricity. People supply us drinking water from Eket. If you don’t have money to buy, you drink well water. There is mass unemployment here. No skill acquisition. Our cottage hospital has been overtaken by bush and there are no doctors,” she said.

She lamented that in the absence of critical social investment in health care delivery by both the State government and oil companies, Ibeno communities have persistently been ravaged by crude oil spill for which the people have denied the benefits in terms of 13 percent derivation.

The executive director, We the People, Ken Henshaw, Ken Henshaw, said the utilisation of the 13 percent in Akwa-Ibom has been woeful and terrible. 

“Ibeno people in Uquo in Emit-Eket LGA drink water in this 21 century from well. Conditions in the communities are terrible. There is no single policy that demands that government channels certain benefits to oil producing communities. It does not exist. The communities feel woeful about 13 percent derivation. They feel sadden and that is because 13 percent derivation has not impacted on them at all. And the reasons are simply because the structure for benefit transfer is faulty in Nigeria. That sharing formula simply does not take the oil communities into consideration,” he said.

Henshaw said the 13 percent derivation has created more suffering and poverty for the people of the Niger Delta. According to him, the governments of the Niger Delta states are classic examples of resource curse which is a concept where natural resources of the people instead of making them rich make them poor. 

IN Delta State, following agitations from oil communities, then Governor James Ibori, in the twilight of his administration in 2007 established the  Delta State Oil Producing Areas Development Commission (DESOPADEC) to drive developmental projects were supposed to be determined through an inclusive and need-assessment process in oil communities. Opinion varies on whether DESOPADEC has remained committed to its core objective of ensuring that the oil communities benefit maximally from the 13 percent derivation accruable to the State. 

President,Ijaw Youth Council President, Eric Omare who hails from Ogbe-ijoh and Ogulagha kingdom of Delta State, acknowledged that DESOPADEC has had an impact on his community, even though it ought to have done better. 

“In fairness, before DESOPDAEC was created in Delta,  we never knew government existed. All we knew was a few intervention by Shell and some other companies that use to build class room blocks. With DESOPADEC projects like roads, class rooms, jetties and so on have been built. Communities are represented in the commission. Projects are being done, despite interference by the governor and State Assembly members.” he said.

Omare observed that while the DESOPADEC Act stipulates that 50 percent of the derivation due the state should be channelled to the commission, this has not been the case. He stated the commission has in some instance misplaced it priorities. One of such, The Guardian findings revealed is the building of a observatory tower, for the Nigeria  Police force headquarters ,Asaba, by DESOPADEC. 

“In most case, people who are not from oil producing communities are the ones in charge of political leadership. Instead of allocating projects under the DESOPADEC to oil communities, they will allocate it to their own communities to the detriment of oil producing communities. Non-adherence to the law establishing the commission is the bane of its ability to meet up its responsibilities” he said.

Omare stated that the indices on ground clearly show that the state like the rest of the Niger Delta have not used oil resources judiciously for the development of people. He argued that the reason for this is because there has not been accountability due to lack of checks and balances between the State executives and the legislators.

“You have a state legislature which is an extension of the state governor. So there is no checks and balances. The problem with 13 percent is that the state governors see the money as their own and so they don’t see themselves as having an obligation to the oil producing communities. They don’t know that communities producing oil face peculiar challenges and the money is to address their peculiar challenges,” he said.

The situation in Eruemukohwarien in Ughelli North LGA that host two oil blocs, OML 30 that pumps about 90,000 barrels per day and OML 34, is one that symbolises misery amidst vast wealth beneath the earth people trod on daily.  Her citizens have been  agitating that funds derived from their ancestral land should for conscience sake benefit them.

A community activist, Agbah Cyril, lamented that the crumbling road and water facility in the community was constructed by Shell long before it sold its assets to an indigenous companies Nigeria Petroleum Development Company, NPDC and ND Western.

“The water we drink was given by Shell. Right now there is the problem of drainage. Whenever it rains the community is flooded. The state government has not done anything. In our secondary, there is no decks for students to sit and learn. It is through community effort that we intend to get them decks. The whole school is dilapidated.  There is no effect of 13 percent derivation in my community which is a host to two oil blocs, OML30 and OML 34” he said.

Cyril alleged that there was no presence of DESOPADEC in Eruemukohwarien. He pointed that the health centre in the community depends on nurses from Ughelli and regretted that a community that bears destructive effect of pollution and gas flare is denied basic social amenities like electricity.

Executive director Africa Network for Environment and Economic Justice (ANEEJ), David Ugolor, who hails 

Oghara, a major oil producing community in Delta state said the reason why the 13 percent derivation is not reflecting much is a governance problem and the patron /client system that is in place in the country. 

“Governors are now emperors. They are commissioners for 13 percent derivation, they are not accountable. And most unfortunate of all is the culture of impunity, even if they are found to have stolen money, nothing happens. The evidence of the stolen money is everywhere, the properties they buy, their children are overseas attending very expensive schools. The evidence is there. The money  is moving around in the banks,” he said.

He add civil society groups in the Niger Delta are exploring international instruments to hold perceived state executives accountable.

Bayelsa State which has received over N1.8 trillion, is well known for financial profligacy of its political elites who have failed to provide quality education, healthcare, good road network and potable drinking for people in oil producing communities who live far away from Yenagoa.

In Ondewari, a major oil producing community, in Southern Ijaw LGA, has for decades being in dire need of social amenities. The schools there were built by Niger Delta Development Commission and Agip oil company. Even a cottage hospital built by Agip over four years ago is not in use because Bayelsa government has not activate it with health workers.

Other major oil producing communities such as  Olugodiri, Biseni, Tein, Egbebiri, Ikarama and Zarama,  to mention but a few have been victims of decades of neglect, exploitation and expropriation. Virtually all infrastructure in these communities are either sponsored by Shell or Agip, while the state is which is custodian of derivation fund is absent.

Stakeholders from oil producing areas who are of the strong opinion that the 13 percent derivation should serve  as a catalyst in the transformation of oil producing communities, have not only been making legitimate demands for accountability, transparency and good governance over the use of the fund, but have almost succeeded in ensuring the establishment of Bayelsa State Oil Producing  Area Development Commission.

The head, Environmental Rights Action in Bayelsa, Morris Alagoa, said himself alongside others have been advocating for the creation of the commission for over ten years and Governor Seriake Dickson, was about to create it. He said the demand for the commission was predicted on the fact that the host communities and rural dwellers have suffered abandonment and alienation for too long as the 13 percent derivation has never felt in these communities.

“Some of us felt that it was unjust to deny the oil producing communities proceeds from the 13% which is accruing to the state because of them. If the Federal government can recognize the need to give that fund in appreciation of taking care of the goose laying the golden egg; why should our own governments do this social injustice to those who ought to benefit from it?”

Alagoa explained that the crusade for the creation of the commission was a social and environmental justice as the communities cannot suffer oil industry induced pollution and related conflicts while others just sit somewhere and enjoy the funds.

“That 13 percent was meant for the oil producing communities. We want a greater part of the money to go the commission so that it will not just be a salary paying body, we want the commission to bridge the gap because there is a lot of ecological and environmental challenges like coastal erosion, sand filling issues, oil pollution and all that. We want our old mothers and fathers to see this before they die” he said.

Rivers State stands out as one of those that has failed to manage its oil wealth properly, resulting  a sad downward spiral of community and youth unrest, economic stagnation in oil producing communities which are now brewing ground to nurture lawless violence tendencies.

Subsequent governments since 1999 have demonstrated inability deliver on social and economic expectations of the oil producing communities; and guard against the corrosive profligacy such as purchase of  Embraer Legacy 600 worth over $20million and Bombardier Global 5000 (N565RS) valued at $45million for exclusive use of two governors who acquired them respectively while in office.  

Nowhere is the lack of political will and compassionate honesty to tackle pervasive poverty in oil communities demonstrated like  OML 25 communities namely Belema, Ofoin-Ama and Ngeje in Akuku-Toru LGA. Despite producing 45,000 barrels per day in the past forty years, there does not exist till day any perceptible presence of the State or local council in terms of provision of basic social amenities. The citizens have for decades  walloped in extreme privation, lack cottage hospital; schools, potable drinking water, electricity.

Fishermen in the aforementioned communities, these days complain that many several species of fishes which they have depended on as a means of livelihood have declined or disappeared completely due no pollution and pipelines that crisscross the bottom of the fragile estuary ecosystem.

Deteriorating state of the Ahoada -Omoku- Egbema road that crisscross through some communities with the rich oil fields in Ahoada and Ogba-Egbema-Ndoni LGA, is constant reminder of government’s neglect of the host communities. Save for multinational oil firms in these areas, their condition would degenerated to the stone age.

Tales of neglect and woes span through, Idu, Odua, Joinkrama 4 in the Edagberi/Betterland Community area where there are over 40 oil wells, Oyigbo, Okwuzi, Aggah, Cawthorn channels 1 and 2 , Ubeta, Emago/Kugbo, K-Dere, Bomu, Bodo, Ejama, Omoku, Obagi, Obrikom, Ogbogu and others numerous oil producing communities in the State.

A university don, Dr Sofiri Peterside, observed that there has been a recent narrative by governors that the federal government is the problem for underdevelopment of the oil states, whereas they have failed to be accountable to the people on how  they money given to them has been spent. According to him, government expenditure is hidden in nauseating secrecy and apparently not being deployed to address the nagging problems of development in the oil producing areas.

“There is still misery, lack of development, the people still lack access to potable drinking water, people still lack access to medical care and electricity, particularly those who are engaged in small business. Access to social amenities is also a problem. So I think the governors of these states have actually not deployed the revenues received from oil to address the problems of lack of access of development in these areas. They act as if they don’t owe the people any responsibility and the people have been humiliated, domesticated to just keep quiet but I think that one day the bubble will bust” he said.

The President of Movement for the Survival of the Ogoni People (MOSOP), Legborsi Pygabara, said rather than use the 13 percent derivation to build a sustainable economy model, whole quantum of resources that continue to accrue to the Niger Delta states have been used to build political tin gods who use the money at their whims and caprices. 

“For us we are not seeing benefit of 13 percent because it has not translated to infrastructural development; human capital development. We have not heard that because of 13 percent free education has been given to the people from primary school to university level. We are not aware that because of 13 percent the quality of education improved because of investment in the educational sector. We cannot even see legacy hospitals that can treat common disease. Our schools are the not among the best in the country” he said.

Pyagbara said the current parasitic state structure and pretentious democracy being practised in the country makes it difficult to hold the governors accountable.  

“So long as it is built around this parasitic state structure and with the kind of democracy we have today, I don’t see any bright hope. It is all about accountability. If we are electing people through vote rigging and violence , and they are not accountable to the people, it means that whatever money is at their disposal will be plundered. We are now seeing what I will call personification of the state, where the chief executive  approximate himself to equal to the state. The quantum of resources that has come into the Niger Delta cannot be quantitated with what we have on the ground. There is mass plundering of resources that have come into these states and that is why it is not reflecting in the quality of life that you expect that type of money to have transform these states into,” he added.

Credit: Guradian

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