13% Derivation Fund Rises By 115.5% To N970.2bn In 1 Year

RELATED

Keturah: Leveraging Resilience, Innovation To Succeed In Entrepreneurship

7 hours ago

Owerri Airport Records Maiden Foreign Flight As Air Peace Airlifts 2025 Hajj Pilgrims

8 hours ago

The 13 per cent derivation fund distributed among the nine oil-producing states in Nigeria increased by a whopping 115.5 per cent to N970.2 billion in 2022, following improvement in the price of crude oil during the year.
Data from the National Bureau of Statistics (NBS) showed that N970. 2 billion was distributed from the federation account to Abia, Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Imo, Ondo, and Rivers states in 2022 compared to the N450 billion distributed to them in 2021.
The 13 per cent derivation fund comes from the federation revenue to oil-producing communities through the state governments as enshrined in section 162, sub-section 2 of the Nigerian constitution.
Analysis of the report showed that Delta state received the highest allocation totalling N296.63 billion, representing 31 per cent of the total revenue from the derivation account.
Delta is followed closely by Akwa Ibom, which received N222.52 billion, representing 19 per cent of the total disbursement during the period.
Other states include Bayelsa (N188.02 billion), Rivers (N169.79 billion), Edo (N37.49 billion), Ondo (N25.95 billion), Imo (N18.61 billion), Abia (N6.95 billion), and Anambra (N4.25 billion).
The 13 per cent derivation fund is different from the three per cent provided for host communities in the PIA from the oil company’s operating expenses (OPEX).
In 2021, the nine oil-producing states shared N450.60 billion from the federation account with Delta state receiving the highest with a total of N141.93 billion, representing 31 percent of the total revenue from the derivation account.
Also Akwa Ibom had received N91.16 billion, being 20 per cent of the total disbursement during the period.
Other states which shared of the 2021 derivation fund included Bayelsa (N87.23 billion), Rivers (N83.12 billion), Edo (N17.12 billion), Ondo (N11.50 billion), Imo (N9.98 billion), Abia (N4.78 billion) and Lagos (N3.78 billion).
Oil prices swung wildly in 2022, climbing on tight supplies amid the war in Ukraine, then sliding on weaker demand from top importer China and worries of an economic contraction, but closed 2022 with a second straight annual gain.
Prices surged in March as Russia’s invasion of Ukraine upended global crude flows, with international benchmark Brent reaching $139.13 a barrel, highest since 2008. Prices cooled rapidly in the second half as central banks hiked interest rates and fanned worries of recession.
Brent crude settled at $85.91 a barrel, while the U.S. West Texas Intermediate crude settled at $80.26 a barrel in 2022.
A survey of 30 economists and analysts forecast Brent would average $89.37 a barrel in 2023, about 4.6% lower than the consensus in a November survey. U.S. crude is projected to average $84.84 per barrel in 2023, down from the prior view. read more
While a jump in year-end holiday travel and Russia’s ban on crude and oil product sales has supported crude, tighter supply will be offset next year by declining fuel consumption due to a deteriorating economic environment, said CMC Markets analyst Leon Li.
Oil’s decline in the second half of 2022 as rising interest rates to fight inflation boosted the U.S. dollar. That made dollar-denominated commodities like crude more costly for holders of other currencies.
The dollar was on track to post its biggest annual gain since 2015. read more
China’s zero-COVID restrictions, which were eased only this month, had squashed demand recovery hopes. The world’s top oil importer and second-biggest consumer in 2022 posted its first drop in oil demand for years.
While China’s oil demand is expected to recover in 2023, a recent surge in COVID-19 cases has dimmed hopes of an immediate boost in barrel buying.
In an indicator of future supply, the U.S. oil and gas rig count rose 33 per cent for the year, energy services firm Baker Hughes Co (BKR.O) said in its latest report.