Derivation Fund: HOSCON Demands Direct Remittance To Communities

Women of Host Oil and Gas Producing Communities of Nigeria (HOSCON) have written to President Bola Tinubu to demand direct remittance of the 13 per cent derivation fund to communities.

In a letter dated December 13, 2024, signed by the chairperson, Nneka Obi; the secretary, Hon Ann Izi, and other state coordinators, they said such communities constitute the derivation principle as provided in the 1999 Constitution of the Federal Republic of Nigeria as amended.

The Senate and House of Representatives were copied in the letter.

The group said it is illegal and unconstitutional to deny the oil and gas producing communities their constitutional rights as they observed that all federation account heads under first-line charges, except the 13 per cent derivation fund, are paid directly to such beneficiaries.

Wondering why the presidency continues to release the 13 per cent derivation fund which is a first line charge to the states that are on third-line charge, they said the constitution did not expressly or impliedly provide that the fund be handed over to governors of the affected states for their own discretional disbursement as has been the practice since 1999.

According to them, the derivation principle was provided for in the constitution to mitigate the adverse effects of oil and gas exploration and exploitation in affected communities, hence, the fund should be released directly to the affected communities.

“The operation of the derivation fund to Oil Mineral Producing Area Development Commission (OMPADEC) in the 80s was executed by the military government then by direct release of the fund to the affected communities through a well-constituted commission assisted by a Federal Monitoring Committee.

“The 1994/95 Constitutional Conference recommended that the 13 per cent derivation fund be given to an authority or agency for the development of the oil and gas producing communities.

“Section 162 (2) of the 1999 Constitution as amended, provides that the principle of derivation shall be constantly reflected in any approved formula as being not less than 13 per cent of the revenue accruing to the federation account directly from any natural resources.

“With the express provision for the derivation principle in the constitution, it implies that the release of the 13 per cent derivation fund is a first-line charge on the federation account just like other similar heads.

“Oil and gas constitutes part of item 39 on the Exclusive Legislative list in the 1999 Constitution along with other items such as mines and minerals, oil fields, oil mining, geological survey and natural gas.

“Any matter that has to do with the Exclusive Legislative list is the exclusive preserve of the president. The president, not the state governors, has the prerogative and jurisdiction on all such matters including the oil and gas that is item 39.

“Neither the state governors nor the State Houses of Assemblies are constitutionally empowered to legislate on any matter on the exclusive legislative list as oil and gas is not on the concurrent list. It is only the National Assembly that is constitutionally empowered to legislate on any matter contained in the Exclusive Legislative list,” they stated.