Obasanjo Backs Higher Derivation Demand For Oil Producing States
Former President of Nigeria, Chief Olusegun Obasanjo, on Monday, advocated an increase in the 13 per cent derivation to oil producing states in the country. Chief Obasanjo said the present benchmark was a starting point…
The 13 percent derivation principle, enshrined in Nigeria's 1999 Constitution, mandates that oil-producing states receive at least 13 percent of revenue generated from natural resources extracted within their territory before the remainder is shared among the federal, state and local governments through the Federation Account. The provision was designed to compensate states in the oil-rich Niger Delta for the environmental and social costs of extraction, but leaders from the region have long argued that the figure falls short of what was practised in earlier eras, when regions controlled a much larger share of revenue from resources produced within their borders, including agricultural exports before the oil boom.
Calls to review the derivation formula have resurfaced periodically amid broader debates on restructuring and fiscal federalism in Nigeria, with oil-producing states and some national leaders pushing for a higher percentage while other regions resist changes that could reduce their allocations. Obasanjo's intervention adds a prominent voice to this debate, though the coverage across outlets does not indicate what specific percentage he proposes, nor any timeline or legislative process that might follow his remarks.