Former President Olusegun Obasanjo has backed calls for an increase in the 13 per cent derivation allocation to oil-producing states, describing the current arrangement as a starting point for further negotiations.
Obasanjo made the position known on Monday during the flag-off of the crude distillation unit of the $1 billion Azikel Refinery in Obunagha, Yenagoa Local Government Area of Bayelsa State.
Addressing Bayelsa State Governor Douye Diri at the event, the former president acknowledged that oil-producing states and host communities had not received adequate benefits from the exploitation of resources in their territories.
“You are right that the states and oil-producing communities have not got a fair deal so far. Thirteen per cent is the beginning. You can continue to talk,” Obasanjo said.
His remarks came as Diri renewed calls for a review of the derivation formula, arguing that oil-producing communities continue to bear the environmental and social consequences of crude oil exploration without receiving commensurate benefits.
The governor also criticised the Land Use Act, describing it as unfair to oil-producing communities because of the separation between control of land and control of the natural resources beneath it.
Diri said the Niger Delta was not seeking to appropriate all proceeds from its natural resources but wanted a greater role in decisions concerning their management and distribution.
“We do not want to take all to ourselves. We just want to be co-players in determining how it is done. Thirteen per cent is not enough for the states,” he said.
The debate over derivation has remained a longstanding issue in Nigeria’s fiscal federalism and resource-control discussions, particularly in the Niger Delta, where communities have repeatedly demanded a greater share of the wealth generated from their natural resources.
Obasanjo Urges Completion of $1bn Refinery
Beyond the derivation debate, Obasanjo challenged the President of Azikel Group, Azibapu Eruani, to ensure that the refinery is completed within the next 12 months.
The former president expressed satisfaction with the progress of the project, whose foundation stone he laid about eight years ago.
Obasanjo said he hoped the facility would be completed before his 90th birthday in March 2027, urging the promoter to consider expanding its capacity after completion.
“My challenge to you, Dr Eruani, is to ensure that the refinery is completed within the next 12 months. With this done, you can even double the capacity,” he said.
He also commended the African Finance Corporation and the African Export-Import Bank for supporting the investment, calling for continued assistance to bring the project to completion.
Obasanjo further praised Governor Diri for what he described as the effective use of the revenue available to Bayelsa State, noting that development projects across the state demonstrated the impact of the funds received.
Refinery to Boost Local Participation
The Azikel Refinery, owned by Azikel Petroleum under the Azikel Group, is designed to process 25,000 barrels of crude oil daily.
According to the project’s promoters, the facility is expected to produce about 2.5 million litres of petrol and two million litres of diesel daily, alongside other petroleum products.
Eruani said the project was conceived to enable Bayelsa and the wider Niger Delta to participate more directly in the petroleum value chain rather than remain primarily suppliers of crude oil.
He described the installation of the crude distillation unit as a significant step towards completing the refinery and advancing industrial development in the region.
Meanwhile, Diri urged young people in Bayelsa to acquire technical and vocational skills to prepare for employment opportunities expected to emerge from the refinery and related industrial activities.
The governor also called on oil companies operating around Gbarain and Obunagha to rehabilitate the road leading to the facility, stressing the importance of supporting infrastructure in promoting industrial growth.
He maintained that greater local participation in refining and other stages of petroleum production was essential to ensuring that oil-producing communities benefited more directly from the resources extracted from their territories.