BUSINESS NEWS
Written by From Aniete Akpan (Calabar) and Willie Etim (Yenagoa)
• Unite Against Monkey-work-baboon-eat Formula
• Stand Divided On Percentage Ratio
•Akwa Ibom Propose Vertical, Horizontal Formula For Revenue Sharing
• Bayelsa Urge Quick Passage Of PIB
All six states of the South South zone are united against the current revenue sharing formula, which, they say, is heavily tilted in favour of the Federal Government. Cross River, Akwa Ibom and Bayelsa made specific demands in this regard but failed to converge opinions on what the ratio for revenue sharing should be among the three tiers of government.
Cross River State Governor, Liyel Imoke, at the South South Zonal Conference on National Dialogue in Calabar, at the weekend, called for review of revenue sharing formula in the country and return to true fiscal federalism.
Imoke stated that the formula should be such that states get 45 percent; local governments, 35 percent; while the federal government gets 25 percent of the monthly federal allocations.
He said Nigeria should return to the true federal structure of the pre-military era when states were encouraged to leverage their comparative advantage to grow regional economies.
T he Cross River governor, who was represented by his deputy, Mr. Efiok Cobham, also aligned with the position of the South-South states that the constitution should be amended to give 50 percent derivation to oil producing states.
He said: “We want the constitution to be amended to read that a state on whose territory oil is extracted be entitled to not less than 50 percent of the entire proceeds from the exploration and exploitation.
Meanwhile, it was an expression of very strong views by representatives of governors from the South-south at the recent three-day zonal public hearing on review of the Revenue Allocation Formula held in Yenagoa, the Bayelsa State capital.
Secretary to the State Government (SSG) in Akwa Ibom, Mr. Udom Emanuel, who represented Governor Godswill Akpabio, canvassed a vertical and horizontal allocation formula.
Giving a breakdown of the proposed ‘Vertical’formula, Udom said the Federal Government should allocate 40 per cent of the total federal revenue to itself, 36 per cent to states, while 24 per cent should go to local governments.
By horizontal allocation, according to Udom, 40 per cent should be shared across board to states based on the principle of equality. The remaining 60 per cent, he said, should be disbursed based on the following pattern: land mass, 10 per cent; social development factors, 10 per cent; population, 15 per cent; population density 15 per cent; and internally-generated revenue,10 per cent.
The proposed review, the SSG insisted, is anchored on the fact the states now assume expanded responsibilities arising from Federal Government’s failure to meet significant aspects of assigned roles, and reduction in its direct duties.
The assumption of the proposed review in the overall, he said is based on the indication that states and local governments will assume even expanded roles in the provision of basic welfare services, job creation and infrastructural development in their various domains.
While formally presenting a memorandum at the public hearing on behalf of the Akwa Ibom delegation, Udom explained that the ongoing
nationwide collation of views is to enable the Commission come up with a just, fair and equitable revenue allocation formula for the country, against the background of the changing realities of socio-economic
development.
The State’s position, according to him, is intended to further expand on, and reinforce earlier memorandum of August 12, 2013, as a state that contributes about 29 percent of the oil revenue that sustains the nation’s economy. Udom said Akwa Ibom has great faith in the review exercise, which is a very good step towards setting the country on the path of fiscal federalism.
The SSG had explained at the public hearing that their position is derived from the 1960 constitution: Sections 134 (1)-(2) which states
that; (1) there shall be paid by the federation to each region a sum equal to fifty percent- (a) of proceed of any royalty received by the
federation in respect of any minerals extracted in that region (b) any mining rents derived by the Federation during that year from within
the region.
The 1960 constitution just like the 1963 constitution: sections 140 (1)-(6) recognise 50 percent derivation that was duly paid to the region, he said.
On onshore/offshore controversy, the position of Akwa Ibom State, as contained in the Memorandum, is that before now
there was no discrimination between onshore/offshore revenue from oil
and gas. But in 1969, dichotomy between onshore and offshore was
introduced with the purported aim of generating more revenue to the federal government for prosecution of the civil war.
Within the period, revenue from the federation account to states was reduced and derivation component in sharing of revenue to states was removed.
The war had ended since 1970 but the situation remains the same to the detriment of the Niger Delta region.
While insisting on 50 percent derivation, representatives of the six
Geo-political zones, including the Bayelsa State Government, reaffirmed the Akwa Ibom State’s position on the demand of a minimum of 50 percent revenue derivation.
The Secretary to Bayelsa State Government, Professor Edmond Allison Oguru, in his presentation, demanded upward review of revenue allocation.
Lamenting the level of environmental degradation occasioned by oil
exploration and exploitation activities in the Niger Delta, he pointed out that the current 13 per cent derivation principle was grossly
inadequate to address the challenges confronting the region.
Calling for a reduction of money accruing to the Federal Government from the Federation Account, the SSG submitted that such reduction would discourage the struggle for political power at the national level and enhance the capacity of States and Local Governments to accelerate development and make life more meaningful for the people at
the grassroots.
“The enormous resources at the centre have fostered a do-or-die mentality among the political elite of this country, most of whom go
to the extreme to achieve their political ambitions to control the centre. States favored by the principle of revenue sharing, such as
population and landmass, have grown steadily dependent on allocation from the federation account and have lost initiative and drive in
matters of economic planning and revenue generation,” he said.
Consequently, Prof Oguru called on the Commission to come up with a more acceptable and equitable revenue formula, just as he urged the national assembly to expedite the passage of the Petroleum Industry
Bill (PIB) into law.
In his words: “The RMAFC should revisit the era of 100 percent, 50 percent or 30 percent
derivation formula to reflect true federalism. It is a well known fact that the exploration of oil in the Niger Delta region has not only
exploited the people of the area but also made the area toxic resulting into massive pollution of the environment which has in turn
adversely affected the agrarian and subsistence lifestyle of the people.
“The current 13 percent derivation principle has become increasingly inadequate to surmount the huge developmental challenges confronting the area.
“That is why it has become imperative for the National Assembly to expedite action on the Petroleum Industry Bill, which I believe when
passed into law, will adequately address the lopsided revenue allocation formula, especially to the oil-producing states and
communities of the Niger Delta.”
The Chairman of the RMAFC, Engr. Elias Mbam, said the Commission decided to embark on the public hearing in line with the provision of the 1999 Constitution, which empowers it to review the revenue sharing
formula periodically.
According to him, the exercise will enable Nigerians make their inputs into the review process that will bring about a new sharing
formula that will conform to changing realities in the country.
Mbam, who described the South-South zone as one that has demonstrated strong commitment to national development, called on the people to avoid utterances and unrealistic demands that could heat up the polity.
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