Niger Deltans finger corruption, malpractice in 13% derivation fund management

…Demand reforms, establishment of management board

The need for transparency, accountability and development of oil-bearing communities in the administration of the 13 per cent derivation is fuelling calls for a reset in the management of the fund, as a group of Niger Deltans fingered corruption and maladministration of the fund as the bane of retarded socio-economic growth and development of the Niger Delta.

The group noted that while some States like Edo, Delta, Ondo, Imo and Abia had established Commissions entrusted with the management of the fund to drive development in oil- bearing communities, others, such as Bayelsa and Rivers, don’t have, which accounted for haphazard and unequal growth and development in the Niger Delta.

BusinessDay gathered that States like Rivers and Bayelsa outrightly rejected calls for the establishment of such Commissions, treating the derivation fund as State fund to be allocated for use wherever the States want.

That is why stakeholders in the South-South Region, which covers more States in the Niger Delta, call for the establishment of a 13% Derivation Board to strengthen accountability, transparency and ensure that oil-bearing communities feel the direct impact of development.

The stakeholders under the auspices of the Niger Delta Civil Society Forum have therefore urged President Bola Tinubu to revisit the calls for reforms in the administration of the 13% derivation fund so that oil-bearing communities can benefit from the funds.

Ezekiel Kagbala, Coordinator of the Niger Delta Civil Society Forum, in a statement made available to BusinessDay, argued that “the derivation principle is constitutional while the Petroleum Industry Act (PIA) is a separate legislation enacted for entirely different objectives.”

The Forum said President Tinubu should “revisit the calls for reforms in the administration of the constitutional 13% Derivation Fund by establishing a Presidential Board to strengthen accountability, transparency and ensure direct developmental impact in oil-producing communities”.

The Forum’s statement is in reaction to a letter by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) dated April 15, 2026, on the constitutional administration of derivation revenues, wherein the Forum described the RMAFC position as an “unparalleled absurdity to redirect statutory funds meant for host communities and then claim that the PIA has addressed their needs”.

According to the Forum, the PIA governs the relationship between international oil companies and host communities through the provision of three per cent of operating expenditure for community development.

“Whereas the 13% derivation fund derives its authority directly from Section 162(2) of the 1999 Constitution (as amended)”, the statement said.

Continuing, Kagbala said: “Legally, the 13% derivation fund is not mentioned anywhere in the PIA. The derivation principle is tied to the volume of oil production from producing communities and was constitutionally designed as compensation.

“We are compelled to ask whether the Revenue Mobilisation Allocation and Fiscal Commission is unaware of the legal foundation and intent of this constitutional provision”, he noted.

While insisting that the derivation fund is compensatory in nature and fundamentally intended to benefit oil-producing communities directly, the forum lamented that the current disbursement structure has exposed the fund to elite capture, alleged misallocation and growing dissatisfaction across the Niger Delta.

The feeling of dissatisfaction is due to the fact that while billions of Naira have been allocated to oil-bearing States through the 13% derivation principle, no commensurate projects are visible in the oil-bearing communities.

Most of them, particularly in the riverine areas, are yet to be connected by roads, lack basic amenities like water, electricity and healthcare facilities, while residents live in squalor, BusinessDay observed.