By
Clement Ikpatt
Recently the President has submitted a draft Bill to the National Assembly against dichotomization of onshore and offshore natural resources. Also included in that Bill are sections that may etch the so-called 13% Derivation principle as law of the land. I do not have any problem with the unction for justice in legislating away the Onshore – Offshore controversy. However, there is poison in the dangled carrot of 13% Derivation principle. As heralded and seemingly welcomed the draft Bill is, a careful consideration reveals that it superficially covers a disingenuous Federal government scheme against all Nigerians, and particularly the peoples of mineral rich Niger Delta region. It does not and cannot effectively deal with inequities against indigenous peoples. It is the least attempt toward justice, equity and fairness especially for my people of the Akwa Ibom State. Therefore, the whole concept of a derivation principle is fraudulent and unacceptable in its present form for the long or short-term interest of Akwa Ibom State. My prediction is that as more people understand the fuzzy math that derives that principle, conflicts will form and fester until indigenous peoples in their respective States are allowed ownership, any form of ownership, of resources according to natural justice and according to relevant international instruments such as in articles of the UN Declaration of Indigenous Rights.
If my people in the Akwa Ibom State acquiesce to the President’s Derivation formula, it shall be for three reasons listed below.
Ignorance – because we do not understand any thing about what and why of a Derivation formula. Rogue politicians and economists who introduced and sustained this Derivation Principle knew how to work our ignorance for regional gains and for creating a super-monstrous Federal government.
Morbid fear for future in accepting to settle for less than crumbs in what is naturally, morally and justifiably ours – because we are afraid to boldly ask for, negotiate and obtain what is ours by natural and citizenship rights.
Mental and material poverty- because there is no telling to what low degrees poverty can sink or destroy its victim. Our capitulation to accepting crumbs and mediocrity due to over four decades of exploitation has foreclosed natural instincts for better alternatives.
However
and for the record, I flatly reject any Derivation principle founded in
prevailing vicious assault – calling on our respective Governors, Senators,
Lawmakers and other Nigerians to throw out the ill conceived, sinister and
conflict generating principle for what it is, a piece of trouble.
Understandably, the general psyche has been battered from years of military and majority
politics. But, we have a unique opportunity of self-correcting if we choose to
redeem the times and overwhelming sympathies by seeking to obtain, once and for
all, much of our rights as a people. Firstly, we must correct the insidious
gossip making rounds in Nigeria high places that the Niger Delta people are
positioning to cause conflagrations with aim of yanking off all crude oil
resources. No, we ask for no more than is just and fair within a democratic
republic: seeking to live respectably and in mutual consideration for other
Nigerians of what must be acceptable in a true federalism. Secondly, let no one
make mistakes about it, the institutionalization of any Derivation
principle works against all Nigerians in the long run – it may be Akwa
Ibom’s turn at the short end of the stick today, surely it will be your turn
tomorrow given today’s rapidly evolving socio-economy.
Very
few Nigerians, including our lawmakers and policy formulators, have made efforts
toward understanding the derivation formula. Very few have bothered to ask how
the Federal government has come up with its magic percentile – 13%. Without a
clear understanding, it is impossible to see how unbalanced, arbitrary and crude
that principle has been and how criminally strategic the behemoth – the
Federal government – has positioned itself for maximum exploitations,
manipulating the peoples’ ignorance through a formula that blatantly steals
from indigenous peoples.
In today’s fiscal regime, the magic percentile – 13% - has no traceable mathematical derivation formula. There has been no standard equation for derivation in 50 years of its various applications. As a result, prevailing concept of fiscal federalism in Nigeria falls short of expectations in both definition and practice. To the extent that it is being practiced as quasi-federalism, there has been an overly centralized control of resources by the Federal government. Notorious Derivation principles have become aberrations that continue to generate perpetual conflict with indigenous rights, hence, a major cause of conflict. Nigeria does not need a Derivation principle: what is needed is a devolution of powers in a diversified economy such that States can, for a start, have partial ownership and control of its resources.
We
must not also fail to realize that the Derivation Principle does not technically
signify the degree of ownership or control of natural resources as is commonly
misunderstood. In Nigeria, mineral rights exclusively belong to the Federal
Government. Only on paper are some states preferred over others in natural
resources – in this case, crude oil and natural gas resources. You may
consider so-called crude oil rich states in Nigeria as those states the Federal
government exploits from and has chosen them to become beneficiaries of a token
reward system for hosting its joint venture schemes. Therefore, can or
has the Federal government, as a mere token for conciliation, prepared any
arbitrary Derivation formula it wishes for the resource-endowed States. And,
since a concession, it logically explains why the Federal government has always
set arbitrary values it considers politically and economically expedient for
maximum profitability and sustained control. That is democratically and morally
wrong.
The Derivation formula or percentile may be determined at any figure and from any arbitrary conception – it does not significantly matter. What matter is who owns the mineral resource and not what token such owner may decide to concede to any agitating group through a scandalous Derivation formula. As you may understand from below, I would rather that indigenous groups retain any degree of ownership of resources than accept a handsome 50% - 100% Derivation principle as calculated in today’s fiscal regime. I would advocate that a middle ground 50% indigenous ownership of mineral resources become the law of the land, subject to periodic incremental reviews based upon extent of economic diversification and other economic pointers.
Assuming President Obasanjo’s Bill becomes law and in calculating 13% Derivation that hypothetically accrues to so-called oil states in Nigeria, let us review some average numbers in figuring out what concessions are available per barrel of crude oil drilled and sold according to Industry expert and sources.
The approximate net amount per barrel @ USD 18.00 from which 13% is derived is far less than USD 2.00. That leaves Akwa Ibom State or any other Oil endowed State deriving less than USD 0.15 or less than 2cents per barrel of crude oil extracted and sold from its land. Putting it mildly, the Federal government’s Derivation formula is an organized heist: a strong-armed tactic and carefully planned life support for a massive and corrupt center at the expense of all indigenous and fundamental rights of its citizens. When contemporary and democratic civilizations are engaging in ways toward devolution of economic powers, both the Executive and Judiciary arms of government are purposefully manipulating ours to feed corrupt ethnocentric and other mundane values.
I
sincerely do not believe crude oil endowed States should advocate for 100%
control of resources at this time of our national development. But, I hate
present arrangement wherein those States own practically nothing of what they
are endowed with. The Federal government owns every single drop of crude oil
that Nigeria produces. The Derivation formula simply does not provide ownership
in any way, but should be seen as being deviously forced upon minority
indigenous groups in the name of concessions. It is only commonsense and
consistent with modern economic policies and practices that the Federal
government must concede partial ownership rights of mineral resources to endowed
states. What our lawmakers should be deliberating about must be over what
starting percentile of resource ownership goes to the resource endowed States
and not over a lousy Derivation formula that perpetuates conflict. Akwa Ibom
State is best served owning 10% of its crude oil reserve than a whopping 70% in
prevailing Derivation formula. But, I advocate a starting and fair 50% ownership
rights.
For
this reason, I consider President Obasanjo’s draft Bill that removes the
Onshore-Offshore dichotomy a partial and cosmetic solution, which must be
complimented by the abrogation of retrogressive and repugnant laws that give the
Federal government absolute rights over mineral resources in Nigeria. It is time
for our legislators to reject the President’s Bill as submitted to the
National Assembly but rewrite with other sections that frontally deal with
issues relating to resource control in following ways:
1. Repeal of retrogressive laws:
a. The Land Use Act of 1978 and 1993
b.
The Petroleum Act of 1969 and 1991
c.
The National Waterways Decree of 1997
2. Abrogation of the arbitrary Derivation Principle. A legacy of confusion and conflicts, together with a lack of any scientific derivation makes its abrogation imperative.
3.
The partial transfer of ownership rights to States subject to
incremental reviews for full rights. In this connection, States make economic
decisions regarding exploration, exploitation and sale of resources within a
favorable Federal Regulatory system while also paying necessary taxes to the
Federal government.
4.
The review of Education and Petroleum Trust Tax set at a
ridiculously high of net 85%. Education is on the concurrent list and we are yet
to measure any appreciable growth changes in the education sector from funds
generated so far from this absurd taxation.
The President Obasanjo’s Bill must not replace the urgent need to devolve absolute mineral rights from the Federal government and giving over of such rights to the indigenous people. As long as the Federal government has all right over the country’s mineral resources, any derivation formula or principle remains the de facto window dressing to mask grave injustices against indigenous peoples who are being deprived of naturally endowed resources.
To my Honorable Senators and House Representatives from the Niger Delta State in general and from the Akwa Ibom State in particular, please do the right thing now. The overriding concern is your obligation to our general welfare and of our posterity. That should be your fundamental principle. I implore that our inalienable rights to local resources be not compromised for short-term gains and temptations in any devious Derivation principle. Your colleagues, Nigerians and the world know of grave injustices against our peoples. So, it will record as yours and our loss should you fail to exploit prevailing sentiments for fairness, justice and equity in favor of our peoples. The opportunity for engaging justice and peace in societies has availed and must be worked out fearlessly and optimally for posterity and welfare of our peoples.
Clement Ikpatt hails from the Akwa Ibom State of Nigeria. September 13, 2002