Nigeria’s oil-producing states collectively received N2.85tn in 13 per cent derivation revenue, between 2022 and 2024, according to an analysis of state budget implementation reports conducted by The PUNCH.
The eight states that benefited from this allocation are Akwa Ibom, Bayelsa, Delta, Edo, Ondo, Rivers, Imo, and Abia.
Despite the surge in revenue, these states are still grappling with a combined domestic debt of N1.34tn as of the third quarter of 2024, based on data from the Debt Management Office.
The 13 per cent derivation fund is a constitutional provision designed to compensate oil-producing states for the environmental and economic consequences of crude oil exploration.
This additional allocation aims to promote local development and reduce infrastructural deficits in the affected regions.
In 2024, Nigeria recorded a significant boost in crude oil production. Data from the Nigerian Upstream Petroleum Regulatory Commission shows that the country produced 408,680,457 barrels of crude oil throughout the year.
Although Nigeria’s average daily production reached 1.484 million barrels per day in December, it fell short of the Organisation of the Petroleum Exporting Countries quota.
The country’s daily production was unstable throughout 2024, starting at 1.42mbpd in January, dropping to 1.32mbpd in February, and further declining to 1.23mbpd in March.
From July, production began to improve, peaking at 1.48mbpd in December.
This gradual recovery is attributed to the Federal Government’s intensified measures to combat oil theft and vandalism, including the deployment of armed drones and attack helicopters to secure oil facilities in the Niger Delta.
The rise in production translated into higher derivation revenue for oil-producing states.
However, questions remain about how effectively these funds have been utilized. Despite increased allocations, several states are still burdened with mounting debt.
Delta State received the highest allocation, totaling N1.14tn over the three-year period, with N296.63bn in 2022, N331.45bn in 2023, and N515.09bn in 2024. Akwa Ibom followed with N659.21bn, while Rivers State received N438.63bn. Bayelsa got N327.42bn, Imo N79.87bn, Edo N87.52bn, Ondo N73.66bn, Abia N17.32bn, and Anambra N18.41bn.
Delta recorded the largest growth in derivation revenue, rising 55.4 per cent from 2023 to 2024. Conversely, Akwa Ibom and Rivers experienced declines of 19.8 per cent and 22.6 per cent, respectively.
Despite the increased revenue, the financial liabilities of some states remain a growing concern. Rivers State’s debt surged from N225.51bn in Q3 2022 to N389.20bn in Q3 2024—an increase of N163.69bn.
Delta’s debt also rose by N69.92bn within the same period, reaching N342.53bn.
Meanwhile, other states reduced their debt. Akwa Ibom’s domestic debt fell from N219.62bn in Q3 2022 to N126bn in Q3 2024, marking a significant reduction of N93.62bn. Imo, Bayelsa, Edo, Ondo, Abia, and Anambra also recorded notable declines in their debt profiles.
These contrasting fiscal approaches have raised questions about the transparency and accountability in the management of public funds.
While some states have adopted conservative borrowing policies, others continue to accumulate debt despite substantial revenue inflows.
Chairman of the Civil Societies Legislative Advocacy Centre, Auwal Musa Rafsanjani, expressed concerns about the lack of tangible development projects in oil-producing states.
“If you look at how much Rivers, Akwa Ibom, Bayelsa, Delta, and Cross River collect, at least the living conditions in those states should improve dramatically, especially in terms of healthcare, education, and economic development. But sadly, you cannot find visible, tangible, developmental projects that can match the revenue or rather the income they collect,” Rafsanjani said.
He further noted the need for state-owned or public-private partnership enterprises that could generate additional revenue for these states, lamenting that such initiatives are largely absent.
Similarly, National Coordinator of the Human Rights Writers Association of Nigeria, Emmanuel Onwubiko, acknowledged some states’ efforts to develop infrastructure but called for stricter legal action against those unable to justify the funds received.
“Whatever allocations have been given to the states, if there is no commensurate development, if the governor, commissioners and the rest of them cannot give adequate justification for the budgetary releases we have made to their respective ministries, there are sufficient legal mechanisms for tracing such disappearances if funds are provided for the construction of certain developmental projects and building of infrastructure in those oil-producing states that have not been executed,” Onwubiko stated.
The disparities in debt management and infrastructure development highlight the need for improved fiscal discipline and accountability to ensure that the 13 per cent derivation revenue fulfills its intended purpose of transforming the lives of citizens in oil-producing states.
