Opinion
Of Royalties And Oil Bearing Communities
The demands and grievances of Nigeria’s oil-bear
ing areas can be identified under five broad themes. These are related to the disposition of mineral land rents, the application of the derivation principle, the allocation of federally collected mineral revenues, the appropriate institutional and fiscal responses to the ecological problems of the oil-producing areas and the responsibility of the oil-producing companies to the oil producing/bearing communities with the present federal structure.
Perhaps the most logically and legally compelling of the demands of the oil-bearing communities and states are their claims to mineral land rents. For instance, land right in Nigeria were vested in the respective local communities. But under the Land Use Decree of 1978, however, ownership of land is vested in the state. Thus both traditionally and legally, the federal government has no direct claims to land in the states.
The Federal Government has continued not only to prescribe how much rent is paid by the oil-prospecting companies for land used, but also to collect these rents. The justification for the Federal Government’s action is the defunct Petroleum Decree of 1969 and relevant provisions of the 1999 constitution which vest in the federation control of all minerals and gas in, under or upon the land and territorial waters of Nigeria. However, these provisions clearly refer to ownership of mineral wealth and not ownership of land which, under the practice of the constitution, remains vested in the states.
In essence, therefore, the federal government’s retention of mineral land rents would appear to be unconstitutional since the states are clearly entitled to such rents as a matter of right. Two unresolved problems, however, beset the position that mining rents are legally not the property of the Federal Government. The first is whether these rents should belong to the state government or to the specific oil-bearing communities involved. Although the Land Use Degree would appear to give the states the right to these rents, the oil producing communities have also asserted an exclusive and intrinsic right to what they regard as rents on communal lands.
A far more complicated issue relates to the attempt by elements from the oil-bearing communities to juxtapose mineral rents and royalties as resources legitimately belonging exclusively to the oil-producing communities. Consider, for example, the following statement by the Movement For The Survival of the Ogoni People (MOSOP): “MOSOP insists that oil royalties and rents are the property of landlords and that the Federal Government must return to the oil-bearing communities all royalties and rents paid to it by the oil-producing companies since 1958.
The constitutional position on the matter is, however, unambiguous while rents are a tribute to the owners of land. The state governments, royalties are levies on minerals, whose ownership remain vested in the Federal Government.
The demand of the oil-producing states and communities is that a significant proportion (usually put at not less than 10 percent) of the mineral revenues should be returned to the producing areas on the basis of the derivation principle. Derivation is, of course, a long-standing principle of distribution which stipulates that a significant proportion of the revenues collected in a locality should be returned to that locality or segment.
Derivation was, however, introduced as mineral exploitation replaced agricultural exports as the principle source of government revenues and foreign exchange earnings in Nigeria. This change in the rules for allocating revenues was denounced by the majority ethnic nationalities who were bent on ensuring that the minority groups that produce the oil were denied their economic rights.
Very sadly, the derivation, which is meant to benefit the host communities by way of building development projects there, never gets to them. Governors of oil producing states have decided to utilise the funds in other areas of the state.
These oil producing communities have been loud about the exploitation they have suffered from the Federal Government. They are denied access to the natural resources situated in their lands. They, therefore, ask the Federal Government to give them access to their God-given resources.
In line with the demands of the oil bearing communities, I urge the Federal Governmen to pay royalties directly to the communities or prevail on state governors to pay the 13 percent deviation to oil bearing communities.
Agbadam is a student of Eastern Polytechnic, Port Harcourt
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