Of Royalties And Oil-Bearing Communities


The demands and anger of oil-bearing communities or regions can be identified under five broad measures. These are related to the disposition of mineral land rents, the appreciation of the derivation principles, allocation of federally-collected mineral revenues, the appropriate institution and fiscal responses to the ecological problems of the oil producing/bearing regions with the present-day government.
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.
The Federal Government has continued not only to prescribe how much rent is paid by oil-producing 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 refers to ownership of mineral wealth and not ownership of land which, under the practice of the constitution, remains vested in the State.
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 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 Decree 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 explain 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 Ogoni People (MOSOP); “MOSOP and the people insist that oil royalties and rents are the property of landlords and that the Federal Government should return to the oil-bearing communities all royalties and rents paid to it by the oil-producing companies since 1958.
The constitutional provision of the matter is, however, unambiguous while rents are a tribute to the owners of land. The State governments, royalties and levies on minerals whose ownership remain vested in the Federal Government.
The demand of the oil-producing communities or states is that a significant proportion (approximately 10 per cent) of the mineral revenues should be returned to the oil-producing communities or 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 revenue collected in a locality should be returned to that segment or locality.
Derivation was, however, introduced as mineral exploitation replaced agricultural exports as the principal source of government revenues and foreign exchange earning in Nigeria. This change in the rules for allocating revenues was introduced by 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. Government agencies, governors of oil-producing states have decided to utilize the funds in other areas of the State.
Oil-producing communities have been loud about the exploitation they have suffered from the Federal Government as the case of the Ogonis and the Niger Delta. They are also 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 in order to create and develop a better, conducive, healthy and wealthy environment, I, therefore, call on the Federal Government and State governors to pay royalties directly to the communities or prevail on state parastatals to pay 13 percent derivation to oil-bearing communities to encourage a wealthy and friendly society.
Edwin is a student of Eastern Polytechnic, Port Harcourt.


Agbadam Edwin