Business
Omo-Agege Accuses Oil Producing Areas Of Diverting 13% Derivation Funds
The Deputy President of the Senate, Ovie Omo-Agege, has decried the diversion of the 13 percent oil derivation funds by oil-producing states.
Omo-Agege, according to a statement by his Special Adviser on Media and Publicity, Yomi Odunuga, made the remarks when he hosted a delegation of Oil and Gas Host Communities of Nigeria (HOSCON), led by the Amanyanabo of Twon-Brass in the Brass Kingdom and Chairman, Bayelsa State Traditional Rulers Council, Chief Alfred Diete-Spiff.
The Deputy Senate President specifically made a case for 100 percent utilisation of the derivation funds for oil-bearing communities, as against the practice where states release only 50 percent of the money to development commissions in their states.
The Delta Central lawmaker noted that since host communities bear the burden of environmental degradation from the oil industry, it is only fair that all funds be channeled into the development of the affected areas.
Omo-Agege, who chairs the Senate Adhoc Committee on Constitution Review, expressed regrets that the utilisation of the 13 percent derivation funds has become a political tool in the hands of state governors in the region.
He said the diversion of the money has contributed gravely to the underdevelopment of the region as the affected communities can hardly boast of having access to the basic necessities of life.
He said: “I have been discussing this matter with Chief (Wellington) Okrika even before I became a senator. It is fair that the 13 percent derivation is meant to ameliorate the conditions of the people who are most impacted by oil exploration and exploitation. That is the only reason this fund was set aside as a consequence of your agitation which you led for so many years.
“These funds are not meant for the state governments. The state governments are meant to be purveyors to host communities.
“Even in states that have development commissions, they only earmark 50 percent of the funds to the Commission to manage on behalf of the host communities.
“So what happens to the other 50 percent? We have always taken the position from the outset that 100 percent of the funds is meant for the development of host communities because it is not every area that suffers from oil exploration and degradation. But for some reason, it has become a political tool”.
Omo-Agege reiterated his call for gas flaring penalties in the Petroleum Industry Bill to be paid to the host communities and not to the Federation Account, stressing that the annual contribution of 2.5 percent actual operating expenditure by oil companies to the Host Community Development Trust Fund should be increased to, at least, five per cent.
He added that the penalties from gas flaring would be used to ameliorate the living conditions in Niger Delta communities, as they suffer from the environmental impact of oil exploration.
He called on the people in the region to show more than passing interest in the development of the area and hold their leaders accountable.
In his earlier remarks, the Senior Special Assistant to the President on Niger Delta Matters, Senator Ita Enang, called on the Senate Deputy President to intervene in the N98 billion gas flare fund, the controversy surrounding the Pipeline Surveillance Contract, 13 percent derivation payment to oil-producing communities and the need to pass a bill for the establishment of a Derivation Commission.
According to him, the Niger Delta people should be engaged in the surveillance contract to give them a sense of belonging.
He also lamented the absence of development commissions in Rivers, Bayelsa and Akwa Ibom States.
Edun made the call while speaking at the 2025 Fellowship Investiture of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, where he reaffirmed the federal government’s commitment to sustaining ongoing reforms and expanding access to finance as key drivers of economic growth beyond four per cent.
“We all know that monetary policy under Cardoso has stabilised the financial system in a most commendable way. Of course, it is a team effort, and those eye-watering interest rates have to be paid by the fiscal side. But the fight against inflation is one we all have to participate in,” he said.
The minister stressed the need for banks to broaden credit access and finance innovation-driven enterprises that can create jobs for young Nigerians.
“The finance and banking industry has more work to do because we must finance their ideas, deepen the capital and credit markets down to SMEs. They should not have to go to Silicon Valley,” he said.
The minister who described the private sector as the engine of growth, said the government’s reform agenda aims to create an enabling environment where businesses can thrive, access funding, and contribute meaningfully to job creation.
The facility, known as the Nigeria Actions for Investment and Jobs Acceleration (P512892), is a Development Policy Financing (DPF) operation scheduled for World Bank Board consideration on December 16, 2025.
According to the Bank’s concept note , the financing would comprise $500m in International Development Association (IDA) credit and $500m in International Bank for Reconstruction and Development (IBRD) loan.
If approved, it would be the second-largest single loan Nigeria has received from the World Bank under President Bola Tinubu’s administration, following the $1.5 billion facility granted in June 2024 under the Reforms for Economic Stabilisation to Enable Transformation (RESET) initiative.
The World Bank said the new programme aims to support Nigeria’s shift from short-term macroeconomic stabilisation to sustainable, private sector–led growth.
“The proposed Development Policy Financing (DPF) supports Nigeria’s pivot from stabilization to inclusive growth and job creation. Structured as a two-tranche standalone operation of US$1.0 billion (US$500 million IDA credit and US$500 million IBRD loan), it seeks to catalyse private sector–led investment by expanding access to credit, deepening capital markets and digital services, easing inflationary pressures, and promoting export diversification,” the document read.
The document further stated that Nigeria’s private sector credit-to-GDP ratio stood at only 21.3 per cent in 2024, significantly below that of emerging-market peers, while capital markets remain shallow, with sovereign securities dominating the bond market.
To address these weaknesses, the DPF will support the implementation of the Investment and Securities Act 2025, operationalisation of credit-enhancement facilities, and introduction of a comprehensive Central Bank of Nigeria rulebook to strengthen risk-based regulation and consumer protection.
The operation also includes measures to deepen digital inclusion through the passage of the National Digital Economy and E-Governance Bill 2025, which will establish a legal framework for electronic transactions, authentication services, and digital records.
Beyond the financial and digital sectors, the programme targets reforms to lower production and living costs by tackling Nigeria’s restrictive trade regime. High tariffs and import bans have long driven up consumer prices and constrained competitiveness, particularly for manufacturers and farmers.
Under the proposed reforms, Nigeria would adopt AfCFTA tariff concessions, rationalise import restrictions, and simplify agricultural seed certification to increase the supply of high-quality varieties for maize, rice, and soybeans. The World Bank projects that these measures will help reduce food inflation, attract private investment, and enhance export potential.
The operation is part of a broader World Bank FY26 package that includes three complementary projects—Fostering Inclusive Finance for MSMEs (FINCLUDE), Building Resilient Digital Infrastructure for Growth (BRIDGE), and Nigeria Sustainable Agricultural Value-Chains for Growth (AGROW)—all focused on expanding access to finance, strengthening institutions, and mobilising private capital.