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Court halts sharing of derivation funds to oil producing states

Court halts sharing of derivation funds to oil producing states


A Federal High Court sitting in Abuja has ordered the Accountant General of the Federation to immediately halt the distribution of more than N1trillion due to oil producing states pending the determination of the suit before it.

The trial judge in the matter, Justice A R. Mohammed in an interim injunction held that the distribution of the derivation funds without the indices of the Revenue, Mobilization, Allocation and Fiscal Commission, RMAFC, was injurious to the applicant which is the Imo State government.


The Imo State Attorney-General had in a suit No FHC/ABJ/CE/415/2022, against RMAFC and others challenged the distribution of the said funds without unambiguous indices by RMAFC as provided in Nigeria’s Constitution.

In his submission before the court, counsel to Imo State Government, Olusola Oke argued on the need to protect his client pending the determination of the suit.

After granting the ex-parte order, Justice Mohammed ordered the Imo State to join other oil producing states as respondents to the suit.


He consequently adjoined the matter to June 15,2022, for hearing of the motion on notice.

Nine oil-producing states in the country shared N450. 60 billion from the Federation Account through the 13 per cent derivation formula in 2021.

Data from the National Bureau of Statistics, NBS, showed that Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, Lagos and Abia received the fund .

The 13 percent derivation fund comes from the federation revenue to oil-producing communities through the state governments as enshrined in section 162, sub-section 2 of the Nigerian Constitution.


Analysis of the report showed that Delta State received the highest with a total of N141.93 billion, representing 31 percent of the total revenue from the derivation account.

Delta is followed closely by Akwa Ibom, having received N91.16 billion, representing 20 percent of the total disbursement during the period.

Other states include Bayelsa (N87.23 billion), Rivers (N83.12 billion), Edo (N17.12 billion), Ondo (N11.50 billion), Imo (N9.98 billion), Abia (N4.78 billion) and Lagos (N3.78 billion).


The 13 per cent derivation fund is different from the three percent provided for host communities in the PIA from the oil company’s operating expenses, OPEX.



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