According to findings, oil-producing states in Nigeria have received a total of N2.85tn in 13 per cent derivation revenue between 2022 and 2024.
The findings are based on analysis of data from each state’s budget implementation reports for the period under review.
The eight states that benefitted from the 13 per cent derivation revenue are Akwa Ibom, Bayelsa, Delta, Edo, Ondo, Rivers, Imo, and Abia.
Despite the increase in derivation revenue, it was observed that the states’ domestic debt burden remains at N1.34tn as of the third quarter of 2024, according to the latest data from the Debt Management Office.
The revenue, designed to compensate these states for oil exploration’s environmental and economic impact, has continued to rise, but questions linger over the management of these funds in the face of mounting liabilities.
The 13 per cent derivation fund is a constitutional provision ensuring that states producing crude oil receive additional allocations from the Federation Account.
The principle is meant to address the effects of oil extraction, foster local development, and reduce infrastructural deficits in these regions.
Nigeria’s crude oil production recorded a significant increase in 2024. Data obtained from the Nigerian Upstream Petroleum Regulatory Commission, an agency of the Federal Government, confirmed that Nigeria produced a total of 408,680,457 barrels of crude oil in 2024.
As production levels rise, the revenue generated from oil sales increases, leading to higher allocations for these states.
This revenue, meant to compensate for environmental degradation and fund development projects in oil-producing regions, has seen a corresponding increase in line with the country’s improved production figures.
However, despite the increase in allocations, concerns persist over how effectively these funds are managed. While the additional revenue provides an opportunity for infrastructural development and improved public services, the rising debt burden in some of the oil-producing states raises questions about fiscal prudence.
Many of these states continue to grapple with rising debt, suggesting a disconnect between revenue generation and financial sustainability. An analysis of the funds received over the last three years reveals that Delta State emerged as the highest recipient, receiving N1.14tn in total.