“13% Derivation Is Not Enough for Oil-Producing States” — Obasanjo, Diri Demand Bigger Share of Oil Wealth

By Taibat Ummi Yakubu

Former President Olusegun Obasanjo and Bayelsa State Governor Douye Diri have renewed calls for oil-producing states to receive a greater share of Nigeria’s petroleum wealth, arguing that the existing 13 per cent derivation formula does not adequately reward communities where crude oil is extracted.

The call came on Monday at the inauguration of the Crude Distillation Unit (CDU) of the Azikel Refinery in Obunagha, Yenagoa Local Government Area of Bayelsa State, where Obasanjo urged stakeholders to continue pushing for a fairer distribution of oil revenue.

Addressing Diri at the event, the former president agreed that oil-producing states and communities had not received a fair deal, describing the existing 13 per cent allocation as only a starting point.

“You are right that the states and oil-producing communities have not got a fair deal so far. Thirteen per cent is the beginning,” Obasanjo said, while commending the governor for what he described as effective use of the state’s revenue for development.

The former president also challenged the refinery’s owner, Azikel Group President, Dr Azibapu Eruani, to complete the project within the next 12 months, saying the facility could eventually have its capacity doubled.

The $1 billion refinery, developed by Azikel Petroleum under the Azikel Group, is expected to produce 2.5 million litres of petrol and two million litres of diesel daily, alongside other petroleum products.

Obasanjo praised Eruani for driving the project and acknowledged the contributions of its technical team, the African Finance Corporation and Afreximbank. He also commended Diri for supporting the investment, which he said had made considerable progress since his previous visit.

Reflecting on his age, Obasanjo urged Eruani to ensure that the refinery was completed while he was still alive, saying he would officially turn 90 next March.

Eruani, in his remarks, described the installation of the CDU as a major milestone in the refinery’s development, recalling that Obasanjo laid its foundation eight years ago.

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He said the project was conceived to transform the Niger Delta from a region that merely produces crude oil into an active participant in refining and other aspects of the petroleum industry.

According to Eruani, the refinery would help drive industrialisation in Bayelsa and the wider Niger Delta, while supporting efforts to improve the domestic supply and affordability of petroleum products.

He also described the facility as Nigeria’s second-largest full-scale refinery and praised President Bola Tinubu for supporting indigenous refining investments.

Governor Diri, however, used the occasion to challenge the existing framework governing ownership and control of natural resources, arguing that oil-producing states should have a greater role in determining how their resources are managed and how the benefits are shared.

He criticised the Land Use Act and the 13 per cent derivation arrangement, saying the current system denied oil-producing communities a sufficiently meaningful stake in the resources extracted from their land.

“The Land Use Act is unfair. Surface resources belong to states, but what lies underneath belongs to the Federal Government,” Diri said, describing the law as unsuitable for a just society.

The governor stressed that the Niger Delta was not seeking to take all the benefits of petroleum production but wanted to become a genuine partner in decisions concerning the industry.

“We do not want to take all to ourselves. We just want to be co-players in determining how it is done. Thirteen per cent is not enough for the states,” he added.

Diri said the refinery represented an opportunity for Bayelsa residents to move beyond hosting oil infrastructure and participate directly in the industry’s economic activities. He urged young people to acquire the technical and professional skills needed to benefit from jobs and other opportunities the project could generate.

He also called on oil companies operating in the Gbarain/Obunagha area to support the state government by rehabilitating the road leading to the refinery.

The refinery project comes amid continuing debate over resource control, revenue allocation and the extent to which oil-producing communities benefit from Nigeria’s petroleum industry. Its completion is expected to expand domestic refining capacity and create opportunities for industrial development in the Niger Delta.