IN considering possible political solutions, the Committee was fully conscious of the fact that such solutions have to be situated within the framework of the Supreme Court judgment. In effect, no political solution should be seen to be going against the judgment which, as shown above, has confirmed dichotomy in the calculation of revenue due littoral States on the basis of the principle of derivation in respect of natural resources directly derived from their territories as defined by the Court, and those derived off-shore. It therefore seems that aspects of CAP 16 as amended and modified may still be in conflict with the judgment.
In the light of the foregoing, the Committee recommends the following options for consideration:
OPTION 1- (INTERIM SOLUTION - IMMEDIATE)
Now that the President has signed an Executive Order along the lines described in paragraphs 39-42 above, the Committee recommends that part of the provision made for Development of Natural Resources in the Federal Government’s share of the Federation Account (3%), should be used to meet substantially, some of the revenue shortfalls as well as take care of the degradation of the environment of the littoral States as described in paragraph 43 above, using objective criteria such as assessed level of degradation or the amount of on-shore installations and facilities on the contiguous littoral States in support of the off-shore operations of oil companies.
OPTION 2- (INTERIM SOLUTION- MEDIUM TERM)
Until Option 3- (Permanent Solution)- which requires constitutional amendment is effected, the Committee further recommends that a Bill be presented to the National Assembly making it possible to regard the natural resources found offshore in any part of the Contiguous Zone adjacent to any of the littoral States as if they were found within the territory of that State solely for the purpose of determining its share of revenue from those resources under the derivation principle. This will be followed by the presentation and passage of a new Revenue natural resources exploited in the zone, as if they were derived from within their borders.
GENERAL RECOMMENDATIONS
Option 1 should be applied in the interim. The new Revenue Allocation Bill will, of course, be submitted to the National Assembly, upon the advise of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC), for enactment into law.
The Committee is of the view that until the new Bill is presented by Government to the National Assembly and passed into law, the Federal Government should continue to pay the affected States from the 3% allocation for the Development of Natural Resources contained in the Allocation of Revenue (Federation Account, Etc.) (Modification) Order 2002, a substantial part of the revenue they were receiving before the judgment, subject to adjustments that might be found necessary in respect of location of oil deposits as well as actual exploitation. This will ensure equitable distribution of funds.
The Department of Petroleum Resources and the National Boundary Commission should be directed to finalize the on-going job of determining the actual location of oil wells in order to remove the disagreement between some States whose common border areas harbour disputed oil wells.
Similarly, the Committee is of the view that the Revenue Mobilization Allocation and Fiscal Commission should consider recommending an increase in the Federal Government’s share of the Federation Account, given the additional responsibilities that this tier of government will now shoulder as a result of the judgement.
The committee appeals to the National Assembly to treat the Bill abrogating dichotomy, when presented, with all seriousness and expediency. We also call on ‘all concerned to treat the new revenue allocation bill with dispatch. The new section be introduced in the 1999 Constitution will obviously take time to effect as it will be taken along with other proposed amendments. The process should, however, not be allowed to be delayed unduly.
The Committee is of the view that the security of the nation is of paramount importance, particularly given the threats posed to it by the simmering situation in the Niger Delta region. Everything possible should be done to address the security situation in the nation decisively, if we are to continue to attract foreign investment to all sectors of our economy, including the oil and gas sectors, two of the sectors in which the nation enjoys comparative advantage.
While the committee was still meeting, there were rampant allegations that money received from the derivation fund by some states was mismanaged and, therefore, not spent in the interest of the generality of the people by some of the beneficiary states. Although the committee’s mandate and terms of reference did not include this subject, it is our considered view that the federal government should, in consultation with the NDDC states, work out modalities for ensuring that money received from the derivation fund is spent for the intended purpose.
In concluding, the committee wishes to associate itself fully with the opening statement of its chairman at the maiden meeting with governors of the oil-producing states in Asaba on 6th May, 2002 in which he, inter alia, stressed the need to offer some compensation and concession to oil-producing states on the basis of “solidarity and equity” with a view to avoiding pitfalls in the nation’s recent history, adding that areas which currently appeared to be less endowed with resources might well become richly endowed in future and that when this happened, the present principles would also apply.
It is the view of the committee that tolerance of diversity and willingness to take political action through conciliation are vital to the existence of the Nigerian federation and to our nascent democracy. We therefore urge all concerned to display the necessary leadership and political will in finding solutions to this problem.
Finally, we wish to express, collectively and individually, our deep appreciation to His Excellency, the President and Commander-in-Chief of the Federal Republic of Nigeria, for finding us worthy to serve our country as members of this committee. We also wish to express sincere thanks to the governors of the oil-producing states for co-operating with our committee, even when we had to meet with them at very short notice.
