Onshore/Offshore Dichotomy; Revisiting An Old Wound
By ALABI WILLIAMS
ONCE again, politicians are looking for excuses to make the polity rowdy and unstable. The Governors of the 19 states in the north and three of their counterparts from the south west have decided to disturb the system by going to the Supreme Court to revisit the sensitive issue of on-shore/offshore dichotomy. From April 2002, when the Supreme Court ruled on the matter in a suit SC/28/2001 between the Attorney General of the Federation Vs Attorney-General of Abia State and 35 others, till early this year, a lot of political energy was dissipated on the subject. Eventually, the presidency used the political solution to douse the flame when in concert with the National Assembly the dichotomy was abolished via the Act 2004 (Abolition of Dichotomy in the Application of the Principle of Derivation). The resolution of that crisis was seen as a landmark political achievement in which politicians across the zones were united in their resolve to address the age long fiscal injustice that is being visited on the Niger Delta and other states. It was also an opportunity to move closer to the ideal practice in a federal system whereby substantial fiscal autonomy is granted to the federating units.
Upon the abrogation of that separation between onshore and offshore mineral resources, the littoral states thought their nightmare within the federation were over. They rejoiced in the expectation of huge allocations from the 13 per cent derivation fund.
That joy is now being threatened. The 22 state governors in a suit filed by Mallam Yusuf Ali, a Senior Advocate of Nigeria they are arguing that the Act also known as On-shore/offshore Act was unconstitutional, ultra vires and therefore null and void. Listed in the suit as defendants are the Attorney-General of the Federation and the eight littoral states of Akwa Ibom, Bayelsa, Cross River, Delta, Lagos, Ogun, Ondo and Rivers. The suit prays that the Attorney - General of the Federation and the Revenue Mobilisation Allocation and Fiscal Commission had no constitutional powers to rely on the Act for the allocation of revenue to the states and local government areas from the federation account.
They thus ask for an order directing the defendants to "forthwith stop the implementation and reliance on the said Act, as well as an injunction restraining the littoral states and their agents from taking benefit from the Revenue Act. They also ask the Supreme Court to issue an order setting aside, annulling and to make void the said Revenue Allocation (Abolition of Dichotomy in the Application of the Principle of Derivation) Act 2004.
The main grouse of the 22 states is that the Act, when implemented would impact negatively on the amount that would accrue to the Federation Account and that this would reduce their share of the revenue. This position invariably takes the argument back to the pre-abrogation era when the debate centred around the constitutional question of resource control. Agitation was rife, particularly among the oil producing littoral states for them to control a substantial part of the mineral resources in their respective states. The democratic environment from 1999 provided an opportunity for activists within and outside government to revisit issues of fiscal federalism and resource control. Governors Victor Attah of Akwa Ibom, his counterpart from Delta, National Assembly members, particularly Senator Udo Udoma and his counterparts from the Niger Delta made the Federal government uncomfortable with their agitation. The federal government thus initiated the court process in which the Supreme Court was asked to determine the seaward boundary of littoral states within the Federal Republic of Nigeria for the purpose of calculating the amount of revenue accruing to the Federation Account directly from any natural resources derived from that state pursuant to section 162 (2) of the Constitution of the Federal Republic of Nigeria 1999.
In that suit, all the 36 states were joined as defendants, even though the main dispute was targeted at the eight littoral states which have boundaries with the Atlantic. Lagos and Ogun were joined in the suit, even though they are not currently oil producing.
Section 162(2) of the 1999 which deals with Public Revenue says, "the president, upon the receipt of advice from the Revenue Mobilisation Allocation and Fiscal Commission, shall table before the National Assembly proposals for revenue allocation from the Federation Account, and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of states, internal revenue generation, land mass, terrain as well as population density; provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources."
The Supreme Court went ahead to rule in a unanimous decision among other reliefs that the sea ward boundary of a littoral state within the Federal Republic, for the purpose of calculating the amount of revenue accruing to the federation account directly from any natural resources, derived from that state pursuant to the constitution of Federal Republic of Nigeria, 1999, is the low - water mark of the land surface thereof.
The federal government went to court with a mindset that states should be contented with the resources within their land mass, leaving whatever is in the waters off-shore for the federal government to control. To the littoral states, particularly Akwa Ibom and Ondo States whose oil resources are situated offshore, the judgement as incontestable as it was coming from the Supreme Court, remains politically unfair. The politics of revenue sharing in the country is fraught with double standards and hypocrisy. Once upon a time, the basis upon which the regions agreed to federate was that they be allowed to remain economically autonomous. They only agreed to cede a percentage of their revenue to the federal government.
The 1963 Constitution is said to have allowed for a sharing formula which gave 50 per cent of mining rents and royalties to the regions from which such rents and royalties were derived. The Federal government earned the remaining 50 per cent. There were no arguments over that formula. According to experts, it was the civil war that compelled the regions to let go in order for there to be sufficient resources to prosecute the war on the federal side. In any case, the regional governments had already collapsed before the war and there was the attempt to foist a unitary system upon the country. Gradually, that 50, per cent dwindled to two per cent in 1979. As a matter of fact, the 1979 Constitution in Section 149 (Public Revenue) is very vague on the issue derivation, as well as on the terms of distributing funds from the Federation account. And that was deliberate because those who ought to have agitated for its inclusion were probably still sleeping. The Constitution itself was elitist and very undemocratic. The same military that smuggled it in 1979 kicked it out in 1983. Just as well.
In 1999, peoples and communities in the oil producing states of the Niger Delta had made it clear that the Federation does not make much sense as it does not provide room for, at least, relative fiscal autonomy. The 1999 Constitution (Section 162(2)) which was the basis for the Supreme Court judgement of April 5, 2002 was not a people's document. That issue has been thoroughly debated.
Increasingly, the 'new federation' from 1966 till date is built around power and resource control. Those who have managed to exercise utmost control of this power and resources are finding it difficult to detach themselves.
That is why these Governors are revisiting an old controversy that was rested on February 16, 2004 when President Obasanjo signed into law the abrogation bill. The National Assembly had passed that bill, believing that even through it was controversial, it was a fair deal for all. For the littoral states, it will appease frayed nerves and discourage youth restiveness. When the angry Delta youths are restless, they disrupt oil production activities and earnings accruing from crude sales are deeply affected. That will even affect more the revenue which the 22 states are so worried about. For Nigeria, the abrogation suggested the coming to terms with the reality of what a federation should be - that of states which are capable of taking care of their economic needs. What we have over the years are states and governors who are waiting every month to receive from the Federation Account. Some have not contributed anything meaningful except to use their allocations to cause religious strife and to agitate for power shift.
At the core of this debate is the revisit of the entire 1999 Constitution. Observers say that this resort to the dichotomy issue is a political subterfuge to throw punches ahead of negotiations for 2007. The south south Zone is putting together a demand for its 2007 game plan. The northern governors have already sounded an alert note that come 2007, power will rotate back to the north. Revisiting the onshore/offshore bill at this time is probably the best way to disorganise the south south agenda. At the end of the day, the critical issues will be negotiated on the basis of 2007. For the three south west governors who have joined the fray, they may have acquiesced to an underground party order. Ordinarily, it is unbelievable that states in the south west, which have been at the forefront in agitation for real federalism will chose to soil their own history at this time when even the conservatives are caving in. It is even more disgusting that Lagos is being litigated against in spite of the huge coastal advantages it offers Nigeria. Shouldn't Lagos control its offshore space
For those northern governors, it is high time they realised that those museum photographs of groundnut pyramids were no illusions. Besides, who said crude oil will not be found in the north Even when that dream is not realisable, is it not better to partake in the eating of the national cake according to the derivation Act 2004 than to drive Niger Deltans into further disruptive tendencies
