Calculating the 13 per cent derivation on revenue remaining after various deductions from total collections was inconsistent with the intention of the derivation principle
By Moses Okorie
Nigeria spent about N1.16 trillion on fuel subsidy in 2021, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Dr Mohammed Shehu, has disclosed.
Shehu made the disclosure on Thursday in Abuja while appearing before the Senate Public Accounts Committee (SPAC), which is investigating the 2021–2023 audit reports on Nigeria’s oil and gas sector conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI).
The RMAFC chairman also told the committee that N1.20 trillion was deducted from the proceeds of crude oil sales during the period.
He further disclosed that other deductions from the federation’s oil revenues included N16.20 billion attributed to crude and petroleum product losses, N22.05 billion for pipeline repairs and N6.75 billion for strategic stock holding.
Shehu also raised concerns over the manner in which the 13 per cent derivation fund was calculated, arguing that the existing method undermined the objective of the constitutional provision.
According to him, calculating the 13 per cent derivation on revenue remaining after various deductions from total collections was inconsistent with the intention of the derivation principle.
“The practice of computing 13 per cent derivation on the balance of revenue after deductions from the total collections is contrary to the intention of the derivation objective,” he said.
Meanwhile, the Senate committee postponed consideration of the submission by the Niger Delta Development Commission (NDDC) to enable members to study the documents and reports presented.
The committee, chaired by Senator Ibrahim Dankwambo, representing Gombe North Senatorial District, directed the NDDC to reappear on August 12.
The committee chairman also expressed displeasure over the absence of the Auditor-General for the Federation from the investigative session.
Dankwambo criticised the failure of the Auditor-General to appear before the committee or send a representative, warning that the official must appear at the next hearing.
“The Auditor-General must unfailingly appear before this committee on Tuesday next week or risk invocation of the powers of the National Assembly against him, which will lead to forced appearance,” he warned.
The investigation is part of the Senate’s ongoing examination of the findings contained in NEITI’s audit reports on the oil and gas industry for the 2021–2023 period, with the committee seeking clarification on revenue deductions, remittances and other financial transactions within the sector.