13% Derivation Arrears: The Facts and Figures

The Evangelist
November 28, 2022

It has become pertinent to respond to issues relating to the refund of the 13 percent derivation arrears to oil producing states, of which Akwa Ibom is one.

The agitation for the refund of the arrears which were deducted from the earnings due to the Oil bearing states was undertaken by the affected Governors, directly and through their officers at the Federation Accounts Allocation Committee FAAC, which agreed with the very detailed submission and calculated the sums accruing to the states. However, due to the large amount involved and the inability of the Federal Government to pay all at once, it was agreed that the payments be made in tranches quarterly, over a period of five years.

In 2021, the sum of 160,000,000,000 was remitted to the state account. In 2022, the projected income from this source was 41,434,000,000, but as at Q3, the sum of 26,000,000,000 has been received.

In line with proper financial records keeping and public finance transparency, the refund was reflected in the 2021 budget as “Other Exceptional income: 13% derivation revenue arrears, which was revised to the tune of 193,000,000,000; in 2022 the revised provision was 41,434,000,000; in the 2023 budget, the estimate for this line item is 100,000,000,000. A simple calculation of these figures will reveal the sustainability thinking disposition that guides the governance of our state.

The report of judicious application of this income and other incomes to the state are captured in the statutory Accountant General’s audited report for 2021 and same will be reflected this year. There is therefore no reasonable cause for the activation of alarmist tendencies on the state of finances of the state, because the Governor is conscious of the judgement of history and posterity and is doing everything to earn a copious mention on its golden pages .

We therefore urge the entire public to ignore the various figures bandied around on various media platforms, as those are nothing more than fiction. With the implementation of the International Public Sector Accounting System (IPSAS), it is impossible for any unaccounted expenditure to occur. It is also worthy to point out that the state’s budgets and annual reports must first be reviewed by the World Bank and it is practically impossible that financial infractions can skip their attention. This is the reason why knowledgeable stakeholders in the national public finance space have greatly commended the Government of our state under Governor Udom Emmanuel for deepening financial transparency in the financial administration of the state . The latest of such commendation came recently from the Consul General of the United States, who not only commended the government but committed to increased partnership with the state in this respect.

It is the avowed commitment of this administration, under the capable leadership of Governor Udom Emmanuel, to ensure judicious and justifiable application of scarce resource to provide for the innumerable needs of the great people of our state.

Nsikan Linus Nkan, FCA, PhD
Honourable Commissioner for Finance
Akwa Ibom State