History of Crude Oil Revenue Sharing in Nigeria.

Discussion in 'General Forum' started by Izu, Jun 24, 2016.

  1. Izu

    Izu Admin Staff Member

    Here is a complete history of Crude Oil Revenue sharing in Nigeria starting from 1958, when the crude oil was first discovered to the last time of the crude oil revenue sharing formula  amendment.

    Please note that this post is source from Facebook. Thanks.
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    Before the independence of Nigeria, as at 1958, this was how crude oil taxes were shared…
    1958:
    1. Oil Producing States retained 67.4% of Mining Rents and Royalties.
    2. Federal Government got 20% of Mining Rents and Royalties. 
    3. Non-oil states got 12.6% So the crude oil and gas was owned by the oil producing states, that how the British left it.
    In 1970, General Yakubu Gowon passed decree No 13, this was how crude oil taxes were now to be shared.

    1970
    1. Oil Producing States retained 45% of Mining Rents and Royalties.
    2. Federal Government got 55% of Mining Rents and Royalties.
    3. Non-oil states got 0% So in the military’s wisdom, the non-oil states did not deserve to get any share of oil revenues. Oil was only for the oil producing states and the Federal Government.

    Then 1975, General Murtala Muhammed introduced decree 6, this is how crude oil taxes were shared 1975
    1. Oil Producing States retained 20% of Mining Rents and Royalties.
    2. Federal Government got 80% of Mining Rents and Royalties.
    3. Non-oil states got 0%. Again the military decided the oil producing states
    should “manage” 20%. of oil revenues non-oil states got zero…

    In 1976, Gen Obasanjo created a technical commission called the Aboyade Technical Commission, this was the
    result.

    1. Oil Producing States got 0% of Mining Rents and Royalties
    2. Federal Government got 100% of Mining Rents and Royalties
    3. Non-oil states got 0% Obasanjo, also introduced the Consolidated Revenue fund aka FAAC, thus, the oil taxes were centrally pooled, then shared to all states. This was the important junction in Nigeria fiscal federalism, this was when crude oil was federalized, taken from the states, managed by the federal government then shared back to the states. In essence, crude oil was no longer based on derivation but on metrics like equality, fiscal efficiency and absorptive
    capacity…

    In 1979, President Shehu Shagari set up the Okigbo Commission, to review the sharing of oil revenues. The Commission agreed to retain the Obasanjo 0% allocation to oil producing state and continue with FAAC but they tweaked the sharing formula in FAAC….
    they came up with 1979
    Equality of States 50%
    Population 40%,
    Land mass 10%
    So here we see population of states and land mass introduced.
    In just 9 years, the oil producing states saw their share of crude oil taxes go from 67.4% to zero. It took until
    the year 2000 for the implementation of 13% back to the oil producing states.
    So in summary, its 67% to 0% to 13%.
    So please do you think the NDA is asking for what is not their due?.
     

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