Former President Olusegun Obasanjo has supported calls for oil producing states to receive more than the existing 13 per cent derivation allocation, saying the current arrangement should be regarded as a basis for further discussion rather than a final settlement. He made the remarks in Obunagha, Bayelsa State, at an event marking progress on the crude distillation unit of the Azikel Refinery project, developed by Azikel Petroleum under the Azikel Group. Obasanjo praised the company’s president, Azibapu Eruani, for pursuing the project and urged the promoters to complete the facility within the next 12 months.
The refinery has been described by its promoters as a project worth approximately $1 billion, with planned output including petrol and diesel. Obasanjo said communities and states from which crude oil is extracted had legitimate grounds to seek a fairer share of the economic benefits. He nevertheless commended Bayelsa Governor Douye Diri for what he described as productive use of resources already available to Bayelsa. Eruani said the refinery was conceived to strengthen industrial activity in the Niger Delta and enable the region to participate more directly in processing the crude oil produced within its territory. Governor Diri used the occasion to renew his criticism of the Land Use Act and the derivation framework. He argued that oil producing communities should play a greater role in decisions affecting their resources and should receive more substantial economic benefits from petroleum operations.
The event drew attention to two connected policy questions: how petroleum wealth should be shared among the federation’s constituent units and how producing communities can capture more value through local processing, investment and employment. The project’s eventual impact will depend on completion, commissioning and sustained commercial operation.
