Former President Olusegun Obasanjo has backed calls for an increase in the 13 per cent derivation allocation to oil-producing states, saying the existing share should be treated as a starting point for further negotiations.
Obasanjo spoke on Monday at the flag-off of the Crude Distillation Unit of the $1bn Azikel Refinery in Obunagha, Yenagoa Local Government Area of Bayelsa State, where he also challenged the project’s promoter to complete the facility within 12 months.
Addressing Bayelsa State Governor, Douye Diri, the former President said oil-producing states and communities had not received a fair deal from the exploitation of resources in their territories.
“You are right that the states and oil-producing communities have not got a fair deal so far. Thirteen per cent is the beginning. You can continue to talk,” he said.
The remarks came as Diri renewed his criticism of the derivation formula and the Land Use Act, arguing that communities in the Niger Delta remained excluded from decisions concerning the resources extracted from their land.
The refinery, owned by Azikel Petroleum under the Azikel Group, is designed to process 25,000 barrels of crude oil daily.
Its foundation was laid by Obasanjo about eight years ago, while the installation of the crude distillation unit marks a major stage in the project’s development.
Obasanjo commended the President of Azikel Group, Azibapu Eruani, for sustaining the project and urged him to ensure its completion within the next year.
“I have told Dr Eruani that I will be officially 90 years by next March. It means I will take the boarding pass soon. So, he has to make sure the project is completed before I exit,” he said.
He also acknowledged the role of the African Finance Corporation and the African Export-Import Bank in supporting the investment, calling for continued assistance to bring it to completion.
“My challenge to you, Dr Eruani, is to ensure that the refinery is completed within the next 12 months. With this done, you can even double the capacity,” Obasanjo said.
The former president also praised Diri for what he described as the effective use of Bayelsa’s revenue, citing projects across the state as evidence that the funds accruing to it had been put to use.
“The most important thing is that even the little you have received, you have used it well,” he said.
In his remarks, Diri said the refinery represented an opportunity for residents of Bayelsa and the Niger Delta to participate more directly in an industry built on resources extracted from their communities.
He argued that the region’s long-standing agitation over resource control stemmed from the perceived imbalance between where crude oil was produced and where the benefits of its exploitation accrued.
“As people of the Ijaw ethnic nationality, we have protested and fought because we feel that God gave us something in our land but we are not benefiting from it. Others are benefiting and see us as second-class citizens,” the governor said.
Diri also faulted the Land Use Act, arguing that the division between state control of surface resources and Federal Government control of resources beneath the ground placed oil-producing communities at a disadvantage.
“The Land Use Act is unfair. Surface resources belong to states but what lies underneath belongs to the Federal Government. That law is obnoxious and not good for any just society,” he said.
He added that the region was not seeking to appropriate all the proceeds from its resources but wanted a greater role in determining how they were managed.
“We do not want to take all to ourselves. We just want to be co-players in determining how it is done. Thirteen per cent is not enough for the states,” he said.
The governor urged young people in Bayelsa to acquire the skills needed to benefit from the refinery and other industrial investments, warning that the presence of such facilities would mean little if residents lacked the capacity to participate in their operations.
He also called on oil companies operating around Gbarain and Obunagha to rehabilitate the road leading to the refinery, saying they should complement the state government’s efforts to support the project.
Diri further stressed the need for African countries to process their natural resources locally, arguing that retaining more processing and industrial activities on the continent was essential to securing greater economic benefits from its resources.
Speaking at the event, Eruani said the refinery was conceived to make Bayelsa and the wider Niger Delta active participants in the petroleum industry rather than remain primarily suppliers of crude oil.
He described the installation of the crude distillation unit as the beginning of the refinery’s completion phase and said the project would help drive industrialisation in the state and the region.
The facility is expected to produce 2.5 million litres of petrol and two million litres of diesel daily, alongside other petroleum products, according to the project’s promoters.
Eruani also commended President Bola Tinubu for supporting indigenous refineries, saying their development aligned with the Federal Government’s objective of improving the availability and affordability of petroleum products.
A board member of Azikel Petroleum, Daru Owei, and the Ibenanaowei of Ekpetiama Kingdom and Chairman of the Bayelsa State Council of Traditional Rulers, King Bubaraye Dakolo, also commended Eruani for the project, saying it could improve the economic fortunes of Bayelsa, the Niger Delta and Nigeria.