Derivation, Gas Flare Penalty Funds Not Reaching Communities — NDCSF Tells Tinubu

The Niger Delta Civil Society Forum (NDCSF) has condemned what it described as the continued exclusion of oil and gas-producing communities from the benefits of the constitutional 13 percent derivation fund and gas flare penalty revenues, calling on President Bola Ahmed Tinubu to urgently put measures in place to ensure that the funds reach the communities most affected by oil exploration and gas flaring.

In a statement issued on Sunday and signed by the Coordinator of the Forum, Comrade Ezekiel Kagbala, the group said it was unjust that communities bearing the environmental and health consequences of oil and gas activities continue to suffer deprivation while revenues generated from their resources are shared through government channels without corresponding development in the affected areas.

The forum specifically criticized the current arrangement under which gas flare penalty funds paid by oil companies are remitted into the Federation Account and subsequently shared among the Federal, State and Local Governments, while host communities remain excluded from direct benefits.

According to the NDCSF, President Tinubu had in February 2026, acting pursuant to Section 44(3) of the 1999 Constitution, issued an Executive Order directing the direct remittance of oil and gas revenues into the Federation Account. The group said the same constitutional commitment should be extended to the implementation and administration of the 13 percent derivation fund in accordance with Section 162(2) of the Constitution.

The forum noted that while President Tinubu’s Executive Order addressed the ownership and control of mineral resources by the Federal Government, there remains an urgent need to ensure that constitutional benefits accruing to oil-producing communities are protected and delivered transparently.

Kagbala disclosed that the NDCSF had been at the forefront of advocacy for reforms in resource allocation and had submitted documents to the National Assembly seeking constitutional implementation of the derivation principle in a manner that directly benefits host communities.

The group therefore urged the President to establish a Presidential Monitoring Committee and a Derivation Fund Management Board to oversee the administration of derivation revenues and ensure that funds meant for oil-producing communities are no longer controlled exclusively by state governments.
“The Federal Government should not take the Niger Delta and its people for granted. Communities continue to suffer environmental degradation, poverty and underdevelopment while gas flare penalty funds paid by oil companies are shared through the Federation Account system, denying the intended beneficiaries meaningful access to the resources generated from their environment,” the statement said.

The forum also called on the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Dr. Mohammed Bello Shehu, to review the current framework for administering the 13 percent derivation fund and gas flare penalty revenues.

According to the group, despite decades of derivation allocations to oil-producing states, many host communities still lack basic infrastructure, healthcare facilities, potable water, roads and environmental remediation projects.
The NDCSF noted that RMAFC, as the constitutional body responsible for monitoring revenue allocation and advising government on fiscal matters, remains a critical stakeholder in any effort to reform the management and distribution of derivation funds.

Citing industry records, the forum said oil companies flared about 323.2 million standard cubic feet of gas in 2025, resulting in environmental degradation and health hazards across the Niger Delta.

“Gas flaring has destroyed our environment, contaminated our water sources and exposed our people to deadly diseases, including cancer. Yet the penalties paid by oil companies for these environmental crimes are collected by government while the victims receive little or no direct benefit,” the statement added.

The group further referenced disclosures by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which showed that approximately N289.3 billion was remitted to the Federal Government as gas flare penalties between January and November 2025.

According to the NDCSF, neither the gas flare penalty revenues nor the 13 percent derivation allocation have translated into meaningful development in many oil-producing communities.

The forum challenged President Tinubu, members of the National Assembly and other public officials to undertake independent visits to oil-producing communities across the Niger Delta.

“Visit these communities and see the reality for yourself. There are communities with no hospitals, no schools, no roads and no social amenities despite billions of naira passing through government channels every year in the name of derivation,” Kagbala stated.

The group described the current management of derivation funds as a constitutional failure that has deprived host communities of the benefits intended for them under the law.
Tracing the history of derivation administration, the NDCSF recalled that under the defunct Oil Mineral Producing Areas Development Commission (OMPADEC), intervention funds were administered through a dedicated structure focused directly on oil-producing areas.

According to the forum, when derivation stood at 2.3 percent, OMPADEC supervised projects that delivered visible development in host communities. It added that after the increase of derivation to 13 percent under the late General Sani Abacha, the structure remained largely intact until the return to democratic rule in 1999.

The group argued that the subsequent transfer of effective control over derivation revenues to state governments weakened direct community participation and accountability, contributing to underdevelopment in many host communities despite trillions of naira generated from oil production.
The NDCSF also faulted the National Assembly for what it described as decades of inadequate oversight and failure to ensure accountability in the utilization of derivation funds.

It maintained that excessive concentration of financial powers in the hands of state governments has contributed significantly to the development gap that persists across the Niger Delta.

The forum further insisted that the three percent Host Community Development Trust Fund established under the Petroleum Industry Act (PIA) cannot replace the constitutional 13 percent derivation fund.

“The Constitution remains supreme. The statutory three percent Host Community Trust cannot substitute for the constitutional 13 percent derivation meant for oil-producing communities,” the statement said.

The group maintained that derivation should be treated as a first-line constitutional obligation and administered in a manner that guarantees direct and measurable benefits to host communities.

Warning against growing frustration in the region, the NDCSF said continued denial of constitutional benefits to oil-producing communities could undermine peace, development and stability in the Niger Delta.
“The people who bear the burden of oil exploration should not remain among the poorest in the country.

Justice demands that oil-producing communities receive the benefits intended for them under the Constitution. The era of treating the Niger Delta as a sacrifice zone must come to an end,” the statement concluded.