Oil Producing States Accumulate N1.6 Trillion Debt Despite Increased Derivation Fund

• Despite receiving increased revenue derivation funds, the nine major oil-producing states collectively owe a staggering N1.56 trillion in debts
• From June to January, their debts surged by over N26 billion, despite the boost in revenue from the Federation Account Allocation Committee

According to investigations by Daily Trust, despite receiving an increased revenue derivation fund totalling N405 billion from June last year to January this year, the nine major oil-producing states of Delta, Akwa Ibom, Rivers, Bayelsa, Edo, Ondo, Imo, Abia, and Anambra collectively owe a staggering N1.56 trillion.

This debt accumulation occurred despite the boost in revenue they received from the Federation Account Allocation Committee (FAAC).

Their debts surged by over N26 billion from June to January this year.

The derivation fund, a portion of revenue paid by FAAC to states that produce oil and other minerals contributing to the country’s foreign exchange earnings, has not been sufficient to offset the mounting debts.

Since the federal government removed petrol subsidies midway through last year, states across the federation have witnessed significant increases in their monthly allocations, which have now surpassed the N1 trillion mark.

According to the Domestic Debt Data Report from the Debt Management Office, the nine oil-producing states collectively hold a domestic debt of N1.56 trillion, accounting for approximately 25 percent of the total debts of all 36 states and the Federal Capital Territory (FCT), amounting to N5.7 trillion as of December 2023.

The breakdown of the 13 percent derivation revenue accrued to these states reveals varying amounts received each month: N47.478 billion in June, N51.545 billion in July, N35.822 billion in August, N60.733 billion in September, N50.674 billion in October, N44.286 billion in November, N33.406 billion in December, and N85.101 billion in January 2024.