Lawyers Explain Supreme Court’s Verdict on Extra Revenue for Littoral States


Senior lawyers have explained the implication of the Supreme Court verdict that more revenue should accrue to oil-producing states when oil price exceeds $20 per barrel.

The seven-man panel of the Supreme Court, which included the Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, in a unanimous ruling on Wednesday, ordered that the 13 per cent derivation due to the oil-producing states be paid upon recovery in accordance with Section 162 of the 1999 Constitution.

The judgement followed a suit by the Attorneys General of Akwa Ibom State, Mr. Uwemedimo Nwoko, Bayelsa State, Wodu Kemasukde, and  Rivers State, Emmanuel Aguma (SAN), now deceased, who in November, 2017, sought the court’s interpretation of Section 16(1) of the Deep Offshore and Inland Basin Production Sharing Contract Act in suit number SC964/2016 filed on their behalf by Mr. Lucius Nwosu (SAN).

Their contention was that Section 162 of the 1999 Constitution enjoins the Federal Government to adjust the states’ share of proceeds from the sale of crude oil whenever the price exceeds $20 per barrel.

Section 162 (2) of the Constitution provides for the mode of revenue allocation principles “Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than 13 per cent of the revenue accruing to the Federation Account directly from any natural resource.”

In his reaction, Ahmed Raji (SAN) said the implication of the judgement was that the Federal Government ought to have reviewed the sharing formula once the oil price was above $20.

Raji said, “It means that government would take in more money and their 13 per cent will go up. That is what they are saying.”

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Also speaking, Tawo Eja Tawo (SAN) said the judgement would be handled as a settlement between the states and the Federal Government through the Office of the Attorney General of the Federation.

Also, Barrister Hamid Ajibola Jimoh, said the constitution said the derivation must not be less than 13 per cent, which gives room for further increase. He added that since the matter had been determined by the Supreme Court, it could not be further appealed against except a fresh matter was brought from the lower courts.

Daily Trust

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