The status of Lagos State as an oil producing state was affirmed by the federal government yesterday with the approval of four out of the five oil wells discovered in the state.
With the development, the federal government will begin the disbursement of the 13 per cent derivation fund to the state, in line with constitution of Nigeria.
The chairman, Indices and Disbursement Committee, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Alhaji Aliyu Mohammed, made this known when he led members of the committee on a visit to the Lagos state governor, Akinwunmi Ambode at the State House, Ikeja.
Mohammed said the committee was in Lagos to verify the crude oil and gas production from Aje oil wells for the purpose of disbursement of the 13 per cent derivation fund to the state.
The 13 per cent derivation fund is money paid to oil producing states by the federal government. Akwa Ibom, Rivers, Bayelsa, Delta, Cross River, Edo, Ondo, Imo, and Abia States constitute the oil producing states in the country, with Lagos as the latest to join the league.
He explained that the federal government’s disapproval of the fifth oil well was hinged on the fact that it fell beyond 200 metres isobaths and did not legitimately belong to the state.
The committee chairman further stated that as part of procedure and in pursuant of its constitutional mandate, the commission had set up an Inter-agency Technical Committee which comprised the commission, the Department of Petroleum Resources (DPR), Office of the Surveyor General of the Federation and the National Boundary Commission to determine the location of the Aje oil wells.
“The technical committee recommended that for the purpose of derivation as spelt out under Section 162 (2) of the 1999 constitution (as amended) as well as the provision of the Allocation of Revenue Act 2004, Aje oil wells 1, 2, 4 and 5 fall within the 200m isobaths and therefore should be attributed to Lagos State.
“As a result, the commission and members of the Inter-agency Committee had to embark on this working visit to conclude the process. Please, note that Aje 3 oil well falls beyond the 200m isobaths and therefore cannot be legitimately attributed to Lagos State,” he said.
According to Mohammed, the commencement of oil production from the Aje oil field by Yinka Folawiyo Petroleum Company Ltd was the first time oil was being produced outside the Niger Delta basin and therefore, of a major significance in diversifying the source of crude oil and gas production in the country.
In his response, Lagos State governor, Mr Ambode, described the visit as historic and one that would go down in the annals of the history of Lagos State.
He noted that the visit was the official step that would take Lagos to that final destination as an oil-producing state.
“We are very glad to receive this delegation. We also want to thank the federal government, especially President Muhammadu Buhari, for making this to happen very promptly. I want to say that this has been the promptest action that has been taken by RMAFC since I have known the commission. I used to be a former accountant general so I had a lot of transactions and relationship with the institution called RMAFC. Within a span of about 60 days of when we wrote our letter, and even before we wrote the letter, this technical committee was actually set up,” he said.
Ambode, who lauded the DPR and the Boundary Commission, said it was significant that the discovery of oil wells in Lagos was going to be the first time oil would be produced outside the Niger Delta.
“It’s significant for Nigeria; it’s significant for Lagos. It means that the whole path to diversification is what we are now witnessing. We would also encourage other states, in terms of other mineral resources, not necessarily to depend on crude oil, whatever it is that can actually allow states to start activating their mineral deposits, it would allow us expand the Internally Generated Revenue.
“It would also give us revenue dependence in a manner that there would be equal growth from all every nook and cranny of Nigeria. One is happy that RMAFC has taken this step and also to say that they should also encourage other states to engage in such activities that would allow them to be able to activate whatever mineral deposit that we have in the various states in conjunction with the federal government, so that we can start to diversify revenue and growth and then create a balanced growth and development for the whole country,” he said.
Oil prospecting in Lagos has been going for 25 years, by Yinka Folawiyo Petroleum Company Limited, before the state officially joined the League of Oil Producing States in Nigeria, in May this year.
According to the Group Managing Director, Tunde Folawiyo, the company spent about $400 million to achieve the feat.
He said the current status of the oil well has the capacity to produce at least 12,000 barrels per day, with a possibility increase to 25,000 to 50,000 barrels per day in the nearest future.
