Oil Producing States in the country receive 13 per cent derivation as a benefits transfer scheme as stipulated in Section 162, Sub-section 2 of the Nigerian Constitution.
Utilisation of these funds have however been trailed by controversies as they appear not to be congruent with the level of development in these states. Rather, many oil-producing communities continue to bear the negative consequences of oil exploration and production.
The derivation fund is paid to states on a monthly basis to assist oil-producing communities in combating environmental pollution and degradation, providing basic amenities such as healthcare, potable water, and paved roads, and empowering community members economically.
The fund is for the exclusive use of oil/gas producing communities as compensation for loss of fishing rights and productive farmlands as a result of oil and gas exploration and production activities.