By Benson Daniel
Delta, Bayelsa and Akwa Ibom states accounted for about 75 percent of the N321.9 billion distributed as 13 percent derivation funds to oil producing states in the first quarter of 2026, reflecting their dominant contribution to Nigeria’s crude oil production.
The allocation, based on the constitutional derivation principle, provides additional revenue to oil producing states as compensation for the exploitation of natural resources within their territories. The funds are intended to support infrastructure development, environmental management and socio economic programmes in host communities.
Available figures show that Delta received the largest share of the derivation allocation, followed by Bayelsa and Akwa Ibom, with the three states collectively accounting for three quarters of the total disbursement during the review period.
Analysts attribute the higher allocations to the states’ substantial crude oil output and their strategic importance to Nigeria’s petroleum industry. They noted that fluctuations in oil production and global crude prices continue to influence the size of derivation payments made to beneficiary states.
Economic experts have urged state governments to channel the funds into projects that deliver long term value, including investments in infrastructure, education, healthcare, environmental remediation and economic diversification to reduce dependence on oil revenues.
They also called for greater transparency and accountability in the management of derivation funds, stressing that prudent utilisation would enhance development in oil producing communities and improve the living standards of residents.
The quarterly distribution underscores the continued importance of the oil and gas sector to government revenues and the fiscal position of Nigeria’s oil producing states, even as the country intensifies efforts to diversify its economy.
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