Don't Miss

Returned Oil Wells Set To Boost Rivers Economy

By on March 27, 2011

WHEN Rivers State Governor, Chibuike Amaechi, presented the 2011 Appropriation Bill to the legislative house, he envisaged inauspicious revenue prospect this year due to the ceding of the state’s oil wells to neighbouring Akwa-Ibom and Bayelsa States.

The State’s kkey ppolicy thrust for the year is sustaining and accelerating human capital investment in health and education; improving road network in the state; providing critical utilities such as electricity and water.

According to Amaechi, “the Budget will be funded from a revenue projection of N205 billion allocation from the Federation Account and N77.1billion internally generated revenue.  Unspent fund of N32 billion carried over from 2010 will be used to finance part of the budget in addition to the N100 billion that will be sourced through issuance of bonds”

The prospect of attaining the state’s budgetary goals is now brighter with the Supreme Court judgement that ordered that 86 Rivers’ oil wells ceded to Akwa-Ibom State be returned along with the revenue accruable with eight per cent interest.

By 2007 when Amaechi assumed office, the state’s allocation from the Federation was above N20 billion. Basking in the euphoria of the huge chunk of oil money that was flowing into the state’s coffers, the administration was spurred to address the nagging issue of critical infrastructural deficit bedevilling it.

The government embarked on the construction of 350. As at November 2010, about 125 of such schools were completed.  Twenty-four model secondary schools were also started.

Other developmental projects started by Amaechi are the reconstruction and dualisation of Azikiwe- OB Lulu Briggs Road, dualisation of Elekahia-Rumuomasi Road, dualisation of Port Harcourt – Owerri Road, dualisation of Rumuokwuta –Choba Road, construction of flyover and construction of Ogoni-Andoni-Opobo Unity Road as well as reclamation work in coastal communities.

Similarly, the state embarked on building of 160 new health centres, out of which 65 have been completed, furnished and equipped as at December last year. In a bid to improve the standard of higher education in the state, construction of a new campus of the Rivers State University of Science and Technology was initiated while local and overseas scholarship programme was sustained.

Worried by the challenge of congestion in Port Harcourt, the governor decided to create a new city christened Greater Port Harcourt. The new city covers approximately 1,900 square kilometres (190,000 hectares of land) with a projected population of two million. The Master Plan is for a period of (50) years, with periodic reviews, which will be implemented in phases.

The governor had also created a state reserve fund backed by law. The state currently is mandated to statutorily save N1 billion monthly. The entire state saving thus far is well over N100 billion.


BUT by mid 2009, due to a sharp drop in Nigeria’s crude oil export, occasioned by the activities of militants in the Niger Delta, falling international market prices of oil, ceding of the state’s oil wells to Akwa-Ibom and Bayelsa States, the state revenue began to dwindle, dropping to as low as N10 billion monthly.

To avoid the plague of abandoned projects, the administration quickly began to strategise on how to increase the internally generated revenue and at some point even decided to borrow to complete on-going projects. It passed a contentious law tagged Social Services Contributory Levy. The proceeds are expected to be used to sustain the social projects which on ground.

Labour unions like the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN ) and the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) vehemently resisted the passage of the bill and even threatened to go on strike at a point.

Irrespective of the passage of the law, the governor still continued to urge the people to support government by paying the token levy that would guarantee good education for the young ones. These free programmes include the provision of three different school uniforms for the three senatorial districts of the state at state expense. The government was also complied to borrow N30billion late last year to enable it complete some ongoing road projects as the dry season started, while it is also expected to raise N100billion from bond this year.


THE near financial crisis of the state was triggered by a petition written by Akwa-Ibom State Government to late President Umaru Musa Yar’Adua over oil well allocations.  This led to the ceding of oil wells hitherto belonging to Rivers to Akwa-Ibom.

“You know politicians, they met and said for the interest of peace, 72 oil wells should go back to Cross River, Rivers State this is your 172, please give Akwa Ibom 86 and keep 86. My predecessor accepted it. I would not have accepted it because there is a Supreme Court judgment, but he accepted and there was peace.

“My brother now, the new Governor of Akwa Ibom petitioned to NBC; he did not challenge the Supreme Court judgment; he simply petitioned the NBC.  The NBC responded and said, we are applying the rule of law in Cross River versus Akwa Ibom, so they took back the 72 oil wells from Cross River to Akwa-Ibom,” Amaechi recounted.

He said: “They came to the boundary between Rivers and Akwa Ibom, and said, we are going to apply historical boundary.  The question is why apply two separate principles in two similar instances to determine such a matter? So the NBC, with the Revenue Mobilization Allocation and Fiscal Commission gave our oil wells to Akwa Ibom.  It took Cross River oil well under the rule of law, but under the rule of man, they took Rivers State oil wells.”

The governor stated that before that happened, the State had gone to court, which said status quo should remain.  But the former Attorney General of the Federation, Michael Aondoakaa, when the Federal Ministry of Finance sought his opinion, wrote and said they should undermine that order.

“It is only in Nigeria, that the Attorney General interprets laws.  This is wrong.  This is one queer thing in justice system in Nigeria; that you will pass a judgment that affects government and an Attorney General comes in to interpret it.  It is only a superior court that interprets the judgment, Amaechi continued.

Irked by the situation, the Governor directed the state lawyers to proceed to the Supreme Court, not to demand for just the 86, but all the 172 oil wells, because that is the Supreme Court judgment.

Thus, when the Federal Account Allocation Committee (FAAC) visited him at the Government House before the Supreme Court judgement, which returned the 86 oil wells to the state, governor Amaechi accused RMAFC of manipulating the revenues of oil producing states to create disagreement among the governors

He lampooned RMAFC for ceding Rivers oil wells to Akwa-Ibom and Bayelsa states, while illegally classifying Cross River State as non-oil producing state.

“Imagine declaring Soku in Rivers State as part of Bayelsa while the whole world knows that Soku gas is in Rivers. RMAFC ceded our oil wells to Bayelsa just because the governor didn’t go to its office in Abuja. I will not go,” stressed Amaechi.

The governor asked RMAFC, which he lampooned it for the current financial predicament of Cross River State, that now borrows to pay salaries, to allow the oil producing states to face developmental challenges in the area.

“The governor of Cross River will be adjudged a non performer because he has no money to perform because RMAFC just sat down, took all the state’s 76 oil wells and gave them to another state. It is unfortunate. Allow us to manage our resources ourselves,” he demanded.

The chief executive noted that Rivers, which use to be largest oil producing state was degraded to second due to RMAFC inability to resist influence of individuals and material gains.

GLADDENED by return of the oil wells, Amaechi said the proceeds would be applied judiciously to complete some of the ongoing projects.  He said with the return of the 86 oil wells, the government would now initiate new projects against earlier position that it would not embark on new project because of the lean purse of the state.

The Commissioner for Information, Mrs. Ibim Semenitari, told The Guardian that the judgment would enable the state to have ssignificant resources not only for infrastructural development, but also to drive its free education programme.

According to her, increased revenue means that the government would be able to complete all ongoing projects.

It is worthy to note that irrespective of the financial challenges the state faced as a result of the disputed oil wells, the state Rivers was able to secure a long-term foreign and local currency ratings of ‘B+‘ and a national long-term rating of ‘AA- from Fitch Rating after a thorough review of the state’s financial activities in 2010.

Source : Guardian