Obasanjo Calls For Increase In 13% Derivation As Azikel Refinery Installs CDU

Former President Olusegun Obasanjo has called for an increase in the 13 per cent derivation allocated to oil-producing states, describing the existing provision as a starting point that could be negotiated upwards.

Obasanjo spoke on Monday during the flag-off of the Crude Distillation Unit (CDU) at the $1 billion Azikel Refinery in Obunagha, Yenagoa Local Government Area of Bayelsa State. The refinery, owned by Azikel Petroleum under the Azikel Group, is expected to produce 2.5 million litres of petrol and two million litres of diesel daily, alongside other petroleum products.

The former president commended Azikel Group President Dr Azibapu Eruani for initiating the project and urged him to ensure it is completed within the next 12 months. He also acknowledged the contributions of the refinery's technical and engineering team, the African Finance Corporation (AFC) and Afreximbank, calling for continued support to complete the project.

Obasanjo praised Bayelsa State Governor, Senator Douye Diri, for supporting the refinery, noting that Eruani had consistently highlighted the governor's contribution to the project. He said the governor had put the state's available resources to good use, pointing to development projects across Bayelsa.

“I have told Dr. Eruani that I will be officially 90 years by next year March. It means I will take the boarding pass soon. So, he has to make sure the project is completed before I exit,” Obasanjo said.

Addressing Diri, he added that the governor's support demonstrated the importance of cooperation between government and private investors.

“You are right that the states and oil producing communities have not got a fair deal so far. Thirteen per cent is the beginning. You can continue to talk. The most important thing is that even the little you have received; you have used it well,” he said.

Obasanjo recalled visiting the project site eight years ago, when little development had taken place, and commended the progress made since then.

He challenged Eruani to complete the refinery within the next 12 months, adding that its capacity could be doubled after completion.

Speaking at the ceremony, Eruani said the refinery would support industrialisation in Bayelsa and the wider Niger Delta, recalling that Obasanjo had laid its foundation eight years ago.

He described the installation of the CDU as a major step towards completing the facility, which he said was conceived to make the Niger Delta an active participant in the oil industry.

Eruani also commended President Bola Ahmed Tinubu for supporting indigenous refineries, saying their development aligned with the Federal Government's efforts to improve the availability and affordability of petroleum products.

He expressed appreciation to Diri, AFC and Afreximbank for their support for the project.

In his remarks, Governor Diri said the refinery represented progress towards addressing longstanding concerns over the limited participation of oil-producing communities in the petroleum industry.

He argued that communities producing crude oil should have greater opportunities to participate in refining and other aspects of the sector.

Diri criticised the Land Use Act and the current 13 per cent derivation arrangement, maintaining that oil-producing states deserved a greater share of the benefits from their natural resources.

“The Land Use Act is unfair. Surface resources belong to states but what lies underneath belongs to the federal government. That law is obnoxious and not good for any just society,” he said.

He added that the region was not seeking to take all the benefits from oil production but wanted a greater role in determining how its resources were developed.

“We do not want to take all to ourselves. We just want to be co-players in determining how it is done. Thirteen per cent is not enough for the states,” Diri said.

The governor expressed optimism that the refinery would position Bayelsa residents to become more active participants in the petroleum industry and urged young people to prepare to benefit from the opportunities it could create.

He also called on oil companies operating in the Gbarain and Obunagha areas to support the state government's development efforts by rehabilitating the road leading to the refinery.

Diri stressed the importance of processing Africa's natural resources locally, saying greater domestic processing would enable the continent to retain more value from its resources.

He congratulated Eruani on the project and urged other young people to emulate his entrepreneurial initiative.

Also speaking, Azikel Petroleum board member Dr Daru Owei and the Ibenanaowei of Ekpetiama Kingdom and Chairman of the Bayelsa State Council of Traditional Rulers, King Bubaraye Dakolo, commended Eruani for the investment.

They said the refinery had the potential to improve the economic fortunes of Bayelsa, the Niger Delta and Nigeria.