“Equity and fair play dictate that you cannot take out without putting something back, otherwise you create a vacuum which Nature abhors. Looking at the issue purely from the point of view of equity, therefore, there is no defensible justification for the distinction between on—and off-shore mining in the application of the derivation principle.”

11. Another argument that has been advanced against the oil producing areas getting any special consideration is that the state or the people concerned have not contributed a kobo towards winning the minerals; unlike agriculture where the farmer puts a lot of labour and money to produce his crops. First of all, it is extremely pertinent to note that the Federal Government has not invested any money into the oil industry that has not emanated from the industry itself. Indeed, if anybody has invested any money, it has been the foreign companies that came here to exploit the oil. It is from the taxes on their profits, the royalties and the various mining licenses that Nigeria has derived the revenue it has invested in the industry. In effect, no indigenous body has made any independent investment in the industry.

12. The second point is that a lot of valuable agricultural land is involved in the oil industry and in mining operation generally. The Rivers State Government estimates that some 25,000 hectares (62,500 acres) of the State’s land is directly consumed by the industry. It is again important to bear in mind that, in both mining and agriculture, we are talking about land. Both require tremendous efforts to bring out the fruits of the soil. Whether this is done by individuals or multinationals seems irrelevant. The important thing is that the landowner expects to benefit from his land. What the argument is saying is that we have deprived the oil landowner of his valuable agricultural land and so he cannot farm like his non-oil counterpart; but while we concede that the latter should reap the fruits of the land, the oil landowner has no right to anything from his because the fruit of his land belongs to all! That surely is not equity.

13. A third point to this argument is that people and Government of the oil producing areas have always contributed and will continue to contribute towards the winning of oil in this country. The people, as shown above, have sacrificed their land for the industry. And the Government? Some of the heaviest trucks that ply the roads in this country can be found in the oil producing areas. This imposes on the Governments of these areas the construction and maintenance of roads and bridges that can withstand the demands of this type of vehicles. It is these Governments that have to provide schools and hospitals for the generality of the staff of the oil companies. It is the Governments that have to provide alternative sources of water when the local streams are polluted. They have to provide alternative means of livelihood for people displaced from their farm lands and fishing grounds.

14. The oil companies position on providing social services in their operating areas is clearly and succinctly enunciated by the Shell Petroleum Development Company of Nigeria Limited. In their pamphlet titled ‘Statement of General Business Principles’ they state that “Shell endeavours always to act commercially, operating within the existing national laws in a socially responsible manner…..The most important contribution that Shell can make to the social and material progress of Nigeria is in performing efficiently its direct line of business. Furthermore, it is neither feasible nor proper for Shell to pre-empt the responsibilities of the Federal or State Government in providing and maintaining social facilities and services”. Albeit, Shell awards a number of scholarships of national character, establishes a few demonstrative farms and builds a number of roads that link their location with State roads (as they should). As for oil industry providing employment opportunities for the oil producing areas, a cursory glance at the staff list, especially in the grades that matter-the management-will reveal that recruitment by no means takes into consideration areas of production.

15. Prospecting and subsequent mining of mineral oil off-shore began in earnest during the civil war when most of the operating oilfields were in the disturbed areas. And there was never any distinction between on-shore and off-shore mining until, by Decree No. 9 of 1971, the Federal Military Government accorded itself the sole rights to rents and royalties on off-shore mining. This immediately raised what has now become a nagging political question: whether Nigeria can lay claim to any territorial waters without first, or at least equally, laying claim to the adjoining state (or territory). The argument then is that Nigeria owns the seas by virtue of the adjoining state being part of Nigeria. Anti-derivationists then point out that the second Columns of Part I of the First Schedule to the 1979 Constitution, which defines the area of each State, nowhere mentions the Continental Shelf or Territorial Waters as being part of any State. And the oil States quickly react by invoking Section 2(2) of the same Constitution which simply provides that “Nigeria shall be a Federation Constitution and, therefore, if our Territorial Waters are part of Nigeria they must be so by virtue of being parts of some States. And so the argument continues.

The points to bear in mind, however, are: (i) that most of the establishments for off-shore mining (e.g. tankfarms) are on land; (ii) that the adjoining States are as exposed to the hazards of off mining as they are to on-shore, as has been amply borne out by recent events in the Rivers State; (iii) the people of the adjoining States lose their farm lands to on-shore operations.

It is worthy of note at this juncture that the North Sea oil-fields in Britain are off-shore and yet Scotland, the adjoining State, has been transformed, within the few years of the North Sea oil operation, from a poverty-striken, almost deserted region to one of the most prosperous in the United Kingdom today.

Equity and fair play dictate that you cannot take out without putting something back, otherwise you create a vacuum which Nature abhors. Looking at the issue purely from the point of view of equity, therefore, there is no defensible justification for the distinction between on—and off-shore mining in the application of the derivation principle. The distinction looks at best like an excuse for depriving a people of their inalienable rights. I therefore recommend that, in respect of mining rents and royalties, there should be no distinction between on-shore and off-shore.


Eric Teniola, a former Director in the Presidency, Writes from Lagos.