Global Policy Forum

Who gets the oil money? With the country expected to earn $14 billion from oil this year, the government asked Nigeria's Supreme Court this week to rule on how the money should be allocated.

Nigeria earns very little from anything else, so what happens to its oil money is crucial. Oil contributed to civil war in 1967. Later on, military regimes stole much of it. But when Olusegun Obasanjo was elected president in 1999, there seemed at least a chance that the money might go towards a village school rather than a flash car for a politician.

The court must decide whether the federal government or the governments of the oil-producing states get the money from off-shore production, which will soon account for the bulk of Nigeria's 2m barrels-a-day oil flow. The case, which has been adjourned until May 21st, raises the stakes in the four-cornered battle for oil revenue between the central government, the 36 state governments, the six oil-producing states, and the people who live in those six states.

Since 1971, all off-shore oil revenue has gone to the federal government. The oil-producing states of the south-east are now demanding a slice of it. Or, indeed, all of it: they have long argued that the oil money should go to the producing states which would then pay tax to the central government.

The oil-state governments are angry. But not as angry as the people who live on top of the oil wells and have seen little revenue trickling down from either the federal or the state governments. They are among the poorest in Nigeria, their farms cut by pipelines, their air and rivers polluted with oil and smoke. Local activists in the Niger Delta, which produces most of Nigeria's oil, regularly kidnap oil workers for ransom or smash installations, sometimes seriously cutting production. Off-shore oil is not safe since oil platforms have also been attacked.

Mr Obasanjo tried to come to an agreement with the oil-producing states by allotting them 13% of on-shore oil revenue, as prescribed by the 1999 constitution. He has left it to the Supreme Court to decide about off-shore oil. But this may not be the end of his troubles. People in the oil area are unlikely to be satisfied whatever happens: earlier regimes bypassed state governments by channelling the money through local authorities, but again most of it ended up in somebody's pocket. And the demands of the south are upsetting the north, whose politicians are threatening to deny the south farm products if it gets much of the oil money.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.