Obasanjo proposes bill to pacify oil region

Nigerian President Olusegun Obasanjo has proposed a bill to increase the share of the country's oil revenue to states in the southern oil region, in an apparent effort to help pacify its increasingly restive communities.

A senior presidential aide said on Monday that the bill, which seeks to address the current dichotomy between revenues from onshore and offshore oil
production, was forwarded to the national assembly (parliament) last week.

"It is expected the legislature will treat it urgently and end the growing disaffection of the Niger Delta people, after the Supreme Court gave the federal government control over offshore oil," the presidential aide told IRIN.

Under the 1999 constitution, at least 13 percent of total oil revenue was to go to the impoverished oil region.

However, on taking office, Obasanjo limited the allocation to 7.5 percent of revenues, on the grounds that offshore oil belonged to the federal government.

Oil is the mainstay of Nigeria’s economy, making the distribution of revenues a key element of the country’s political dynamic.

Following a dispute raised by the affected state governments, the federal government last year filed a complaint at the Supreme Court seeking a ruling on the ownership of offshore oil.

In its judgment in March, the court ruled that offshore oil revenues belonged exclusively to the federal government.

The ruling was viewed adversely in the oil regions, where it reduced the financial resources of most state governments. Akwa Ibom and Ondo lost most of their share of oil revenues, since most of the production in these states was offshore.

There have since been a series of protests in the region, disrupting the operations of oil transnationals, in apparent reaction to the Supreme Court ruling.

Obasanjo will be seeking re-election next year and the row over oil revenue distribution has raised questions about his electoral prospects in the Niger Delta, where he polled very strongly in 1999.

Analysts see the proposed bill as a deft political stroke by Obasanjo, to repair his political standing in the region, which produces almost all of Nigeria's oil, ahead of next year's elections.