A bill that seeks to grant state governments control over their own oil and mineral resources has moved one step closer to becoming law, passing its second reading in the House of Representatives. However, analysts are sounding alarms over the potential ramifications, warning that the bill could exacerbate political instability, intensify regional tensions, and fuel acts of political rascality.
The proposed legislation aims to decentralise resource control, granting state governments a significant degree of autonomy over oil and mineral wealth found within their territories.
The bill, titled “A Bill for an Act to Alter the Provisions of the Constitution of the Federal Republic of Nigeria, 1999 to Decentralize the Governance of Natural Resources in the Federal Republic of Nigeria to transfer Mines and Minerals, Including Oil Fields, Oil Mining, Geological Surveys and Natural Gas from the Exclusive Legislative List to the Concurrent Legislative List and for Related Matters (HB. 200, 1310, 1446 & 1546) was sponsored by Abbas Tajudeen, the House speaker and three others.
Currently, Nigeria’s Constitution vests ownership of mineral resources in the federal government, enabling centralized management and revenue distribution. However, states—particularly oil-producing ones—have long agitated for greater control, citing environmental degradation and insufficient benefits from resource exploitation.
Certain natural resources, such as mines, minerals, oil fields, oil mining activities, geological surveys, and natural gas, are managed solely by the federal government and termed ‘exclusive legislative list’, meaning only the federal government makes laws and decisions about them.
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Proponents of the bill argue that it will foster local economic growth, increase state revenues, and allow for more efficient management of resources.
However, critics believe that the move could destabilize the nation, encouraging the rise of politically motivated violence and increased agitation from marginalized groups.
Speaking to BusinessDay on the implication of the Bill if passed into law, Baka Zakka, an oil and gas analyst described the move as a mistake that any government will make, considering the that Nigeria is still a developing country.
According to him, the bill, if allowed to become law, it will give rise to uncontrollable agitation and war lords, whose interests will be detrimental to both the Nigerian economic and political space.
He said, “Going ahead with the bill and seeing it become a law will be one of the greatest mistakes our leaders will make, it does not matter the kind of resources. This move will create a lot of war lords across the country.
“For example, in the oil producing states today, many of the known leaders do not have these oils in their lands, not even in their local government, but we see them agitating for powers because they are connected to the sources of oil, even when it is still being controlled by the Federal government.
“People who are not fit for political positions will spring forth from every where because they have one resource or the other and would want to lead. This may not go well for Nigeria as a country.”
Speaking on the expected impact on state revenue, Zakka stressed that state government, without creativity, cannot generate needed revenues even when given powers over resources.
He decried that the Nigerian government was yet to harness its refineries and abundant crude oil in the country for the betterment of the citizens. “Meanwhile, there are countries without crude oil but the leaders are able to manage their refineries to generate revenues from countries like Nigeria.
“The inability of leaders to generate revenue is not really the unavailability of resources but lack of creativity. Nigeria is still an emerging nation, and if we allow that Bill to become law, it will give rise to fresh agitation which will be a threat to already existing investors,” he added.
Part 1 of the Second Schedule, (Exclusive Legislative List) of the 1999 Constitution, Item 39 currently states: “Mines and minerals, including oil fields, oil mining, geological surveys, and natural gas.” This provision gives the federal government exclusive control over these resources, meaning that states have no direct authority to regulate, tax, or manage them.
However, if the proposed bill becomes law, it could mean states can issue mining and oil exploration licenses, regulate resource extraction, and collect revenues independently of the federal government.
Etulan Adu, Oil and Gas expert told BusinessDay that while the bill could usher in a new era of resource management if all stakeholders engage constructively, there are inherent risks. He feared that certain elements within the existing system could potentially undermine state resource development, and individuals within the states themselves might exploit this opportunity for personal gain.
According to Adu, the decentralization of authority could inadvertently heighten the risk of corruption at the state level. “Without robust checks and balances, the mismanagement of significant financial inflows from petroleum revenues could hinder the very development efforts that these funds are meant to support. This is a major concern on the level of corruption being witnessed on the management of state resources.
“Government officials on state levels could consider this bill as an opportunity for embezzlement. A structured anti-corruption mechanism and financial framework with private partners and asset managers would help in reducing the corruption risks.
“The potential for conflict between states is another critical consideration. Disputes over boundaries and resource rights could arise, particularly in regions where petroleum resources extend across state lines, leading to instability and tension. There has been instances already of states having conflicts on the ownership of oil blocks in the Niger Delta.
” This could have a nationwide impact as various regions would fight for resources close to state boundaries and potential boundary adjust conflict would be on the rise. The federal government should ensure all outstanding boundary cases be resolved and peace agreements are signed before passage of the bill,” he said.
He noted that one of the most promising aspects of the proposal is the potential for localized decision-making, stressing that state governments may be better positioned to address the specific needs of their communities, prioritizing development projects that directly benefit their residents.
This he said could lead to more efficient and effective utilization of petroleum revenues, fostering economic growth at the state level. “This will reduce the bureaucracies in resource development and financing options. The danger here is decisions could be skewed to favour certain entities within the state. If a transparency and people-centered approach would serve as the bedrock of localized decision-making, then a win-win scenario can be expected.
He further explained that with states in control of their petroleum resources, there is an opportunity to implement more transparent and equitable revenue allocation systems.
Adu added that the proposed amendment’s success is predicated on the establishment of stringent accountability, transparency, and state-level cooperative mechanisms.
“It’s an impressive bill with opportunities by state actors to hijack. But this would support the need for true federalism in Nigeria. A decentralized government reduces the power grab, influence and controls the federal government has over the states,” he added.
Supporters of the bill view it as an opportunity to address longstanding grievances, particularly in the Niger Delta region. They argue that granting states control could enhance accountability and ensure communities benefit directly from local resources.
However, Muda Yusuf, the chief executive officer, Centre for Promotion of Private Enterprise (CPPE) believes that the Bill if passed into law will boost states revenues.
For him, the state governments currently do not benefit so much from investments in their states as most taxes are being paid to the federal government. He stressed that the move will further deepen the concept of federalism and reduce the concentration of power and resources at the federal levels.
“This move will give the state governments more capacity to attract investments and boost their revenues as they do not benefit so much from investments in their states presently.”
He also noted that politically, it may not be easy for the bill to scale through yo become a law, because not all states are endowed with these resources.
He explained that, for example, many of the northern states are blessed with more agricultural lands from which not so much taxes are generated. “So we may see states that do not have much resources coming up to resist the bill. So there must be a framework that ensures that the rich states support the less endowed states.”
