Former Nigerian President Olusegun Obasanjo has backed calls for a fairer oil revenue share for producing states, describing the existing 13 per cent derivation allocation as a starting point for further negotiations, during the flag-off of the crude distillation unit at the $1bn Azikel Refinery in Obunagha, Yenagoa Local Government Area of Bayelsa State.

Addressing Bayelsa State Governor Douye Diri at the ceremony, Obasanjo acknowledged longstanding complaints that oil-producing communities have not received sufficient benefits from the natural resources extracted from their territories.

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“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 former president said.

His remarks added weight to renewed calls for a review of Nigeria’s revenue-sharing arrangements, particularly from communities in the Niger Delta, where crude oil production has contributed significantly to the national economy for decades.

The 13 per cent derivation principle provides for oil-producing states to receive a share of revenue derived from natural resources within their territories.

However, leaders in the region have repeatedly argued that the allocation does not adequately reflect the environmental damage, infrastructure challenges and social costs associated with oil exploration.

Obasanjo’s intervention came as Diri renewed his criticism of the existing arrangement and the Land Use Act, arguing that oil-producing communities remain insufficiently involved in decisions about the resources beneath their land.

“As people of the Ijaw ethnic nationality, we have protested and fought because we feel that God gave us something in our land but we are not benefiting from it.

Others are benefiting and see us as second-class citizens,” Diri said.

The governor also described the Land Use Act as unfair, arguing that the distinction between state authority over land and federal control of petroleum resources leaves producing communities at a disadvantage.

“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.

Diri stressed that the Niger Delta was not seeking to retain all the proceeds from its natural resources but wanted a greater role in determining how the resources were managed and their benefits distributed.

“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,” he added.

The debate over derivation has remained a recurring feature of Nigeria’s fiscal federalism, reflecting wider disagreements over how revenue should be shared between the federal government and the states.

Federal revenue-sharing figures published in 2026 show that oil-producing states continue to receive derivation payments under the existing arrangement.

In June 2026, for example, the states collectively received approximately ₦197.61bn through the 13 per cent allocation, according to the Federal Ministry of Information and National Orientation.

Beyond the debate over revenue, the ceremony marked a significant stage in the development of the Azikel Refinery, an indigenous petroleum project promoted by Azikel Petroleum under the Azikel Group.

The $1bn facility is designed to process 25,000 barrels of crude oil daily. Its foundation stone was laid by Obasanjo approximately eight years ago, making the installation of the crude distillation unit an important milestone in a project that has taken years to advance.

Obasanjo commended Azikel Group President, Dr Azibapu Eruani, for sustaining the investment and challenged him to complete the refinery within the next 12 months.

“I have told Dr Eruani that I will be officially 90 years by next 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, using a personal remark to underline the urgency he attached to the project.

The former president also acknowledged the support of the African Finance Corporation and the African Export-Import Bank, urging the institutions to maintain their assistance until the refinery is completed.

“My challenge to you, Dr Eruani, is to ensure that the refinery is completed within the next 12 months. With this done, you can even double the capacity,” he said.

The refinery’s promoters expect the facility to produce approximately 2.5 million litres of petrol and two million litres of diesel daily, alongside other petroleum products.

Those figures represent projected output rather than confirmed production from an operational refinery.

The completion deadline set by Obasanjo also remains a target, not a guarantee that commercial operations will begin within that period.

For Bayelsa, the project’s potential extends beyond fuel production.

A functioning refinery could create employment opportunities, stimulate supporting businesses and provide a platform for technical training, although the scale of those benefits will depend on completion, commercial operations and the extent to which local residents participate.

Diri urged young people in the state to acquire the technical and professional skills needed to benefit from the investment.

He warned that the presence of major industrial facilities would offer limited advantages if local communities lacked the expertise required to work in them.

The governor also called on oil companies operating around Gbarain and Obunagha to rehabilitate the road leading to the refinery, arguing that private operators should complement the state government’s infrastructure efforts.

Eruani described the installation of the crude distillation unit as the beginning of the refinery’s completion phase.

He said the project was conceived to move Bayelsa and the wider Niger Delta beyond their traditional role as suppliers of crude oil towards greater participation in refining and other industrial activities.

He also commended President Bola Tinubu for supporting indigenous refining investments, saying the development of local facilities aligned with efforts to improve the availability and affordability of petroleum products.

Obasanjo, meanwhile, praised Diri for what he described as the effective use of Bayelsa’s revenue, pointing to development projects across the state as evidence that the funds received had been put to productive use.

“The most important thing is that even the little you have received, you have used it well,” he said.

The event also attracted commendations from Azikel Petroleum board member Daru Owei and King Bubaraye Dakolo, the Ibenanaowei of Ekpetiama Kingdom and chairman of the Bayelsa State Council of Traditional Rulers.

Both expressed confidence that the refinery could improve the economic prospects of Bayelsa, the Niger Delta and Nigeria.

Diri further argued that African countries needed to process more of their natural resources domestically rather than depend primarily on exporting raw materials.

Retaining more refining and industrial activity within the continent, he said, would allow producing communities to benefit more directly from their resources.

The two issues raised at the ceremony, revenue distribution and local industrial development, remain closely connected.

A larger derivation allocation could provide producing states with additional public revenue, while a completed refinery could support employment and economic activity.

Neither outcome, however, would automatically resolve the region’s longstanding concerns about environmental protection, infrastructure and local participation.

Obasanjo’s endorsement has therefore strengthened the case for further discussion of the 13 per cent derivation formula, while his challenge to Eruani has placed renewed attention on the refinery’s delivery timetable.

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For Bayelsa and the wider Niger Delta, the lasting test will be whether negotiations over resource revenue and investments in local industry translate into tangible improvements in the lives of the people whose communities sustain the petroleum sector.