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Business and EconomyNEITI: Mining Companies owe government N2.76bn

NEITI: Mining Companies owe government N2.76bn


➢ Solid Minerals sector contributed N128billion in 2020 as against N75billion in 2019

➢ Government Earnings from the sector increased by 54% in 2020

➢ FG, States, LGs Shared N8.89billion solid minerals revenue in 2020

➢ ₦624.45billion earned from the sector in 13 years

➢ Recommends government Set up an SoE to lead investments in the sector

OrderPaperToday – Over two thousand companies operating in Nigeria’s solid minerals industry are indebted to the federation to a sum of over N2.76billion. 

This is according to the latest report of the sector by the Nigeria Extractive Industries Transparency Initiative (NEITI) for the year 2020.

As contained in a statement by Obiageli Onuorah, Deputy Director/Head, Communications & Advocacy, NEITI stated that the companies’ liabilities resulted from failure on the part of 2,119 companies to pay statutory annual service fees for respective mineral titles.

READ ALSO: NEITI, ICPC sign MoU to tackle revenue leakages

The report stated that 6,010 existing solid mineral titles were valid as of 31st December 2020, while 7,605 mining titles were issued in the industry in the past five years. 

NEITI stressed that at a time government is in a desperate search for revenues to finance the widening budget deficits, it is determined to use its reports to disclose potential revenue recoveries awaiting immediate action by the relevant government agencies.

According to Dr. Orji Ogbonnaya Orji, Executive Secretary of NEITI, who presented the report before its multi-stakeholders in Abuja:

“It is of interest to NEITI that every kobo counts to reduce government financial burden, and our reports will continue to provide useful information and data on who owes what in the oil, gas and mining sector. This is another impact that our reports will pursue in line with our mandate.” Dr. Orji declared. 

Revenue Contributions

He announced that the total revenue contributions from the sector in 2020 rose to N128.27billion, an increase of over 54% from the N74.85 billion recorded in 2019 despite the COVID-19 pandemic.  

Highlights of the NEITI Report showed that the sum of ₦8.89billion was shared to the federating units as solid minerals revenue in 2020.

A breakdown of the figure shows that the Federal government received N4.07billion (45.83%), states and local governments received N2.07billion and N1.59billion (23.25%; 17.92%) respectively while N1.16 billion (13%) was recorded as derivation share.

READ ALSO: NEITI: Oil and Gas companies owe federation N1.32trn, as revenues from sector dipped by 40% in 2020

The NEITI Independent Solid Minerals Industry Report tracked and reconciled financial flows in the sector, checked quantities of minerals produced, utilised and exported in 2020. It also examined the governance and process issues in the sector, outlined key findings and made far-reaching recommendations that require urgent remedies. 

For instance, it disclosed that 71.1 million metric tons of minerals were produced in 2020.

Total Mineral Production

A breakdown of the total production showed that granite, limestone, sand and laterite were the highest contributors to minerals royalty payments recorded within the period.

NEITI further disclosed that five states of the federation topped the table, contributing 66% of solid minerals produced in the country that year. The first state is Ogun, followed by Kogi, Cross River, Edo, and Bayelsa States.  

On companies’ activities that shaped business investments in the solid minerals sector, the NEITI report identified Dangote Cement Plc. as the first, followed by Lafarge Plc, BUA International, as well as Dantata and Sawoe with the highest production accounting for about 64% of the total mineral production volume in 2020.

Total Minerals Exports (2020)

NEITI further disclosed that total minerals exports in 2020 were 32.99 million tons valued at $42.46 million while China with 80% of the total exports remained the major destination for Nigeria’s solid minerals exports. 

From the report, a total of N3.87billion was recorded in 2020 as social expenditure, representing an increase of 49% over the amount expended for the same purpose in 2019. 

Besides, N5.8 million was documented as environmental expenditure by three (3) companies in the year, while information on Community Development Agreements was not disclosed. 

Export Contribution

The Report further revealed that out of Nigeria’s total GDP of N152.32 trillion in 2020, the solid minerals sector contributed N686.64 billion representing only (0.45%) while the sector’s contribution to the country’s exports during the period was a mere 0.14%. 

The NEITI Report underlined the urgency for the government to invest aggressive energy, time, interest, and resources towards the development of the solid minerals sector to maximise its potential for the future of Nigeria’s economy.

Recommendations

The NEITI Report made 26 recommendations, one of which is the urgency to commence and intensify comprehensive reforms in the solid minerals sector.

It underlined as a priority, the restoration and establishment of a public-private-state-owned enterprise (SOE) to lead and drive investments in the sector. This SOE, according to the report should be similar to the role of the NNPC in the oil and gas industry.

NEITI however strongly advised that any such public-private-state owned enterprise should adapt and emulate the Nigerian Liquefied Natural Gas (NLNG) model.

READ ALSO: PIB will foster transparency in NNPC – NEITI

The Chairman, NEITI National Stakeholders Working Group-NSWG, Olusegun Adekunle, explained that the report was conducted under its oversight and approved in line with the EITI Standard and in consonance with the NEITI national obligations (NEITI Act 2007).

Adekunle urged the civil society, the companies, government, and the citizens to use the information and data in the report as tools to advance public discourse on developing the solid minerals sector to create jobs and reduce poverty.

NEITI has so far published eleven (11) cycles of the solid minerals industry reports spanning the period 2007 to 2020. The reports revealed that the sector has contributed a total of ₦651.55billion to the government’s coffers within the 13 years.

READ ALSO: OrderPaper Commends NEITI, NNPC on remediation

The 2020 Solid Minerals Industry report was conducted by Amedu Onekpe & Co. Chartered Accountants, an indigenous firm familiar with the principles and standards of the global Extractive Industries Transparency Initiative (EITI) and NEITI’s national mandate. 

Further details on the NEITI 2020 Solid Minerals Industry Audit report are contained in the full report available on NEITI’s website – www.neiti.gov.ng.

Temidayo Taiwo-Sidiq
Temidayo Taiwo-Sidiq
Temidayo Taiwo-Sidiq is an ace political analyst and content editor with major interest in Nigerian Politics and Governance
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