By Bassey Udo
Over 2000 mining companies operating in Nigeria’s solid minerals industry owe the federation over N2.76 billion, the 2020 solid minerals sector audit report published by the Nigerian Extractive Industries Transparency Initiative (NEITI) has revealed.
Although the report was one of three audit reports launched by NEITI last week in Abuja, the details of its findings were released on Sunday.
In the report, NEITI said the debt was as result of the failure by the 2,119 companies to pay their statutory annual service fees for respective mineral titles.
Of the total of 7,605 mining titles issued to various operators in the industry by the government in the last five years, the report said only 6,010 were valid as of December 31,2020.
Other details showed that during the year the federal, state and local governments shared N8.89billion from solid minerals revenue, while the sector accounted for a total of ₦624.45billion contribution to the Federation Account in 13 years.
A breakdown of the distribution among the three tiers of government showed that the Federa received N4.07billion (or 45.83 percent), states and local governments received N2.07billion and N1.59billion (23.25 percent and 17.92 percent) respectively, while N1.16 billion (13 percent) was recorded as share of the derivation revenue to the relevant benefiting states.
Presenting the Report before its multi-stakeholders in Abuja, the Executive Secretary of NEITI, Orji Ogbonnaya Orji, noted that at this period when the government was desperately in search of other sources of revenues away from crude oil to finance the widening deficits in the federal budget, disclosures from NEITI annual audit reports would serve as potential avenues for revenue recoveries by the relevant government agencies.
“It is of interest to NEITI that every kobo counts to reduce government financial burden. 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.” Orji said.
The NEITI Executive Secretary said that despite the impact of COVID-19 pandemic, the sector’s total revenue as contribution to the gross domestic product (GDP) during the year rose by 54 percent, from the N74.85billion in 2019 to N128.27billion.
The NEITI Independent Solid Minerals Industry Report tracked and reconciled financial flows in the sector, checked quantities of minerals produced, utilized and exported in 2020.
Also, the report examined the governance and process issues in the sector, outlined key findings and made recommendations that required urgent remedies.
For instance, the report disclosed that out of the total 71.1 million metric tons of solid minerals produced in 2020, granite, limestone, sand and laterite were the highest contributors to minerals royalty payments within the period.
Besides, the report said five states of the Federation, namely Ogun, Kogi, Cross River, Edo and Bayelsa, contributed 66 percent of the solid minerals produced in the country in 2020 .
On companies’ activities that shaped business investments in the solid minerals sector, the NEITI report identified four companies, namely Dangote Cement Plc as top, followed by Lafarge Plc, BUA International and Dantata and Sawoe with the highest production capacities of about 64 percent of the total mineral production volume in 2020.
Total minerals exports in 2020, NEITI said, was about 32.99 million tons valued at $42.46 million, with China accounting for 80 percent of the total exports, and the major destination for Nigeria’s solid minerals exports during the year.
Again, the report said a total of N3.87billion was recorded in 2020 as social expenditure, representing an increase of 49 percent over the amount expended for the same purpose in 2019.
Besides, NEITI report said about N5.8 million was documented as environmental expenditure by three companies during the year, while information on Community Development Agreements was not disclosed.
Out of Nigeria’s total GDP of N152.32 trillion in 2020, the solid minerals sector contributed about N686.64 billion, representing only 0.45 percent, while the sector’s contribution to the country’s exports during the period was a mere 0.14 percent.
The NEITI Report underlined the urgency for the government to invest aggressively in energy, time, interest and resources towards the development of the solid minerals sector to maximize its potentials for the future growth of Nigeria’s economy.
Of the 26 recommendations contained in the report, NEITI called for urgency to commence and intensify comprehensive reforms in the solid minerals sector, while underlining 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, the report said, should be similar to the role of the Nigerian National Petroleum Company Limited (NNPC) in the oil and gas industry, although NEITI strongly advised that any such public-private-state owned enterprise should adapt and emulate the Nigerian Liquefied Natural Gas (NLNG) model.
NEITI has so far published eleven cycles of the solid minerals industry reports spanning the period 2007 to 2020.