The Solid Minerals sector of the nation’s economy needs urgent intervention and progressive legislation to attract investors, the Nigeria Extractive Industries Transparency Initiative (NEITI) has said.
NEITI said the sector, which currently contributes less than one percent to the nation’s gross domestic product (GDP) needs urgent and comprehensive reforms to make attractive.
The Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji made the call during an interaction with the Senate Committee on Public Accounts – SPAC on the agency’s industry reports for the oil, gas and mining sectors for 2021, 2022 and 2023.
Orji said the reforms should cover the review of the 2007 Solid Minerals Act with emphasis on establishing a dynamic physical regime for the sector and the creation of a national company to drive investment efforts in the sector among other measures.
Presenting the reports, Dr. Orji lamented the abysmal performance of the sector, which he said did not mirror the vast mineral deposits in Nigeria and the potentials that the sector holds for the economy.
“The Solid Minerals industry contributing less than one percent to the GDP, needs urgent help, intervention and progressive legislation that would attract investors,” the Executive Secretary said.
NEITI works with the ministry and we know what the challenges are, they also need support. The data we presented reflects the current situation and activities in the sector, but that is not in any way near the
potential of the sector”.
He said the information and data provided by NEITI in its annual report to the public are with the expectation that policy makers and the legislature would use them to initiate the comprehensive reforms needed in the sector to grow.
Dr. Orji said the oil and gas industry reports showed that Nigeria recorded some of the most significant progresses and positive milestones in 2023, in terms of the drop in crude oil losses by 78 percent.
The NEITI report, he pointed out showed that the country lost about 36.6 million barrels of crude oil in 2022, while the 2023 records indicated a significant drop to 7.68 million barrels.
He commended the Office of the National Security Adviser, the Armed Forces and Security Agencies for coordinated policies that deterred crude oil theft, such as better surveillance of the nation’s pipelines etc.
The NEITI Executive Secretary recommended the ownership and buy-in structure that would encourage the involvement of the host communities to curb crude oil theft.
He underscored the dangers of indiscriminate laying off of skilled manpower, who for lack of what to do and their level of technical know-how, engage in the vandalism of oil and gas infrastructure to survive.
Another positive indicator in the oil and gas report is the drop in importation figures, which showed that fuel imports declined by 3.5billion litres, from the 23.54 billion litres recorded in 2022 to 20.28billion litres in 2023, attributable to the removal of subsidy.
The NEITI reports, Orji said, however revealed a decline in revenues from the sector by 13.7 percent between 2022 and 2023.
“The oil and gas sector recorded a total revenue of $35.78 billion in 2022, but dropped to $30.86 billion in 2023. The NEITI report also showed that Nigeria earned a total of $831.14 billion between 1999 – 2023 (25yrs)”, Dr. Orji
stated.
Similarly, the NEITI reports also showed that the sector’s contribution to Nigeria’s GDP consistently declined for the three years under review, with 7.24% for 2021, 5.74% for 2022 and 5.48% for 2023 respectively.
On the same trajectory, gas production also declined during the period from 2.47 Billion standard cubic feet (SCF) in 2021, to 2.52 billion scf in 2022 and lower to 2.49 billion scf in 2023.
He called for clear alignment between Nigeria’s gas commercialisation and energy transition policies and the Climate Change Act to accelerate the country’s journey to affordable, clean and renewable energy.
The NEITI report also revealed a total sum of $6.1 billion as outstanding liabilities owned by the Oil and Gas Industry to the federation as at August 2024.
The outstanding liabilities consists of outstanding royalties, taxes, rents and other collectible revenues due for collection into government coffers.
“At a time when the country is mobilising resources to meets its budget expenditures, recovering these revenues by the
relevant agencies will be a huge relief to the government”, Dr. Orji said.
Chairman of the Senate Committee on Public Accounts, Senator Aliyu Wadada said the Committee would hold a public hearing to be driven by the NEITI industry reports.
He emphasised that all companies with outstanding liabilities to the federal government must appear before the Committee during the proposed hearing.
Senator Wadada lamented the poor performance and contribution of the solid minerals sector to the economy especially with the recorded remittances which does not reflect the potentials of the sector nor the quantum of activities and revenue that the sector is generating and can generate for the Nigerian economy.
“This is quite ridiculous and unacceptable. It cannot continue. Nigeria needs a profitable solid minerals sector,” Senator Wadada said.
In his answer to a question by Sen. Osita Izunaso (Imo West) on the way the Petroleum Industry Act (PIA) was being implemented, the Executive Secretary of NEITI said the only concern was in the area of the law being implemented without a coordinated plan or a strategy.
He said an implementation plan was spelt out immediately the PIA was enacted, adding that the Committee – the Petroleum Industry Act Steering Committee- PIASTEERCO did not conclude its assignment and did not submit any report, making it impossible for the new administration to have a plan to work on.
The Executive Secretary called for a revisit and the constitution of a new team comprising multi stakeholder group to develop a strategic plan to guide the implementation of the PIA because of the importance of the law.
Sen. Dafinone (Delta Central) welcomed NEITI’s interest in data and requested explanation on the fluctuation in terms of production and its correlation with oil theft.
The Executive Secretary explained that although oil theft was gradually decreasing, recording a 78% decrease in the 2023 report, the need to be sustained the ongoing onslaught against oil theft should be sustained. He commended
the Office of the National Security Adviser and other security agencies for the job done so far and called for more coordination and exchange of information.
Sen. Abdul Ningi (Bauchi Central) requested NEITI’s update on the status of remittances to the Federation account based on the liabilities disclosed by NEITI report.
The NEITI Executive Secretary explained that the liabilities were collectable revenues due to the FIRS for taxes and to the NUPRC for royalties, rents among others.
He explained that NEITI is working with the EFCC and the two respective agencies to recover all collectible revenues in the industry and remit to the appropriate bodies.
Senator Victor Umeh (Anambra Central) focused his questions on the less than 1% revenue performance of the solid minerals sector and requested to know the level of collaboration between NEITI and the Ministry of Solid Minerals Development and what needs to be done to revitalize the sector.
Responding, Dr. Orji who pointed out that the solid minerals sector and the Ministry needed help, welcomed the passion by the current Minister to reposition the sector, but maintained that NEITI’s position remained a comprehensive reform on the sector based on the Executive Bill before the National Assembly.
Orji agreed with the Senators that the performance of the sector was far beyond expectation.
