NEITI ES
Waziri Adio
How
NEITI ES
Waziri Adio
How Solid Minerals Earned N52bn in 2017-
NEITI
The solid minerals sector contributed N52.75 billion to
federation revenue in 2017, a 21% increase on the N43.22 billion
contributed by the sector in 2016.
The information and data followed an independent reconciliation
of company payments and government receipts in the sector by the
Nigeria Extractive Industries Transparency Initiative (NEITI) in
its latest report released in Abuja.
From the sector’s total revenue contribution of N52.75billion,
payments to the Federal Inland Revenue Service (FIRS) accounted for
N49.162 billion which is about 93% of the total revenues realized
during the period under review. Payments to the Mines Inspectorate
Department (MID) and Mining Cadastre Office (MCO) amounted to
N1.59billion and N2.08billion or about 3% and 4% respectively of
the total revenue from the sector.
NEITI however noted, “Except for revenue from MID, there was
significant increase in revenue from all other streams” in
2017.
According to NEITI, “A trend analysis of the revenue flows
showed that there has been a very remarkable increase in revenue
accruing to the Federation from the solid minerals sector from 2013
to 2017, though 2016 witnessed a decrease of 31.02% compared to
2015.”
Other revenue flows from the solid minerals according to the
NEITI report, include sub-national payments. These are direct
payments to states and local governments as a result of national
laws, contractual obligations or local regulations which are
disclosed as unilateral disclosures by the extractive companies.
“The total payment was ₦2.877 billion representing about 5.45% of
total government revenue from the sector”, NEITI stated.
On production, the NEITI Solid Minerals Report disclosed that
35.33 million metric tons of minerals valued at N32.78 billion was
produced in Nigeria during the same period. “The production data
was based on minerals either used or sold during the year”.
A breakdown of the production showed that Limestone, Granite and
Laterite accounted for 85.72% of the total minerals produced with
Limestone alone contributing about 55% of the production volumes.
However, in value terms, Granite and Limestone contributed 37.28%
and 35.57% respectively.
On state-by-state contribution, the report highlighted that Ogun
State produced the highest quantity of minerals in terms of both
volume and value. “The state accounted for over one-third of total
production quantity and 23% of the total minerals production value.
The contributions by Ogun and Kogi states put together accounted
for over half of the total production quantity”. A further analysis
showed that the two states led in Limestone as major minerals
produced in the states. However, in terms of production value,
Ogun, FCT and Kogi states accounted for 23%, 20% and 18%
respectively.
A review of minerals production by states also shows that with
the exception of the Federal Capital Territory, there was a
material decline in states production in terms of both quantity and
value. Total production quantity decreased from 41.87million metric
tons valued at N34.09billion in 2016 to 35.33 million metric tons
valued at N32.78billion in 2017. The figure represented a decline
of 15.64% in production volumes and 3.83% in production value in
2017.
The NEITI 2017 Solid Minerals report also revealed that Dangote
Cement dominated activities in minerals production in 2017. The
company alone was responsible for about 46% of the total minerals
production that year. Other big players in the sector included
Lafarge Cement Plc., CGC Nigeria Limited and Julius Berger Plc.
“The four companies produced over 27 million tons of minerals,
representing 77.31% of the total minerals production quantity and
over 60% of the production value”, the report remarked.
The sector’s contribution to employment in 2017 was about 0.3%
of Nigeria’s total employment, same as the figure recorded in 2016.
The report also affirmed that artisanal and small-scale miners
currently dominate the sector.
On the solid mineral sector’s contribution to exports, the NEITI
report stated that about 16.34million metric tons of minerals
valued at $29.90million was exported in 2017. According to the
report, “Nigeria’s total export was about ₦13.60trillion with solid
minerals contributing N77.23billion or 0.57% of total export in
2017”.
The trend analysis shows that in 2015, solid minerals export was
N1.94 billion. This witnessed a geometric leap to N11.16 billion in
2016 and an equally impressive figure of N77.23 billion in 2017.
This is an indication that the solid minerals sector is steadily
contributing to the Federation’s export earnings but requires
greater government attention.
The report also disclosed, “The major destination of Nigeria’s
export during the year under review is China. The country accounted
for 68% of the total export value during the year”. Other
destinations are Malaysia, Vietnam and India. The report however
observed that export data received from the Nigerian Customs
Service (NCS) include minerals that were not captured in the
production data provided by the MID as well as inconsistency in FOB
value of minerals.
The report also contains comprehensive information and data on
how many licenses were issued as well as gross revenues that
accrued to the federation account from both oil and non-oil sources
for the year 2017. It asserted that while Nigeria’s gross revenues
stood at ₦7.35 trillion, revenues specifically from the solid
minerals sector represented only about 0.05%.
The report explained that the absence of an industry-specific
fiscal regime made it difficult to tie revenue flows from the solid
minerals industry to the federation account. According to the
report, the development equally affected efforts at quantifying the
contribution of the solid minerals sector to Nigeria’s GDP, which
presently stands at current basic price of ₦113.72 trillion. The
report however highlighted that the sector’s contribution to GDP
was an abysmal 0.11%, which showed a decline of 0.01% and 0.02%
from the data of 0.12% in 2015, and 0.13% in 2016.
The report further explained that out of 1,072 entities covered
by the exercise, only transactions by 59 companies were reconciled.
These 59 companies accounted for over 86% of the total royalty
payments made by the sector in 2017. Royalties paid by fifty-nine
(59) companies in 2017 was N1.3billion as against the N1.4billion
paid by fifty-six (56) companies in 2016 resulting in a decrease of
about 7.7% in revenue. This may be an indication of lower
investment in mining activities in 2017.
On payouts to the federating units from solid minerals revenue,
NEITI stated that the last distribution of solid minerals
accumulated royalties occurred in July 2016, when the sum of ₦9.92
billion was distributed by FAAC. “The accumulated balance in the
account as at December 31, 2017, was ₦8.54 billion. However, as of
April 30, 2019, the accumulated balance in the account increased by
66.4% to ₦14.21 billion,” NEITI explained.
Amedu Onekpe & Co, an indigenous accounting and auditing
firm, conducted the 2017 solid minerals audit for NEITI. While
underlining the importance of a comprehensive action plan to shift
attention from oil to the development of the solid minerals sector
in the face of dwindling oil revenue, the report noted the
significant reforms and development in the sector. Some of them
include:
Increased funding to the sector from various sources from
N1billion in 2015 to N7billion in 2017;
Approval of ₦30 billion ($100 million) as intervention fund to
facilitate exploration projects towards the much-needed geosciences
data and other regulatory framework;
N5billion support fund launched by the Bank of Industry for
small-scale miners at 5% interest rate;
A $150 million loan secured from the World Bank for the Mineral
Sector Support for Economic Diversification Project (MinDiver)
which became operational in 2017;
Inauguration of a project delivery team (PDT) to invigorate the
coal sub-sector and concession of coal blocks of the Nigerian Coal
Corporation as part of MMSD’s contribution to the energy policy in
other to increase the contribution of coal power plants to 30% of
the nation’s electricity by 2020;
Discoveries of some mineral deposits in 14 states have led to an
appreciation in Nigeria’s limestone resource base from 2.3 billion
tonnes to 10.6 billion tonnes making Nigeria sufficient in cement
production;
An estimated 4.8 billion tonnes of Marble was found in the FCT,
Nasarawa, Ondo, Edo, Oyo, Kogi, Kwara, Niger and Kebbi states;
Engagement of M/S Fugro by MMSD to carry out aeromagnetic survey
covering various mineral deposits across the country with
discoveries made on the existence of base metals in Ebonyi State,
gold in Osun and Kaduna states;
· Acquisition of diamond core drilling rigs and assaying
equipment by MMSD for the National Steel Raw Materials Exploration
Agency and the Nigeria Geological Survey Agency (NGSA), which would
aid gathering of more credible geosciences data;
· The MCO has been decentralized, upgraded and six zonal offices
established;
· The MCO has introduced online mineral title administration to
ensure transparency and improved turn-around time in mineral title
processing from 45 days to 15 days;
· The strict implementation of the “use it or lose it” provision
of the Minerals and Mining Act, 2007 that stipulates the revocation
of non-performing or defaulting mineral titles to curtail the
activities of speculators;
· The MMSD continues in its drive to encourage state
governments’ participation in the sector and promote partnerships
with the Federal Government;
· National Council of Mining and Mineral Resources constituted
to serve as an administrative mechanism to douse tension between
federal and state authorities on issues of natural resource
governance.
The NEITI report among its many recommendations called for
closer inter-agency collaboration specifically between Nigeria
Customs Service and the Mines Inspectorate Department in revenue
collection and management in efforts to develop the industry. The
transparency agency reminded companies to provide their annual
financial statements as failure to do so would attract sanctions
based on the NEITI Act of 2007.
The independent audit of the solid minerals sector is consistent
with NEITI’s mandate under the NEITI Act 2007 and in fulfillment of
Nigeria’s obligation to the global Extractive Industries
Transparency Initiative (EITI) as an implementing country. Data for
the report was obtained from extractive industries companies and
seven government agencies: the Central Bank of Nigeria, Bureau for
Public Enterprises, Mining Cadastral Office, Mines Inspectorate
Department, Federal Inland Revenue Service, Nigeria Customs Service
and Federation Account Allocation Committee.
Dr Orji Ogbonnaya Orji
Director, Communications & Advocacy.