The Ministry of Mines and Steel Development (MMSD) as well as the Mines Inspectorate Department, lack the required capacity and logistics to effectively monitor activities in the sector thereby giving room for revenue leakages, the solid minerals sector audit conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed.

However, the federal government generated about N53 billion from the solid minerals sector the audit report which was released yesterday in Abuja, covering the period 2007 - 2010 showed.

The audit is the first ever to be done in the sector and was conducted by indigenous auditors Haruna Yahaya & Co. It revealed that about N4 billion estimated revenue was lost within the period.

According to the report, "the mines inspectorate department and the MMSD do not have the required capacity and logistics to effectively monitor the companies in order to determine tonnage, production levels and royalty payments, thus allowing companies to declare whatever they want without proper verification."

A breakdown of the revenue figures showed total royalty paid by companies within the period as N2.212 billion, total ground rents/annual surface rents was N173.9 million, total tax was N51.37 while total levies paid by companies in the sector between 2007 and 2009 was N122.9 million.

The audit covered a total of 78 companies mainly construction, manufacturing, and mineral centres which taxes are above N1 million annually.

It was discovered that the prices used for calculation of royalty payments were not current market value thereby leading to loss of revenue. "For example royalty of granite is still a pittance N800 which was the price as at 2002. Today in 2012, the minimum market price on royalty per ton is N2500," the report stated.

The audit also established that the sector was controlled mainly by construction companies and cement manufactures and noted that it was unhealthy given the fact that the sector was capable of attracting full time investors with capacity to establish factories and industries.

It was also disclosed that most companies audited do not submit their annual tax returns to the Federal Inland Revenue Service (FIRS) even as it was found that there is lack of synergy between the Mining Cadastre Office and the State mines inspectorate a situation which allows illegal mining to thrive.