Nigeria: NEITI - Govt's Earning From Mining Rose to N79.96 Billion in 2019

21 June 2021

Abuja — Nigeria earned N79.96 billion from the solid minerals sector in 2019, representing a 15 per cent increase when compared to the N69.47 billion recorded the previous year, a new report released yesterday by the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown.

The data contained in the 2019 audit report of the solid minerals sector released by the organisation in Abuja stated that the 2019 earnings accounted for 16 per cent of the total revenues of N496.28 billion that have accrued to the federation from the sector over the period of 13 years (2007 to 2019).

It also represented the highest since 2007 when NEITI commenced reconciliation of payments in the solid minerals sector, now in the 10th cycle of the independent audit.

A breakdown of the 2019 receipts as reported by NEITI showed that taxes to the Federal Inland Revenue Service (FIRS) on behalf of the federation accounted for N69.92 billion or 87.4 per cent of the total, while fees and royalties paid to the Mining Cadastre Office (MCO) and Mines Inspectorate Department (MID) accounted for N2.37 billion (3.0 per cent) and N2.55billion (3.2 per cent) respectively.

Revenue accruals to the states stood at N5.1 billion, representing a 42 per cent increase when compared to the N2.1 billion recorded in 2018, with FIRS accounting for the highest flow to the coffers.

In addition, the outstanding amount of N8.887 billion, which accrued from the solid minerals sector as of 31st December 2019, was distributed amongst the three tiers of government in May 2020 using the revenue sharing formula while the balance as of 31st October 2020 was N3.948 billion.

A breakdown of the distribution shows that the federal and state governments received N4.073 billion or 45.83 per cent and N2.065 billion or 23.25 per cent respectively, while local governments got N1.592 billion or 17.92 per cent. The balance of N1.155 billion was distributed to only solid-minerals-producing states as their shares of the 13 per cent derivation.

According to the report, out of 702 companies that paid royalties to the government in 2019, only 74 companies met the materiality threshold of N3 million, representing a 7.2 per cent increase when compared to 69 entities that met the threshold in 2018.

"These 74 companies accounted for 87.63 per cent of total royalties of N2.50 billion paid in 2019, with the top five companies (Dangote Cement PLC; Lafarge PLC; Dangote Industries; Julius Berger; and Reynolds Construction) paying more than 50 per cent of total royalties" the report stated.

It added that a total of 1,296 mineral permits were issued by the MCO in 2019, with small-scale leases being the highest with 602 permits.

This was followed by 501 and 169 for exploration licences and quarry leases respectively, while the least figure of 24 was recorded for mining leases.

The 2019 audit report revealed that the total volume of minerals produced was 59.82 metric tonnes, while a five-year trend analysis of minerals production showed that the total minerals production in the past five years stood at 224,188,056 tonnes, out of which 59.82mt was produced in 2019. This signified the highest in the five years reviewed.

In addition, the 2019 volumetric figures also represented an increase of 29.41 per cent when compared to 46.7mt produced in 2018, closely followed by 43.08mt and 39.27mt produced in 2016 and 2015 respectively, with the lowest production figure of 35.32mt recorded in 2017.

An analysis of revenues flow from the sector also showed that N79.96 billion recorded in 2019 was the highest in the past five years, followed by N69.47 billion and N69.2 billion recorded in 2018 and 2015 respectively, while N52.76 billion was recorded in 2017 and accounted for N41.98 billion in 2016.

On minerals exported, the report showed that the solid minerals sector accounted for N124.23 billion of the total government exports of N24.275 trillion for 2019, representing 0.51 per cent of total export for the year.

On contribution of the sector to the economy, NEITI's report cited data from the National Bureau of Statistics (NBS), which stated that mining and quarrying contributed 0.26 per cent to Gross Domestic Product (GDP), higher than 0.18 per cent contribution recorded in 2018.

"Nigeria's GDP in 2019 was N144.210 trillion with contributions from the solid minerals sector totalling N368.99 billion, representing 0.26 per cent of the total amount. This shows steady growth in the sector's contribution to the economy in the past five years, from a contribution of 0.12 per cent in 2015 to 0.26 per cent in 2019," it stated.

A sectorial review of revenue distribution of taxes and royalties by the 74 companies showed that manufacturing and construction companies contributed 68.60 per cent and 29.67 per cent respectively in royalty and taxes while quarry, mining companies and buying centres contributed only 1.73 per cent.

On environmental impact and social expenditure, the report said 10 companies reported environmental expenditures to the tune of N17.13 million, covering environmental fees, air quality and waste permits, and registration fees for environmental impact assessment (EIA).

The report stated that mines environmental compliance department carried out reclamation of seven abandoned mines costing N534.81million.

It added that a total of 32 mining sites have so far been reclaimed from 2007 to 2019, costing N2.39 billion.

On social expenditure, the report revealed that N2.598 billion was spent on 557 projects by 44 extractive companies.

To address the non-payments of taxes and multiple Tax Identification Numbers (TIN), the NEITI report recommended that FIRS should carry out comprehensive tax audits to recover all unpaid taxes by companies and work in collaboration with the superintending ministry to reconcile the numbers.

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