An audit of the nation’s solid mineral sector has revealed that regulatory failures are resulting in enormous revenue losses.
Between 2007 and 2010, audits of the sector commissioned by the Nigeria Extractive Industries Transparency Initiative (NEITI) showed that over N4 billion that should accrue to the nation from royalty payments was lost, as the prices used for the calculation of these payments were not the current market value.
Meanwhile, NEITI’s executive secretary, Zainab Ahmed, has said the oil and gas audit report for the period 2009 to 2011 will be presented to the public early 2013, as the audit exercise had already been concluded by the independent auditors contracted.
Ledum Mitee, chairman of NEITI, speaking on Thursday in Abuja at the formal presentation of the audit reports, noted that the review, which followed base-line information provided by the scoping study conducted earlier in the sector, also reveals payment discrepancies between government receipts and payments of companies operating in the sector.
“For example, royalty for a tonnage of granite is still a pittance of N800 which is the price as at 2002. Today in 2012 the minimum market price on royalty per ton is N2, 500. The prices used for the calculations on all mineral deposits are long overdue for review. We calculate that about N4.048 billion is total revenue lost as a result of these outdated rates that have been used for royalties,” Mitee said.
Several factors, including Illegal mining, inadequate investments and lax regulatory and monitoring have for decades prevented the solid mineral sector from attaining its full potentials.
A total of 78 companies were covered in this year’s audits, with activities covering construction, manufacturing, artisanal mining and mineral buying centers. Between 2007 and 2010 the audit reports show government receipts was N54.56 billion while remittances from the companies was N53.87 billion reflecting a little over N687 million discrepancy, which is 1.25 per cent of total government receipts over companies’ payments. The total royalty, ground rent, tax and levies paid by the companies in 2007 to 2010 was N2.21 billion , N173.93 million, N51.37 billion and N122.91 billion respectively.
The NEITI chairman said, “These discrepancies were as a result of lack of adequate information /documents, payments without adequate details of activities by the major players (companies and entities), and inadequate details of the operating /production cost in the major companies/entities financial statements.