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FG Makes N10.97bn in Mining Fees, Royalties

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  • FG Makes N10.97bn in Mining Fees, Royalties

Even though the Federal Government had anchored a significant part of its diversification programme on the mining sector, it made only N10.97bn from fees and royalties paid by mining operators in four years, an investigation has shown.

In a document on the performance of the sector, the Minister of State for Mines and Steel Development, Mr. Bawa Bwari, said the government made N2.97bn in royalties and fees between January and October 2018.

Bwari said, “Overall, the revenue generated by the ministry from royalties and fees has improved from N2.08bn in 2015 to N3.92bn in 2017 and N2.97bn as at October 2018. Limestone mining has continued to lead in royalties earned by the government.”

Other data obtained from the Ministry of Mines and Steel Development showed that the Federal Government made N2bn from mining royalties and fees in 2016.

This means that the government made N10.97bn from mining royalties and fees between 2015 and 2018.

One of the issues accounting for low revenue generation in the sector is the evasion of payment of royalties by operators but Bwari said in the document that this had been dealt with in the guidelines that would soon be released.

He said, “Under the soon-to-be-released Mineral Export Guidelines, the lingering issue of evading payment of royalties or false declarations has been dealt with. All mineral exports shall henceforth be inspected by government-appointed independent pre-shipment inspection agents, who shall also render quantity and quality control services and monitor pricing. This is in accordance with the Pre-Shipment Inspection of Exports Act.

“The ad valorem value (market value) on which all royalties for exports are the cost will henceforth be charged against the international quoted price of the commodity. The effective ad valorem value to be used for calculating royalties is subject to the content of the mineral in the ore, concentrate or refine consignment.

“This simply means that a person exporting, for example, tin concentrate of 50 per cent tin metal content will pay fewer royalties than a person exporting a concentrate of 70 per cent tin content. The royalty rates for miners has been reduced from between three per cent and five per cent to between two per cent and3.5 per cent.”

To promote and encourage more mineral exporters to go into mining and to make provision for the environmental degradation resulting from the activities of the informal artisan producers, he explained that royalties for mineral trading exporters had been set at a reduced rate to between 2.5 per cent and 4.5 per cent.

The extra one per cent charged for non-mining exporters would be deployed for environmental remediation by the government, he added.

Bwari said to ensure the reduction in overheads by exporters and ease collection of royalties, appropriate measures for monitoring of repatriation of export proceeds had been put in place.

According to him, royalties will henceforth be paid directly to the federation account, after the repatriation of proceeds by the exporter’s bank – in the currency of trade – before the exporter’s domiciliary account is credited.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

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Farm input

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

The Nigerian Institute of Animal Science on Tuesday called on the Federal Government to halt the continued export of maize and soybean to reduce the scarcity of the commodities as well curb their price hike in Nigeria.

Registrar and Chief Executive Officer, NIAL, Prof. Eustance Iyayi, told journalists in Abuja that the poultry sector was currently hit by the severe scarcity of maize and soybean.

This, he said, was due to the continued export of the commodities, the COVID-19 pandemic, which had disorganised the international supply chain, lingering insecurity in the North-East, farmers/herders conflict and flooding in some parts of the country.

“Maize and soybean are being exported and this has exacerbated the situation leading to local scarcity and price escalation of the commodities in poultry production,” Iyayi stated.

He added, “The increasing prices of the essential commodities has resulted in the increase in price of finished feeds by about 75 per cent.

“This has led to the closure of small and medium sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity.

“To set the poultry industry from total collapse, the institute urges the government to immediately halt the exportation of soybean and maize and grant import permit to importers at the official foreign exchange rate.”

Iyayi said there was shortage of soybean in Nigeria and other countries, stressing that the little amount being produced across the country should not be exported.

He said the current maize yield of about one to two tonnes per hectare being produced in Nigeria would not be enough to sustain the country.

The NIAL helmsman stated that the country should be producing between seven and 10 tonnes per hectare in order to meet the requirements for humans and animals.

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Economy

Petrol Landing Cost Jumps to N186, Oil Hits $64

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Petrol Landing Cost Jumps to N186, Oil Hits $64

Against the backdrop of the rising price of oil prices, the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has increased to N186.33 per litre.

Investors King had exclusively reported on February 9 that the landing cost of PMS rose to about N180 per litre on February 5 from N158.53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.

The international oil benchmark, Brent crude, closed at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.

Other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

Apart from the changes in global crude oil prices, the exchange rate of naira to the dollar also affects the cost of imported petrol.

The cost of petrol would be higher if the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480/$1 at the parallel market.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

Brent crude, against which Nigeria’s oil is priced, rose by $1.67 to $64.58 per barrel as of 6:08pm Nigerian time on Monday.

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Economy

FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

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FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

The Federal Government has said about 100 million Nigerians will be lifted out of poverty through the National Gas Expansion Programme (NGEP).

The Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed this on Monday during the inauguration of the NGEP in Ado Ekiti, Southwest.

Sylva said the project was “a practical demonstration of President Muhammadu Buhari’s commitment to lift 100 million Nigerians out of poverty by using gas value chain as catalyst for social and economic development in Nigeria”.

The minister said, “The programme has its main objective to reinforce and expand gas supply as well as stimulate demand in Nigeria through effective and efficient mobilisation and utilisation of all available assets, resources and infrastructure in the country.

“The programme is geared towards the implementation of Mr President June 12, 2019 promise to take hundred million Nigerians out of poverty within the current decade by ensuring that locally produced, available, accessible and affordable fuel is sufficiently supplied across the country”.

Sylva added that Nigeria was richly endowed with mineral resources, specifically, hydrocarbons, crude oil and natural gas with proven gas reserves of over 200 trillion cubic feet of natural gas, which he said had presented the country with opportunity to use gas as a catalyst for social economy renaissance.

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