The Federal Government on Tuesday announced the creation of what it called “Special Purpose Vehicles ((SPVs)” with the aim of boosting the participation of state governments in commercial mining activities within their constitutional geographic jurisdictions.
Kayode Fayemi, minister of mines and steel development, stated this Tuesday in Sokoto, while delivering a keynote address at the opening ceremony of for a two-day capacity workshop on SPVs for beneficial participation of state governments in mining.
This he said is intended to avoid undermining private sector players in the industry or discouragement of mining enterprise within the states, as well as streamlining the relationship of states and mineral host communities for greater productivity.
In August 2016, a mining roadmap was approved by the federal government which, in part, emphasizes the need for collaboration with the federal and state governments, and the need to build stronger cooperative processes and structures to sustain the desired cooperation.
On the basis of the mining roadmap, the ministry of mines and steel development has already begun the implementation of the target reforms, including that of the constitutionally guaranteed 13 percent derivation for mineral revenues in states, which is similar to the derivation that oil producing states currently enjoy from the federation accounts.
The ministry is also working with state governments and relevant ministries to formalize and manage artisanal miners, while working with defense and security agencies to curb the actions of illegal mining in the country.
“Under the MinDiver programme, we have commenced the modalities for capacity building in community based organizations and other community representatives, helping them participate in key decisions in mining operations and processes,” Fayemi assured.
According to him, “we are also providing guidance on suitable benefit sharing mechanisms, such as foundations, trusts and funds and their applicability in different mining operations at all levels of engagement on behalf of mining communities.”
There is also a provision in the mining roadmap that, while the states cannot be given licenses as separate legal entities, companies in which the states have ownership interest can bid for and receive licenses.
This is because, before now, the federal government, through its ministry of mines and steel development, had tensions with most of the state governments because the sector was designed to regulate them without any incentives for the states and local governments to support its growth.
For this reason, royalties and taxes were not directly accessible to them, thereby excluding them from optimally revenue from the mining of resources in their respective jurisdictions.
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