• Mon. May 20th, 2024


Who is to collect Royalty – NIWA or Solid Minerals?

The current land reclamation project of the Lagos State Government at Ilubirin lagoon being handled by Julius Berger Nigeria Plc (JBN) has played up the vexing question of which agency (or agencies) of the federal government is vested with the mandate of collecting royalties for sand mining.

Presently two federal authorities, the National Inland Waterway Authority (NIWA) and the Ministry of Solid Minerals and Steel Development (MSMSD) have been collecting royalties and other license fees from sand miners and quarry operators throughout the country. While NIWA collects mainly from operators who have operations in Nigerian inland waters, the MSMSD collects royalties from both marine operators who are mining sand and prospectors of solid minerals nationwide. All seemed to be going well for the two agencies until this year when JBN’s Lagos dredging department, according to the MSMSD, relied upon an Asaba High Court judgment to stop honoring MSMSD’s moves to collect royalties for its sand winning activities in Lagos waters.

JBN is widely known in Nigerian dredging circles to engage in commercial sand-winning exercises for many clients. Royalties are usually paid based on the quantity of sand being pumped out of the water, charged at N100 per cubic metre by NIWA and N28.50 per cubic metre by MSMSD.

A mining engineer with the MSMSD in Lagos, Mr Mayowa Omosebi, intimated DDH that although JBN had been paying them royalties before now, they stopped paying after the Asaba High Court judgment. He went further to say that a new development has overruled that judgment and since that subsequently MSMSD office in Lagos has been trying to prevail on JBN to resume paying them royalties all to no avail. That new development, according to him, is the signing into law of The Nigerian Minerals and Mining Act 2007. This new law, according to Mr Omosebi, even brings the activities of NIWA under the superiority of MSMSD in all matters of mining. He said their attempts to get the highly reputed civil construction giant to understand that the new law has vacated the powers of the Asaba High Court judgment have been rebuffed with the argument that the court ruling still stands.

In the current case under contention, an estimated 100 hectares land reclamation project at Iluburin lagoon, millions of cubic metres of sand is now being dredged by JBN for the Lagos State Government proposed major bus terminus as part of the ongoing Lagos Central Business District redevelopment. The terminus is designed to be a transport hub for all passenger and commercial vehicles going into Lagos Island, Ikoyi and Victoria Island. It will have a park and ride bus system into the city and a ferry terminal for passengers wishing to go by ferry to Apapa, Mile 2, Epe and other destinations, as well as a international market for traders. The facility will have banks, recreational facilities, eateries and office and shopping malls, etc. However, the land reclamation project is now the point at issue between the dredging contractor, Julius Berger and the MSMSD. While DDH gathered that NIWA has issued a N40m debit note to Julius Berger for royalties for the sand being dredged, attempts by MSMSD to have its bill also honored is being problematic with JBN allegedly rebuffing MSMSD’s approaches.

When DDH sought the views of Julius Berger corporate headquarters in Abuja for its response to this allegation, its public affairs adviser, Mr Clement Iloba, responded that there was no face-off at all between them and the MSMSD. He explained that they though they follow compliance with the Asaba High Court ruling, they were now awaiting final determination of which of the two agencies should collect royalties going by the new law. He admitted that whereas they used to pay MSMSD royalties before the Asaba High Court judgment, they stopped paying with the ruling in favour of only NIWA as the rightful agency to collect royalty. He said no official communication from MSMSD has been made to JBN concerning the new law and that whenever such communication was made, they would readily comply with the official position of the Government on the matter.

The Asaba High Court case (suit no. FHC/B/CS/63/2003) was filed by Messrs Celestine Nwachukwu, Mr Nwakacha Nnalue and Mr Azuka Nwanmor (plaintiffs) against NIWA and Federal Ministry of Solid Minerals (now MSMSD) (as 1 st and 2 nd defendants respectively) and was decided by Justice G.O. Kolawole on 21 st of April, 2005. The plaintiffs wanted the court to determine “which of the two defendants is entitled to issue authority and demand royalty from the plaintiffs for building sand manually removed/dredged from the River Niger beaches at Asaba”. Two main reliefs were sought as follows:

(1) “An order of the court declaring between the 1 st and the 2 nd defendants the appropriate Federal Government body or agency entitled to issue authority or license and to demand/collect royalties from the plaintiffs for building sand at all sand beaches in Asaba, Delta State”.

(2) An order of the court restraining the defendants not entitled, their agents and privies from demanding and receiving royalties from the plaintiffs and from harassing, disturbing or interfering with plaintiffs sand quarry operation”.

In arriving at his judgment, the Judge looked at NIWA Act, No. 13 of 1997 and the Minerals and Mining Act, No. 34 of 1999. Quoting from section 2 of the NIWA Act, he brought out the stated objectives of NIWA from paragraphs

(a) improve and develop inland waterways for navigation;

(b) provide an alternative mode of transportation for the evacuation of economic goods and persons; and

(c) execute the objectives of the national transport policy as they concern inland waterways.

He also highlighted some of the functions of NIWA to include section 9 (i) grant permit and licenses for sand dredging, pipeline construction, dredging of slots and crossing of waterways by utility lines, water intake, rock blasting, and removal”

He then posed two questions which he said were “pertinent… from the totality of the processes filed by both the plaintiffs and the defendants. The first question is whether there is a correspondingly clear and specific provision in the Mining Act to the section 9(i) of the NIWA Act which I have just reproduced. The second question is whether the 1 st defendant is empowered to demand for royalties from the plaintiffs with regards to the “unit of sand” which they manually dredged from the River Niger beaches at Asaba?

“With regard to the first question, I have looked through the Minerals and Mining Act, I am afraid, there is no such provision specific and clear as section 9(i) of the NIWA Act which unambiguously vests such powers as the 1 st defendant has been given in the 2 nd defendant…” On the second question, he answered that, “ …when we look at section 9(a) , the 1 st defendant is empowered to “undertake capital and maintenance dredging” of the inland waterways declared to be navigable. This function is, in my view, concomitant and in accord with its declared corporate objectives under section 2(a), that is to “improve and develop inland waterways for navigation”. It is in my view and I hold that when all these provisions are read together and liberally interpreted, I have no doubt that the demand being mad by the 1 st defendant on the plaintiffs in respect of sand being manually dredged at the Rive Niger beaches at Asaba was not ultra-vires its enabling Act. It is intra-vires.”

The conclusion of the 26-page judgment went like this: “Finally, in the light of the analysis that I have done, I hold that the 2 nd defendant has no power to grant permits or issue licenses and or to demand and collect royalties from the plaintiffs for the sand dredging business which they carry on within the 1 st defendant’s area of authority as defined by the NIWA Act. By the provisions of section 5(l) of the Mining Act, the plaintiffs are not even qualified to be granted such licenses or permits, they not being “body corporate” by the 2 nd defendant. Afortiori, I hold that the 2 nd defendant has no power, and it acts illegally by granting such licenses/permits to the plaintiffs and demanding and receiving royalties from them virtue of section 232(1) of the Mining Act….”

But in his contribution to the debate, Engr Omosebi quotes The Nigerian Minerals and Mining Act 2007, section 76(1) which states as follows: “Not withstanding the provisions of any other enactment, consent or approval provided for under an enactment and in particular, sections 9(1), 29(1), 10, 11, 12 and 13 of the National Inland Waterway Authority Act, every operation for the purpose of extracting any quarriable mineral from a quarry including sand dredging in the navigable waterways or elsewhere, for industrial use (in this part referred to as a “quarrying operation”) shall be conducted under a lease or license granted by the Minister under this Act”.

76(3) “Pursuant to section 1(1) of this Act, except as provided in this part, no person shall conduct any quarry operation on any land in Nigeria, its contiguous continental shelf and all rivers, streams and water courses throughout Nigeria, any area covered by its territorial waters or constituency and the Exclusive Economic Zone, or divert or impound water for that purpose”.

Mr Omosebi quoted many other parts of the 64-page volume of the new law to assert that MSMSD is the superior authority over all matters of sand mining and its royalties though he said they were not out to stop NIWA from charging its own royalties. He said as a rule, applicants for NIWA’s permits and licenses are subject to paying NIWA charges and thereafter must obtain the ultimate authority to proceed with their dredging businesses at the offices of the MSMSD nationwide.

It will be recalled that royalties being charged by both NIWA and MSMSD have been the criticized by many indigenous dredging outfits who decry such a practice as double taxation. The current situation under contention may lead to clearing the air on the multiplicity of fees and other charges by governmental authorities at federal and state levels on various aspects of dredging and sand mining in the country.

An Extract Of The Law To Provide For The Regulation Of Waterfront Infrastructure Development In Lagos State.


Section 20 – (1) Any person who carries on the business of sand dealing or sand dredging along the waterfronts without obtaining the necessary Operations Permit shall be liable on conviction to a fine not more than One Million Naira (N1, 000,000.00) or imprisonment for a term of 2 years or both.

(2) Any person who constructs, develops, erects any building or any other structure (not being a structure required for water transportation) along the waterfronts and embankments within the State without a permit or in any other manner contravenes the provisions of this law, shall be liable on conviction to a fine not more than One Million Naira (N1, 000,000.00) or imprisonment for a term of six months or both.

(3) Any person who encroaches, obstructs, or impedes physical accesses to any waterfront, damage or impairs the aesthetic of any waterfront whether partially or wholly shall be liable on conviction to a fine not exceeding Two Hundred and Fifty Thousand Naira (N250, 000.00) or imprisonment for a term of three months or both.

Type Operator Fee Per Location Per Annum Fee Per Dredge Per Annum
Sand Miners – N200,000.00
Laterite Dealers – N100,000.00

Dredging firms: Category ‘A’.
Ø Hopper Dredge – N10 Million
Ø Cutter Suction Dredge (24” – 30”) – N10 Million
Ø Cutter Suction Dredge (17” – 20”) – N3 Million
Ø Cutter Suction Dredge (10” – 16”) – N1.5 Million

Dredgers: Category ‘B’

Ø Sand Stockpiles/Sellers

1. LEKKI Ajah – N1,000,000.00
2. Ikorodu – N750,000.00
3. Badagry/Epe – N1,000,000.00

Dredgers: Category ‘C’
Ø Manual Dredgers – N100,000.00

(Source: http://www.lagosstate.gov.ng/pagemenus.php?p=119&k=39)