STATE CONTROL OF NATURAL RESOURCES
1.0 INTRODUCTION.
2.0 OBJECTIVE
STATE CONTROL OF MINERALS
DEFINITION OF MINERALS
CLASSIFICATION OF MINERALS
CONTROL AND MANAGEMENT OF MINERAL RESOURCES.
IMPLICATION OF STATE CONTROL AND MANAGEMENT OF MINERALS
PRINCIPLE OF DERIVATION
NIGERIAN OIL AND GAS CONTENT DEVELOPMENT ACT 2010.
WHAT IS NIGERIAN CONTENT
WHAT DOES NIGERIA OIL AND GAS INDUSTRY MEAN?
5.0 SOVEREIGN INVESTMENT AUTHORITY (ESTABLISHMENT ETC) ACT 2011
6.0 CONCLUSION
7.0 SUMMARY
8.0 TUTOR MARKED ASSIGNMENT/ SUGGESTED ANSWERS
9.0 SUGGESTED FURTHER READING /REFERENCES STATUTES
MINERALS
INTRODUCTION.
A natural resource is any material in its native state which when extracted has economic value. Timberland, oil and gas wells, ore deposits and other products of nature that have economic value are example of natural resource.
The term includes not only timber, gas, oil, coal, minerals, lakes and submerged lands but also features which supply human need and contribute to the health, welfare and benefit of a community and are essential to the well being thereof and proper enjoyment of property devoted to park and recreational purposes.
See A-G Federation V A-G Abia State (No.2) (2002) 6 NWLR (PT 764) 542.
The control and proprietary rights over natural resources in Nigeria under or upon any land in Nigeria rivers, streams, water courses or territorial waters is vested in the Government of the Federation for and on behalf of the people of Nigeria.
Section 1 of the Land Use Act which vests control of all lands in the states of the Federation in the government also divests citizens of both land and natural resources. There have been constant agitation by communities to have greater share in the revenue accruing to the state from the exploitation of the natural resources located in their communities. These have ranged from civil protests, kidnapping to environmental terrorism including blowing up of oil rigs, pipeline vandalisation and incineration of vehicles used for transportation of natural resources.
OBJECTIVE
The objective of this unit is to examine control of natural resources by the state with a view to acquainting the students with the existing laws regulating the management and control of mineral resources in Nigeria.
STATE CONTROL OF MINERALS
Nigerian Minerals and Mining Act 2007 which repealed the Minerals and Mining Act No 34 of 1999 was enacted for the purpose of regulating all aspects of the exploration and exploitation of solid minerals in Nigeria and related purposes.
DEFINITION OF MINERALS
Minerals or “mineral resources” is defined by the Nigerian Minerals and mining Act as any substance whether in solid, liquid or gaseous form occurring in or on the earth, formed by or subjected to geological processes including occurrences or deposits of rocks, coal, coal bed gases, bituminous shales, tar sands, any substances that may be extracted from coal, shale or tar sands, mineral water and mineral components in tailings and waste piles but with exclusion of petroleum and water without mineral content.
CLASSIFICATION OF MINERALS
Minerals are essentially classified into two. They are:
- Floating Mineral: These are minerals which are spilted over the land. It is not necessary to dig the land to have access to it e.g. ash, salt potash, and gas
- Underground minerals: This refers to minerals that are embedded in the soil and have to be dug out for access to be obtained to them
CONTROL AND MANAGEMENT OF MINERAL RESOURCES.
The entire property in and control of all mineral resources in and upon any land in Nigeria, the 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 is vested in the Government of the people of Nigeria. - Section 1 (i) of the Nigeria’s Minerals and Mining Act 2007
- Section 1 of the petroleum Act vests the entire ownership and control of all petroleum in, under or upon any lands in Nigeria, under the territorial water and forms part of the Exclusive Economic Zone of Nigeria in the federal Government
Section 44 (3) of the Nigerian constitution similarly. vests ownership and control of all minerals, mineral oils and natural gas and entire petroleum in Nigeria in the Federal Government
All lands in which minerals have been found in commercial quantities from the commencement of the mining act is liable to been acquired by the government of the Federation in accordance with the provision of the Land Use Act discussed in the previous Module.
The government is however empowered to transfer its proprietary interest to any person by whom the mineral resources are lawfully won upon their recovery in accordance with the Minerals Act.
To ensure the orderly and sustainable development of Nigeria’s Mineral resources and the development of a well planned and coherent programme of exploitation of mineral resources taking cognizance of economic development, ecological and environmental functions, the minister responsible for solid minerals is empowered by the Act to monitor compliance with its provisions. See section 4 of the Act.
The right to search for or exploit mineral resources is conferred by the Minister in the form of:
- a reconnaissance permit
- an exploration licence
- a small scale mining lease
- a mining lease
- a quarry lease and
- a water use
Exploitation of mineral resources without the issuance of a valid permit or authority granted by the Minister is punishable under the Act – section 46 (2) of the Act.
Every holder of an exploration licence is obligated to conduct exploration activities in a safe, friendly, skilful, efficient and workman like manner in accordance with the regulations. The licensee is also mandated to conduct exploration activities in an environmentally and socially responsible manner – section 61 of the Act
IMPLICATION OF STATE CONTROL AND MANAGEMENT OF MINERALS.
The implication of state control and management of resources is that the government has sole power to exploit or grant or revoke licences to individuals or corporations to exploit mineral resources. The government also has the sole responsibility for fixing prices for minerals exploited in Nigeria.
The communities where the minerals are located have no input whatsoever in the exploitation of the mineral since they are mere “occupiers” under the Land Use Act. This is however without prejudice to their right to enter into negotiations with the prospecting or exploration company to pay rents to them to be granted access to the mineral source and compensation for damage to crops and other property.
Oil producing states in Nigeria are however given preferential treatment in the sharing of revenue accruing to Nigeria from crude oil. Section 162 (2) of the 1999 constitution and item 36 of the Exclusive legislative list vests resource ownership in the Federal Government but provide that the revenue from the resources should be distributed between the federal government and state of the federation from which the resources derived.
PRINCIPLE OF DERIVATION
It is provided that under the principle of derivation that revenue accruing to the Federation account from any natural resources is deemed to have been derived from the state where such resources are located, and not less than 13% of the revenue accruing to the federation account directly from any natural resource shall be payable to the state of the federation from which such natural resource is derived.
For a State to qualify for this allocation of funds from the Federation Account, the natural resources must have come from within the boundaries of the state. That is the resources must be located within the state.
The provisions are not limited to littoral states but all states from which revenue in derived from their natural resources.
in A-G, Federation V A-G Abia State (No.2) 2002 6NWLR (PT 764) 542.
The Supreme Court affirmed that the fact that Nigeria is a sovereign state, is accorded control and sovereignty over its territorial waters, the contiguous zone and the continental shelf by the municipal and Geneva conventions. None of the littoral state is sovereign. They are part and parcel of the sovereign independent state of Nigeria. Non e of them can exercise any control beyond the land mass of their respective states. They cannot claim that revenue accruing from mineral resources offshore belongs to any of them. Whatever revenue accrues from drilling offshore belongs to the whole federation of Nigeria based on section 162 of the constitution.
The principle of derivation according to Mudiaga Odje is the:
recognition of a prior beneficial right that was subsequently expropriated. Thus the principle of derivation is a form of compensation and / or reparation for an expropriated interest.
The adequacy of the present 13 percent derivation percentage has been generating considerable agitation in oil producing communities in Nigeria who are demanding autonomous control of the revenue accruing from their states. Such States including Akwa Ibom, Cross River State, Edo, Delta, Bayelsa and Rivers State are unwavering in their demand.
The feeling of discontent among oil producing communities has propelled ethnic militia’s to engage in kidnapping, blowing up of oil wells and the perpetration of heinous environmental crimes.
To ensure greater participation of Nigerians and host communities in the oil and gas sector, the Nigerian oil and gas industry Content Development Act 2010 was enacted.
NIGERIAN OIL AND GAS CONTENT DEVELOPMENT ACT 2010.
The Act provides for the development of Nigerian Content in the Nigerian oil and gas industry. All regulatory authorities, operators, contractor subcontractors alliance partners and other entities involved in any projects operation, activity or transactions in the Nigerian oil and gas industry are mandated to consider Nigerian content as an important element of their overall project development, and management philosophy for project execution. See section 2 of the Act.
WHAT IS NIGERIAN CONTENT
Nigerian content means the quantum of composite value added to or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilization of Nigerian human, material resources and services in the Nigerian oil and gas industry.
WHAT DOES NIGERIAN OIL AND GAS INDUSTRY MEAN?
It refers to all activities connected with the exploration, development, exploitation, transportation and sale of Nigerian oil and gas resources including upstream and downstream oil and gas operations.
Section 28 of the Act provides that Nigerians shall be given the first consideration for employment and training in any project prompter in the Nigerian oil and gas industry.
Section 28 (2) however mandates the Board to ensure that the operator or project promoter maintains a reasonable number of personnel from areas it has significant operations.
The above provisions is a palliative measure for host communities in the exploitation of their mineral resource.
In the light of the socio-economic challenges Nigeria is confronted with, the implementation of the National Content Act has been viewed with reservation in view of the fact that is essentially a forced arrangement between multinational corporations operating in the oil and gas sector and indigenes or locals
To ensure that revenue accruing from natural resources is property managed and controlled, Nigeria established the sovereign investment Authority (Establishment Etc) Act 2011
SOVEREIGN INVESTMENT AUTHORITY ESTABLISHMENT ETC) ACT 2011
It is known as the Nigerian sovereign welfare fund Act. It was enacted by the National Assembly on May 11, 2011. It established the Nigerian Sovereign Investment Authority (NSIA) and conferred it with the responsibility to receive manage, and invest in diversified portfolios the medium and long term revenue of the Federal Government of Nigeria, the 36 States of the Federation, the Federal Capital Territory and the Local Government Areas and Area Council in Nigeria.
The Act was necessitated by the recognition of the depletion of non renewable natural resources in Nigeria, the need to provide for future consumption, future generation, boost the economic profile of Nigeria to make it attractive to foreign investors as well as engage in infrastructural development.
CONCLUSION
The control and management of Mineral resources in Nigeria is vested in the federal government irrespective of the community where it is located. The states where the resources are located are however entitled to 13 percent of the revenue accruing directly from any mineral resources located in their state.
SUMMARY
- Mineral resources refer to solid, liquid or gaseous substances occurring in or on the earth formed by or subjected to geological processes
- Minerals are classified into floating minerals and underground minerals.
- The entire property and control of mineral resources in Nigeria, the 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 is vested in the Government of the Federation for and on behalf of the people of Nigeria
- Exploration of mineral resources without a valid licence issued by the Minister for solid minerals constitutes a punishable offence.
- States are entitle to 13 percent of revenue accruing to the Federal Government from mineral resources located in their states.
- The Nigerian Oil and Gas Content Development Act 2010 mandates the Board to ensure that operator or project promoter maintains a reasonable number of personnel from areas it has significant operation
- To ensure sustainable utilization of revenue accruing from non renewable natural resource for the benefit of the present and future generations, boost Nigeria’s economic profile and attract foreign investors, in May 11, 2011, Nigeria enacted the Sovereign Investment Authority (Establishment Etc)
TUTOR MARKED ASSIGNMENT
Section 1 of the Land Use Act which vests control of the Land comprised in each territory of the state in the Federal Government includes the Mineral Resources, DISCUSS
SUGGESTED ANSWERS
- Definition of natural resources relates to mineral resources on the land or submerged in the land and are therefore part of the land vested in the Federation
- Section (1) (1) of the Minerals and Mining Act 2007
- Section 1 of the Petroleum Act 1969 refers to petroleum in under or upon any land
- A-G Federation V A-G Abia State (No.2) (2002) 6 NWLR (PT 764) 542
SUGGESTED FURTHER READING /REFERENCES
- The Land Use Act edited by J A Omotola (Lagos: Lagos University Press 1986) 27
- International Energy Law Review (IELR) issue 2,
- Akpo Mudiaga Odje Challenges of True Federalism and Resources Control in Nigeria (Lagos: Quadroon Impressions Ltd 2002) 368
STATUTE
Constitution of the Federal Republic of Nigeria 1999 Land Use Act 1978
Nigerian Minerals and Mining Act 2007
Nigerian Oil and Gas Content Development Act 2010. Sovereign Investment Authority (Establishment Etc) Act 2011