Mineral riches: What`s in there for locals?

BY POLYCARP MACHIRA

5th January 2014

Tanzanians now eagerly await the fate of how the extractive industry performed by the fiscal year ended June 30, 2012 following the appointment of an auditor by the Tanzania Extractive Industry Transparency Initiative (TEITI).

It is argued that an increasing number of investors in the sector, especially in gas explorations in Mtwara, plus public awareness created by both government and private actors has raised public understanding in the sector.

TEITI has appointed an audit firm, Moore Stephens of the United Kingdom, as an independent administrator for reconciliation of payments made to the government by extractive companies during the period under review.
The audit firm has since completed scoping and identified companies and government entities as well as payments and revenue streams to be covered in the reconciliation process.

At least 20 of the firms deal in oil and gas while the remaining 23 are engaged in hard metals. 

“The independent administrator has been instructed to issue reporting templates for collection of payments and data from the companies and government entities,” TEITI Chairman Mark Bomani told The Guardian in a telephone interview.

He said the new report would make improvements on some of the shortcomings of previous reports.

A cross section of stakeholders who talked to The Guardian expressed mixed reactions on whether there was anything good out of the sector’s performance in the year under review.

The previous reports show there were differences between the figures reported by the government and the figures reported by companies. 

In the fiscal year 2010/2011 government report, the Golden Pride Mine -- which is owned by Resolute Tanzania Limited -- was the only company that paid corporate tax out of six large gold mine operations.

Resolute was opened in 1997, and is the first large gold mine to open in Tanzania after reforms in the 1990s.

In June, 2013 Resolute closed its mine after having been in operating for 16 years, having paid corporate tax in the last two years of its mine life.

Between 2011 and 2012, the company paid a total of Tsh71.1bn/- in corporate tax.

None of the other large gold operators paid anything during this reporting period. 

Reports show that tax revenues come mainly form royalties and taxes on wages, under which employee-related taxes accounted for around 50 per cent of total mining taxes during 2008 and 2009 and slightly below 30 percent in 2009/2010.

In its efforts to promote transparency in the extraction of minerals and oil, the government joined the Extractive Industries Transparency Initiative (EITI) in February, 2009. 

EITI is a global standards institution for governance of natural resources that requires governments to engage citizens in the affairs of extractive industries. 

SOURCE: GUARDIAN ON SUNDAY