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EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) GHEITI SENSITIZATION PROGRAMME. 21 ST MAY,2009

EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) GHEITI SENSITIZATION PROGRAMME. 21 ST MAY,2009. OVERVIEW OF GHEITI REPORTS;UPDATES ON RECOMMENDATIONS. Kwaku Boa-Amponsem Boas & Associates. OBJECTIVES OF EITI.

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EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) GHEITI SENSITIZATION PROGRAMME. 21 ST MAY,2009

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  1. EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) GHEITI SENSITIZATIONPROGRAMME.21ST MAY,2009

  2. OVERVIEW OF GHEITI REPORTS;UPDATES ON RECOMMENDATIONS. Kwaku Boa-Amponsem Boas & Associates.

  3. OBJECTIVES OF EITI • Improve Development Outcomes from payments made to Governments by the Extractive Industries • Reduce Potential for Corruption and large scale Embezzlement of these payments.

  4. GHEITI AGGREGATED REPORTS Aggregated Report Jan-June 2004(Feb 2007) Aggregated Report July-Dec 2004(July 2007) Aggregated Report-2005.(April 2008)

  5. Objectives of Aggregated/Reconciled Reports. • Collect, Analyze and Aggregate payments made by mining companies to Government of Ghana. • Reconcile mining companies’ submissions of mining benefits payments to those received by Government. • Check disbursements to/utilization of royalties by District Assemblies. • Utilize Lessons Learnt from the Reconciliation/Aggregation to enhance Transparency in Payments, Receipts, Disbursements and Utilization of these benefits.

  6. Scope of Work • Mining Benefits: The mining benefits considered under the reports : • Mineral right licences (reconnaissance, Prospecting, mining lease) • Ground rent • Property rates • Mineral royalties • Corporate taxes • Dividends • Voluntary contribution

  7. MINING COMPANIES.

  8. Significant Findings: • Length of stay of CEPS officials at Mines • Lack of independent check on the fineness. • No guidelines for establishing the prices of minerals won. • Royalty payment at the minimum 3% threshold. • Low Corporate Tax payment. • Low ground rent . • Non payment of Capital Gains Tax. • Inter-sectoral collaboration . • Regional OASL offices do not provide adequate information on payments made to beneficiaries. Recommendations: • Commencing on pilot basis-random sampling to ascertain differences in fineness between companies’ and independent Assayers declared figures. • Value for money procedure as companies already declare figures ranging between 88-95%

  9. SignificantFindings cntd. • Lack of guidelines for the utilization of royalty receipts at the District Assemblies. Recommendations: • On random sampling basis, the assay results of mining companies should be compared to that of independent assayers. • Formula for computing the operational ratio should be amended with specific reference to capital allowances. • Guidelines for pricing should be established. e.g Gold prices based on the price of day of shipment –AM/PM • The regional OASL offices should provide relevant information to the beneficiaries.eg companies /months for the disbursements. • Ground rent should be reviewed upwards. • Guidelines should be established for the utilisation of mineral royalty receipts by the District Assemblies.

  10. IMPLEMENTATION OF RECOMMENDATIONS • Independent check (assay) of fineness. -Minerals Commission’s laboratory proposals. • Mineral Royalty - Stakeholders meeting at Akosombo. -capital allowance/operational cost brought forward excluded from formula in Draft regulations. -Likely to ensure payment beyond 3%,if draft is adopted. • Guidelines for pricing of minerals -Captured in draft regulations. • Corporate Tax -IRS rep/Tax Policy Unit on incentives including Capital allowance etc. • Ground rent -No clear agency responsible for increase -NTRU/Land Commission/Land Valuations Board/Min. Comm to discuss.

  11. Implementation contd. • Information on disbursement -OASL indicates regional officers educated. -subsequent aggregation to confirm • Capital gains Tax -Mineral rights as depreciable asset. -Purchaser to indicate payment of c/gtax for change of ownership. • Inter sectoral collaboration -Min Comm/ IRS collaboration with special reference to capital gains. • Guidelines for the utilization of Mineral Royalty receipts -Selection of consultant underway by NREG through Minerals Commission.

  12. CHALLENGES –REPORTING/IMPLEMENTATION OF RECOMMENDATIONS. • Multi-stakeholder expectations • Lack of Legal backing. • Delays in gathering data. • Recommendations not restricted to one Agency. • Lengthy processes required in amending or enacting legislation.

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