Districts unhappy with the way mineral benefits are awarded
Jan 30, 2008
There is a raging conflict in Kasese over the sharing of royalties between Hima Town Council and Kasese district administration. The royalties are mainly accrued from Hima Cement factory. It is not only Kasese that receives royalties but several other districts. A royalty is not a tax. It is a form
By Joshua Kato
There is a raging conflict in Kasese over the sharing of royalties between Hima Town Council and Kasese district administration. The royalties are mainly accrued from Hima Cement factory. It is not only Kasese that receives royalties but several other districts. A royalty is not a tax. It is a form of recognition that the area from which a given mineral mined is rewarded.
Many districts are gifted by nature. For example, Hoima and Buliisa districts are gifted with the famed oil deposits. Tororo (lime and gold), Kasese (copper and lime) Kamwenge, Kabarole and Busia ( cement, lime, lead and gold), as is Kiboga and Mubende (gold), Bushenyi (gold) and parts of Kabale. Districts in Karamoja should also be sharing in the mineral deposits in their areas.
According to both the 1995 constitution and the Mining Policy, districts are supposed to be paid royalties as a way of sharing in the natural resources in their area. Section 244 (1) under Minerals of the 1995 Constitution asked parliament to make a law regulating the exploitation of minerals, the sharing of royalties arising from mineral exploitation.
A mining act was formulated recently. It is through this act that districts for the first time in many years were able to receive some royalties. According to the act, minerals are a national resource and not owned by individual districts. The act states, that minerals do not include clay, murram, sand or stone quarries.
Districts with huge mineral deposits and organised mining receive more. For example, in the 2005/06 financial year, Kasese district received sh256m from the Government as royalties, and sh205m in the last financial year. And yet, some districts receive as low as sh0.5m. The procedure is, the mining company declares the amount of minerals worth got from an area to the Central Government.
The Government then checks if they are correct, before paying royalties to the respective district. The mining companies pass the royalties to the Central Government, that in return passes them on to the districts. World-wide, the average share of royalties by local communities in mineral rich areas is around 3%. Such communities include those in Tanzania, Zambia, Angola, Malawi, Nigeria and others.
According to Tororo district LC5 Chairman Emmanuel Osuna, Tororo has received royalties twice. “We were not receiving money until recently. We have since got sh90m in the 2006 financial year and sh40m last year,†he says. Tororo has got several minerals including Limestone that is used for making cement, lime and phosphates that is used for making fertilisers among other things.
Busia has got gold that is mined by various companies around Busitema. “We had not got any benefit for a very longtime.
However, we recently got something,†says Busia LC5 Chairman Patrick Were. He is not happy with the paltry sh3m they were given. “We had been told that we were going to get at least sh10m,†he says. This was to be payment for the many years of arrears.
Some Local Leaders are not happy that the official percentage share of the royalties is not known to them. “We do not know the percentage. I think we should know,†Were says.
In the case of Tororo, “17% of revenue after taxation goes to the districts, while 3% goes to the landlord. the Landlord is Tororo Municipality, where the factory is located,†Osuna explains.
Kamwenge district has one of the richest mineral deposits in the country. The district has got gold, lead, limestone deposits, especially around areas of Kitata. According to the district chairman Edward Musingye, they were supposed to receive at least sh8m in royalties, but they are yet to receive their share. “Before we split off Kabarole, we were getting royalties. But for the five years since we split, we have not been receiving royalties,†Musingye says. He says the ministry of finance told them last year, that the cheque was not ready.
In Mubende, gold mining has been going on around Kisita hills for many years. Very soon, more gold will be mined in Kamalenge. However, according to the district LC5 Vice-Chairman Ziada Kalema, they have never received any penny in form of royalties. “Last year, we saw an advert in the papers indicating that we were going to receive around sh1.7m, however we have not yet got that money,†he says.
When oil was first confirmed in Hoima district, sections of local leaders there demanding for a 50% share of royalties from the oil proceeds. LC5 Chairman George Tinkamanyire said in an earlier interview that it was difficult to discuss who will get what percentage before ascertaining the amount of oil.
According to an official at the Ministry of Finance, all cheques for districts that were due to receive royalties last year are ready and it is the district officials who are not picking them. “The cheques have been lying at the ministry for a long time,†he says. He refused to give details on how the percentages are decided.
There is a raging conflict in Kasese over the sharing of royalties between Hima Town Council and Kasese district administration. The royalties are mainly accrued from Hima Cement factory. It is not only Kasese that receives royalties but several other districts. A royalty is not a tax. It is a form of recognition that the area from which a given mineral mined is rewarded.
Many districts are gifted by nature. For example, Hoima and Buliisa districts are gifted with the famed oil deposits. Tororo (lime and gold), Kasese (copper and lime) Kamwenge, Kabarole and Busia ( cement, lime, lead and gold), as is Kiboga and Mubende (gold), Bushenyi (gold) and parts of Kabale. Districts in Karamoja should also be sharing in the mineral deposits in their areas.
According to both the 1995 constitution and the Mining Policy, districts are supposed to be paid royalties as a way of sharing in the natural resources in their area. Section 244 (1) under Minerals of the 1995 Constitution asked parliament to make a law regulating the exploitation of minerals, the sharing of royalties arising from mineral exploitation.
A mining act was formulated recently. It is through this act that districts for the first time in many years were able to receive some royalties. According to the act, minerals are a national resource and not owned by individual districts. The act states, that minerals do not include clay, murram, sand or stone quarries.
Districts with huge mineral deposits and organised mining receive more. For example, in the 2005/06 financial year, Kasese district received sh256m from the Government as royalties, and sh205m in the last financial year. And yet, some districts receive as low as sh0.5m. The procedure is, the mining company declares the amount of minerals worth got from an area to the Central Government.
The Government then checks if they are correct, before paying royalties to the respective district. The mining companies pass the royalties to the Central Government, that in return passes them on to the districts. World-wide, the average share of royalties by local communities in mineral rich areas is around 3%. Such communities include those in Tanzania, Zambia, Angola, Malawi, Nigeria and others.
According to Tororo district LC5 Chairman Emmanuel Osuna, Tororo has received royalties twice. “We were not receiving money until recently. We have since got sh90m in the 2006 financial year and sh40m last year,†he says. Tororo has got several minerals including Limestone that is used for making cement, lime and phosphates that is used for making fertilisers among other things.
Busia has got gold that is mined by various companies around Busitema. “We had not got any benefit for a very longtime.
However, we recently got something,†says Busia LC5 Chairman Patrick Were. He is not happy with the paltry sh3m they were given. “We had been told that we were going to get at least sh10m,†he says. This was to be payment for the many years of arrears.
Some Local Leaders are not happy that the official percentage share of the royalties is not known to them. “We do not know the percentage. I think we should know,†Were says.
In the case of Tororo, “17% of revenue after taxation goes to the districts, while 3% goes to the landlord. the Landlord is Tororo Municipality, where the factory is located,†Osuna explains.
Kamwenge district has one of the richest mineral deposits in the country. The district has got gold, lead, limestone deposits, especially around areas of Kitata. According to the district chairman Edward Musingye, they were supposed to receive at least sh8m in royalties, but they are yet to receive their share. “Before we split off Kabarole, we were getting royalties. But for the five years since we split, we have not been receiving royalties,†Musingye says. He says the ministry of finance told them last year, that the cheque was not ready.
In Mubende, gold mining has been going on around Kisita hills for many years. Very soon, more gold will be mined in Kamalenge. However, according to the district LC5 Vice-Chairman Ziada Kalema, they have never received any penny in form of royalties. “Last year, we saw an advert in the papers indicating that we were going to receive around sh1.7m, however we have not yet got that money,†he says.
When oil was first confirmed in Hoima district, sections of local leaders there demanding for a 50% share of royalties from the oil proceeds. LC5 Chairman George Tinkamanyire said in an earlier interview that it was difficult to discuss who will get what percentage before ascertaining the amount of oil.
According to an official at the Ministry of Finance, all cheques for districts that were due to receive royalties last year are ready and it is the district officials who are not picking them. “The cheques have been lying at the ministry for a long time,†he says. He refused to give details on how the percentages are decided.