Business News of Thursday, 17 May 2018
Dividends accruing to Ghana from mining activities should increase significantly with the adoption of a new formula for calculating the figure.
The new system has become necessary as the country is reported to have been losing millions in revenue to the mining sector over reports of little or no profits by the mining companies.
These among others are the key suggestions in the 2015 Extractive Industry Transparency Initiative (EITI) report on the oil and gas as well as the mining sector.
The EITI report is concerned with reconciling the actual amount of cash received by governments with that paid by companies within a given period.
The 2015 report amongst others indicates that the review has become apparent as there is empirical evidence to do so.
Despite centuries of hosting major mining companies, Ghana is reported to have benefitted little or none from the profits of the companies.
The Vice President, Dr. Mahamudu Bawumia recently corroborated this at a meeting with some officials of the International Monetary Fund (IMF).
The Co-Chair of the EITI, Dr. Steve Manteaw has also been explaining to Citi Business News how the government could benefit from the mineral resources going forward.
“The new system is being modeled after the current development in the oil and gas sector where your carried interest is converted to a share of production so once the company produces, you receive your share of the products, sell them and use the proceeds to undertake developmental projects,” he explained.
The report, albeit delayed also highlights issues of discrepancies in the figures quoted by the oil or mining companies as well as their counterparts in the mining industry.
While some were regarded positive where the companies quoted figures higher than what the government produced, other negative discrepancies occurred where the opposite is the case.
For instance, under petroleum, there was a discrepancy of US$10,589 when comparing Kosmos Energy’s reported corporate tax payment of 11.74 million dollars against 11.73 million dollars in the records of the state agencies.
Dr. Manteaw further explains what accounted for such issues.
“This discrepancy can also occur when the exchange rates being used by the companies does not correspond to that used by the state agencies. For instance, at a time that a company is paying a particular tax, the prevailing rates may be different from the rates to be used by the GRA to compute its figures into its systems,” he asserted.
Meanwhile, in the mining sector, all but one of the fourteen companies that submitted their reports, paid amounts of 5 million cedis and above to the government.
The defaulting company, Prestea Sankofa, a subsidiary of GNPC paid a total of 827 thousand cedis to the government comprising Mineral rights licensing fees, ground rent, and property rate among others.