A tanzanite miner. New Tanzania Bills seek to reform the mining sector. PHOTO | FILE
The Tanzanian government has crafted new Bills as it seeks
sweeping changes in the exploitation of natural resources in the
country’s mining sector.
Two of the Bills are new while
a third amends existing legislation as the Magufuli administration
moves to ensure that Tanzania’s natural resources are exploited to
benefit the citizens.
The proposed laws have come at a time when the government is negotiating with mining firms on revenue sharing.
The
three laws are the Natural Wealth and Resources Contracts (Review and
Re-negotiation of Unconscionable Terms) Bill, 2017; the Natural Wealth
and Resources (Permanent Sovereignty) Bill, 2017; and the Written Laws
(Miscellaneous Amendments) Bill, 2017.
The Natural
Wealth and Resources Contracts (Review and Re-negotiation of
Unconscionable Terms) Bill 2017 is meant to empower Parliament to review
all the arrangements and agreements made by the government regarding
natural resources.
Acacia Mining Plc, which has been in negotiations with the government
after an audit of its activities and revenues which stated it had
under-declared $100 billion since 1998, said it will review the proposed
changes in the context of “our existing agreements and will provide
further updates as appropriate.”
The
Natural Wealth and Resources Contracts (Review and Re-negotiation of
Unconscionable Terms) Bill, 2017 gives powers to parliament to direct
the Government to re-negotiate and rectify any term that it seen to bear
questionable circumstances in the contracts.
The
Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017 states
that the People of the United Republic shall have permanent sovereignty
over all natural wealth and resources and that the ownership and control
(over natural wealth and resources) shall be exercised by, and through
the Government on behalf of the People.
“Pursuant to
paragraphs (c) and (i) of Article 9 of the Constitution, it shall be
unlawful to make any arrangement or agreement for the extraction,
exploitation or acquisition and use of natural wealth and resources
except where the interests of the People and the United Republic are
fully secured and approved by the National Assembly,” the draft law
reads.
According to the Natural Wealth and Resources
(Permanent Sovereignty) Bill 2017, it will be the government’s duty to
ensure that the country obtains an equitable stake in any arrangement
towards extraction, exploitation or acquisition and use of natural
wealth and resources.
Value addition
The
proposed law bars exportation of raw resources and instead encourages
establishment of valued addition facilities within Tanzania.
A number of laws dealing with natural resources, will also be amended to align with the new laws.
The
government maintains that the amendments to the existing legislations
governing natural resources are seeking to remove inconsistencies
between tax laws and the laws on mining and petroleum sectors which have
resulted in the loss of revenues.
Worried investors
But
concern is mounting in the private sector that the unprecedented
legislation together with growing resource nationalisation calls are
likely to push away new and existing investors, with experts predicting
that the government may lose up to 40 per cent of revenues if mining
companies leave.
The Bills are expected to set the
stage for the amendment of the Mining Act 2010, the Income Tax Act, the
Insurance Act and the tax administration with the ruling Chama cha
Mapinduzi-dominated parliament expected to overwhelmingly support them.
While
investors are trying to understand how the laws will affect their
investments and weighing their options, critics say the tabling of the
drafts under a Certificate of Urgency locks out feedback from key
stakeholders.
Withdrawing from conventions
A parliament schedule seen by The EastAfrican stipulates
that stakeholders provide their feedback on Saturday while the
parliamentary committees review government proposals between Sunday and
Monday before MPs debate and vote for the Bills on Tuesday.
The
amendments to the Mining Act of 2010 establishes the mining commission
whose responsibilities include regulating the mining sector and resolve
the disputes rising out of the mining operations.
Tanzania
is a signatory to the Multilateral Investment Guarantee Agency and the
International Centre for Settlement of Investment Disputes conventions
where most of foreign investors have traditionally taken contractual
disputes and it is most likely that the proposed commission will take
over the role, rising the possibility of the country withdrawing from
the conventions.
Furthermore, the government proposes
amendments of section 9 of the Mining Act 2010 proposing the government
to acquire up to 50 per cent of the shares of the mining company
commensurate with the total tax expenditures incurred by the government
in favour of the mining company.
“The National Gold and
Gemstone Reserve will be under the Bank of Tanzania which will act as a
government warehouse and the central custodian of all metallic minerals
and gemstones obtained by the mineral rights holder in Tanzania,” the
proposed amendment reads.
Reported by Erick Kabendera and Samuel Kamndaya.
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