GOVERNMENT earnings from the extractive industry surged from 956 billion/-

GOVERNMENT earnings from the extractive industry surged from 956 billion/- in 2013 to 1.221 trillion/- during the fiscal year 2014, according to findings of a report by the Tanzania Extractive Industries Transparency Initiative (TEITI).In a quick reproach though, the Chairman of TEITI, Judge (Rtd) Mark Bomani, noted with concern that the country could earn more from the lucrative industries if the government had implemented recommendations by the presidential commission which he chaired in 2008.“We had proposed among others that the royalty paid by mining companies should be increased from 3 to five per cent but the government reluctantly settled for 4 per cent of gross revenues rather than net profits as previously pegged.
“The commission recommended as well that the companies should repatriate to Tanzania 60 per cent of their earnings but this has not been implemented at the expense of dwindling value of the local currency,” Judge Bomani stressed.
The senior citizen made the remarks in Dar es Salaam yesterday during the launch of two TEITI reports for 2012/2013 and 2013/2014 in which he also announced his decision to retire as TEITI Chairman after seven years at the helm of the initiative.
“But since available reports indicate that we have only mined 20 per cent of known reserves of minerals, it is high time we learned to make best use of the remaining 80 per cent,” he explained.

Judge Bomani proposed as well that the TEITI scope should be expanded to cover middle and small-scale miners to boost government revenues from the mining sector. Tanzania joined the Extractive Industries Transparency Initiative (EITI) in 2009 following recommendations by the Bomani-led commission in 2008.

The commission was formed by President Jakaya Kikwete as the country sought to improve revenues and transparency in the mining sector. During the first TEITI report in 2009, government earnings stood at just 128bn/- with a discrepancy 30m US dollars (about 65.4bn/-).

The disparity rose during reconciliation of the payments in which the companies reported to have paid more than what the government admitted to have received. “The good news is that the disparity has now been reduced to 6bn/- during the year 2014.

The 30 million US-dollar discrepancy in 2009 astonished us,” Judge Bomani remarked. Speaking at the same occasion, former Controller and Auditor General (CAG), Mr Ludovick Utouh, said Tanzania could earn more revenue from the mining sector through direct ownership and development of resources. “Personally, I think we are using a wrong approach in managing our resources.

The only way we can increase revenues is through direct ownership as the case is in Botswana where they invite investors with capital and technology but share revenues,” he stated.

On the other hand, Mr Utouh showered praise on President John Magufuli for taking action against corrupt civil servants based on former audit reports prepared by the National Audit Office of Tanzania (NAOT).

The Reconciliation Team Leader for the TEITI report, Mr Juvinal Betambira of BDO East Africa, said a total of 59 companies were surveyed in 2014, including 38 mining companies in addition to 21 companies in the oil and natural gas industry.

“During the 2013 fiscal year, a total of 65 companies, 46 mining firms and 19 companies in the oil and natural gas reported their payments,” Mr Betambira noted. He said the earnings for 2014 surged due to among others payment of 300bn/- in corporate tax by Ophir after the company sold some of its stake.