Report shows some discrepancies

Mozambique’s second report for the Extractive Industry Transparency Initiative (EITI) shows there are still discrepancies between what the government says it has received from mining companies, and the payments the companies say they have made.

Unlike last year’s report, which concerned payments made in 2008, this time the government‘s record of payments received in 2009, is rather larger than the amounts of taxes and fees the companies say they paid.

The difference is not great. The report, published on Friday in the central city of Quelimane, shows that the companies say they paid 1,069,521,807.15 meticais (38,750,790 US dollars at current exchange rates), while the government says it received 1,070,147,028.21 meticais.

The difference is 625,221.06 meticais (22,653 dollars) – or just 0.06 per cent of the figure the companies say they paid.

According to Moises Marrime, of the Mozambique Tax Authority (AT), these results require a profound reflection by the tax and finance authorities, as well as those in charge of the mining sector, to discover the origin of this discrepancy.

Speaking at the Friday seminar where the report was presented, Marrime said there are weaknesses in the way that contributions from mining companies are classified, and this could lead to discrepancies.

“We are working to improve the coordination between institutions”, said Marrime. “There is a reduction in the discrepancy, when compared with last year, and that reduction is the result of this coordination between all the state institutions involved. But we have divergences due to the misclassifications of contribution. Often the differences that emerge are not because the money has not been paid”.

“Once these divergences have been detected, the next step is to check the origin and nature of the difference”, he added.

The coordinator of EITI in Mozambique, Benjamim Chilenge, stressed that, comparing last year’s report with this one, there has been a very considerable reduction in the discrepancy. “The level of coordination is better, there is better cross-checking of information, and access to information has been facilitated. The information is available at the moment we want it”, he said. “This exercise has encouraged the government and the companies to improve their accountability systems”.

Last year’s report, referring to payments made in the 2008 financial year, showed the government claiming it had received 92.2 million meticais, while the companies said they had paid 204 million meticais – more than twice as much.

The difference was so huge that the government had to hire a consultancy company to recheck the figures. This exercise brought the discrepancy down to 4.5 million meticais. It found that the mining companies had paid 177 million meticais, while the amount the government had really received was 172.6 million meticais.

Chilenge blamed the discrepancies on confusion among the companies as to what information was required from them. Some gave information referring to the wrong financial year.

This year’s report, compiled by the consultancy firm Ernst & Young, refers to all taxes and fees paid in 2009 by the mining and hydrocarbon companies covered – including corporation tax (IRPC), personal income tax (IRPS), the mining surface tax, the signature bonus, dividends paid to the state, the institutional capacity building fund, and contributions to the social projects fund.

The report refers to 31 companies. 36 had been selected – but five did not reply to the requests from Ernst & Young for information. 20 of those that did reply are mining companies and the other 11 are in the hydrocarbon area.

According to Ernst & Young representative Ismael Faquir, who was the independent administrator of the second report, his company attempted to extract information from the five missing companies but without success, largely because they have pulled out of mining, or no longer have offices in Mozambique.

Thus the companies AP Limitada and Grinakers Mocambique Lda bo longer hold mining titles; JSW Natural Resources Mocambique Lda and Africa Drilling Comoany Afrodroll have no business structures in Mozambique; and Wentworth Mocambique Petroleos has ceased to operate in Mozambique.

Post published in: Africa News

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