sharing in governance of extractive industries

EITI report reveals the plunder of mining revenues in Ghana

A glaring plunder of mining revenues has been revealed in the Extractive Industries Transparency Initiative (EITI) aggregate report of Ghana. The aggregated audit report meant to collect, analyze and reconcile payments made by mining companies to the government and to reconcile mining companies’ submissions of mining benefits payments to those received by the government was made known in Ghana EITI – Dissemination Workshop held in Kumasi on January 31, 2011.

The workshop that brought together diverse stakeholders including Metropolitan, Municipal and District Chief Executives (MMDCEs) and Finance Officers, traditional authorities, the media, and the civil society had the objectives of sensitizing the stakeholders and to disseminate the findings and recommendations of the EITI aggregate report.

Ghana signed on to the EITI on 27 September, 2007 and according to Franklin Ashiadey, Ghana EITI (GHEITI) Coordinator, during his presentation at the workshop said “the EITI is making a lot of direct and indirect contributions to governance in the extractive sector”. At EITI Board meeting at Dar-es-Salaam, Tanzania on October 19, 2010, Ghana achieved the EITI compliant status.

The audit report that reconciled payments and receipts from 2006 to 2007 to 2008 revealed gruesome discrepancies. In 2006, there was a discrepancy of GH₵511,660 and GH₵2,753,111 for 2007 between mining company payments and government receipts. In 2008, there was a discrepancy of GH₵370,697. Mining payments bordered on mineral royalty, property tax, corporate tax, dividends, ground rent and mineral right licenses made by about 11 mining companies including Anglo Gold Ashanti (Obuasi and Iduaprim), Gold Fields (Ghana) Ltd, Abosso Gold Fields, Chirano Gold Mines, Newmont (Ghana) Ltd, Ghana Manganese Ltd, Ghana Bauxite Company, Central African Gold, among others.

The findings of the report disclosed the reasons behind these distortions in mineral revenues were that mining companies generally paid royalties without providing adequate documentation of production and prices. Again, pre-production costs were not stated with advice of the Minerals Commission and that amount payable as concession ground rent was not significant. With weak institutions, payments go unrecorded. In March 2006, according to the aggregated report, dividend payment of GH₵830,928.06 by AngloGold Ashanti was not captured as government receipts. Exactly where the money went to still remains a mystery.

Though the country has made enviable strides in obtaining EITI compliant candidacy, the EITI, according to Dr. Steve Manteaw, Convener of Publish What You Pay-Ghana, does not seek to achieve a fair share of the dividends in the extractive sector to host governments. Also, EITI does not seek to address social and environmental concerns. In this regard, whether or not the country is benefiting from the right mineral revenues is not addressed by the EITI.

It is against the backdrop of this that the civil society believe the “EITI does not address all our concerns with regard to the extractive sector. The initiative is in fact limited in scope”. Mrs. Philomena Johnson of Publish What You Pay-Ghana, therefore, asserted in her presentation that “a bigger responsibility now rests on Ghana as it was conferred the EITI compliant status”.

As much as mining companies are to blame for underpayment of mineral revenues, payments made to the government that go down to District Assemblies and Office of the Administrator of Stool Lands are unaccounted for. The extent of opacity that has shrouded sub-national revenue distribution explains the reason for increased poverty in mining communities.

By: Stephen Yeboah (stephenyeboah110@yahoo.com)

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