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Kenya: Counties target new levies on mining as key laws still not ready

By Benard Sanga | July 20th 2015

The Senate is yet to harmonise two crucial bills that would enable county governments get part of royalties paid by mining companies.

Yesterday, Kwale Governor Salim Mvurya said his administration will not allow any exploration of minerals in the county until the new laws are in place.

Coast counties have also been mulling introduction of new levies on mining firms in the region, with Kwale and Lamu also threatening to introduce levies on mining auxiliary services.

"I will not allow any further exploration of mineral in my county until either the legal framework to facilitate us to receive royalties is in place or we have a proper consultation," said Mvurya.

He said currently, the county does not get any revenue from titanium mining in the region after the Treasury advised the mining firms against against paying any fees to county governments.

Yesterday, Nominated Senator Agnes Zani said the Senate was yet to harmonise the Mining Bill 2014 and the Natural Resources (Benefit Sharing) Bill 2014 to stipulate the percentage of royalties from mining that should go to the counties.

"The President declined to assent to the Mining Bill after after the National Assembly sent it to him without the Senate's input. I have also drafted the Natural Resource (Benefit Sharing) Bill and we would harmonise on the part of how much counties and communities will get," said Dr Zani.

Mineral-rich counties at the Coast have been at loggerheads with the national government over royalties from the extraction of minerals, with the devolved units claiming that currently they don't receive even a cent from the sector.

Royalties row

"It is really sad that we don't receive even a cent from titanium mining in Kwale. We also hear there is a another that wants to start titanium exploration in the county but we will oppose it," said Mvurya.

Mining Cabinet Secretary Najib Balala insists that the current Mining Act (1940) provide that mining is a national function and counties cannot charge mining firms operating in their areas any fees.

According to Kwale County's Financial Act, mining companies with more than 50 employees should pay an annual permit levy approximately Sh1,122,000.

Medium-sized mining companies with up to 50 employees will be charged Sh75400.

It also proposes a Sh5600 levy for every tonne of sand containing titanium ore, but Base Titanium opposed the levies before it was later advised not to pay fees by Treasury.

Lamu County is also mulling introduction a new levy of Sh6300 per acre of land under exploration for oil and gas by foreign firms. It has also proposed Sh1900 for local firms doing the exploration.

According to the Mining Bill 2014, counties will be entitled to 20 per cent of the royalties, the national government 30 per cent and local communities 10 per cent.

President Kenyatta sent back the bill in January this year with a recommendation that the Senate reviews it first.

On the other hand, the Natural Resources (Benefit Sharing) Bill proposes that local communities get 12.4 per cent of the royalties, the county government 19.6 per cent, national government 48 per cent and 20 per cent be put into the sovereign wealth fund.

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