Blog Post

05 Jul
By: root 0 0

STREAMLINE THE REGULATORY ENVIRONMENT IN THE EXTRACTIVES SECTOR FOR IT TO GROW

The Energy and Extractives Sector Board held its monthly meeting on July 5, 2019. The main agenda of the sector board meeting was to discuss challenges facing the mining sector in the country.

It was reported that the Mining Act 2016 requires that all the Mining companies should submit royalties to the National Treasury on behalf of the community where the companies are based. However, the royalties have not been submitted to the communities since the Mining Regulations on Royalty has not been enacted. Some mining companies have therefore been facing some hostility in the areas they are based.

The sector board members raised concerns with the Natural Resources (Benefit Sharing) Bill 2018, which provides a legislative framework for the establishment and enforcement of a system of benefit sharing in resource exploitation between resource exploiters, the national government, county governments and local communities and to establish the Natural Resources Benefits Sharing Authority. The sector board was concerned that the bill has the same line of thought yet the royalty payment in the Mining Act which was enacted in 2017 has not been implemented. The sector board is for-seeing a situation where investors will be in conflict with the local communities due to failure by government to remit royalties to them.

The Upstream sector (which deal with searching for potential underground or underwater crude oil and natural gas fields, drilling exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil or raw natural gas to the surface) is concerned by the number of permits required to operate one well. It was noted that to operate one well in Kenya, a company requires a total of 30 permits from different government agencies. This makes it too costly for the investors who have put in a lot of money to get one potential well which has crude oil. The sector feels that the government is being too hard on them because normally you only require one permit to operate one geothermal well, 5 to operate one large mining site for other minerals. The sector board recommended that the government to collapse some permits for the sector to attract more investors.

The members of the sector board proposed that there is need to come up with a strategy for mineral exploration in the country which will in turn attract investors in the sector. This is because mineral explorers can do more than 20 sites without finding any minerals, yet they have been spending money. What investors need is to be assured that when they finally get the minerals, their investment will be secured. Due to various policies and laws in the sector, we have only one investor in the sector since 2012 while Tanzania has over 21 from 2017.  It was unanimously agreed that for sector to grow, there is need for favorable regulatory environment.

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