UK mining firms to disclose cash paid to host governments

British firms operating in the extractives sector will need to publicly declare the amounts they pay host governments every year.

In Kenya, Uganda and Tanzania, the figure stands at $164.5 million that the three governments received in 2015.

Britain has made it mandatory for oil, gas and mining firms to publicly declare such payments — whether in money or in kind — in line with the Reports on Payments to Governments Regulations of 2014.

The firms are expected to file the returns with the Companies House Extractives Service of Britain within 11 months from the end of their financial accounting year. These amounts include production entitlements, licence fees, bonuses, taxes, royalties and dividends.

In East Africa, the rules apply to BG Group, Tullow Oil Plc, Ophir Energy Plc, Acacia Mining Plc and Soco International Plc, which has wound up crude oil exploration works in eastern Democratic Republic of Congo. Shanta Gold Ltd in Tanzania is exempted from the rules as it is a Guernsey-registered firm, and is, therefore, not required to comply with Britain’s Corporate Governance Code.

The Kenya Civil Society Platform on Oil and Gas said the disclosure by British companies of payments in East Africa helps augment the global Extractives Industry Transparency Initiative (EITI), to which Tanzania is a signatory.

“In Kenya, disclosures are crucial as the country is not a member of EITI,” said the platform’s co-ordinator Charles Wanguhu. “The disclosures can be compared with the Auditor-General’s reports on receipts by the relevant ministry.

Last year, Ethiopia, the DRC and Mozambique earned about $1.9 million from British registered companies going by public disclosures made to date in the UK.

Acacia Mining Plc, which explores in Tanzania, Kenya, Burkina Faso and Mali, paid $132 million to governments in Africa. The bulk of the money was received by Tanzania for gold production.

In Tanzania, Acacia agreed to increase the local service levy from $200,000 per mine to 0.3 per cent of revenue, leading to tripling of money paid to the regional government to benefit the community.

Acacia chief financial officer Andrew Wray said in 2015 that they had agreed with the Tanzania Revenue Authority to pre-pay corporate tax completed in the first quarter of this year.

“We expect this amount to increase to $20 million in 2016 and bring forward our expected payment of corporate taxes by approximately three years,” he said.

The firm’s 2015 payments to Kenya stood at $644,000 including net indirect taxes, withholding tax and payroll taxes.

Ophir’s company secretary Philip Laing said in its 2015 report that the firm paid Kenya $232,000 as licence fees for offshore oil and gas exploration block L9.

Soco’s filling to the Companies House Extractives Service shows the firm paid $1,097,000 to DRC government as exploration fees for block V near the Virunga National Park.

Soco in 2015 did not renew acreage’s licence and wrote off costs of seismic surveys among others due to pressure from conservationists campaigning to protect Virunga which is home to one of the world’s largest population of mountain gorillas.

BG Group paid Kenya’s Energy Ministry $528,000 as fees — $275,000 for offshore block L10A and $253,000 for acreage L10B along the coastline where oil and gas exists. The firm, which was recently acquired by Royal Dutch Shell Plc, paid $537,000 to Tanzania Petroleum Development Corporation.

Filings show $311,000 was for offshore block 1 and $226,000 for offshore block 4 where commercial deposits of natural gas have been found but production is yet to begin.

Tullow’s consolidated filings for 2015 show that the Uganda Revenue Authority received $36,059,000 as income taxes from the company.

The firm paid Kenya Revenue Authority $9,000 as income tax. In Ethiopia it paid $441,000 as licence fees for the South Omo block and $197,000 as payment to a third party for infrastructure improvement.

London Stock Exchange-listed Shanta generated $96 million in foreign exchange for Tanzania.

Shanta’s chairman Anthony Durrant said the firm paid $11.6 million in royalties, direct and indirect taxes, excluding value added tax to the government. The company has commercial gold production operations in Tanzania.