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Wednesday, 22 August 2007

IMF/World Bank on Mining Contracts

The IMF/World Bank today published the Joint Staff Advisory Note on Zambia's FNDP, with some interesting comments on the mining contracts. It appears even they are getting wary of the current position:

Staffs commend the Government for taking steps to reform the fiscal regime of the mining sector while preserving Zambia as a competitive, credible, and attractive investment destination, but advocate the inclusion of an additional revenue-sharing mechanism that would capture a higher share of mineral rents for government during period of abnormally high international prices for minerals. Such a device is currently not part of the proposed reforms.
With the "big two" having your back, there can only be one outcome even without the foreign consultant.

6 comments:

  1. With the "big two" having your back, there can only be one outcome even without the foreign consultant.

    If they still won't budge and start charging the mining companies, then there has to be some kind of illegal agreement between the signers of the contracts and mining companies.

    Mining companies are notoriously corrupt, so the only question remaining would be - who on the government's side has been on the take?

    Also, they should be pushing the IMF/WB a little. If they agree with (for instance) a windfall tax, or an enforcement of Price Participation, how about some profit sharing as well? How about some state mine ownership (of course with full disclosure of profits)? Or an end to carrying forward costs against income?

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  2. "Mining companies are notoriously corrupt, so the only question remaining would be - who on the government's side has been on the take?"

    Lol!!

    On a serious note, where do you stand on how mining contracts should be negotiated.

    Do you favour a case by case approach?

    Clear rules of thumbs?

    National approach or local approach?

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  3. An international approach would be the best. If there were regional standards on how profits must be shared, the mining companies can't shop around for the worst deal for the governments in question.

    However, on the subject of corruption...

    Have your read the articles on Charle Mulipi's Public Accounts Committee? Some quotes:

    "We have observed that within contract negotiations, there appears to be capacity lacking or there is a deliberate attempt on the part of officials in the ministry to swindle government," he observed.

    And...

    Milupi said it appeared most government officials were conniving with contractors.

    That is just the building industry.

    Apparantly I am not the only one who is suspicious about the government's zealousness in pursuing the best contracts for the Zambian taxpayer.

    But this PAC is an exciting new development. If someone can hold the state accountable, it could start right there.

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  4. Yes PAC appears to getting on with the job. They have been looking at various issues including ZAMTEL.

    But these committees have been in existance since time immemorial. The effectiveness of the committee depends on the "chair". At the moment it is chaired by an Independent Committee so there's some political will there to look into all sorts of issues - but if he goes who knows who might take over. And of course, the more noise Mulipi makes the less chance of him being elected as Chair next time - assuming he is elected as an MP in 2011 - the general rule has been that if a Chair is very effective some people try and get rid of them next time round :)

    I also hope Mulipi publishes the reports. I have yet to see a report from them. Now that Parliament has all their bills and acts on online, including proceedings I hope we can see select committee reports.

    ReplyDelete
  5. Here is the list of committees:

    http://www.parliament.gov.zm/index.php?option=com_content&task=view&id=405&Itemid=90


    And here is the list of the reports so far for this sitting:

    http://www.parliament.gov.zm/index.php?option=com_docman&task=cat_view&gid=63&Itemid=112

    ReplyDelete
  6. Here is the list of committees:

    http://www.parliament.gov.zm/index.php?option=com_content&task=view&id=405&Itemid=90


    And here is the list of the reports so far for this sitting:

    http://www.parliament.gov.zm/index.php?option=com_docman&task=cat_view&gid=63&Itemid=112

    ReplyDelete

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