Monday, December 16, 2013

Revocation of SI 89 may delay revenue to treasury - Chikwanda
By Abel Mboozi
Sat 02 Nov. 2013, 14:01 CAT

FINANCE minister Alexander Chikwanda on Thursday told Parliament that the reversed SI89 was issued as a cash flow management measure to avoid a situation where the government will be compelled to resort to short-term borrowing at high cost or curtailing expenditure to institutions due to non-receipt of mineral royalties.

And Chikwanda says the revocation of Statutory Instrument number 89 will not occasion any revenue losses but may only result in further delays of revenue to the treasury.

He explained that the rationale of SI 89 was to ensure that revenues from the mines to the national treasury were not unduly delayed as a result of the stockpiling that was currently going on.

He said according to section 134 of the mines and minerals development Act, mineral loyalty was due when minerals were sold either in raw or processed form.

"Given that mining companies have been producing and stockpiling, the government has not been able to receive revenues as projected to fund its operations," he said.

"The issuance of SI 89 was part of the cash flow management so that government could not be compelled to resort to short term borrowing at high cost or curtailing expenditure to institutions due to non receipt of mineral royalties."

Chikwanda said the delay in receiving mineral royalty on copper ores and concentrates was dependent on the time it would take the mining companies to process and sell copper.

On Wednesday, Speaker of the National Assembly Patrick Matibini directed Chikwanda to provide an explanation on the SI 89 of 2013 and implications of its re-alignment at the behest of President Michael Sata.

Speaker Matibini gave the directive following a point of order by Mwandi MMD member of parliament Michael Kaingu who asked what the financial implication of the realigned SI was.

Earlier in the week, Chikwanda told the parliamentary committee on estimates that reversal of the SI would cost the country revenue because of inadequate smelting capacity.

On Monday, President Sata cancelled Statutory Instrument Number 89 which Chikwanda signed on October 4.

SI 89 which was to be in force up to September 30, 2014 was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition to copper exports and improve accountability in the vast mining sector.

SI 89 has since been replaced with SI 99 which has reinstated the 10 per cent export duty on copper concentrates and ores which Chikwanda briefly abolished after being lobbied by First Quantum Minerals and Lubambe Copper Mines.

And local government minister Emmerine Kabanshi told Parliament on Thursday that her ministry had received K50 million to pay off constituencies that had not received their Constituency Development Fund.

In her policy debate on the budget, Kabanshi dispelled allegations that the government was segregative in the way it administered CDF.

"MPs that have not received CDF should remain patient, besides the treasury has just released K50 million and the 38 remaining constituencies will be paid off. There is no segregation in the way this fund is administered," said Kabanshi.

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