E.U bank lifts sanctions on Zambia
TIME PUBLISHED - Sunday, December 11, 2011, 9:51 pm
The European Investment Bank has lifted restrictions on its activities in Zambia.
This is in-recognition of the strong stance against corruption taken by the PF Government under the leadership of President Michael Sata.
Meanwhile, government and the European Investment Bank have signed an 80 million Euro’s financing contract for the rehabilitation of the Great East Road.
European Investment Bank President, Philippe Maystadt says a third public sector operation, involving a 64 million united states loan for the Itezyi-tezyi power project, is under preparation for submission to the banks governing board, within this month.
According to the letter to Zambia’s Finance Minister, Mr. Maystadt says the bank will soon submit a proposal for a 30 million United states dollars loan for the Kafue -Livingstone power transmission line.
He says this is also in recognition to the substantial efforts made by government to strengthen public service governance.
The estimated cost of the Kafue -Livingstone power transmission line currently stands at 103 million United States dollars.
The project aims at addressing power supply challenges in Livingstone and to facilitate transmission of thermal power from Maamba into the National grid.
And Finance Minister Alexander Chikwanda says government is hopeful that other prospective co-financiers of the project namely, the World bank and the African Development Bank , will move expeditiously to ensure that the Kafue -Livingstone power transmission line project progressed smoothly.
Mr. Chikwanda has told Representatives of the Bank in Lusaka, that the Zambian government is irrevocably committed to the principles of good governance and strict fiscal compliance in the utilization of both local and external mobilized resources.
This is according to a statement released to ZNBC News by Ministry of Finance and National Planning Public Relations Officer Chileshe Kandeta.
[ZNBC]
Labels: EIB, SANCTIONS
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Government saving face on mine tax issue - Simuusa
By Mutale Kapekele
Wed 15 June 2011, 06:30 CAT
PEOPLE who were calling for more tax from the mines have been vindicated, says a parliamentarian. Nchanga member of parliament Wilbur Simuusa said
the government is embarrassed by the foreigners’ action taken against Mopani’s tax underpayments and is now trying to save face by asking the mine to pay more tax.On June 1, the European Investment Bank (EIB) froze its US50 million funding to Glencore, the parent company for Mopani Mines following two independent audit reports that revealed inconsistencies in the figures that the mine submitted to the Zambian Revenue Authority for tax administration.
The first report was carried out by accountants Grant Thornton on the insistence of the government to investigate the tax affairs of the country’s second-biggest miner last year.
The second report was carried out by European experts who reported to the British parliament that Mopani paid less tax than it should and polluted the environment.
Last week, finance minister Dr Situmbeko Musokotwne said although the Zambia Revenue Authority (ZRA) has asked Mopani to pay more money in underpaid taxes, Mopani must be given a chance to respond.
Dr Musokotwane did not say how much was owed, but disclosed that Mopani has been asked to pay more in tax and what it owed voluntarily or faced a bigger tax bill from ZRA.
But Simuusa in an interview said the government was being hypocritical in dealing with the matter.
“The people who were calling for more tax from the mines are vindicated. The government is hypocritical and is now trying to save itself from shame. Musokotwane was adamant when he was defending the mines and tried hard to put critics down,” Simuusa said.
“If the mines were paying enough tax, why are they chasing Mopani now? The government is embarrassed and now wants to save itself. Musokotwane even hid the audit report because he knew all along that the mines were not paying enough.”
Simuusa said despite the statement from Musokotwane that Mopani should pay more, the government had no political will to collect the correct mining tax.
He said the government would always be on the side of the mines since they were close to them.
Simuusa also said the government had no capacity to effectively collect tax from the mines, adding that it was not surprising that the EIB had frozen funding to Mopani.
Yesterday, economic consultant Bob Sichinga said the law currently does not allow ZRA to collect more money from the mines.
Sichinga said currently, it was legally not possible to collect enough taxes from the mines, adding that ZRA does not collect money anyhow but needed a law to allow them do so.
Labels: EIB, MINING, TAX EVASION, WINDFALL TAX, WYLBUR SIMUUSA
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ActionAid welcomes Glencore loans freeze
By Gift Chanda
Tue 07 June 2011, 08:20 CAT
THE decision by the European Investment Bank to freeze all new loans to Mopani’s parent company, Glencore should make the Swiss-listed company quickly “exonerate” itself from tax evasion allegations, says ActionAid.
The European Investment Bank (EIB) recently froze all new loans to Glencore and its subsidiaries, citing “serious concerns” over the group’s corporate governance.
It said it would ‘decline any further financing’ requests from the company, or one of its subsidiaries, as it conducts an internal investigation into allegations of tax irregularities at Mopani stemming from a leaked draft of an audit report by the accountancy firm Grant Thornton and Econ Poyry.
“As ActionAid, we welcome this move by the EIB because it is in line with our call on irresponsible business transactions, tax dodging and all matters related to denying African governments and countries that which is due to them,” ActionAid Africa spokesperson Henry Malumo said in an interview.
He said Zambia and other African countries continue to lose revenue from mining companies because governments do not take necessary measures to ensure transparency.
“There is a lot that the governments in Zambia and Africa in general are losing in the mining sector due to bad business practices. And to see EIB taking this step is a something positive and in the right direction,” he said.
“This defines global trading where investments whether from Europe or Africa benefits everyone. We should extend this even to other economic sectors.”
Mulumo also commended the government for taking a bold step to investigate the tax evasion allegation on Mopani.
“We understand the government in Zambia, South Africa and other SADC countries will work together to investigate the allegations,” said Malumo.
“These foreign investors are coming to Africa in the name of investing but they are applying foreign tax evasion tactics.”
Mopani has been accused by some non-governmental organisations (NGOs) of tax evasion and of causing widespread pollution.
The mining company has tried to deny the claims made in a draft audit report from the Zambia Revenue Authority (ZRA) on the mining company’s sales volumes, manipulated copper prices and improperly recorded hedges, saying the conclusions were based on “errors and inconsistencies” and were a “calculated move to tarnish the image and integrity of Mopani.”
But the EIB stated in its statement that its concerns went “far beyond” Mopani. It stated that it had commissioned its own independent probe into the matter.
“Any conclusive proof of tax evasion would lead to local penalties and could trigger early repayment of the loan,” the EIB said, adding, “it would, if necessary, improve its own due diligence audit mechanisms.”
In 2005, the European Investment Bank had loaned Mopani Copper Mines US $50 million for the renovation and modernisation of the Mufulira copper smelter.
Labels: ACTIONAID, EIB, GLENCORE INTERNATIONAL AG, MOPANI, TAX EVASION
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COMMENT - This article came to my attention, courtesy of
Cho's Zambian Economist blog. Glencore is a company led by a convicted criminal, Marc Rich. Convicted of tax evasion, and pardoned by former president Bill Clinton.
UPDATE 1-EIB halts Glencore lending on governance concerns
By Clara Ferreira-Marques and Philip Blenkinsop
Wed Jun 1, 2011 11:33am GMT
LONDON/BRUSSELS, June 1 (Reuters) - The European Investment Bank has frozen all new loans to commodities trader Glencore and its subsidiaries, it said in a statement, citing "serious concerns" over the group's corporate governance.
The EIB, the European Union's lending institution, provided a $50 million loan to Mopani Copper Mines, a Zambian subsidiary of Swiss-based Glencore, in 2005, to help pay for the modernisation of a copper smelter.
But Mopani has since been accused by some non-governmental organisations (NGOs) -- most recently by campaign groups in an open letter signed by a group of European parliamentarians -- of tax evasion and of causing widespread pollution.
Glencore has denied the allegations, the bulk of which stem from a leaked version of a pilot audit report commissioned by the Zambian tax authorities. The EIB, in a statement issued to answer comments from NGOs, said it has commissioned its own independent probe into the matter.
Any conclusive proof of tax evasion would lead to local penalties and could trigger early repayment of the loan, the EIB said, adding it would, if necessary, improve its own due diligence audit mechanisms.
"We welcome the EIB taking a close look at Mopani, since we are confident that we will be completely exonerated," a spokesman for Glencore said on Wednesday.
"The allegations are based on an incomplete, draft desktop study that was circulated in Zambia several months ago. We publicly refuted the draft conclusions of this document at the time," he said.
Mopani itself has also placed advertisements in local Zambian newspapers to reject claims made in the draft audit on sales volumes, manipulated copper prices and improperly recorded hedges, saying the conclusions were based on "errors and inconsistencies" and were a "calculated move to tarnish the image and integrity of Mopani".
MORE THAN MOPANI
But the EIB said in its statement its concerns went "far beyond" Mopani, repeating comments made in a letter to a group of parliamentarians who last week called for EU financing for mining projects in Africa to be suspended.
"Due to serious concerns about Glencore's governance, which has been brought to light recently and which go far beyond the Mopani investment, the president of the EIB has instructed the services to decline any further financing request from this company or one of its subsdiaries," it said.
EIB invests in mining projects throughout Africa and beyond as part of EU development cooperation policy.
Other projects with EIB involvmement include the Ambatovy nickel project in Madagascar and the Tenke Fungurume mining project in the Democratic Republic of Congo.
The group of more than 50 members of the European Parliament called last week for a moratorium on EU public financing for mining projects until "adequate standards and regulations" are brought in.
They questioned the environmental impact of the EU investment in Mopani, arguing the EIB was ill-equipped to monitor mining projcts and to deal with related risks.
Mopani, in which Canada's First Quantum and the Zambian state own minority stakes, has generated over $380 million in tax payments to the Zambian government since its privatisation in 2000, through royalties, import/customs duties and income taxes.
Glencore, the world's largest diversified commodities trader, listed on the London stock exchange in May.
Its shares were trading at 523 pence, down 1.5 percent, at 1050 GMT, underperforming a 0.9 percent rise in the broader sector and still below their 530 pence debut price.
(Editing by Greg Mahlich)
Labels: CORRUPTION, EIB, FIRST QUANTUM MINING, GLENCORE INTERNATIONAL AG, MOPANI, TAX EVASION, WINDFALL TAX
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World Bank withdraws funding for TAZAMA pipelines rehab
Written by Kabanda Chulu
Thursday, June 25, 2009 3:25:27 PM
ENERGY permanent secretary Peter Mumba has said rehabilitation of the TAZAMA pipelines has delayed because the World Bank and the EIB have withdrawn their funding as a result of Zambiaís inability to meet certain conditionalities.
And Mumba has said the government could not implement uniform petroleum prices countrywide due to lack of bulk storage facilities in provincial centres.
Appearing before the Parliamentary Committee on Government Assurances, Mumba said the government acquired a loan amounting to US $22 million from the World Bank and US $20 million from the European Investment Bank (EIB) for use on the rehabilitation of the TAZAMA pipelines.
He said some of the funds were disbursed and works were carried out.
“However, the rehabilitation works could not be completed due to the fact that the financiers withdrew their funding as a result of Zambiaís inability to meet certain World Bank conditionalities. At the time of cancellation, 21 per cent of the funds from the World Bank were utilised and 87 per cent from the EIB and due to this development, TAZAMA has resorted to carrying out rehabilitation works using its own resources,” Mumba said. ìSo far major portions of the pipeline including pumping stations have been worked on. However, a stretch of about 10 kilometres of pipeline on the Tanzanian side still needs to be replaced and new pipes have already been procured for this purpose.”
On strategic oil reserves, Mumba said the government had provided US $2.3 million for the completion of the 40,000 metric tonne diesel tank at Bwana Mkubwa in Ndola whose works were suspended when the donors withdrew funding under the petroleum rehabilitation project.
Mumba further said the government had failed to implement the programme due to lack of bulk fuel storage facilities in provincial centres.
“Transportation and storage of petroleum products in bulk has the potential to contribute to the reduction of the logistical cost and therefore the pump price of fuel products in the outlying areas. To this effect, government recognises the need to rehabilitate the existing bulk fuel depots in provincial centres and the first phase of rehabilitation after tender processes will start with Lusaka, Mongu and Solwezi depots,” said Mumba.
Labels: EIB, TAZAMA, World Bank
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EIB lends 20m euros to local banks for SMEs
Written by Fridah Zinyama
Thursday, November 27, 2008 11:58:35 AM
(EIB) is lending 20 million euros to five commercial banks in Zambia to support investments by small and medium scale enterprises (SMEs).
And commerce minister Felix Mutati said Zambia needs a stimulus plan to address the financial effects of the credit crunch that the international market is experiencing.
Meanwhile, Investrust Bank managing director Friday Ndhlovu has commended the European Investment Bank for providing finances to five commercial banks in Zambia as liquidity had become a major constraint in the banking sector worldwide.
The five commercial banks that would benefit from the financing agreement with EIB are Standard Chartered Bank, Stanbic Bank, Finance Bank, Investrust Bank and Africa Banking Corporation.
During the signing of the financing agreement between EIB and the five commercial banks in Lusaka yesterday, EIB Head of the Southern Africa and Indian Ocean Division, Serge Klumper, said the loan would have an important developmental impact on Zambia as it would encourage growth in the private sector.
“Accessing long term finance has been a major challenge for most of the SMEs in the country and we hope that funds that EIB is loaning to the five commercial banks will go a long way in improving the situation,” he said. “We have decided not to set the interest at which the banks will pay back the loans because experience has taught us that it makes it difficult for them to pay back the loans.”
Klupmer said the loans were being provided at very competitive interest rates and were meant for long term financing which goes up to ten years.
“Most importantly, these funds will go towards diversifying Zambia’s economy which is highly dependent on copper and will create jobs for local communities across Zambia,” said Klupmer. “This project is also supported by the Zambian government and will be used to finance investments by small companies from a wide range of sectors including industry, agriculture, tourism and infrastructure.”
And Mutati said the funds would go towards Zambia’s stimulus plan which needed to be urgently implemented because of the financial shock that the world was currently experiencing.
“As government, we would like to continue with policies that are going to ensure that a good business environment is created where business can be freely conducted,” said Mutati.
And Ndhlovu, who gave a vote of thanks on behalf of the five commercial banks, said the Zambian economy needed more funds for its continued growth.
“We are optimistic that the Zambian SMEs will greatly benefit as the funds come with favourable interest rates, longer repayment periods and the currency choice of disbursement to support export trade,” he said.
Ndhlovu said Zambia had for a long time not had access to long term financing, adding that the 20 million euros would therefore provide the much needed leverage for the growth of the SMEs.
Labels: EIB, FELIX MUTATI, FRIDAY NDHLOVU, FUNDING, INVESTRUST BANK PLC, SMEs
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