Edward Ouko says the ministry did not verify exported quantities and prices reported by Base Titanium which remitted Sh404.2 million.
He also could not confirm the accuracy and completeness of mining royalties of Sh107.1 million from Carbacid Company Limited for carbon-dioxide manufacture.
Government royalties for various minerals stand at six per cent while miners pay a lower rate when they process locally.
The Ministry of Mining is on the spot over possible loss of millions of shillings after it relied on self-declared figures from companies in calculating royalties and cement levies.
Auditor General Edward Ouko says the ministry did not verify exported quantities and prices reported by Base Titanium which remitted Sh404.2 million
“However, as reported in the 2015/16 report, records in support of these royalties receipts indicates that the Ministry did not verify the export quantities and prices reported by the company, which forms the basis for computation of royalties,” Mr Ouko said in a qualified audit report on the revenue statements of the Ministry of Mining for the year to June 2017. He said although the Ministry was engaging an expert to verification export details, the exercise had not been done for the year ended June 30, 2017.
“Under the circumstances, it was not possible to confirm the accuracy and completeness of the royalties totalling Sh404,220,727,” Mr Ouko said.
He also could not confirm the accuracy and completeness of mining royalties of Sh107.1 million from Carbacid Company Limited #ticker:CARB for carbon-dioxide manufacture.
Government royalties for various minerals stand at six per cent while miners pay a lower rate when they process locally.
Kenya has proven deposits of titanium, gold and coal and is also understood to hold significant deposits of copper, niobium, manganese and rare earth minerals. The Ministry of Mining was set up five years ago and legislation to regulate the industry passed in 2016. The sector accounts for less than one per cent of the country’s gross domestic product.
On cement levy receipts totalling Sh503,400,309, Mr Ouko said records in support of the levy indicates that the ministry did not verify the production levels reported by various cement companies. “Consequently, the ministry relied solely on self-declared production figures of the cement companies.
“Although, according to management, the ministry’s inspection capacity has been enhanced through recruitment of inspectors of mines, verification of production is yet to be done,” he said. Mr Ouko said three cement companies had not paid levies relating to both the current and previous years, attributing this to business decline.
“According to management, levy collection enforcement measures applied have not yielded any collections because cement production and business is currently regulated under Industrialisation and not Petroleum and Mining sector,” he said.
Mr Ouko said although the ministry has entered into a memorandum of understanding with the Kenya Revenue Authority to collect cement levy on its behalf, the deal is yet to be actualised.
“Under the circumstances, it has not been possible to confirm the accuracy and completeness of the reported cement levy of Sh503,400,309,” he said in the report dated May 7, 2018.
Mr Ouko revisited an earlier audit query on the irregular export permits with a value $18,619,645 (Sh1.9 billion) which were issued during the 2014/15 financial year by an officer whose employment contract had expired.
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