John Omenge, the Mining PS, told Parliament the draft Royalty Fund Sharing Regulations is with the Attorney General and the Treasury.
Mr Omenge said the ministry had collected Sh3.43 billion in the last three financial years which have all been remitted to the Consolidated Fund in the absence of regulations guiding the sharing of the royalties.
This means that the Treasury is holding Sh686 million being 20 per cent of the counties share and Sh343 million or 10 per cent share to communities where minerals were exploited.
The Treasury and the Attorney-General’s office are sitting on a legal instrument that is required to unlock more than Sh1 billion in royalties that are due for payment to counties and communities.
John Omenge, the Mining principal secretary, told Parliament the draft Royalty Fund Sharing Regulations is with the Attorney General and the Treasury.
The Mining Act stipulates that royalties are shared by national government, county governments and communities on a percentage of 70-20-10 respectively.
Mr Omenge said the ministry had collected Sh3.43 billion in the last three financial years which have all been remitted to the Consolidated Fund in the absence of regulations guiding the sharing of the royalties.
This means that the Treasury is holding Sh686 million being 20 per cent of the counties share and Sh343 million or 10 per cent share to communities where minerals were exploited. The balance of Sh2.4 billion (70 per cent) is the share of the national government.
“We have drafted an instrument which is lying with AG and National Treasury. We need your help for us to get the same to be released to Parliament so that monies collected on behalf of counties and communities through royalties are paid as per the law,” Mr Omenge told the Environment and Natural Resources committee during budget scrutiny last week.
Mr Omenge said the Ministry has experienced difficulty in respect of a legal instrument needed to help it pay the money.
Mr Omenge said the ministry is unable to reimburse monies to counties and communities because the royalties is paid to the Consolidated Fund. “We were advised that money that goes to Consolidated Fund can’t be removed unless it is through the approval of Parliament.
“We have proposed in the draft legal instrument the creation of a Royalties Fund that will be sharing and disbursing the money it. We need the regulation to be enacted through Public Finance Management Act,” Mr Omenge told MPs.
He said the ministry has forwarded the draft Royalty Sharing Fund regulations to the national Treasury and the AG “which is yet to get back to us.”
“Counties and communities can’t access this money due to this technicality,” Mr Omenge told the Kareke Mbiuki-led committee.
He said in 2014/15 financial year, the ministry collected Sh1.25 billion royalties while in 2015/16, Sh1.1 billion was collected. In 2016/17, the ministry received Sh1.08 billion in royalties.
“One contributor of these royalties is the project in Kwale. Base Titanium started operations early February 2014 and gave us about Sh85 million in royalties. In 2014/15 it gave Sh12 million, in 2015/16 (Sh304 million) and last year (2016/17) it generated Sh400 million. By March this year, they had paid Sh275 million,” Mr Omenge said.
Base Titanium pay 2.5 per cent of total revenue it generates in Kwale as royalties but Mr Omenge said an agreement had been reached for Base to pay 5 per cent. He said the ministry also collect levy from cement companies as royalties.
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