13 June 2017

Tanzania: Between 68.6tr/ - and 108.5tr/ - Lost From 1998 to March 2017

Photo: Fadhili Akida/Daily News
President John Magufuli displays the second report on mineral sand investigation shorlty after receiving it from the special committee he assigned to undertake the task, at the State House in Dar es Salaam.

Tanzania lost between 68.6 trillion/- and 108.5 trillion in revenues from exporting mineral concentrates from1998 to March 2017, the second Presidential Committee formed to probe the deals has revealed.

The shocking report established that the missed earnings were a result of mining companies evading paying income tax, withholding tax, royalties and costs for vessels to load and offload at the ports.

During this period, the committee discovered that, on the minimum scale, the nation lost 55.6 trillion/- (income tax), 11.1 trillion (royalties), 1.6 trillion (levies from offloading services) and 94.4 billion (withholding taxes), which amounts to a total of 68.6tri/- from exporting 44,277 containers of concentrates.

But, going by the maximum scale the amounts were: income tax (95.5tri/-), royalties (11.1 tri/- ), vessel offloading services levies (1.7tri/-) and withholding tax (94.4bil/-). This added up to 108.5tri/-, lost from transporting 61,320 containers outside the country.

According to the eyebrow-raising revelation by the chairman of the committee, University of Dar es Salaam (UDSM) economics Professor Nehemiah Osoro, the money

was the equivalent of two or three national budgets, going by the 2017/18 budget estimates.

"The money was enough to build a standard gauge railway from Dar es Salaam to Mwanza," he elaborated as invited guests were attentively following his presentation at the State House in Dar es Salaam.

He remarked that the dishonest government officials and mining companies plunged the nation into a big loss.

According to the committee, the money was lost through transfer price manipulation, inflating costs for the operations of mines, which led to the companies' profits not being noted, consequently affecting the tax base for corporate tax. The committee discovered that the concentrates had 13 types of minerals, contrary to only three types that the mining companies declared.

The eight-member committee further established that the concentrates contained gold, silver, copper, sulpher, Iron, Nickel,Zinc, Beryllium, Ytterbium, Iridium, Rhodium, Tantalum, and Lithium. Prior to the handing over of the report to President Magufuli at the State House in Dar es Salaam, Prof Osoro gave details of the findings over amounts and value of each type of mineral contained in the containers.

He noted for 44,277 containers, among other types of minerals, there were 1,240 minimum and 2,103 maximum tonnes of Gold worth 108.6 tri/- and 183.3tri/- respectively. The containers carried 270 tonnes of silver valued at 329.6 bn/- on the minimum scale and 309 tonnes worth 378.3 bn/- on the maximum scale.

The amount of copper in the containers was 230,240 tonnes worth 2.8 tri/- , using the minimum scale while on the maximum scale the copper concentrate weighed at 299,135 tonnes at a value of 3.7 tri/-.

Moreover, the report indicates that there were 345,360 tonnes of sulphur with a value of 227bn/- at a minimum scale, but on the maximum scale, the figure went up to 449, 854 tonnes worth 296.9bn/-.

But, going by maximum number of 61,320 containers exported during the period, for gold alone, it weighed at 1,717 tonnes valued at 149.6 tri/- using the minimum degree while weighing at 2,913 tonnes with a value of 253.8tri/- on the maximum scale.

Prof Osoro explained that the committee discovered loopholes in the mining contracts, of which the government was not part. One of the weaknesses was that mining companies were not obliged to submit to the government report on smelting exported concentrates.

"The Tanzania Minerals Audit Agency (TMAA) was getting false reports over the types, amount and value of the minerals contained in the concentrates after seeking them from these companies," Prof Osoro stated.

The committee criticised Mining Development Agreements as amended in 1999, which had removed 5 per cent shares of the government from mining companies.

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