Kenya to create special fund for mining royalties

Thursday December 21 2017

Base Titanium workers explores for titanium in

Base Titanium workers explores for titanium in Kenya’s Kwale County. Under the Mining Act, 2016, the national government gets 70 per cent of mineral revenues, the counties with mines get 20 per cent and host communities 10 per cent. PHOTO FILE | NATION 

By KENNEDY SENELWA
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Mining Cabinet Secretary Dan Kazungu said the Mineral Royalty Fund will be created in the next financial year to promote accountability in sharing of mining revenues between the national government, county governments and communities around mining fields.

Currently, such monies are remitted to the Consolidated Fund.

Under the Mining Act, 2016, the national government gets 70 per cent of mineral revenues, the counties with mines get 20 per cent and host communities 10 per cent.

In Uganda, 80 per cent of the revenue goes to the government, 17 per cent to mineral producing districts and 3 per cent to the landowners or occupants of mining areas.

In Rwanda, 10 per cent of mining royalties are given to the Local Administrative Entities Development Agency for development projects selected by people living near mines.

Electricity generating

The Energy Bill of 2017 before the Kenyan National Assembly proposes that monies paid by electricity generating firms be shared between the local community, the county government and the national government in the ratio 5:20:75.

Besides royalties, Kenya mining firms will also be required to allocate 1 per cent of sales revenues of minerals like gold to the local communities. National Assembly Majority Leader Aden Duale said the Bill seeks to consolidate the laws relating to energy and align the legal and regulatory framework of the sector with the Constitution.

“It will do this by setting out with clarity the specific roles of national and county governments in relation to energy,” Mr Duale said.

The Bill seeks to repeal the Energy Act, 2006 and Geothermal Resources Act, 1982.

The oil and gas proceeds will be shared between the national government and the firm in three bands – 50:50, 65:35 and 75:25 – depending on the cost of extraction and the revenues received.

Companies holding valid mining leases and special mining leases granted under the repealed Mining Act of 1940 will be required to sign development agreements with the communities within 18 months.

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