Natural Resources Ministry is not about to award a contract for the rehabilitation of the GGMC building at High and Princes streets

Dear Editor,

The Ministry of Natural Resources and the Environment has noted the continuous misunderstanding and, at times, deliberate misrepresentation of the way in which the financial management of Guyana Geology and Mines Commission Operates (GGMC) is executed. In this regard, therefore, we wish to once more clarify this process to ensure that the general public benefits from the facts.

Historically, the Lands and Mines Department (the predecessor of the GGMC) suffered from inadequate and un-assured funding to pursue its programmes, and in particular, geological programmes. This resulted in loss of professional staff and with them, skills and experience which severely impeded the department’s, and hence government’s ability to attract foreign investment to the mining sector.

Persons with a true appreciation and understanding of the industry, including those who have worked within the industry, have over the years continued to remind us that the commission’s semi-autonomous status greatly contributed to the creation of an environment conducive to carrying out and sustaining exploration, research and the implementation of other initiatives to attract investment.

It should be noted, also, that Guyana Forestry Commission and Guyana Lands and Surveys Commission followed GGMC in becoming semi-autonomous agencies, attesting to the fact that this model proved beneficial to the agencies and the sectors that they serve, to generate more funds and benefit from the retention and use of such funds in carrying out their work programmes and stimulating investment and growth under their respective mandates.

Legislation

  • Under the GGMC Act No. 9 of 1979, GGMC was specifically set up as a body corporate in order to establish autonomy and strengthen the framework for the mining industry in order to attract investment
  • Section 4 of the GGMC Act, in stipulating certain functions, by implication (in particular section 4 (1) (c) and (e), and section 4 (3) (b) which states “The Commission shall be responsible for – the collection and recovery of all rents, fees, levies, tolls and charges (including royalties) payable under the Mining Act and any other revenues of the Commission;”
  • Section 6 of the Act also states thus: “The funds and resources of the Commission consist of…(g) all other sums or property which may in any manner become payable to or vested in the Commission in respect of any matter incidental to its functions”. (Those functions are as set out in section 4. Alluded to prior).

Whilst the general public is cognizant of the fact that the mining sector has achieved record performance in 2012 at a time of high prices and particularly due to the hard work of our small and medium scale miners, it is imperative to understand that in the mineral trading sector it’s the miners who are the recipients of the proceeds through the sale of these precious metals to the Guyana Gold Board or licensed dealers. It is also important to note that of the total sales, only seven per cent is deducted, in total, of which five per cent is remitted to the GGMC (as royalties) and two per cent is remitted to the Guyana Revenue Authority.

These royalties form part of the financing that supports GGMC’s ability and capacity for effective regulation and enforcement of the mining sector.

Additionally, it ensures the commission’s:

  • ability to conduct geological field research;
  • presence on the ground at mines stations and sub-stations and equally importantly;
  • ability to respond speedily to complaints and disputes on the ground; and
  • capability to mount campaigns as required for compliance enforcement, monitoring and systematic gathering of standardized information and data for factual management of the industry, particularly the small and medium gold and diamond mining sector.

These activities becomes more important in the context of the LCDS, and the Monitoring Reporting and Verification (MRV) process, with requirements for managed deforestation in the mining sector, and consequently, for closer monitoring and regulating of individual mining operations, in order to obtain a high level of compliance of the Mining Act and Regulations. This requires a bolstering of GGMC’s field staff, upgrade of field accommodation and facilities, emergency road works in mining areas, training, and construction of facilities in new areas to better track and regulate activities and ‘shouts’. A review of the commission’s work programme for 2013 would give greater details of those activities.

It is important to note that all of the royalties from large scale gold mining at Omai passed through GGMC’s books and were directly paid over to the Bank of Guyana and then to the Consolidated Fund. This is an important precedent as we recall that gold royalty is 5% of gross production and that in the new paradigm, gold royalty for large scale producers rises to 8% once the gold price exceeds US$l,000/oz. Currently there is no large scale mine in operation although a few are being developed.

We wish to go further by stating that as recently as 2006-11, GGMC’s contributions to the Consolidated Fund were as follows:

Year                                      Amount
a.  2006                                 $800 million
b.  2010                                 $2 billion
c.  2011                                  $2 billion
d.  2012                                 $2 billion Total $6.8 billion

Further, in keeping with the Act of GGMC and the Amerindian Act, support would have been provided to the Amerindian communities through the Ministry of Amerindian Affairs.

A second matter which is of concern to the ministry is the false assertion in one section of the press that MNRE is deeply involved and about to award a contract for the rehabilitation of the GGMC building at High and Princes Streets.

We wish to state categorically that the design, preparation of biding documents and the launching of the Invitation for Bids are all being done by the GGMC.

Further we wish to advise that the commission contracted an independent, external consultancy firm that has been providing support for the process while another independent consultancy firm provided some short-term engineering reviews. It should be noted that the Invitation for Bids for Lots 1 and 2 (Civil and Electrical) was advertised widely in all the local newspapers which led to the public opening of bids submitted.

A broad based Evaluation Panel comprising of the GGMC management, Ministry of Public Works, representatives of the mining sector and the Board of Directors was then appointed to evaluate the bids submitted for Lots 1 and 2. This panel is being assisted by the consulting engineers and as far as   the MNRE is aware the evaluation is still ongoing and no      recommendations have been taken to the Board of Directors for review and approval; thus we find it highly malicious for a newspaper column to even imply the ministry is directly involved in the process of evaluation much less the awarding of this or any contract for the GGMC.

The MNRE wishes to assure all stakeholders that we will continue to provide the necessary policy guidance to ensure the effective management of the sector.

Yours faithfully,
J McKenzie
Permanent Secretary
Ministry of Natural Resources and the Environment

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