BOSAI owes gov’t US$54M in royalties -Harmon

Member of Parliament for the main opposition party APNU Joseph Harmon said that he is unconvinced that the Ministry of Natural Resources and the Environment has a handle on the royalties that BOSAI Minerals is supposed to pay to Guyana for its bauxite extraction, which he estimates to be in the order of US$54 million.

He said that this came out of a meeting of the Sectoral Committee on Natural Resources held on Wednesday at the Public Buildings.

“I pointed out to the Minister [Robert Persaud] that BOSAI has a contract with the Guyana Geology and Mines Commission (GGMC) which requires that the company pays royalties,” he said.

He noted that there had been a three-year moratorium on the payment of royalties to the government.

However, he said that the three-year period has come to an end and that the company is in the second year of a second three year period.

“I asked the Minister whether this information is correct,” Harmon said. “I had written the GGMC asking clarification and they did not have the courtesy to answer me,” he added. According to Harmon, the Minister did not provide the information as to whether BOSAI owes royalties.

“The Minister undertook to investigate and present a report to the committee in the first or second week in January,” said Harmon. Calls to Commissioner of the GGMC Rickford Vieira to ask whether the company was paying its royalties went unanswered.Writing in a Stabroek Business column last year, attorney and chartered accountant Christopher Ram noted that under the agreement with the government the company was exempted from the payment of property tax and royalty for the five years to December 8, 2009.

Joseph Harmon
Joseph Harmon

He said the notes to the 2010 financial statements state that the company had sought a five year extension, but went on to state that no royalty was payable on sales during the period December 9, 2009 to December 31, 2010 and that no property tax provision to December 31, 2010 had been made.

“Order 8 of 2005 indicates that the company is subject to royalty at the rate of 1.5% but to a zero rate for the first five years, Ram said.

“I searched the Laws of Guyana but could only find statutory authority for a 3% rate and first saw a reference to 1.5% in a 1997 Mining Policy and Fiscal Regime by Prime Minister Samuel Hinds.

Mr Hinds’ paper did not even mention the Bauxite (Production Levy) Act 1974 which was introduced to ensure that the country gets a fair share of the revenues from its natural non-renewable resources,” he said.

Speaking to this newspaper in an interview, Ram said that while the law says that the minister could waive the levy, he does not see how a company as profitable as Bosai should be benefiting from the waiver.

“It does not meet the test of being just and equitable.

“If in any particular case a waiver is justified, it should only be done on a year to year basis since the conditions of the company could change,” he argued.

 

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