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Mining companies now pay GHc14 as ground rent

By: Fred Yaw Sarpong, Daily Express

Mining companies operating in the country have started paying GHc14 per hectare as Ground Rent (concession rate) after recommendations from the Ghana Extractive Industry Transparency Initiative (GHEITI) was approved and accepted by stakeholders.

Before the current amount of GHc14 per hectare took effect the mining companies in the country were paying GHc0.50 as ground rent per kilometer square of concession given to the companies by landowners.

The Ghana Extractive Industry Transparency Initiative is the Ghana subset of the global initiative aimed at following due process and achieving transparency in payments by Extractive Industry companies to governments and government linked entities.

Daily Express gathered that the last time the rate was reviewed was in 1986. The rate was then five thousand cedis (₵5000). The redenomination of the cedi translates the amount into GHc0.50 per square kilometer.

This has been in existence until late last year when EITI made recommendations to the stakeholders in the mining sector to increase the ground rent.

The stakeholders include the mining companies themselves, minerals commission, the ministry of finance, the ministry of lands and natural resource, civil society organizations in the mining sector and others.

Some few years ago, a committee was tasked to review the ground rent. The committee initially fixed the fee at GHc36.50 per hectare, however the mining companies rejected it.

The then committee comprised Minerals Commission, Ministry of Finance, the Land Division of Lands Commission, the Land Valuation Division of Lands Commission, and the Office of the Administrator of the Stool Lands.

Dr. Steve Manteaw, co-chair of Ghana’s Extractive Industry Transparency Initiative (GHEITI) told Daily Express that there have been a lot of reforms in the mining sector.

“What this means for the government is to increase revenue from extracting of our natural resource particularly mineral revenues,” said Dr. Manteaw.

He said “some of the reforms we seen in the mining sector are quite fundamental and goes to the heart of bringing more revenue to the government.”

He mentioned that the royalty rate paid by mining companies to traditional rulers has been increase to a fix rate of 5% from the previous 3%. “This is because all the companies stack to a minimum which was 3%.”

He stated that corporate tax has also been increase from 25% to 35%. “We also decided to stagger the recovery of capital allowances in the mining sector over 5 years. This means that the capital allowances can be redeem at a rate of 20% every year for 5 years,” he added.

Daily Express told that this makes the mining companies comes to a tax paying position in their operation. “Previously they could operate up to 10 or 15 years without paying tax,” said Dr. Manteaw.

Under this new regime the companies have to begin paying tax early, at least within 5 years or after 5 years of their operations in Ghana.

The Extractive Industries Transparency Initiative (EITI) was launched by the UK Prime Minister at the World Summit on Sustainable Development in Johannesburg, September 2002.

The initiative encourages government, extractive companies, International agencies and NGO’s to work together to develop a framework to promote transparency of payments in the extractive industries. The EITI therefore seeks to create that missing transparency and accountability in revenue flows from the extractive industry.

The initiative is a voluntary initiative, supported by a coalition of companies, governments, investors and civil society organizations. Alongside other efforts to improve transparency in government budget practice, the EITI begins a process whereby citizens can hold their governments accountable for the use of those revenues.

It is a shared belief that transparency over payments and revenues increases the likelihood that the revenues generated by the development of natural resources are used in an efficient and equitable manner and can assist governments in financial and macro-economic planning and also reduces the risk of diversion or misappropriate of resources. EITI focuses on both company payments and government revenues and their disbursement.


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