Hundreds of millions owed in bauxite royalty by Bosai

Jul 16, 2014 News

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– Questions swirl over GGMC’s sloth to collect

 

Regulators are expected to decide on how to move forward in what is estimated to be hundreds of millions owed in royalty by Chinese-owned bauxite company, Bosai Minerals Group Guyana Incorporated (BMGGI).

The issue has been simmering for over a year now, with the Opposition raising questions over the seeming lax attitude by the Guyana Geology and Mines Commission (GGMC) to collect the royalties.

How GGMC and by extension Government allowed that figure to balloon is what Member of Parliament for A Partnership For National Unity (APNU), Joseph Harmon, wants to know.

On Monday, the Ministry of Natural Resources and the Environment, led by Minister Robert Persaud, appeared before the Parliamentary Sectoral Committee on Natural Resources.

Since last year, Harmon had been hammering the Ministry and GGMC over the royalty issue.

This latest episode would bring to fore the touchy issue of concessions and how Government may be bending over backwards in facilitating foreign investors without ensuring that Guyana receives the best possible end of the deals.

The Opposition MP said that Bosai, one of the biggest employers in Linden, Region 10, owed over US$5M from royalties of bauxite produced, but Government is not having much success in collecting. The issue was raised since last November when the Ministry appeared before the same committee. Harmon was concerned especially over a report that Bosai had been granted a three-year stay on the payment of royalties.

According to GGMC’s Chairman, “We are working hard to bring closure to the issue surrounding royalty payment. I assure you that it is a matter that is engaging the attention of the Board.”

The official disclosed Monday that based on information, Bosai has been paying taxes to the Guyana Revenue Authority. Bosai is reportedly contending that because it is paying taxes, it does not have to pay royalties. GGMC has been examining for some time whether Bosai was right.

According to Williams, GGMC is in the process of billing Bosai with a definitive decision to be made within 10 days. Minister Persaud said the issue was not a simple one to resolve, considering the legal and other implications.

In December, prominent consultant Ramon Gaskin described the present arrangement between Bosai and the Government as “a product of corruption.” Both he and Harmon said that it was clear that non-payment of royalties was clearly designed to rob Guyana of the revenues it was entitled to.
When Bosai had taken over the Omai Bauxite Company in Linden, its operations were then governed by a signed agreement which reportedly was drafted by the controversial National Industrial and Commercial Investments Limited (NICIL) in 2004.

GGMC’s Commissioner Rickford Vieira had reportedly said last year that he was unaware of any agreement between Government and the company, which says that the corporate tax would offset the royalties to be collected by them.
Vieira said that a copy of the contract was not even in their possession, despite several efforts to contact the Bauxite Company to provide them with one. The Commissioner said that regardless of the arrangement between the government and the company, they are supposed to pay royalties to GGMC.  He said that any other arrangement simply contradicts the Bauxite Act.
“We are not aware of any waiver or even the specifics of the arrangement as it was done between the government and the bauxite company. We don’t have the records and we have tried for some time to get the records from them, but to date they have not provided us with the proper documentation.

“An economist was hired to calculate how much bauxite was extracted and shipped, and that report was sent to the GGMC already. At this point we are unable to accurately calculate the amount of royalties owed, based on the arrangement between the two parties. However, we will be able to estimate, according to normal standards, how much they are supposed to pay.”
Gaskin had also stressed that the laws of Guyana are clear on the issues, and royalty and corporate tax are separate.

“According to the Income Tax 85.01, the Commissioner General of the GRA is supposed to collect all taxes on income, while the Mining Act says that GGMC is supposed to collect royalties on all minerals being shipped out of this country. These companies are simply being allowed to drain this country of its resources without paying a cent. The company already had five years free of taxes and it has been four years now since it had that free period, as it came to an end in 2009. What more does it want?”

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