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KRA On The Spot For Allowing Illegal Exports of Minerals

Githii Mburu
KRA Commissioner General Githii Mburu. [PHOTO/ COURTESY]

The Kenya Revenue Authority (KRA) is on the spot for allowing unlicensed businessmen and companies export minerals, a report by the Auditor General has shown.

According to the report, there were three unlicensed gold exporters, five for gemstones, seven for salt and 29 for soapstone.

The unlicensed gold exporters include Great Source Freight Forwarders Ltd, Afri Solutions Ltd and Alinani Precious Metals Ltd.

On the other hand, unlicensed gemstone exporters include Timothy Ryan, Kline Jewelry Inc, Virlen Bane, Adonai Trading & Logistics Co. Ltd, and Swift Cargo Logistics Ltd.

“The statement of receipts and transfers reflects Ksh7,203,125 and Ksh74,422,975 being receipts from mineral export levy and mining royalties respectively. The receipts are comprised of levies on sales of minerals and permits for mineral exports. Regulation 18 of the Mining Act (Dealings in Minerals) Regulations, 2017 provides that a person shall not export a mineral unless the person holds a permit granted by the Cabinet Secretary for that purpose while Regulation 19 provides that a person shall not be qualified to apply for a permit to export minerals unless such a person is a holder of a mining license, mining permit or a dealer’s permit,” said the auditor general Nancy Gathungu.

“However, mineral export records at the Kenya Revenue Authority (KRA) for the year under review, revealed exports of minerals by persons and companies who, according to the State Department’s data, were not holders of valid export, mining or dealers’ permits.”

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Appearing before the National Assembly’s Public Accounts Committee (PAC) on Wednesday, KRA Commissioner-General Githii Mburu was at pains to explain how the entities were able to export minerals worth over Ksh141 million in the 2018/2019 financial year without licences.

“In the circumstances, it was not possible to confirm how the exporters were allowed to trade in the minerals without permits or how the permits, if any, may have been issued without payment of mineral export levies,” added the auditor general.

PAC has now given Mburu seven days to provide export permits for 27 entities, which exported minerals worth millions without licences.

During the year under review, the State Department granted licenses to several companies to export soils and crushed rocks as mineral samples with no commercial value and which, therefore, would not attract royalty payments.

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However, one company that exported ore residue samples of unknown quantity to Tanzania failed to submit results of tests and analyses of the exported samples to the State Department as required under Regulation 26 (5) of the Mining Act (Dealings in Minerals) Regulations, 2017.  Further, export permits for the samples were not made available.

“In view of the foregoing, it was not possible to confirm the chemical composition of the exported samples and the quantities and values thereof,” added Gathungu.

Also, during the year under review, there were at least seven salt mining companies operating in Kenya without mining licenses and for which assessment for royalties due was not done.

The companies extracted the salt in the coastal region and sold their products locally and abroad without export permits for the salt exports.

The seven include Krystalline Salt Ltd, Peter Kimani Kabui, Kensalt Ltd, Mapex Enterprises Ltd, General Supplies and Agroproducts, Eric Wanekeya, and Black Diamond Logistics Ltd.

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“Although Management indicated that the State Department had engaged the salt mining operators with a view to formalizing their operations as provided for in the Mining Act, 2016, delay in formalizing the operations hindered the State Department from collecting revenue from the companies,” added the auditor general.

The taxman also lost Ksh519,564,262 after the government failed to formalise the deed of variation between the government and Base Titanium Company Limited to the royalty rate increase from 2.5 percent to five percent, effective 2014.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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