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The Ministry of Energy and Mineral Development Financial Statements for the Financial Year 2015/2016 unearthed irregularities in licensing and issues of mineral import and export permits.
The Office of the Auditor General says the management assessed royalty and awarded exports for 93 kilograms of gold worth 11.82 billion Shillings. But corroborative reports from the Customs and Excise Department of URA indicated that 5,316 kilos of gold had been exported.
The gold exports were valued at close to 700 billion Shillings, according to the Auditor General.
Uganda lost huge amounts of money in unregulated mining and falsification of mineral data by groups trying to profiteer from the mineral imports and exports, a report of the Auditor General indicates.
The Ministry of Energy and Mineral Development, oversees the mining sector, including issuing exploration and production licenses and enforcing rules. The Minerals Act 2003 requires the payment of royalties in respect to prospecting and mining.
The Office of the Auditor General says the management assessed royalty and awarded exports for 93 kilograms of gold worth 11.82 billion Shillings. But corroborative reports from the Customs and Excise Department of URA indicated that 5,316 kilos of gold had been exported. The gold exports were valued at close to 700 billion Shillings, according to the Auditor General.
The government according to the report should have collected over 6.98 billion Shillings or 34.9 billion Shillings in royalties using the applicable rate of 1 percent or 5 percent for imported or locally mined gold.
The office of the Auditor General says there seems to have been no action on the offenders by the Ministry of Energy or Directorate of Geological Surveys and Mapping.
The Auditor General’s report also found that some of the mining companies operating in the country were defaulting in payment of annual rental fees and tasked the Ministry of Energy to put in place controls over mineral imports and exports given that minerals are non-renewable resources.
The Auditor General says two companies he did not disclose had defaulted payment of annual rental fees for two years.
One of the companies had not paid 250 million shillings in rent while the other had 441 million shillings outstanding.
Similarly, a report by the London-based human rights group, Global Witness in June this year said widespread corruption at the mines department, including using bribes to secure licenses, is stifling investment in the sector and eroding benefits for Ugandan.
Global Witness said it had conducted an 18-month investigation that uncovered evidence of bribery at the Directorate of Geological Survey and Mines (DGSM) and use of political connections to secure licenses.
Uganda as per the 2010 International Conference on Great Lakes Region (ICGLR) in Lusaka was supposed to put in place six tools to mitigate against illegal extraction of the region’s natural resources. One of the tools involved joining the Extractives Industries Transparency Initiative (EITI). The government has however been reluctant to be part of EITI despite its benefits in promoting transparency in oil, gas and minerals sectors.
Keto Nyapendi Kayemba, the Assistant Auditor General whose office deals with auditing the Extractions Industry says the government should subscribe to EITI so that payments from the natural resources are made public and managed to benefit all Ugandans.
Meanwhile, the Auditor General also unearthed nonperforming mining leases in the districts of Ntungamo, Bududa, Kabale, Kisoro, Kamwenge, Bushenyi and Bundibugyo among others. The holders had defaulted in implementing their development plans as licensed.
Global Witness found that holders of such licenses are always speculators or wild cutters expecting to cash in by selling to other miners. The Directorate of Geological Survey and Mines was also accused of randomly issuing mining export licenses.
The inspector general of government (IGG), Irene Mulyagonja in mid-June wrote to the secretary to the Treasury, Keith Muhakanizi, halting the payment of billions of Shillings to Welt Engineering Ltd, a company owned by sons of Peter Lokeris, the Minister of State for Minerals.
The Minister’s sons were in court battling with a Chinese firm, China Road and Bridge Corporation (CRBC) over a dispute relating to ownership of Kamusalaba rock in Lorengedwat Sub County, in Nakapiripirit district.