Complexities abound in enacting new mining sector laws

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BY VICTOR BWIRE

One of the shattering results of the haphazard and spur-of-the-moment manner in which the country is enacting law will be witnessed in the extractive industry.

This manner of enacting legislation, especially in a situation where almost all sectors are developing laws that are not necessarily anchored with Sessional or policy papers – which is currently happening in Kenya – is wrought with several mishaps.

The extractive industry is just one area where a lot is happening on the legislative front: the Mining Bill 2014, The Natural Resources Benefits Sharing Bill 2014, Energy Bill 2014, the Petroleum Bill 2014 including county related laws that seem to target the industry.

Given that these laws are not being enacted in any order of preference, and are coming at a time when there are existing agreements between the government and some companies that were developed in any environment devoid of comprehensive laws, a situation might arise when the government, the community or the companies will suffer irreparable damage.

While the landscape in the extractive industry will change dramatically once the myriad of laws are enacted ostensibly for the good of the country and the community, who is taking the legal obligations of the companies that had already entered into agreement with the government?

All the already developed Bills that relate to the sector seem keen on creating some benefits to the community and the county governments, and vesting powers of re-issuing of new licences to the Cabinet Secretaries. They fail to take cognizance of the fact that the existing agreements were done legally.

Examples abound from several African countries including Uganda, Nigeria and Ghana where the mineral industry has been marked by illegal and exportation of the minerals, theft of funds coming from the sale of the extractives by few corrupt individuals who hide the wealth in off accounts in foreign countries and local communities failing to get any benefits such as improved infrastructure from the proceeds of the exploration of the minerals.

For example, the Mining Bill 2014 says that the holder of a mineral right in respect of a large scale operation shall within eight months after coming into force of the Act re-apply for the license in accordance with the provisions of the Act and its regulations and submit the license to the Cabinet Secretary and be issued with a new license which complies with the conditions set out under the Act.

Now the problem is that the radical proposals in the Act, might just destabilize the sector with devastating results. Already, there is anxiety in the sector because of some provisions in the Mining Act, which has slowed down work in the sector.

We are making the sector look very uncertain, thus most of the funding institutions are withholding the loan facilities to the companies. Most of the prospecting companies now are holding their breath, which is slowing down investment and development, while at the same time losing in stocks in global stock markets.

Remember most the reforms in the industry are happening when the country has not yet enacted the right to information law, and is yet to join to the Extractive Industry Transparency Initiative, thus knowing what the process will involve in revoking or re-issuing the licenses is hazy.

Who knows what the current agreements provided for, how much was already pocketed from the extractive industries and what price will people pay, unofficially to brokers or licensing authorities to maintain the licences. And what happens to a company that has already spent heavily in exploration, research and now lose a license just before it starts development and exportation?

(Bwire is the Media Council of Kenya Deputy CEO & Programmes Manager)

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