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Ministry drafts new mining, petroleum proclamations

Companies may lose mining, petroleum licenses

The Ministry of Mines and Petroleum is drafting new mining and petroleum proclamations that would transform the sector.

The Ministry is revising the mining law which was enacted in 2010. Senior official of the Ministry of Mines and Petroleum told The Reporter that the mining law was last revised in 2010 while the petroleum proclamation was enacted during the military regime. “The mining and petroleum industry is dynamic. The mining and petroleum proclamations do not align with the existing industry practices,” the official said.

The Ethiopian mining industry, which used to fetch more than 600 million dollars from the export of minerals, has nosed dived to 130 million. “The mining sector has faced many challenges and there should be a new impetus to revive the sector,” the official told The Reporter.

The new mining and petroleum proclamations would revise, among other things, the licensing and supervision procedures, investment incentives and taxation regulations. According to the senior official duty free privileges and tax exemptions would be amended in the new law. “The main purpose of the new proclamations is to boost the mining and petroleum sector. Particularly the mining sector needs an urgent overhaul,” he said.

Officials of the Ministry of Mines and Petroleum last week deliberated with stakeholders on the draft mining proclamation and policy in Bishoftu town, Oromia Regional State. “This is part of the ongoing national economic reform program led by the administration of Prime Minister Abiy Ahmed (PhD),” the official said. 

Sources told The Reporter that the Ministry of Mines and Petroleum is contemplating to establish a new agency dubbed mining and petroleum operations supervisory authority. According to sources, the new Minister of Mines and Petroleum Samuel Urkato (PhD) has evaluated and the supervision works the Ministry undertaken on mining and petroleum companies operating in the country. “It has been noted that the supervision work has been satisfactory and there is a new proposal tabled for discussion that requires the establishment of a mining and petroleum works supervision authority,” sources said.

According to sources, there are many mining and petroleum companies, which did not execute their investment projects according to schedule and the new minister is not happy about that at all. “After a thorough evaluation is made there may be a number of foreign and local companies who will lose their mining and petroleum licenses,” sources said. “There are many companies which kept their exploration concession idle for years,” they added.

According to the Ministry of Mines and petroleum Ethiopia offers excellent opportunities for mineral prospecting and development. There is favorable geological environment hosting a wide variety of mineral resources. The Ministry claims that Ethiopia’s green stone belts offer one of the finest areas for gold mineralization anywhere in the world, and more than 500 metric tons of gold deposits have already been identified by exploration. Precious and metallic minerals such as tantalum, and platinum have been mined in small scale. There are more than 200 foreign and local licenses mining companies engaged in exploration and mining of minerals.    

With regards to petroleum resources the country has five sedimentary basins. The Ogaden basing covering 35,000sqkm of land is largest basin in Ethiopia. Natural gas and crude oil reserves have been discovered in the basin.

Mining firms operating in remote parts of the country have reported security concerns have hampered their activities.           

There are five international oil firms engaged in oil and gas exploration and development projects in different parts of the countries. Poly GCL Petroleum Investments Ltd, New Age, Africa Oil, South West Energy and Gazprom are the licensed companies to prospect and develop hydro oil and gas reserves.

A petroleum company executive told The Reporter that the sporadic clashes in various parts of the country is a stumbling block to exploration projects.  

Senior official of the Ministry of Mines and Petroleum said that the security problems need political solution adding that that situation is beyond the control of the Ministry. However, he said. Some companies try to use the security problem as a scape goat for their poor performance.