TRA, MoE fork out 25.5bn/- from Tancoal’s profits in 2019

07Apr 2020
The Guardian Reporter
The Guardian
TRA, MoE fork out 25.5bn/- from Tancoal’s profits in 2019

OVER 25.2bn/- in royalty and tax backlog has been paid by Tancoal Energy Limited to Tanzania Revenue Authority and Ministry of Energy last year.

Intra Energy Corporation Limited’s Graeme Robertson.

In its half year resulted for year ended December 2019, Intra Energy Corporation Limited said its half year results dominated by contingent liabilities dating back to 2011 when it started operations at Ngaka Coal Mine in Ruvuma region. Australian based IECL is Tancoal’s holding company which jointly owns with National Development Corporation. 

“The Ministry of Energy and Minerals has made a claim to Tancoal for US$10.4 million (US$6.939 royalty and inspection fee and US$3,470 penalty) for a royalty that it has deemed payable on the transport portion of sales to customers to their final domestic and international destinations for sales between September 2011 and June 2019,” said IECL’s Board Chairman, Graeme Robertson said.

In the half year results report, Robertson further noted that Tanzania Revenue Authority advised that a fuel exemption paid to Tancoal in 2015 and 2016 was contrary to the purpose of the performance contract under which it was paid and the company had to refund 1,020,838,410/-.

“An additional significant item is an assessment from the TRA for a withholding tax audit of 278,662,706/-, the majority of this assessment was for withholding tax on the full value of management fees up to 30 June 2016,” Robertson noted saying the assessment was imposed retrospectively after the law was brought in on 1 July 2016, prior to this withholding tax under the law was properly charged on only 30 percent of the management fees.

He stated that underlying profit after tax on continuing operations also includes an expense of $1.521m for royalty on transport charges in the half-year, the re-charging of the costs to customers is however still under discussion.

Australian based IETL owns a 70 percent interest in Tancoal, a joint venture with National Development Corporation which holds the remaining 30 percent interest. Tancoal was granted a mining licence by the government in August 2011 and commenced mining and supply of thermal coal to domestic and regional industrial customers mainly in Tanzania, Kenya, Uganda and Rwanda. The mine is manned exclusively by Tanzanians.

During the period, Tancoal produced 307,360 metric tons and sold 317,645MT compared to 408MT produced in 2018 while sales were 364,519MT. “Sales began strongly at the start of the half-year but the imposition of the royalty on transport, the startup of some smaller competitor mines, lower sales to some major customers undergoing refurbishment of their plants and the rainy season reduced sales during the period,” the IECL Board Chairman explained.

Production capacity at the mine has been increased to 80,000MT per month which enables the company to increase production and meet rising demand. “The focus remains on meeting the requirements of local customers in Tanzania and then the marketing of coal into regional economies while working on the development of export facilities through the Port of Mtwara to allow barge and/or handymax deliveries to overseas consumers,” Robertson added.