Mineral-rich county governments will receive royalties within 14 days if a proposed framework that seeks to guide the sharing of the payments between the national government, counties and communities is passed.
The National Treasury has published the framework that an inter-agency task force comprising officials from the Treasury, Ministry of Petroleum and Mining, and State Department for Trade.
Other task force members are the Council of Governors (CoG), Office of the Attorney-General (OAG) and Commission on Revenue Allocation (CRA) developed.
The framework tasks the ministry with setting up a Mineral Royalties Collection Account for receiving royalties from which it will transfer 70 per cent of collections to the Consolidated Fund.
The Treasury, which will be receiving the royalties by the end of every month, will then open a County Mineral Royalties Account into which 30 per cent of the collections will be deposited.
“The ministry responsible for mining shall prepare and submit to the Treasury, by the 15th day after every quarter, a schedule indicating amounts due to county governments and communities from which the royalties were collected and minerals against which the payments were made,” the framework says.
It adds that mineral-rich counties will be paid 30 per cent of the royalties within 14 days after Treasury receives the schedule, after which the counties will be required to pay 10 per cent to the communities from where the minerals were mined through a Special Purpose Account.
The Mining Act stipulates that royalties are shared by national and county governments and communities on a percentage of 70-20-10 respectively, but gaps in the Act had derailed the sharing, resulting in non-remittance of billions of shillings.
The CRA last year revealed a cash pile of Sh5.8 billion in mineral royalties had been accumulated in the previous four years with a cumulative amount of Sh1.76 billion owed to counties.
While Kenya’s top royalty earner is cement and titanium, the framework comes at a time the country is eyeing commercial oil production, which would guide the sharing of earnings from the product.
Joint venture firms — Tullow Oil, Africa Oil and TotalEnergies — are still eyeing to partner with a well-resourced investor before making a final investment decision on how to progress with Kenya’s oil project.
The firms last year said commercial oil production would commence at least 36 months after they make the final investment decision.