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Situmbeko Musokotwane

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LUSAKA – Zambia has asked commodity trader Glencore’s Mopani Copper Mines for unpaid taxes after an audit of the subsidiary, leaked earlier this year, revealed it had underpaid mining dues, Minister of Finance and National Planning Situmbeko Musokotwane has said.

But Zambia is leaving the door open for a deal with Glencore.

Dr Musokotwane told Reuters recently that the Government hoped to resolve the long-standing issue and was giving Mopani a chance to respond.

Mopani has been accused by some non-governmental organisations — most recently by campaign groups in an open letter signed by a group of European parliamentarians — of tax evasion and of causing widespread pollution.

Two weeks ago the European Investment Bank, the European Union’s lending institution, said it had frozen all new loans to Glencore and its subsidiaries, citing “serious concerns” over the commodity trader’s governance.

Most of the claims stem from a pilot audit commissioned by Zambian tax authorities, which leaked earlier this year.

Glencore has repeatedly denied the allegations in the audit report and says they are based on an incomplete study.

The commodities giant, which has said it believes it will be completely exonerated, had no further comment on Monday.

“The Zambia Revenue Authority has asked Mopani to pay more money in underpaid taxes, but they must be given a chance to respond,” Dr Musokotwane said in an interview.

Dr Musokotwane did not detail how much was owed, but he said Mopani had been asked to pay more.

He said if the company’s response did not hold up to scrutiny, it would be hit with a bigger tax bill.

“If their answers are satisfactory, we will go by what they submit, but if they are not satisfactory we will adjust their tax liability upwards to the figure that the Zambia Revenue Authority has asked them to pay,” he said.

“We are very confident that this matter will be resolved amicably and are just waiting to hear from Mopani,” Dr Musokotwane added.

Glencore is the world’s largest diversified commodities trader and listed on the London Stock Exchange in May.

Mopani, in which Canada’s First Quantum and the Zambian state own minority stakes, has generated more than US$380 million in tax payments to the government since its privatisation in 2000, through royalties, import and customs duties and income taxes.

Reports from South Africa say Glencore is still fighting negative investor perception that its corporate governance was at best dogdy.

Glencore chief executive officer Ivan Glasenberg brushed off the suggestion that there was any real problem at a press conference when releasing the company results in South Africa.

At the start of June, the European Investment Bank said it was investigating Glencore following accusations of tax evasion by non-governmental groups and a leaked draft of a Zambian Revenue Authority-commissioned study that accused the trader of inflating mine costs and of undervaluing its minerals.

Mr Glasenberg said Zambia Revenue Authority is carrying out a full audit on the group’s Mopani copper project. “I believe when the full audit is done at the operation we will be fully vindicated.” – REUTERS

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By CHRISTINE CHISHA

GOVERNMENT has disclosed that the K1 trillion to be used on an urban roads rehabilitation programme will be paid by mining companies.

Minister of Finance and National Planning Situmbeko Musokotwane said this is money that the mining companies owe the government in taxes.

He said in 2008, mining companies had a dispute with Government over corporate taxes, variable income taxes and mineral royalties but the matter was resolved after meeting, and the mining companies are now paying arrears.

“The arrears that the mining companies are paying have created extra revenue that has been channelled to infrastructure development and rehabilitation of urban roads,” he said.

Dr Musokotwane said another potential source of the money will be the selling of bonds on the international market at US$500 million. Part of this money will be used for the urban road rehabilitation programme.

He said this in Lusaka yesterday during the recording of the Ministry of Finance and National Planning television programme, Culture Remodelling.
The programme also featured Minister of Works and Supply Gabriel Namulambe.

The theme of the programme was infrastructure development, progress and financing arrangements.

Dr Musokotwane said most roads in urban areas have had their useful life, hence the need to rehabilitate them.
He said there is nothing political about infrastructure development, rehabilitation and construction of roads.

He said when an economy is growing, there is always need to grow infrastructure to match the expansion of the economy.

Dr Musokotwane said if it was political, the private sector would not have joined in infrastructure development but they foresee more growth of the economy, which will result in high demand for more and better infrastructure.

He said more investment is coming despite this being an election year because investors have confidence in the government.

Dr Musokotwane said a review of the growth of the economy will be madebetween July and August.

He said the economy is no longer stagnant but is growing and it is only right to improve the infrastructure.

And Mr Namulambe said works on major roads are progressing well because most contractors are on site or just waiting to sign contracts.

He said some of the major road projects are the Chipata-Mfuwe, Sesheke-Senanga, Isoka-Muyombe and for the Kalabo-Sikongo roads.

Mr Namulambe expressed disappointment that some Kitwe residents were stoning the machinery moved to the site to start the road rehabilitation.

He said that the MMD government wants to ensure that more roads are constructed to ease movement of goods and people.

Mr Namulambe said it is a pity that his predecessor, Mr Mike Mulongoti is condemning the construction and rehabilitation of roads on the Copperbelt when he is the one who promised that township roads would be worked on.

He said K19 billion has been allocated for feeder roads on the Copperbelt in this year’s budget and K6 billion has already been released.

Mr Namulambe commended mining companies such as Mopani Copper Mines and Konkola Copper Mines for supplementing Government’s efforts by rehabilitating some township roads on the Copperbelt.

He said President Banda should be commended for initiating and completing development projects started by President Mwanawasa.

He said Mr Banda has shown that he is a responsible leader who wants to improve the lives of all Zambians.

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LUSAKA, May 21 (Reuters) – Zambia’s economy is likely to grow beyond 7.0 percent in 2011 largely driven by investments in mining and infrastructure, Finance Minister Situmbeko Musokotwane said on Saturday.

“We are set to have very good growth in 2011. The numbers will be revised around July-August and I expect a very good number, even above 7 percent,” Musokotwane said at a media briefing.

He added: “Infrastructure development is going to be part of the growth process for Zambia.”

Zambia planned to invest 1 trillion kwacha ($216.7 million) in the rehabilitation of urban roads and the money would come from a $500 million international bond and additional tax revenue from the mines, Musokotwane said.

The International Monetary Fund in March projected Zambia 2011 growth at 6.8 percent.

Zambia’s economy grew 7.1 percent in 2010.

Musokotwane also said that inflation was not likely to exceed the 8 percent end-year target following Zambia’s bumper maize harvest of over 3 million tonnes.

Zambia’s headline consumer inflation slowed to 8.8 percent year-on-year in April, a rare example of easing price pressures in Africa caused in part by a drop in the cost of basic food.

(Reporting By Chris Mfula, Editing by Olivia Kumwenda)

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LAP Green shares frozen
By DARLINGTON MWENDABAI

ZAMBIA has frozen LAP Green Network’s 75 percent shares in Zamtel in conformity with the international community’s decision to freeze all assets belonging to Libya following the unrest in the Arab country, Zamtel managing director Hans Paulsen said in Lusaka on April 15.

The international community has been freezing some Libyan assets dotted across the globe. Mr Paulsen said Zamtel will not be affected by the new development and there is no need for customers to worry.

He said Zamtel will continue to operate normally and Government will oversee the affairs of the telecommunications company. Lap Green held 75 percent shares in Zamtel while the Zambian government is a minority shareholder with 25 percent.

Mr Paulsen was responding to questions from journalists during a media breakfast at which the company unveiled a new Zamtel brand and logo dubbed Live Life Today at the Taj Pamodzi Hotel in Lusaka.

“I can confirm that Lap Green’s 75 percent shares in Zamtel have been frozen, just like the Minister of Finance and National Planning [Situmbeko Musokotwane] intimated to Parliament recently. This means Zamtel will not have to touch the shares for now,” he said.

He said no dividends will be paid out at the moment until such a time when the matter is resolved but he was, however, optimistic that Government, which owns 25 percent in Zamtel, will help to ensure that the company’s operations are not affected.

He said the continued unrest in Libya will not have an impact on the operation of the company and its market share.

In a ministerial statement last month, Dr Musokotwane said the UN Security Council resolutions 1970 and 1973 were likely to affect Lap Green’s shareholding in Zamtel but would not affect the operations of the company.

Dr Musokotwane assured the nation that freezing Libya’s stake in Zamtel would not affect the operations of Zamtel but the shareholder, Lap Green.

“There is a likelihood that the shares in Zamtel held by Lap Green are covered by the UN Security Council resolution 1973 and those shares are likely to be frozen,” DrMusokotwane told Parliament then.

“My Government will ensure compliance in the management of these assets in line with the UN resolutions in the same manner as set out in connection with the shareholding in Zamtel,” he said.

In a ministerial statement last month, Minister of Finance and National Planning Situmbeko Musokotwane said the UN Security Council resolutions 1970 and 1973 were likely to affect Lap Green’s shareholding in Zamtel but would not affect the operations of the company.

Dr Musokotwane assured the nation that freezing Libya’s stake in Zamtel would not affect the operations of Zamtel but the shareholder, Lap Green.

“There is a likelihood that the shares in Zamtel held by Lap Green are covered by the UN Security Council resolution 1973 and those shares are likely to be frozen,” DrMusokotwane told parliament then.

“My Government will ensure compliance in the management of these assets, in line with the UN resolutions in the same manner as set out in connection with the shareholding in Zamtel,” he said.

And Zamtel has launched a new brand logo dubbed, “Live Life Today” which replaced old brands Cellz and Zamtel on-line effective on April 15.

“Zamtel has three brands that required supporting in the market namely Cellz, Zamtel and Zamtel on-line. As you know, supporting multiple brands effectively in a market is costly as opposed to having a monolithic brand,” he said.

Mr Paulsen said to achieve that, a market study last year was conducted by Steadman Group, in which customers referred to the old Zamtel brand as poor, old, boring and tired.

He said the old brand prior to the privatisation of the company lacked customer appeal and resonance and needed a visual revamp and repositioning.

“The company is here to stay and will give the Zambian populace the best telecommunication solutions. In the next five years, the company will grow its market share to 25 percent,” he said.

Currently, the company has remained with 20 kilometers to finish putting up a fibre network heading to the Southern Province, following the completion of similar works on the Copperbelt.

Once the fibre network has been laid down, subscribers will continue to enjoy telecommunication services immediately, at affordable rates as the new brand states.

And Zamtel has launched a new brand logo dubbed Live Life Today, which has replaced old brands Cellz and Zamtel on-line effective yesterday.

“Zamtel has three brands that require supporting in the market namely Cellz, Zamtel and Zamtel on-line. As you know, supporting multiple brands effectively in a market is costly as opposed to having a monolithic brand,” he said.

Mr Paulsen said to achieve that, a market study last year was conducted by Steadman Group, in which customers referred to the old Zamtel brand as poor, old, boring and tired.

He said the old brand prior to the privatisation of the company lacked customer appeal and resonance and needed a visual revamp and repositioning.

“The company is here to stay and will give the Zambian populace the best telecommunication solutions. In the next five years, the company will grow its market share to 25 percent,” he said.

Currently, the company has remained with 20 kilometres to finish putting up a fibre network heading to the Southern Province following the completion of similar works on the Copperbelt.

Once the fibre network has been laid down, subscribers will continue to enjoy telecommunication services immediately at affordable rates as the new brand states.

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By CYNTHIA MWALE

SAUDI firm Menafea Holding intends to invest US$125 million in a 5,000-hectare farm in North-Western Province this year and in building 2,000 housing units in Lusaka South multi-facility economic zone (MFEZ).

The project is expected to create employment opportunities in Lusaka and Northw-Western Province and link up indigenous small-scale farmers to a ready market through outgrower schemes.

Menafea Holding board member Khaled Alrajhi said the company plans to invest the funds this year and will grow pineapples and build a factory to produce juice.

This is contained in the latest issue of the Zambia Development Agency (ZDA) Spotlight publication availed to the Mail on March 1.

Mr Alrajhi said Menafea will build 2,000 housing units in the Lusaka South MFEZ under the same agreement, signed with Zambia’s investment promotion agency.

“We have been granted 5,000 hectares of land to grow pineapples using the latest technology and are going to put up a factory to produce juice for local consumption as well as export,” Mr Alrajhi said.

ZDA director for investment promotion and privatisation Muhabi Lungu said more Saudi investments were expected in Zambia.

Last December, Finance Minister Situmbeko Musokotwane said Zambia did not regard leasing farmland to foreign investors as a form of ‘colonialism’ and was encouraging countries from the Gulf to invest in its agricultural sector.

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Zambia is getting ready to launch a debut $500 million eurobond after receiving a B credit rating from Fitch this week, Finance Minister Situmbeko Musokotwane said on Today.

Dr Musokotwane told Reuters in an interview the rating will also help Zambia attract more investors, stating that investors who did not know about Zambia will now be interested because of the rating.

He explains that with this rating it means Zambia is now ready to issue the $500 million international bond.

Zambia has been contemplating a foreign currency bond issue for several years although its plans were blown off course by the global financial crisis.

The rating given to Zambia Africa’s biggest copper producer is the same as that assigned last year to Angola, the continent’s second-biggest oil producer.Nigeria, Africa’s leading crude producer, also has a B rating.

Fitch said the ratings reflect the marked improvement in Zambia’s economic performance since 2003 driven by improved macroeconomic stability, economic liberalisation, rising private investment and production in the mining sector, and more recently, a strong agricultural performance.

Zambia’s resilience in the face of the global economic crisis gave further support to the credit assessment. The economy has grown at an average of 6.3 percent a year since 2006 and accelerated to 7.1 percent in 2010, Fitch said.

The agency also noted falling inflation and strength and stability in the kwacha currency as pillars of the country’s growing economic stability.

Standard & Poors and Moodys are also expected to announce ratings soon./QFM

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