Armenian Government threatens to deprive impractical businessmen licensees in subsurface acquisition sphere

ArmInfo. "We will hold auditing of  all presented licensees in subsurface use sphere", Armenian Prime  Minister Karen Karapetyan stated during the Government session on  April 20.

According to him, current legislation in subsurface use sphere  stipulates the governing conditions, monitoring and processing  entities accountability. With that the criteria of conducting  monitoring and orders of reports presenting are not fixed. As a  result of these legislative gaps, there is no opportunity to estimate  the real affect of subsurface acquisition, as well as to undertake  relevant preventative means. 

With that, the Prime Minister instructed Minister of Nature  Protection to process and present the Government the package of legal  acts in three months, based on international experience, which will  cause the possibility to regulate the conducting procedure  correspondent to the monitoring and assignment of accountability. 

Referring to the Minister of Energetic Infrastructures and Natural  resources, Karen Karapetyan noted, "We will conduct auditing of all  assigned licensees and the obligations on investments".

The head of the Government stressed that processing entities were  warned once. "We told them to give us projects. With those, who will  present projects, we will sit and reach agreements, we will register  several terms. With those, who would not react, we will talk very  toughly on canceling the licensees", Karen Karapetyan stressed.

To recall, earlier appropriate modifications to the licensing  procedures were  approved by the Government at its session on  February 16. According  to Ashot Manukyan, The Minister of Energy  Infrastructures and Natural  Resources, according to the actual  procedure, the subsoil operators   possess a permission to operate   lands without any competition. At  the same time, the same procedure  sets forth the construction right obtaining based only on the  appropriate tender procedure. New  procedure allows to build up and  operate underground facilities  without a competition or a bidding  process.  

Answering the question of Prime Minister Karen Karapetyan what it   will give to the sector entities, the Minister clarified: "Today   subsoil operators, obtaining the right to operate lands, should be   ready to settle their further transactions and liabilities related   with the owners of lands mentioned. If they could obtain the land   leasehold right without a tender, than the right to   launch   construction works and  all the appropriate permits could be obtained   just and only based on the results of  a tender. This raises   additional obstacles for business, and within the purpose to cancel   those obstacles, we offer to grant such rights without a tender as   well," Ashot Manukyan stated.  Earlier Armenian Government, meeting  the wishes of the mining sector  companies, has submitted to National  Assembly a draft package on tax  discount modifications to make the  tax load easier.  According to  Khachatryan, in the result of this  arrangement, in the case the  indirect method of evaluation is  applied to the royalty tax base, it  is proposed to implement the 80%  limit instead of actual 90%/ It is  expected also, that starting with  2017, the base used for he  calculation royalty will stand  essentially closer to the limits of  benefits obtained. 

To remind, in 2016, the industrial produce in Armenia grew 6.7%   versus 2015  (against 5.2% growth a year before) to AMD 1.429 trln   ($2.9bln). Improvement of processing industry dynamics and continuing   upward trend of mining sector, which traditionally remains the key   driver in the industry  dynamics, contributed to acceleration of   growth rates.  In Dec 2016 alone, the industrial output increased   6.4% (versus 9.3% rise in Dec 2015) to AMD 143.4 bln  (297 mln USD).   In Jan-Dec 2016 versus the same period of 2015, mining industry and   open pit mining increased 8.3% (versus 50.4% growth a year before) to   256.4bln drams. In Dec alone, the mining industry output totaled 23.6   bln drams with a 2.2% monthly growth. 

Manufacturing industry  increased 7.7% y-o-y (vs 5.6% decline a year  before) to AMD 885 bln ,  AMD 89.2 bln of which  - in December with  4.9% monthly growth.  Production of non-metallic mineral products  declined by 20.4% in  Jan-Dec 2016, chemical industry output fell by  8.7%, textile  production by 4.8%. In the meantime, jewelry output  rose 97.7%,  production of computers, electric and optic equipment -  by 27.5%,  production of tobacco- by 23.5%, and clothes - by 16.4%.  In the  manufacturing industry segment, food output made up 287.3  AMD, base  metals - 152.5 bln AMD, cigarettes - 135.1 bln AMD, and  beverages -   110.9 bln AMD.