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Annual Report ����—���� ANNUAL REPORT ����—���� 2019 momp.gov.af Download our publications at momp.gov.af Mining ANNUAL REPORT 1397 Sector (2017-2018) Roadmap + REFORM STRATEGY EXTRACTIVE INDUSTRIES 2019 momp.gov.af July 2018 www.mom.gov.af Standard Disclaimer This is a technical document drawing on multiple data sources, all of which are open source. While any analysis is based on this data, both sins of commission or omission are the responsibility of the MoMP Public Relations Directorate. Should there be either typographic or data errors in the report, kindly communicate these in writing to [email protected] and a revised version will be posted online. Copyright Statement All queries on rights and licenses, including subsidiary rights, should be addressed to the Rezaei Rohola Public Relations Directorate, Ministry of Mines and Petroleum, Abdulhaq Square, Kabul, Afghanistan. 2019 © Ministry of Mines and Petroleum, Islamic Republic of Afghanistan Layout design by: Contents Acknowledgments Executive Summary Good Governance 5 6 7 Revenue and Geological Data Small- and Large- Budget Management Scale Mining Projects 13 16 18 Stakeholders' Conclusion Annex 1 Engagement 22 25 26 3 Ministry of Mines & Petroleum Acknowledgments 2018 was a year of remarkable achievements Fourth, the Ministry needed technological for the extractive sector in Afghanistan. Despite advancements to improve transparency and many obstacles, the Ministry of Mines and efficiency in its operations. Thus, the Ministry Petroleum (MoMP) succeeded in initiating highly installed Mining Cadaster Administering System consequential policy, regulatory and institutional (MCAS), Non-Tax Revenue System (NTRS) and reforms. Transparency Portal to digitalize contract management, revenue collection, and publication First, the Ministry drafted and adopted new of license-related information. Hydrocarbons Law (2017) to better regulate the hydrocarbons sector. The new law clearly defines Fifth, the Ministry assessed all four State-Owned the role of policy making and implementing Enterprises (SOEs). Based on the findings of the actors. Consequently, the Afghanistan Oil and Gas assessments, and provisions of the Minerals Law Regulatory Authority (AOGRA) was established to and State-Owned Corporations Law, the Ministry monitor the oil and gas sectors of the country. plans to corporatize three SOEs. Corporatizing them will help boost the economy of scale in their Second, the Ministry developed a comprehensive production. Mining Sector Roadmap that guides the Ministry on the short-, medium-, and long-term reforms and All these achievements despite the challenges developments. To operationalize the Roadmap, have been possible because of the support of the Ministry developed a seven-year Reforms the leadership of National Unity Government Strategy that focuses on 5 areas: i) Institutional and unwavering commitment and dedication of Reforms and Development; ii) Geological Data Ministry’s team especially the deputy ministers, Management; iii) Contract Management and advisors and directors who worked tirelessly Compliance; iv) Transparency and Accountable to implement wide-ranging reforms across Governance; and v) Growth and Enabling the sector. Therefore, I would like to thank H.E. Environment. President Mohammad Ashraf Ghani for guiding the Ministry in development of the sector. It Third, the Ministry developed a new Minerals is also important to mention the support of Law to remedy the shortcomings of the previous H.E. Chief Executive Dr. Abdullah Abdullah; law for effective and transparent governance Mr. Ajmal Ahmady, Acting Minister of Industry of the sector. Based on the new law, small-scale and Commerce; and Dr. Mohammad Homayun mining projects are awarded based on first-come, Qayoumi, Acting Minister of Finance; and my first-serve applications, and large-scale projects colleagues at the Ministry, different government are awarded based on a transparent bidding institutions, international community, the private process. Furthermore, the new law awards sector, and civil society who supported us in our license/contract based on technical and financial mission to bring reforms and create the enabling capacity, rather than highest royalty, a practice environment for all the stakeholders to thrive. allowed by the previous law. Also, I would like to thank our dedicated team, Mr. The Ministry, as part of its institutional reform Hamid Baraywal, Mr. Abdullah Asifi, Mr. Mustafa initiatives, designed a new organizational Majidyar, Mr. Mohammad Fahim Hashimi, Mr. structure that called for downsizing a number of Abdul Qadeer Mutfi, and Mr. Rohola Rezaei, who unrequired positions and upgraded Afghanistan worked hard on this report to reflect MoMP’s key Geological Survey’s General Directorate to a achievements during the years 2017/18 in detail. Deputy Ministry. The Ministry also hired several highly qualified technical experts for the unfilled Sincerely, positions. Nargis Nehan Acting Minister of Mines and Petroleum 5 Ministry of Mines & Petroleum Executive On an operational level, the Ministry Summary adopted e-Governance to improve efficiency, transparency, and accountability in financial, administrative and managerial activities. The Ministry improved its existing Information & Communication Technology (ICT) infrastructure and overcame several other technological deficiencies. Such technological advancements resulted in a staggering increase in revenue collection- the total mining sector revenue increased by 70 percent in 2017/18 compared to fghanistan sits on one of the richest 2016, reaching over AFN 7 billion. troves of natural resources in the world. AAfghanistan’s vast mineral resources have Moreover, in 2017 the Ministry’s geological a promising potential of transforming the country activities related to prospection and mapping into one of the most important mining centers increased significantly. The Ministry was able in the world, thereby reinvigorating its economy. to prospect, trench, pit and scrap 630 cubic However, sustainable exploitation of the minerals meters in ten areas of interest and collected 1,230 requires an effective legal and regulatory mineral and rock samples comprising a wide framework, strong institutions, well-developed variety of commodities from 12 areas of interest. infrastructure, and international market linkages. In 2018, the same activities resulted in a coverage The Ministry of Mines and Petroleum (MoMP) of 390 km2 of potential mineral deposits in four undertook a series of wide-ranging reforms in areas of interest. The Ministry prepared 31 2017/18 to achieve its vision of developing an areas for tendering for marble, travertine and equitable and sustainable mining sector. talc commodities, and received approval for additional 38 mineral areas in 18 provinces for The year 2017 should be noted as the year other minerals. The Ministry ensured compliance of ‘setting the foundation for the right start’. The with the terms of contracts for all the 176 Ministry, in consultation with key stakeholders, contracts that were active in 2017 and additional developed two documents that outline the 152 contracts active in 2018. These included Government of Afghanistan’s vision for the the three newly signed large-scale exploration extractives sector and the way forward: The contracts of gold and copper. Furthermore, the Roadmap and the Reform Strategy. Both documents Ministry also initiated a review of its large-scale reflect the Ministry’s plans and strategies to and other pending contracts to decide whether achieve its vision for the sector. the contracts should be renegotiated, suspended, or terminated. At the sectoral level, the Ministry sought to create an enabling environment so that all the This Annual Report examines and presents the extractives industry actors could thrive. The Ministry’s performance, developments and Ministry engaged key stakeholders, including the operations in the year 2017/18. The report is public entities, the private sector, civil society organized in five sections: organizations, and the international community to create an environment conducive to the • (i) Good Governance; sustainable growth of the extractives industry. • (ii) Revenue and Budget; The Ministry also reinforced its research and • (iii) Geological Data Management; development capacity to promote a culture of • (iv) Small- and Large-Scale Mining Projects; evidence-based policy making. • (v) Stakeholders' Engagement. 6 ANNUAL REPORT 2017/2018 The previous legislative framework provided too much discretion to the Ministry to approve Good contracts. In particular, the Minister could grant four of the six license types without the oversight or review of any external bodies. Such Governance centralization of decision-making rights had contributed to increased misuse and corruption. For this reason, the new legislation requires that all mining areas be reviewed and approved by the High Economic Council (HEC) and Cabinet. The large-scale mining contracts shall be approved by HEC, NPC, and the Cabinet. Second, the Ministry introduced greater transparency to the tendering process. Previously, the Ministry was responsible for issuing tenders, LEGAL & REGULATORY FRAMEWORK evaluating the bids, negotiating the terms of The Ministry of Mines and Petroleum with the the contract, and approving the evaluation. The support and guidance of H.E. President Ghani concentration of the entire mining tendering developed a comprehensive Mining Sector process within one institution paved the way for Roadmap that was approved
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