Second National Reconcilation Study EITI Peru - unofficial…

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Consultancy for the Second National Reconciliation Study of the Extractive Industries Transparency Initiative (EITI) in Peru (2008 – 2010) (Continuation) 9) Further projects, once previous projects are already in place and working, preferably promoting sustainable development. PMSP management Each mining company transferred to a trust, a civil association or to another legal entity the amount pertaining to its Annual Voluntary Contribution, upon auditing of its company Financial Statements and subsequent approval of the General Shareholders’ meeting. Generally, such transfer is made at the end of April of corresponding year. Based on the Voluntary Contribution of the companies, two funds were created: The Local Mining fund and the Regional Mining fund. 1) The Local Mining fund: is the fund intended to the areas of influence directly connected to a company mining activities. The area may include various population centres, districts or provinces. 2) The Regional Mining Fund: is the fund used for project executions in the poorest areas within the region or regions where the Company develops operations. In the case of the Regional Funds, it may happen that various companies decide to consolidate their contributions into one single Regional Fund to implement joint projects. The Local and Regional Funds are managed by a respectively created Technical Coordination Committee (Acronym in Spanish: CTC). CTC members are the municipal, district and/ or provincial authorities in case of the Local Fund, and representatives of the regional authorities in case of the Regional Fund. The CTC composition varies depending on the area and the companies. Local and Regional CTC were in charge of identifying projects, making the respective cost analysis and recommending project executions according to the intervention lines and to the priorities set out in the Agreement. In other words, in the regions or districts, the Technical Coordination Committees were the entities responsible for making decisions regarding executed projects, programmes and works, as well as regarding who executed projects and how they were executed. Calculation of the Voluntary contribution amount A price analysis was conducted to check whether the price of the mineral or minerals produced by the company remained stable during the assessment year, and above the reference price agreed upon in the Agreement. If it was not the case, the company did not contribute to the fund in that year. However, in the case that the price had remained above the reference price, the contribution was calculated based on the net annual earnings of the company after Income Tax payment and prior to dividend payout. It should be noted that both the local and the regional funds were calculated independently, based on the respective Agreement provisions. The Local Mining Fund can amount up to (depending on the amount to be deducted for royalties) 2.75% of the company earnings: by contrast, the Regional Mining Fund always represents 1% of the annual net earnings after Income Tax payment. Regarding the Regional Mining Fund especially, mention must be made that in year 2007 the Government decided that 4% of said Fund be directly delivered to the Truth Consultancy for the EITI Peru Multi-Sector Permanent Working Committee 160
Consultancy for the Second National Reconciliation Study of the Extractive Industries Transparency Initiative (EITI) in Peru (2008 – 2010) (Continuation) and Reconciliation Commission, what indeed occurred, an estimated S/.7 millions having been transferred at that time. [TEXT IN THE FOLLOWING TABLE] Fondo Minero: Mining Fund Fondo Minero Local: Local Mining Fund Fondo Minero Regional: Regional Mining Fund Hasta 2.75% : up to 2.75% Siempre 1%: always 1% Consultancy for the EITI Peru Multi-Sector Permanent Working Committee 161
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Product 3: Final Report Second Nati
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Lima, 13 December 2011 Mr José Lui
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Contents Executive Summary 9 I. Aim
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2.2.3. Establishing the distributio
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