AMMAN -- In a bid to increase state revenues, the Cabinet on Wednesday decided to deduct 5 per cent of Jordan Phosphate Mines Company's (JPMC) sale revenues and give the funds to the Treasury.
A by-law on phosphate mining revenues for 2013 was endorsed in this regard by the Cabinet during a session Wednesday that was chaired by Prime Minister Abdullah Ensour, according to the Jordan News Agency, Petra.
The amount taken from JPMC will be either five per cent of the revenues or JD1.420 per each exported tonne of phosphate, depending on which value is higher. A financial disclosure carried by the Amman Stock Exchange website on JPMC preliminary financial results in 2012 said the company's total sale value, generated through its various units, reached around JD759 million in 2012. The company sold more than six million tonnes of phosphate in the same year, according to the disclosure.
The amounts deducted from JPMC revenues are known as mining royalties, and will be paid monthly. They will be paid alongside additional fees and taxes and in accordance with the new by-law, which does not need Parliament approval.
The Cabinet is entitled to amend JPMC phosphate mining fees, as it has been over seven years since the signing of a privatisation agreement in 2006, according to Petra.
Experts' reactions varied to the decision.
Zu'bi Al Zu'bi, chairman of the University of Jordan business management department, said, "I think this is a step in the right direction".
"JPMC has been granted many privileges and it is only fair that it pays back to the state", he said.
This way, the government will be able to provide funds to the Treasury through large companies, instead of imposing heavy financial burdens on citizens by increasing water and electricity tariffs, he said.
Economist Yusuf Mansur argues that it is important to determine if the government has actually studied the impact of the new tariffs on the company's production.
A mining company official said the cost of production will increase, adding that the phosphate sale price will also be affected.
"The phosphate market is very competitive so the company is bound to have marketing difficulties", he told The Jordan Times over the phone, preferring anonymity.
"For me, the most significant issue is what the government will spend these royalties on", Mansur said.
"The southern governorates, where the mines are situated, are in desperate need of new services," noted Mansur, who believes the funds should be put towards providing better education, infrastructure and transport services in these areas. The Jordan Times tried to reach JPMC officials to comment on the decision, but they were not available.
© Jordan Times 2013
