JPMC debt to treasury expected to jump to JD18 million
The Jordan Phosphate Mines Company's (JPMC) growing debts to the national treasury are expected to jump to JD18 million by the end of 2000, senior officials announced.
According to Mohammad Abu Hammour, Finance Ministry secretary general, the JPMC has defaulted on paying nearly JD16 million in mining fees that had accumulated since the beginning of the year.
The JPMC used to channel some JD20 million in fees to the treasury on an annual basis.
However, recent figures released by the Finance Ministry revealed that domestic revenues from the mining sector have plunged by JD13.6 million during the first 10 months of 2000, compared to the corresponding period of 1999, down to JD8.7 million.
Revenues from the mining sector are collected from the JPMC and the Arab Potash Company (APC), with the latter paying regularly, said Abu Hammour.
The government charges JD5 on each exported tone of phosphate, while it collects JD8 on each tone of potash, or 25 percent of the APC's total profits, whichever is higher.
The APC is boosting its production by 15 percent this year, with further increases expected in the near future.
However, in light of the JPMC's hefty losses, which amounted to JD59 million during the first six months of this year, Abu Hammour said the government might slash mining fees to JD3.5 on each tone of phosphate, beginning next year.
The JPMC claims that the heavy financial burden of the high mining fees collected by the government continues to adversely affect its competitiveness.
According to economists, the current fee is considered one of the highest in the world. In the US, the mining fee is less than $1.
The JPMC's losses were primarily due to the high provisions of around JD41 million taken for the early retirement scheme, which the company decided to write off this year. A decline in sales, the drop in the world price of fertilizers and the increasing fierce competition in international markets have all contributed to the JPMC's woes.
JPMC officials said production is forecast to reach six million tones by the end of this year, but that the company intends to increase its output in 2001.
Under the proposed reduced fee-formula, the government's income would be in the range of JD14 million in 2001 if production continues within the 2000 rates. And even with a higher output, earnings for the whole of 2001 are expected to be around JD15 million, according to Abu Hammour. ¯ (Jordan Times)
By Rana Awwad
© 2000 Mena Report (www.menareport.com)