The Government Proposes to Direct 2% of Paid Royalties to the Affected Communities

The Government Proposes to Direct 2% of Paid Royalties to the Affected Communities

Today the Government of Armenia accepted the package of laws "On Making Amendments to the Law on the Budget System of the Republic of Armenia" and "On Making Amendments to the Law on Local Self-Government", which proposes to transfer 2% of royalties paid by the subsoil users to the affected communities (item 15 of the Government’s Session dated 12.02.2021).

The funds allocated to the communities will be directed to implementation of sustainable community development programs, which will contribute to community development by increasing funding of the infrastructure, education, healthcare, job creation and other priority areas.

2% from the royalties paid to the state budget will be distributed in 50/50 ratio among the communities affected by the operations of the given mining company and other communities affected by the mines operated by other companies that pay royalties. The draft law also provides the formula for calculations of amounts to be distributed. Relevant accountability and transparency will be guaranteed as well.

The community council will approve the programs to be funded and supervise program implementation. Communities shall publish reports on received revenue streams and implemented programs on the community's or Marzpetaran's official websites.

According to the data in the Armenian EITI reports 23.5 billion, 37.6 billion, 34.6 billion and 37.4 billion AMD royalties were paid (calculated) to the RA state budget respectively in 2016-2019. Therefore, overall approximately 700-800 million AMD will be allocated to the affected communities for a year, and if the metal prices growth continues, the computed royalties, thus the allocated amounts will increase.

If adopted by the National Assembly, the laws will enter into force on 1 January, 2023.