The EcoPartner experts have analyzed several bills directed on regulation of relations connected with land, including relations in the sphere of subsurface resources use. We would like to present this analysis to you and would be glad to receive your feedback and offers.
In accordance with the offered amendments and additions to the Land Code of the Kyrgyz Republic approved by the Jogorku Kenesh on December 25, 2009, foreign companies – subsurface resources users cannot carry out geological works/prospecting on license area given to them if this area is located on the agricultural land; this rule is applied at any stage of works. In accordance with article 13 of the Law of the Kyrgyz Republic “About pastures”, foreign legal entities may be granted a right to use pastures only if there are pastures that are not demanded/used during two years and on the basis of interstate and intergovernmental agreements ratified by the Jogorku Kenesh of the Kyrgyz Republic.
Hence, granting of agricultural land, except for not demanded pastures included into the license area of a foreign company – a subsurface resources user, is impossible without transfer (transformation) of this land to a category of industrial land. However, in our opinion it is absurdity to make such transfer at minerals exploration and/or prospecting stage when there is no necessity for a subsurface resources user to take out completely the given land from agricultural use.
On the other hand granting of not demanded pastures is a matter in dispute too. For example, there is a private foreign company, which has received the license for prospecting of minerals from the authorized state body of subsurface resources use. Now, in order to start prospecting, it is necessary for the company to receive the permission for temporary use of the land in the license area. However, to obtain this permission for the land use according to the KR Law “About pastures” it is necessary to have an interstate or intergovernmental agreement on granting of the given territory to the company. Moreover, after signing of the given agreement, it is necessary to have it ratified by the Jogorku Kenesh, that is in our opinion either impossible, or very difficult, so it is easier to give up this deal.
Concurrently with aforementioned changes in the Land Code of the KR, several proposals were developed for introduction of changes and additions to the norms regulating questions of land use for geological and mining companies.
The bill developed by the Ministry of natural resources of the KR “About amendments and additions to the Land Code of the KR” proposes to introduce a following concept – the State reserve of the land with mineral deposits (the land for subsurface resources use). The given concept includes land under which deposits and displays of minerals are explored and which stocks and resources are included in the State balance and (or) the State cadastre of deposits and displays of minerals, and also the land where mineral deposits are found and conducting prospecting works is expected . It follows from the concept that the land included in the license areas and given for exploration and prospecting of minerals, should also be included into the State reserve of the land with mineral deposits.
The Ministry of natural resources of the KR also proposed the following norm in point 15 of article 4 of the bill “About subsurface resources”, which is placed on its official web site:
A land lot of the State reserve of the land with mineral deposits is a part of the earth surface under which deposits and display of mineral deposits are explored or preliminary assessed, which are included into the State balance of stocks or the State cadastre of deposits and displays of minerals. This land is defined in graphic documentation in square-wave coordinate system by its angular points and belongs to the disposal of the authorized state body of subsurface resources use
This norm generates a discrepancy with the first bill, i.e. the land included in the license areas and given for exploration and prospecting of minerals is not included into the State reserve of the land with mineral deposits.
It turns out that two bills offered by the same Ministry contain inconsistent information concerning the same crucial issue, because possibility of further use of land by foreign companies – subsurface resources users depends from whether the given land is included into the state reserve of the land with mineral deposits or not. In accordance with article 21-1 of the bill “About amendments and additions to the Land Code of the KR”, the Ministry of natural resources of the KR will be the State body of subsurface resources use that has the right of granting land lots for use within the borders of land for subsurface resources use and the right of submitting of information to the Government of the KR about land, which is subject to transfer in a category of the state reserve of the land with mineral deposits. Presence of the given powers would simplify for geological and mining companies a process of coordination of use of the land within license territories with local communities.
Comparing changes in the Land Code of the KR approved by the Jogorku Kenesh of the KR on December 25, 2009 and the bill “About amendments and additions to the Land Code of the KR” offered by the Ministry of natural resources of the KR we come to conclusion that even after approval of changes offered by the Ministry of natural resources, foreign companies – subsurface resources users won’t be able to carry out their activity on the agricultural land without infringement of legislation of the KR because the Ministry of natural resources does not consider the matter of granting pastures to a foreign company in any of its bills.
This legislative restriction will be exist until there is no legal status and regime of use of agricultural land that is included into license area given to foreign investors for subsurface resources use.
Even if agricultural land after acceptance of the bill offered by the Ministry in short terms will be transferred to the category of the state reserve of the land with mineral deposits, there is still the issue of foreign companies– subsurface resources users that have licenses for exploration and prospecting of minerals. In accordance with the offered bill “About subsurface resources”, the given for exploration and prospecting of minerals territories do not belong to the State reserve of the land with mineral deposits. Therefore, they remain in the agricultural category and so, according to the introduced changes in article 5 of the Land Code of the KR, this land cannot be given to foreign companies.
Amendment to article 31 of the Land Code of the KR is a rather risky innovation that imposes not always reasonable expenses on subsurface resources users, and in this connection, this innovation has risks of negative consequences including risks of social character. The exemption of words “the rent contract” by legislators from article 31 of the Land Code of the KR establishes, that the only document granting right for temporal use of land for subsurface resources use will be the Certificate on the right of temporal use of the land (the green book). According to the current regulation “About granting of the land lots for subsurface resources use”, the certificate on the right of temporal use of the land is granted on the basis of the license for the right of subsurface resources use, i.e. with indication of angular co-ordinates and a total sum of the license area. Previously a subsurface resources user in case of the contract conclusion with an Aiyl Okmotu or a Timber enterprise for temporal use of the land, had possibility to pay cost of “rent” and the land tax for actually used part of the land. If the President signs offered changes and additions in article 31 of the Land Code of the KR, a subsurface resources user will have to pay the ground tax not for actually used territory, but for the whole license area.
It is necessary to mention, that according to the bill of the KR “About subsurface resources use” it is planned to have overlapping of licenses for the right of subsurface resources use. According to article 30 of the bill “About subsurface resources use”, despite the fact that there is a license for subsurface resources use and exploration and prospecting works given to a certain company, the third party has also the right to obtain a license for subsurface resources use and exploration and prospecting works of mineral deposits on the same territory without the consent of the first licensee if these minerals have not been included into the license given to the first company. Because the same license area can be given simultaneously to several users, the problem at registration of the second certificate on the right of temporal use of the same land lots might arise. Besides, there is a risk of double taxation on the same object of aforementioned licensees, i.e. both subsurface resources users will pay for the same land.
In connection with above stated amendments and additions connected with the land tax payment, it is quite probable that subsurface resources users who are currently carrying out explorations would try to reduce the license area that they have received. In accordance with the offered bill “About subsurface resources”, the licensee can reduce his license area only when the authorized state body for subsurface resources use accepts his report about results of carried out works on the area that is subject to reduce. Thus, one more complication appears, one must pay the land tax for the whole license area, and the area can be reduced only after carrying out of prospecting works and submitting a report.
In order to create practical conditions for successful business and preservation of foreign investments volume into mining industry of Kyrgyzstan we consider it necessary to revise the bill “About amendments and additions to the Land Code” that was approved by the Jogorku Kenesh on December 25, 2009. It is crucial to bring in conformity the Land Code of the KR and the Law “About pastures” with the Country Development Strategy for 2009-2011 and with actual needs of mining industry. It is also necessary to bring in uniformity the bills “About subsurface resources” and “About amendments and additions to the Land Code” offered by the Ministry of natural resources regarding the issue of including land lots in the State reserve of land with mineral resources.
The “EcoPartner” ecological consulting and legal company
