CFE

Article 1 of Law No. 58-2009 of December 15, 2009, established the parafiscal tax called the Financial Contribution for Water Resources (FCW) for the benefit of Public Interest Groupings and Water Agencies. These agencies are the key players in implementing water policy in Burkina Faso, and for the effectiveness of their actions, it is essential that they have substantial and appropriate resources. The water sector, long dependent on public budget constraints and external aid, must, to achieve the objectives set at the national and international levels, find autonomous financing, i.e., financing derived from this sector; in other words, water must finance water. The Financial Contribution for Water is an appropriate mechanism to meet this requirement. Under the terms of Article 2 of the said law, “the parafiscal tax called the financial contribution for water includes: the raw water abstraction tax, the water regime modification tax, and the water pollution tax……..”.

To initiate the implementation of this taxation, Decree No. 2011-445/PRES/PM/MEF/MAH determining the rates and collection procedures for the raw water abstraction tax was adopted on July 18, 2011. The said decree provides in its Articles 2, 3, and 4 the rate of the abstraction tax according to different uses. Thus: the abstraction of raw water for the production of drinking water is set at one (1) CFA franc per cubic meter (m³) of water abstracted; the abstraction of raw water for mining industries and other industries is set at two hundred (200) CFA francs per cubic meter (m³) of water abstracted; the abstraction of raw water for civil engineering works is set at:

• ten (10) CFA francs per cubic meter (m³) of backfill executed;
• twenty (20) CFA francs per cubic meter (m³) of concrete implemented, all concrete grades combined.

Article 7 of the said decree obliges persons subject to the raw water abstraction tax to declare the volumes of water abstracted or the materials used during the past quarter based on available activity declaration forms and to pay the corresponding tax no later than the 30th of the month following the declaration to the competent collection services. Given the entry into force of the raw water abstraction tax on July 18, 2011, the declaration of abstracted water volume will take effect from October 18, 2011, and payment is due no later than November 30, 2011.

Indeed, the 2001 Framework Law allowed for the institution of water payment so that everyone contributes to the nation’s effort to manage a resource as crucial as water. Furthermore, the various misinterpretations of this taxation raised by the Chamber of Mines to evade payment of the said tax are merely erroneous interpretations of the provisions of the Mining Code.

The establishment of a system of contribution to the water sector and thus the payment of a water tax stems from Burkina Faso’s international commitment to the management and protection of natural resources, which has been translated into its various legal texts, such as the constitution, the environmental and mining codes, the framework law on water management, etc. Consequently, the legislature has consistently reiterated the general obligation to preserve the environment, often linking it to the prospect of economic development. To this end, Article 65 of Law No. 031-2003/AN of May 8, 2003, constituting the Mining Code of Burkina Faso, states that the occupation of land necessary for prospecting, exploration, or exploitation activities includes, where applicable, the right to use free-flowing waterfalls and surface and groundwater, all within the perimeter defined in the mining title or authorization, subject to compensation or payment of taxes or fees provided for by laws or regulations in force. This provision, made with the aim of combining the rights granted to the mining sector with obligations related to the use and preservation of water resources, demonstrates the great concern of the Burkinabe government to combine investments with respect for our environment. Article 76 of the same code further states that “activities governed by the mining code must be conducted in a manner to ensure the preservation and management of the environment and the rehabilitation of exploited sites according to the standards, conditions, and procedures established by the regulations in force….”.

It is evident that this provision is of fundamental importance as it subjects mining activity to compliance with national and international provisions regarding environmental protection. It is in this context that Article 76 should be read in parallel, on the one hand with Article 3, which indicates that the mining code applies without prejudice to other legislative instruments, including, among others, the Agrarian and Land Reorganization Act (RAF), the law on water management, the health code, or the environmental code, and on the other hand with Article 79, which subjects mining activities to the regime of classified establishments. In this regard, the said code emphasizes in its Article 79 that, in addition to the provisions of the mining code, holders of titles and beneficiaries of authorizations are also subject to general legislative and regulatory provisions in force, notably those relating to the preservation and management of the environment.

The objective of this parafiscal tax is to contribute to the country’s continuous development, by allowing, on the one hand, the allocation of financial resources to the Water Agencies and, on the other hand, promoting rational and economical water management by different users. Water can and must finance water, and the Financial Contribution for Water should increasingly be integrated into the users’ economic and financial management policies. If the level of contribution must be based on scientific, economic, and technical criteria according to a participatory and pragmatic approach, the process must nevertheless aim for a progressive transfer of costs to users. The goal is to gradually have users contribute with the least possible impact on the selling prices to consumers of the products of major water users (ONEA, SONABEL, SOSUCO, mines, large companies, etc.). It also consists of avoiding discouraging small and medium-sized operators (entrepreneurs, small-scale irrigators, etc.) in the water domain.

This is why the setting of this tax was preceded by several studies conducted since 2005 to present all possible situations to achieve a low impact on the activities of the liable parties. A study on the issue of taxing the main uses of raw water in the short, medium, and long term according to the activities carried out estimates that the parafiscal tax for the benefit of the water agencies will (i) guarantee sustainable financing of the sector and thus ensure better maintenance of hydraulic structures by empowering local populations and (ii) make users aware that water is vital, scarce, and expensive, and must be used rationally and sparingly.

In the context of industry in general and the extractive industry in particular, water is a technical factor of production, just like electricity, and is not generally considered a raw material. Mining companies use water at several levels: during the exploration phase, during the exploitation phase, and after extraction. The assessment of the FCW for mining companies took into account the following parameters:

• Investments and operating costs for dewatering are entirely borne by the concerned companies;
• The pipelines will benefit other operators (agriculture) along their route;
• The current ONEA rate;
• The feasibility studies of the concerned companies and the amounts already authorized by the Ministry in charge of water.

Furthermore, the Mining Code places the obligation on the Mines Administration to enforce the standards for environmental management and preservation. Similarly, the said code stipulates that holders of mining titles may use surface and groundwater subject to the payment of taxes or fees provided for by laws or regulations in force.

Mining is undoubtedly a powerful lever for the socio-economic development of our country, and especially for the populations living near mining sites. The gains are already tangible on the ground with the construction of infrastructure for the benefit of the populations. These efforts are in no way overlooked by the government but are, on the contrary, encouraged, and it is in this same dynamic that mining actors are called upon to contribute to the preservation and restoration of water resources, both for the population and for the sustainability of their own activities. Mining actors have committed to contributing to the effective implementation of government policies, and this involves considering and adhering to the policies and mechanisms defined by the Government. The preservation and restoration of water resources is the responsibility of all actors to ensure the availability of the resource for current and future uses. It is true that the efforts of mining companies are in no way overlooked by the State, but this should not exempt them from contributing to the preservation of the water resource, a national heritage which they draw upon for economic purposes.

Furthermore, mining companies are strongly encouraged to adopt an integrated system that allows for the recycling of abstracted water and its reuse within the system, as well as the development of their own mechanisms, in order to further minimize the quantities of water abstracted, and out of concern for environmental respect. The rational management of natural resources, whether renewable or non-renewable, is today a fundamental requirement of our societies, from the perspective of sustainable development. Hence the necessity to involve all water users in better water management, the source of life.