Draft Agenda - Extractive Industries Transparency Initiative

Transcription

25TH EITI BOARD MEETING
ABIDJAN, 16-17 OCTOBER 2013
Board paper 25-1
Draft Agenda
EITI International Secretariat
Oslo, 1 October 2013
Wednesday 16 October
(07:30 Committee breakfast meetings)
25th EITI Board meeting
Implementation session– part I
09:00 Welcome
09:05 Session 1: Report from the country visits to DRC, Guinea, Ghana and Nigeria
It is proposed that the each delegation gives a brief report (15 min.) from the visit, with a brief
introduction by the participating government representative, if any. The report could focus on challenges
with implementation, innovative aspects, outlook for the process etc. It is suggested that each report will
be followed by a brief round of clarifying questions. After all delegations have reported, it is proposed that
there is a broader discussion about lessons learned, common themes and next steps.
11:00 Break
11:15 Session 2: Understanding oil contracts
Oil contracts contain complex sets of agreements and terms related to all aspects of petroleum
operations. In light of the provisions related to contract transparency within the EITI Standard, EITI Board
members and stakeholders could benefit from gaining a better understanding of how contracts work.
The aim of this session is to enhance knowledge of the main features of contracts, i.e. the content, main
clauses, the parties involved, and what purpose the different contractual terms serve. The focus will be
educational and will not seek to explore different policy positions on i.e. contract transparency. This is
intended to be a first introductory session to the topic, that could possibly be followed up by more indepth sessions should there be a demand and interest from participants.
11:15 Introduction by Clare Short
11:20 Oil contracts: Petroleum regimes and key features of oil contracts
Presentations by Open Oil and Shell
Q&A
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Board Paper 25-1
Draft Agenda
12:30 Lunch
13:15 Case studies from Azerbaijan, Liberia and Norway (tbc)
Q&A
14:45 End
15:00 25-1 Adoption of agenda
Board paper 25-1-A Draft agenda
15:05 25-2 Report from the Head of the Secretariat
Including follow-up on actions and decisions through circular since the last Board meeting
15:20 25-3 Report from the Implementation Committee
Board paper 25-3-A Implementation Progress Report
Board paper 25-3-B Template Terms of Reference for Independent Administrators
16:20 25-4 Brief report from the World Bank MDTF
16:40 End
(17:00 Committee meetings)
Thursday 17 October
07:30 Committee breakfast meetings
25th EITI Board meeting continued
09:00 25-5 Report from the Validation Committee
Board paper 25-5-A Final Validation report from Cameroon
Board paper 25-5-B Final Validation report from Indonesia
Board paper 25-5-C Final Validation report from Kazakhstan
09:40 25-6 Report from the Outreach and Candidature Committee
Board paper 25-6-A Terms of Reference Outreach and Candidature Committee
Board paper 25-6-B EITI Outreach Strategy 2013-2014
Board paper 25-6-C EITI Outreach Progress report July-September 2013
Board paper 25-6-D Candidature Assessment: Senegal
Board paper 25-6-E Candidature Assessment: Ukraine
10:40 Break
11:00 25-7 Report from the Governance Committee
Board paper 25-7-A Terms of Reference Governance Committee
Board paper 25-7-B Draft Code of Conduct
11:20 25-8 2014 Workplan
Board paper 25-8 Draft International Secretariat 2014 Workplan
11:50 25-9 Report from the Finance Committee
Board paper 25-9-A Financial update: January-June 2013
Board paper 25-9-B 2014 EITI Budget Proposal
2
Board Paper 25-1
Draft Agenda
12:10 25-10 2014 Board Meetings
12:20 25-11 Any other business
12:30 Lunch
Implementation session – part II
13:15 Session 3: Outlook for the EITI in francophone Africa
Moderated by Abdul Askia, EITI Niger
In transitioning to the EITI Standard, a key priority for implementing countries is to revise their EITI
workplans. This includes discussions about priorities and challenges in the extractive sector and how the
EITI can be an effective tool for addressing these issues. A regional workshop on the EITI Standard for
some 40 multi-stakeholder group representatives from implementing countries in francophone Africa will
take place back to back with the Board meeting in Abidjan. The purpose of this session is to hear from
representatives from these countries what priorities they have identified for their 2014 workplans,
including any challenges and opportunities with the EITI Standard.
• EITI workplans: Objectives and priorities for implementation, introduction by Eddie Rich.
• Impact of the EITI in Côte d’Ivoire: Presentation by members of the multi-stakeholder group in Côte
d’Ivoire on the impact of the EITI and the outlook for the process.
• Presentation of 2014 workplans by selected countries.
• Q &A
14:15 Session 4: Implementing the EITI Standard
Moderated by Faith Nwadishi, Executive Director, Koyeneum Immalah Foundation
While the EITI Standard contains several new disclosure requirements, many of these are a reflection of
what is already good practice in many implementing countries. This session will look at innovative
implementation efforts and take stock of available guidance and capacity building activities on the EITI
Standard.
•
•
•
Introduction and brief update on development of guidance notes, training and capacity building
activities, by Sam Bartlett, Technical Director, EITI International Secretariat.
Discussions about ongoing implementation projects and innovative implementation efforts
- Oil sales, brief presentation by Zainab Ahmed, Executive Secretary, NEITI, on coverage of oil sales
in the 2009-2011 EITI audit.
- Post award process audit, brief presentation by Sam Topkah, Head of Secretariat, LEITI, on the
findings of the audit of how licenses, concessions and contracts were awarded in the period July
2009-December2011.
- Transit, brief presentation on coverage of transit payments from the Cameroon-Chad pipeline in
EITI reporting.
- Beneficial ownership pilot project, brief update by Dyveke Rogan, Regional Director.
- EITI reporting procedures, including standard Terms of reference for Independent
Administrators, by Sam Bartlett, Technical Director.
Q&A
15:30 Meeting ends
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Board Paper 25-1
Draft Agenda
Summary of actions from previous Board meetings
Note: In Berlin the Board agreed to include, in future Board agendas, a summary of action points agreed at previous meetings
and details on their current status. In Lima the Board agreed the update should list all actions from the previous meeting and
action items from earlier meetings that were not yet complete.
Agenda
item
Action
Actions items from the 24th Board Meeting, 24 May 2013, Sydney
24-3
The Governance Committee is to address questions on voting procedures, tenure for
Board members, external communication by Board members, representation of
supporting and implementing countries on the Board and the composition of the
Board.
24-4
The Secretariat to write a short report from the Conference.
24-5
The Secretariat to update the document on committees for consideration via Board
circular.
24-5
Board members to express their interest to join the committees.
24-5
Committees to consider drafting workplans to be presented to the Board.
24-6
The Secretariat to update the proposal for transitional arrangements in consultation
with National Coordinators, and present a revised proposal to the Validation
Committee for consideration.
24-6
The Secretariat to develop guidance on implementation requirements related to
state-owned enterprises.
24-7
The Secretariat to propose dates and locations for Board meetings in October 2013,
and February and May 2014.
Actions items from the 23rd Board Meeting, 22 May 2013, Sydney
23-1
EITI Chair to write a letter of support to Jean Claude Katende.
23-3
EITI Chair to write to the government of Zambia recalling the need for strong
political support.
23-3
The Secretariat to improve the structure and presentation of future IPR.
23-4
The Secretariat to inform the government of Cote d’Ivoire of the Board’s decision.
23-4
The Secretariat to inform the government of Togo of the Board’s decision.
23-4
The Secretariat to inform the government of Indonesia of the Board’s decision.
23-5
The Secretariat to inform the government of Honduras of the Board’s decision.
23-5
The Secretariat to inform the government of Philippines of the Board’s decision.
23-7
The Secretariat to pursue discussions with the WB MDTF and its Management
Committee regarding funds for validation.
23-7
The Secretariat to draft guidelines for a short review of the selection of the auditor.
Incomplete action items from previous Board meetings
Actions items from the 22nd Board Meeting, 26-27 February 2013, Oslo
22-5
Secretariat to launch a public consultation on the Code of Conduct.
22-5
Board members and other stakeholders to provide feedback to the Governance
Committee via the International Secretariat on the draft Code of Conduct by 15
April.
22-5
Governance Committee to finalise guidance for companies considering support to
MSGs.
22-9
The Secretariat to explore mechanisms for recognising implementation that
exceeds the EITI Requirements.
Status
Ongoing
Completed
Completed
Completed
Ongoing
Completed
In progress
Ongoing
Completed
Completed
Ongoing
Completed
Completed
Completed
Completed
Completed
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
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Board Paper 25-1
Draft Agenda
Action items from the 21st Board Meeting, 25-26 October 2012, Lusaka
21-11
The International Secretariat to circulate proposed dates and venues for the 2013
Board meetings.
AOB
The Governance Committee to develop guidance on requests for financial and inkind contributions from MSGs.
Action items from the 19th Board Meeting, 14-15 February 2012, Wiston House
19-2
The Secretariat to invite comments on future annual progress reports via
Governance Committee and Board circular.
Action items from the 18th Board Meeting, 25 October 2011, Jakarta
18-4
The Secretariat to sketch next steps towards a firmer UN commitment to the EITI.
In progress 1
In progress 2
Pending until next
annual progress
report
Ongoing
Decisions taken via Board circulars after the 24th Board meeting, 24 May 2013, Sydney
BC 153
20.06.2013
The Secretariat is to proceed with negotiations with the WB/MDTF on funding for Validation
based on the request approved by the Board.
BC 153
25.06.2013
Mauritania’s suspension is lifted as of 25 June 2013.
BC 154
9.07.2013
Sydney Board meeting minutes are approved.
BC 155
26.07.2013
Yemen’s suspension is lifted as of 26 of July 2013.
BC 155
22.07. 2013
Members to the Board Committees are confirmed.
BC 157
13.08.2013
25th Board meeting is confirmed to take place in Abidjan, Cote d’Ivoire.
BC 157
23.08.2013
Chad’s status as an EITI Candidate country is renewed.
BC 157
21.08.2013
Transitional arrangements to the EITI Standard are agreed.
BC 157
21.08.2013
Terms of reference for the Validation Committee are approved.
BC 158
20.08.2013
Trinidad and Tobago is granted a six-month extension to their Validation deadline, i.e. until
28 February 2014.
BC 158
20.08.2013
Terms of reference for the Implementation Committee are approved.
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2
The dates and venue for the autumn 2013 meeting is still to be confirmed.
A draft guidance note is under consideration by the Governance Committee.
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ABIDJAN 16-17 OCTOBER 2013
Board Paper 25-3-A
Confidential
IMPLEMENTATION
PROGRESS REPORT
August-September 2013
For information
Summary
This report provides an update on EITI implementation in the 39 implementing countries,
highlighting key developments in the period August-September 2013. The report discusses progress
and innovations as well as challenges in implementation, particularly in relation to EITI reporting
and Validation. Nine countries – Burkina Faso, Central African Republic, Democratic Republic of
the Congo, Indonesia, Peru, Sao Tome and Principe, Sierra Leone, Solomon Islands and
Yemen - are highlighted as facing significant challenges.
The paper reflects the views of the International Secretariat based on information from
implementing countries and other sources. The EITI Board and other stakeholders are encouraged to
consider where they can provide additional support to implementing countries.
Board Paper 25-3-A
Implementation Progress Report
IMPLEMENTATION PROGRESS REPORT
AUGUST-SEPTEMBER 2013
Table of Contents
1.
Summary............................................................................................................................. 2
2.
EITI spotlight ...................................................................................................................... 3
3. Thematic focus: Sub-national EITI reporting and transfers................................................. 6
4. Country by country assessment .............................................................................................10
Table 1: Country assessment of progress .............................................................................................................. 10
5. EITI reporting ....................................................................................................................... 25
Table 2: Overview of EITI reporting – September 2013 ..................................................................................... 25
6. Validation ............................................................................................................................. 28
7. Outreach Update.................................................................................................................. 28
8. Training and capacity building ........................................................................................... 28
9. Secretariat activities ............................................................................................................ 29
Annex A: Briefing note for Board delegation to the Democratic Republic of Congo……… 30
Annex B: Briefing note for Board delegation to Ghana ......................................................... 30
Annex C: Briefing note for Board delegation to Guniea......................................................... 30
Annex D: Briefing note for Board delegation to Nigeria ........................................................ 30
1. Summary
Since the last Implementation Progress Report issued in August, implementation activities have focused on
rolling out the EITI Standard, including providing advice on transition procedures. The majority of
implementing countries are now giving priority to revising their workplans, including discussions about
priorities and challenges in the extractive sector and how the EITI can be an effective tool for addressing
these issues. A number of countries are commencing preparations for EITI reporting in accordance with the
EITI Standard and are currently reviewing and discussing approaches to the various new aspects of the EITI
Standard. Chad is preparing to address oil sales as part of its next EITI Report and the Republic of Congo has
published quarterly reports on oil sales, production data and production sharing agreements. Cameroon
completed Validation and published its 2011 Report, which includes key requirements of the EITI Standard,
including information on licenses, state ownership, production data, transit fees and transfers to local
government. Kazakhstan is exploring online EITI reporting. Timor Leste is developing a Transparency Law.
The Secretariat continues to facilitate these discussions with multi-stakeholder groups and through regional
training events on the EITI Standard. Revised workplans will be published on the EITI country pages when
available.
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Board Paper 25-3-A
Despite these efforts several countries experience difficulties in producing timely and comprehensive EITI
Reports. A number of countries, including Burkina Faso, the Democratic Republic of the Congo,
Indonesia, Peru, Sierra Leone and Yemen have tight timetables for publishing the 2011 EITI Reports
before the end of this year and are thus at risk of being temporarily suspended (see section 5). Several
countries, e.g., Peru and Mongolia have technically sound EITI reporting processes, but these are having
limited impact in informing public debate. In several countries, MSGs have experienced difficulties in
reaching a consensus on key aspects of EITI implementation. For example, the MSG in Azerbaijan has been
discussing changes to the guiding MoU for over 12 months without agreement. In Timor Leste and
Tanzania, there have been controversies regarding the approval of EITI Reports by the MSG prior to
publication. Concerns about the environment for civil society participation have emerged in Azerbaijan and
Liberia, and is a key issue in the preparations for candidature in Ethiopia and Ukraine.
Understanding the challenges with implementation, recognising achievements and exploring the outlook for
the EITI will be a central theme during the visits by EITI Board members to DRC, Ghana, Guinea and Nigeria
prior to the Board meeting in Abidjan (see section 2). The Secretariat is continuing to collate examples,
produce case studies and guidance on various aspects of implementation. To this end, this IPR includes a
thematic focus on subnational EITI implementation (see section 3), highlighting progress with including
revenues collected at local levels as well as transfers of revenues between central and local government
entities in EITI reporting.
Key facts on implementation
• 39 countries are implementing the EITI. 23 are Compliant and 16 are Candidates.
• About 400 civil society organisations are engaged in EITI implementation both at local
and international levels.
• 81 major international oil, gas and mining companies support the EITI.
• Over 90 institutional investors support the EITI, with total assets under management of
over US $19 trillion.
• EITI Reports have been published by 34 countries covering 180 fiscal years and over US
$1 trillion in government revenues.
2. EITI spotlight
In the last IPR, the Secretariat introduced the ‘EITI spotlight’ section as a means of highlighting examples of
good practice, innovation, and particular challenges related to implementation. In this IPR, the focus is on
the Democratic Republic of the Congo, Ghana, Guinea and Nigeria. In conjunction with the EITI Board
meeting in Abidjan, Board members and other stakeholders will visit these countries to learn about and
stimulate implementation. Below is a snapshot of the EITI processes in these countries, highlighting some of
the challenges with implementation and potential outlook for the EITI. Detailed country briefs are provided in
Annex A.
Democratic Republic of the Congo
The DRC has vast natural resources and produces 54% of the world’s cobalt and 34% of industrial diamonds,
but suffers daunting challenges to manage these resources for the benefit of its citizens. Competition for
mineral resources has fuelled conflicts, which have claimed more than five million lives in the last 15 years.
Despite multiple challenges, EITI implementation has contributed to ensure that taxes collected by
government entities are effectively deposited at the Central Bank.
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Having failed to achieve compliance following two Validations, the Board suspended DRC in April 2013. The
MSG has a tight deadline to produce a high quality 2011 EITI Report by year-end in order to meet the
requirement for timely reporting. In recent weeks, the MSG has been engaged in detailed discussions
regarding scoping (i.e., which revenue streams, companies, and government entities need to be covered in
the 2011 EITI Report). This step is critical in ensuring that the report is comprehensive and reliable.
Publication of the report for the mining sector by the 31 December deadline is in doubt and the DRC risks
failing to meet the requirement for timely reporting.
Accordingly, the objectives of the visit are to:
(i)
Assess progress in the implementation of the corrective actions agreed by the Board.
(ii)
Encourage strong political commitment to use the EITI as a platform for wider reforms.
(iii)
Explore with key stakeholders the ways in which the EITI Standard can contribute in improving
the governance of the country’s vast natural resources.
Looking ahead, the opportunities for deepening the EITI process include:
1. Allocation of licenses and license registers: 30% of the country’s 2.3 million square kilometre
surface area is under exploration, with more than 3500 exploration and production licences. The
country’s cadastre system could be improved by maintaining a register of licenses as required by the
EITI Standard (Requirement 3.9).
2. Sub-national reporting and certification schemes: In July 2013, noting provision 1502 of the
Dodd-Frank Act, the DRC launched a certification scheme of conflict-free minerals. The International
Conference on the Great Lakes Region, or ICGLR, is implementing the five-part certification scheme.
In addition to the traceability of minerals from the conflict zone (3T), EITI implementation at the local
level will ensure the traceability of payments to local governments in Eastern DRC.
3. Enhance transparency and governance in the management of state-owned enterprises: The
2013 Africa Progress Panel’s report states “between 2010 and 2012, the DRC lost at least US $1.36
billion in revenues from the under‐pricing of mining assets that were sold to offshore companies”.
Poor governance and weak oversight of state-owned enterprises (SOE) are key factors in the lost
revenues highlighted in the report. The World Bank economic governance matrix for the DRC
includes measures that will require seven SOEs (including Gecamines; and Cohydro) to publish their
audited accounts. Implementation of the provisions in the EITI Standard (Requirement 3.6) will bring
greater transparency and accountability in the management of SOEs.
4. Extension of the scope of EITI reporting to the forestry sector: In 2012, the government
announced its commitment to extending the scope of EITI reporting to the forestry sector. EITI can
facilitate the monitoring and enforcement of the forestry code by local communities and bring
transparency to payments made by logging companies.
Ghana
Ghana is the second-largest gold producer in Africa. In 2012, the mining sector alone contributed 27% of the
total tax and 6% of the country’s Gross Domestic Product while corporate tax exceeded royalties for the first
time. The extractive sector accounted for 56% of exports in 2011, up from 12% in 2010 due to oil discoveries.
However, its overall contribution to state revenues is relatively small, leading the government to increase
royalties for most commodities (including gold) from 3% to 5% in 2011. But this looks set to be offset by
falling commodity prices, especially gold, as the government’s deficit continues to widen.
Oil production began in 2011. Oil revenues have probably already surpassed mining receipts, and gas
production looks promising in the future. Ghana is establishing an Exploration and Production Bill: a piece of
legislation designed to strengthen regulation of Ghana’s extractives sector, management of oil blocks,
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Board Paper 25-3-A
inspection requirements and management of the social and environmental impact of the extractives
industries. This builds on a fairly sound legal and policy framework for mining which mostly drives its
reasonable performance on RWI’s index (15th/58)1. However, it is too soon to assess its implementation in the
oil sector.
The 2010 and 2011 Ghana EITI Reports were published in February 2013 and are being rolled out throughout
the country. These include oil and gas revenues, production volumes, mineral export values, the names of
companies operating in the country, production data by company, production stream values, royalties,
special taxes, dividends, license fees, and acreage fees. Information on applications for mining concessions is
available for a fee, but there is no clear explanation of how licenses are allocated. Mining contracts are not
published and it is difficult to evaluate the actual fiscal terms that apply to companies. However, many oil
contracts are available on government websites. Some Ghanaians allege that MPs from the ruling party have
been appointed to the boards of mining companies. There is therefore further room to strengthen links
between EITI and other efforts such as the work of the Public Interest and Accountability Committee, the
Inter-Ministerial (Energy and Natural Resources) Committee, the Global Anti-corruption Commission and the
Parliament.
It is not yet clear that EITI implementation is making a significant impact on government policy or hitting its
potential in informing wider debates such as tax rates and contract terms (in mining and in oil) or other
aspects. The story of the GHEITI data is not well told. Public debate on the implications of the reports and on
the use of the EITI could be more ambitious. There has been limited analysis of how gold or oil terms compare
with other countries in the region.
On the positive side, the GHEITI is functioning well and successfully incorporated oil in the latest EITI Report
through capacity building and expansion of the MSG. The coverage of the reports is impressive, including the
first EITI coverage of subnational transfers.
Guinea
Guinea has large mineral reserves and mining accounts for 26% of GDP. There is also growing interest in the
oil sector. Since the election of President Alpha Condé, the country has been undergoing a series of reforms.
However, the EITI process is not sufficiently linked to these efforts. An 18 person Technical Commission
(CTRTCM) comprised mainly of government representatives and overseen by a Strategic Committee has been
tasked with undertaking a review of the mining contracts. The aim is to review all of the 18 contracts by the
end of 2013.
The new mining code, adopted in September 2011, was a significant improvement in terms of transparency,
anti-corruption and environmental safeguards, but imposed significantly increased direct state shareholding
in mining operations and more onerous tax provisions. Key amendments include reduction of royalties,
custom duties and corporate income tax, longer fiscal stabilisation period and clearer rules on transfers of
interests and calculation of tax bases. The code has also been revised to allow for more progressive
application of the new provisions to existing contracts.
The visit of the Board will be a good opportunity to show how the EITI process could be incorporated and
linked to these efforts. For example the EITI could be used to address beneficial ownership and license
allocation, as well as extractive revenue management at central and sub-national levels. Additional technical
support is needed to address weaknesses in EITI reporting regarding the comprehensiveness and reliability of
data.
1
Revenue Watch Index 2012, http://www.revenuewatch.org/rgi
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Board Paper 25-3-A
Nigeria
The oil and gas sector in Nigeria has long been mismanaged. Revenues, especially at the state level, have not
always been put to good use and corruption is relentless. It is estimated that Nigeria is losing somewhere
between US $3bn and US $8bn in revenue due to large-scale oil theft and pipeline sabotage. Reforms aimed
to address these maladies have been announced and discussed for many years, but have barely materialised.
NEITI’s work since 1999, including financial, physical and process audits, has contributed solidly to the
debate. It has promoted solutions on challenges such as unpaid royalties, crude oil and refined products
theft and unpaid subsidies by NNPC, the national oil company. It has identified US $9.8 bn owed to the
Federal Government, of which US $2 billion has been recovered through NEITI’s efforts. Efforts are also
undertaken by NEITI to track the derivation transfers and to make other policy recommendations. The
mismanagement of the mining sector might be the next big untold story in Nigeria with NEITI leading the
way with its first solid minerals audit carried out in December last year.
Despite these achievements, it is less clear whether the work is having any effect on policy reforms. The visit
in October presents an opportunity to give NEITI its due recognition and express international support for
NEITI’s efforts with particular emphasis on creating space for the Inter Ministerial Task team, the institution
mandated to undertake remedial actions recommended through the NEITI audits. Other objectives include
getting an update on NEITI’s activities related to the Petroleum Industry Bill, NEITI’s work on the missing
signature bonus from the OPL 245 Block, and progress on EITI reporting related to the Joint Development
Zone with Sao Tome and Principe.
3. Thematic focus: Sub-national EITI reporting and transfers
The coverage of sub-national payments and transfers is an important issue in several implementing
countries. Several countries have encountered challenges in addressing these issues sufficiently in order to
achieve compliance. These issues are also a key focus in the United States and Myanmar as they prepare
candidature applications, and in Australia which is undertaking an EITI pilot.
In some countries, companies make direct payments to sub-national levels of government (e.g. regional
governments, municipalities, chiefdoms). In addition, many countries have (formal or informal) revenue
sharing agreements that stipulate that a share of central government revenue from the extractive sector is
transferred to sub-national levels of government. These payments and transfers are often of great interest to
stakeholders, particularly in discussions regarding the immediate benefits that accrue to local communities,
even where these payments are relatively small compared to total revenues at the national level. Revenues
captured at local levels are often an important source of income for local governments (i.e. they may be
locally material, even if they are not material at a national level).
The EITI Rules (2011) required that EITI Reports covered direct payments to sub-national levels of government
where the MSG considered these to be material. The EITI Standard provides greater clarity on these
requirements, and also addresses the issue of sub-national transfers (see box 1).
Box 1 – Coverage of sub-national EITI reporting and transfers in the EITI Rules (2011) and EITI Standard (2013)
Requirement 9(e) of the EITI Rules stated that:
In agreeing a definition of “material payments and revenues”, it is a requirement that the multistakeholder group clearly establishes whether payments to regional and local government entities are
material. Where material, the multi-stakeholder group should take steps to ensure that the reconciliation
of company payments to sub-national government entities and the receipt of these payments are
incorporated into the EITI reporting process. The multi-stakeholder group may wish to consider extending
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Board Paper 25-3-A
the scope of the EITI reporting and reconciliation process to transfers between national and sub-national
tiers of government, particularly where such transfers are mandated by a national Constitution or statute.
Requirement 4.2 of the EITI Standard states that:
d) Sub-national payments: It is required that the multi-stakeholder group establish whether direct
payments, within the scope of the agreed benefit streams, from companies to sub-national government
entities are material. Where material, the multi-stakeholder group is required to ensure that company
payments to sub-national government entities and the receipt of these payments are disclosed and
reconciled in the EITI Report.
e) Sub-national transfers: Where transfers between national and sub-national government entities are
related to revenues generated by the extractive industries and are mandated by a national constitution,
statute or other revenue sharing mechanism, the multi-stakeholder group is required to ensure that
material transfers are disclosed in the EITI Reports. The EITI Report should disclose the revenue sharing
formula, if any, as well as any discrepancies between the transfer amount calculated in accordance with
the relevant revenue sharing formula and the actual amount that was transferred between the central
government and each relevant sub-national entity. The multi-stakeholder group is encouraged to
reconcile these transfers. The multi-stakeholder group is encouraged to ensure that any material
discretionary or ad-hoc transfers are also disclosed and where possible reconciled in the EITI Report.
Where there are constitutional or significant practical barriers to the participation of sub-national
government entities, the multi-stakeholder group may seek adapted implementation in accordance with
Requirement 1.5.
Sub-national government entities commonly collect revenue streams such as land and property fees.
Revenue management at these levels of government is in some cases characterised by weak administrative
capacity to collect and to manage these funds, increasing the risk of waste and corruption.
Given the increasing interest in these issues, the International Secretariat has reviewed the coverage of
payments made directly by companies to sub-national levels of government in implementing
countries based on their most recently published EITI Reports (as of September 2013). The results are
presented in table 1.
Countries have been grouped into four categories:
1. Countries in green have a systematic approach for addressing sub-national reporting, including
reconciliation of direct sub-national payments.
2. Countries in amber have partially included direct sub-national payments in their EITI Reports,
meaning that there has been limited reconciliation due to lack of participation by relevant
companies or government entities, administrative weaknesses, and/or unilateral disclosure of
subnational payments by companies only.
3. Countries in magenta have not yet established whether sub-national payments are material and
should be included in the EITI Report.
4. The fourth group are countries where sub-national reporting does not apply as there are no direct
payments to local governments or the MSG has documented that these payments are immaterial.
Table 1 –coverage of reporting on direct payments to subnational government entities as per latest published EITI
Reports (September 2013).
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Board Paper 25-3-A
Country
Albania
Cameroon
Ghana
Guatemala
Madagascar
Mongolia
Tanzania
Togo
Zambia
Afghanistan
DRC
Guinea
Indonesia
Iraq
Kyrgyz Republic
Mali
Nigeria
Sierra Leone
Central African Republic
Chad
Mauritania
Niger
Yemen
Azerbaijan
Burkina Faso
Côte d'Ivoire
Kazakhstan
Liberia
Mozambique
Norway
Peru
Rep of Congo
Timor Leste
Trinidad & Tobago
Does the latest EITI Report cover
company payments to local
government? (share of total revenues)
Yes (0.14%)
Yes (0.15%)
Yes (0.05%)
Yes (2.00%)
Yes (2.00%)
Yes (3.10%)
Yes (0.90%)
Yes (0.05%)
Yes (1.20%)
Partial (0.03%)
Partial (1.00%)
Partial (0.90%)
Partial (0,02%)
Partial (1.23%)
Partial (4.30%)
Partial (1.25%)
Partial (2.26%)
Partial (8.70%)
Unknown
Unknown
Unknown
Unknown
Unknown
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Immaterial
Note: Honduras, Philippines, Sao Tome and Principe, Solomon Islands and Tajikistan are not included in the above assessment as they
have not yet produced an EITI Report.
Around half of the countries that implement the EITI are currently reporting on direct payments from
companies collected at the subnational level. These direct payments represent on average 1.63% of total
revenues from the oil, gas and mining sector in the countries and reports considered for this survey. While
this is a small proportion of the overall revenues from extractive industries, it may nevertheless represent a
significant portion of what local communities receive from their natural resources.
It is also clear from the review that several countries are facing difficulties in reporting these revenues
comprehensively. In some cases, reconciliation work has been limited by the lack of capacity of local
government to properly account for these revenues and/or due to the complexity of including a large
number of local government authorities. In other cases, MSGs need to undertake further work to establish the
relevance and significance of these payments. Independent Administrators and Validators commonly also
provide recommendation on improving reporting on such flows. There is a need for closer follow up by the
Secretariat and other technical assistance providers to ensure that such recommendations are followed up
and reflected in the Terms of reference for forthcoming EITI Reports.
8
Board Paper 25-3-A
The Secretariat is drafting a guidance note to provide MSGs with clearer advice on addressing these issue.
The guidance will include examples and case studies from implementing countries that have successfully
reported on direct subnational payments. Implementing countries that are exploring this issue for the first
time are encouraged to undertake additional scoping work to investigate the materiality of subnational flows
and potential obstacles to reporting so that the MSG can make informed decision on coverage of these
revenues.
The EITI Standard also requires a more comprehensive approach to addressing transfers between central and
sub-national levels of government. As of September 2013, Cameroon, Ghana, Guatemala, Indonesia,
Madagascar, Mongolia, Peru and Togo are covering sub-national transfers in their EITI Reports. Box 2
highlights the approach adopted in Peru and Madagascar. Other countries such as Nigeria and the
Philippines, where transfers from the central government are likely to be a considerable source of revenues
for local governments, will have to include such disclosures in their forthcoming EITI Reports. A suggested
approach to reporting on subnational transfers will also be included in the forthcoming guidance note.
Box 2 – Case studies of coverage of sub-national EITI reporting and transfers
Peru
The 2010 EITI Report shows that 34% of total revenues from the mining and oil sectors are transferred
automatically to local governments in Peru. The largest contributor is the mining canon which is derived from
the corporate tax paid by extractives companies. 50% of the corporate tax collected goes directly to local
entities according to the following distribution: 10%, 25% and 40% to municipalities in districts, provinces
and departments where the extractive activity happens, and 25% to regional governments. A similar formula
is applied to mining royalties. On the other hand, hydrocarbon royalties are distributed following a
comparable procedure that benefits mostly the regional government (for oil) and municipalities (for gas).
Peru’s EITI Reports include a detailed explanation of this regime.
The EITI Reports reconcile the figures calculated for the mining canon obtained from the disclosure of
corporate tax and the applied formulas with the figures determined by the government agency in charge of
administering these transfers (Office of the Prime Minister). Similar comparisons are included for the
distribution of mining royalties between the aggregated (by region) disclosed royalties and the transferred
figures in accordance with the Office of the Prime Minister. For the distribution of oil royalties the reports also
reconcile the figures disclosed by the companies with the figures calculated by authorities. In the case of gas
royalties, the distribution to the Department of Cusco, the only recipient of gas royalties, is also reconciled
between the companies participating in the reconciliation and the collecting agency Perupetro. These
reconciliations revealed negligible differences in the case of distribution of gas royalties, minor discrepancies
in the case of the mining canon, but significant differences in the case of mining royalties. There is no
evidence that the latter discrepancies have been investigated or discussed by stakeholders.
Madagascar
The 2010 EITI Report published in September 2011 showed that revenues collected on behalf of local
communities at the central level were not transferred to their respective beneficiaries. The report shed light
on the main issues preventing local communities from receiving their revenues. Following the publication of
the report, mayors from mining affected communities protested officially to their line minister, requesting
payment of those revenues. This led to an important debate 2 and further investigation showed three to four
2
See:
http://www.eiti-madagascar.org/fr/content/frais-dadministration-mini%C3%A8re-d%C3%A9faillance-dusyst%C3%A8me-de-reversement and http://www.lexpressmada.com/revenu-minier-madagascar/46656-des-regions-et-
9
Board Paper 25-3-A
years of unpaid revenues to municipalities. The report also showed that transfers have been made to the
personal accounts of local officials, as many municipalities did not have bank accounts. The debate has led to
important reforms, but the issue is still challenging. The 2011 EITI Report is addressing sub-national payments
in more detail.
4. Country by country assessment
A country by country assessment of progress is presented in Table 1 below. The table classifies the
39 implementing as:
•
Red: delays and facing considerable challenges
•
Amber: making progress but facing some challenges
•
Green: on track and not experiencing any particular difficulties
This is an informal and confident assessment as requested by the Board with a view to highlighting
countries that experience difficulties. The International Secretariat has drawn on information from
implementing countries and other sources.
Table 1: Country assessment of progress
Red: delays and facing considerable challenges.
Country
Status
Burkina Faso
Compliant
Country manager:
John Kanyoni
Assessment
Previous assessment: Green
Burkina Faso is ranked “red” because the reporting process has been
delayed and it appears unlikely that the end –of-year deadline for timely
reporting will be met. A consultant (Moore Stephens) has been recruited
to prepare both scoping studies and the EITI Reports for 2011 and 2012,
but the work was delayed by protracted contract negotiations. Work has
not yet commenced. The MSG is aiming to produce the reports in
accordance with the EITI Standard. The MSG is also working on a 2014
EITI Workplan. The challenge is to link the EITI to other developments in
the mining sector. The government is seeing increased revenues from
gold mining, but there is a debate about the lack of benefits to citizens.
The mining code is being reviewed. The EITI process and revised
workplan could be better linked to the revisions of the legal framework
and possibly be used as an instrument for contract transparency and
beneficial ownership. Supporters are encouraged to urge faster progress
on the 2011 and 2012 reports and to support work on the 2014 workplan.
des-communes-non-payees.html
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Board Paper 25-3-A
Previous assessment: Red
Central African
Republic
Compliant
(suspended)
Country manager:
Bady Baldé
Democratic
Republic of the
Congo
Candidate
(suspended)
Country manager:
Bady Baldé
Central African Republic is ranked “red” because the country is
temporarily suspended. On 18 September, Prime Minister Nicolas
Tiangaye wrote to the EITI Chair requesting that the temporary
suspension in place since April 2013 be lifted. In his letter, the Prime
Minister cites the government’s commitment to the EITI, the
commitment of all stakeholders involved and the functioning of the MSG.
The new government reaffirmed its commitment to the EITI in May 2013.
The Minister of Mines, Oil and Energy, Mr Herbert Gontran Djono-AHABA
chairs the MSG and has reappointed Robert Moidokana as the National
Coordinator. Civil Society representatives in the MSG have published a
declaration (attached to the request) calling for the lifting of the
suspension. Although a workplan has been adopted to restart EITI
implementation, the functioning of the MSG and the ability of
stakeholders to operate outside of the capital Bangui is in doubt.
Violence between rebel groups persists and the security situation
remains precarious. The Secretariat is preparing a detailed assessment for
consideration by the Implementation Committee.
The Democratic Republic of the Congo is ranked “red” because the
reporting process has been delayed and it appears unlikely that the end –
of-year deadline for timely reporting will be met. The MSG plans to
publish the mining and oil and gas reports separately. Publication of the
mining report by year-end looks particularly challenging. Following an
extensive review of the scoping study, on 13 September 2013 the MSG
reportedly approved a materiality threshold and a list of companies and
government entities required to report, although the scoping study had
not been finalised. The EITI continues to play an important role. The
Inspector General’s Office completed its investigations of discrepancies
identified in the 2010 report and is reviewing the accounts of
government agencies to improve data reliability in the 2011 report. More
than one hundred contracts are now publicly available. Supporters are
encouraged to provide training for civil society, support revisions to the
workplan, and provide technical assistance for implementation of new
provisions in the EITI Standard, such as full disclosure from state-owned
enterprises, maintaining a publicly available license register, subnational
reporting, beneficial ownership, social payments to local communities
and infrastructure investments.
11
Board Paper 25-3-A
Indonesia
Candidate
Country manager:
Sam Bartlett
Peru
Compliant
Country manager:
Francisco Paris
Indonesia is ranked “red” because the reporting process has been
delayed and the end –of-year deadline for timely reporting will not be
met. Indonesia’s Validation, completed on 18 July 2013, highlighted
significant delays with implementation and concerns regarding the
comprehensiveness of the 2009 EITI Report. A key priority for the MSG in
the coming months is to address these weaknesses in the forthcoming
2010/2011 EITI Reports (deadline 31 December 2013) and identify a
viable schedule for clearing the backlog of EITI Reports. The International
Secretariat visited Jakarta in mid-September to provide advice on the
scope and support the development of a detailed roadmap for the 20102012 EITI Reports. While data collection for the report has commenced
and the recruitment of the Independent Administrator is scheduled for
October, publication of the report by the deadline will not be possible. It
is expected the MSG will submit a request for an extension of the
reporting deadline. A broader challenge is to increase political backing
and relevance of the EITI process. Following the recent debates around
SKK Migas, the oil and gas regulator, and the lack of transparency in its
relationship with oil trading companies, there is an interest among EITI
stakeholders to do more work in this area. The International Secretariat is,
together with EITI Indonesia, the World Bank and other supporters,
planning a series of events in Jakarta in the first week of December to
reengage the government and explore the outlook for the EITI process.
Previous assessment: Amber
Peru is ranked “red” because the reporting process has been delayed and
there is significant risk that the end –of-year deadline for timely reporting
will not be met. The MDTF grant agreed in mid-July 2013 was only
finalised in mid-September delaying the recruitment of the Independent
Administrator for the 2011 and 2012 EITI Reports. Hiring an Independent
Administrator in the coming weeks is critical. A World Bank mission is
visiting Lima at the end of September to agree a fast-track approach for
completing the next report. Aida Aamot from the International
Secretariat will be based in Lima for the coming months to support
implementation, including the transition to the EITI Standard. Supporters
are encouraged to highlight the opportunities associated with
transitioning to the EITI Standard. In particular, there is a need to ensure
that the EITI Reports include timely information that stakeholders will
find useful, and to encourage stakeholders to make better use of the
existing information to inform public debate. The MSG has taken some
steps to expand the process to three regions (Loreto, Moquegua and
Piura) building on current subnational EITI reporting. There have also
been some limited efforts to widen stakeholder engagement and link the
EITI to work to reduce conflict in the mining sector. The announced
partnership with Canada under the G8 Fast track programme on
extractive industries is yet to be put into action.
12
Board Paper 25-3-A
Sao Tome and
Principe
Candidate
Country manager:
Bady Baldé
Sierra Leone
Candidate
(suspended)
Country manager:
Siri Farstad
Sao Tome and Principe is ranked “red” because there has been limited
MSG engagement or progress in preparing for the first report. The Board
re-admitted Sao Tome and Principe as a Candidate country in October
2012, but there have been significant delays in the implementation of the
2012-14 workplan. The MSG is still not operational, and government
commitment to implement EITI is in doubt. On 13 September, Jonas
Moberg wrote to HE Hélio Silva Vaz d´Almeida Minister of Planning and
Finance, calling on increased government commitment to the EITI
process. Supporters are encouraged to convey similar messages. On 2325 September, the World Bank provided training on the new Standard to
the MSG in Sao Tome. The World Bank is also providing technical
assistance for a scoping study. In April, the African Development Bank
launched a project that will support EITI implementation. Coordination
with the sub-committee of the Joint Development Zone (JDZ) with
Nigeria has been slow. Supporters are encouraged to support and
facilitate this work. Activities in the oil and gas sectors are still in the
exploration phase, both in the Joint Development Zone (JDZ) with
Nigeria and in the Exclusive Economic Zone.
Sierra Leone is ranked “red” because the reporting process has been
delayed and there is significant risk that the end –of-year deadline for
timely reporting will not be met. Sierra Leone was temporarily suspended
by the EITI Board in February following a second Validation that did not
demonstrate compliance. The suspension caused shock waves locally,
and the government and stakeholders have renewed their commitment
to reach compliance. There has recently been good progress in preparing
a supplementary report, and in preparing for the 2011 EITI Report to be
published by 31 December. However, the timeline for meeting this
deadline is challenging. In addition to the next EITI Report, the MSG is
working on developing an EITI Act. Supporters are encouraged to
support efforts to expedite the recruitment of the Independent
Administrator.
13
Board Paper 25-3-A
Solomon Islands
Candidate
Country manager:
Sam Bartlett
Yemen
Compliant
Country manager:
Eddie Rich
Solomon Islands is ranked “red” because there has been limited MSG
engagement or progress in preparing for the first report. The majority of
actions in the workplan are donor-financed, and there have been delays
in finalising the MDTF grant. After repeated delays, disbursement is
expected in October. There is renewed political interest following Prime
Minister Gordon Darcy Lilo’s participation at the EITI Global Conference in
Sydney. However the mining sector is small, with only one producing
mine (Gold Ridge). Accordingly, production of the first EITI Report will not
be difficult. The planned coverage of payments to landowners will add
interest, but it may prove challenging to secure full participation. Looking
ahead, the EITI Standard opens up for linking the EITI to broader
community concerns regarding the social and environmental impact of
mining exploration (onshore and offshore). Coverage of licensing
information (Requirements 3.8 and 3.9), and beneficial ownership should
be relatively easily achieved. Training for the MSG on the EITI Standard
has been delayed until November. Supporters are encouraged to assist in
convening and building the capacity of the MSG.
Yemen is ranked “red” because there have been delays in preparing the
2011 report. Yemen’s 2008-2010 EITI Reports were published on 30 June
and the Board subsequently agreed to lift the country’s suspension.
There is an improvement in the quality of the report and in the
functioning of the multi-stakeholder group. However, the requirement
to publish the 2011 report by 31 December 2013 remains challenging.
More needs to be done to link these reports with the public debates on
the management of the sector. Eddie Rich visited Yemen in early October
to meet with the MSG and agree the next steps, including the priorities
for further technical assistance.
Amber: making progress but facing some challenges.
Country
Status
Assessment
14
Board Paper 25-3-A
Afghanistan
Candidate
Country manager:
Dyveke Rogan
Chad
Candidate
Country manager:
Bady Baldé
Guatemala
Candidate
Country manager:
Francisco Paris
The immediate priority for AEITI is to make progress on addressing
corrective actions from Validation. A MSG working group is due to be
established at the end of September to discuss the scope of the next EITI
Report, the TORs for the Independent Administrator and a roadmap for the
publication of the report (deadline March 2014). The recruitment of a new
National Coordinator is delayed, but is expected shortly. In the mid-term, a
key challenge is to balance the focus on the corrective actions needed to
achieve compliance with the EITI Rules (Secretariat Review by 10 October
2014), and at the same time encourage the government and the MSG to
raise the ambition of the EITI in line with the EITI Standard. Opportunities
identified include transparency in license allocation procedures,
production data, governance of state-owned enterprises and contract
transparency. The International Secretariat is planning a visit later in the
year when a new National Coordinator has been recruited and the new
MSG is established.
On 23 August the Board agreed to renew Chad’s candidature for one year
(until 23 August 2014). Chad is now implementing the corrective actions
requested by the EITI Board, to be assessed in a secretariat review. On 5
September, the High National Committee agreed to hire an Independent
Administrator to produce the 2012 EITI Report (due by 31 December 2014).
A key focus will be on improving the comprehensiveness and reliability of
the data. The report will also address key provisions in the EITI Standard,
such as production figures, the sale of in-kind revenues, and information
on licenses and state ownership. Further technical assistance is needed to
facilitate consultation in updating the 2013-14 workplan in line with the
EITI Standard.
Guatemala had a Validation deadline of 28 August 2013. On 7 August,
Guatemala requested an extension of this deadline. The Implementation
Committee considered the request at its meeting on 11 September and
agreed to recommend to the Board that Guatemala is granted a three
month extension of the deadline, i.e. to 28 November 2013. It is expected
that the recommendation will be submitted to the Board via circular
shortly. Implementation activities have been delayed primarily due to
legal, financial and socio-political obstacles. The first EITI Report covering
2010 and 2011 data was published in May 2013.
15
Board Paper 25-3-A
Guinea
Candidate
Country manager:
John Kanyoni
Iraq
Compliant
Country manager:
Eddie Rich
Kyrgyzstan
Compliant
Guinea is currently addressing the remedial actions requested by the Board
following its Validation in 2012. An Independent Administrator was
recruited in late July to conduct a scoping study and produce the 2011 and
2012 EITI Reports. The scoping study does not appear to be sufficiently
comprehensive and lacks information from the cadaster on mining licenses
and on revenues collected at sub-national level. Following a Secretariat
visit in mid-September, the government agreed to provide all of the
missing information to address gaps noted identified in the scoping study.
The EITI Reports for 2011 and 2012 are due to be published at the end of
November 2013. With support from the World Bank, a consultant has been
recruited to provide technical assistance to the national secretariat and the
MSG over the next 10 months. A key priority for the coming months will be
to raise the profile of the EITI, engage new actors and make sure that the
EITI is connected to the wider debates, including the review of the mining
contracts and implementation of the many important transparency
provisions in the revised mining code. The visit by the Board delegation in
October provides an opportunity to discuss a revised EITI Workplan that
addresses some of the broader issues in the sector, and to provide advice
on any gaps in the scope for the 2011-2012 EITI Report.
The Iraqis continue to make progress with the EITI process. The dialogue is
strong and improving, despite the complex environment. The Deputy
Prime Minister, Hossain Al-Shahristani, continues to be an important EITI
champion globally. However, relations between the Iraqis and the Kurds
remain at a low ebb over many issues. The Kurds have effectively
withdrawn from the EITI process. Iraq became Compliant in December
2012 with a requirement for “the inclusion of oil and gas production in the
Kurdistan Region and sales revenue to the Kurdish Regional Government
(KRG) to be addressed in the 2010 EITI Report”. The 2010 report was
published in December 2012 and the Kurdish chapter went through at
least four iterations before the final version approved by the MSG in
May. The Kurdish EITI chapter reveals how little reliable information is
publicly available about the oil sector in Kurdistan. The data are poor,
incomplete, difficult to interpret, unaudited, and not reconciled. The Kurds
have issued a statement reiterating their commitment to the EITI, but
embarking on a separate 2011 reporting process. All stakeholders are
asked to encourage the KRG to continue with the Iraq-wide process and,
even if they do not agree to a single process, that publish their figures
within a single Iraqi report (albeit with a separate Kurdish chapter). Iraq
appears to be on track to publish the 2011 report by November and the
2012 report by March 2014. The MSG has signed the reconciliation contract
with Ernst and Young for both reports.
The immediate priority in Kyrgyzstan is to increase political sponsorship for
16
Board Paper 25-3-A
Country manager:
Dyveke Rogan
Madagascar
Candidate
(Suspended)
Country manager:
Bady Baldé
the EITI process. Combined with a weak MSG and secretariat, and limited
funding, the lack of government engagement severely limits the
contribution of the EITI to the very vibrant domestic debate about the
governance of the mining sector. Near term priorities include: (1)
reengaging the government; (2) refreshing and strengthening the MSG;
and (3) making sure that the EITI process contributes to the wider debates.
Following the visit by the International Secretariat in June, the MSG has
launched a consultation on 2014 workplan activities. The workplan is
expected to be finalised in late October. Contract and license transparency,
verification of production data, and governance of local development
funds in mining areas were some of the priorities identified by
stakeholders. Stakeholders could also make better use of the EITI as a tool
and platform for reducing the deep mistrust between local communities,
companies and the government. WB MDTF funding expires in October.
Renewed technical and financial support will be required to support the
workplan activities. EITI reporting is on track, with the 2012 EITI Report
scheduled to be published in November 2013.
Madagascar continues to make progress under challenging circumstances.
The parliamentary and presidential elections scheduled for 25 October
provide an opportunity to address the political crisis of the last three years.
Ms Rajo Daniella Randriafeno, the Minister of Mines, chairs a wellfunctioning National Committee (MSG). On 16 September, the MSG
appointed the Chair as acting National Coordinator. The World Bank is
providing funding through a restructured governance project (PGDI) for
the preparation of the 2011 EITI Report. This report is due to be published
by 30 September 2013 and will include key aspects of the new Standard
including: (i) contextual information on licenses, contracts, state
ownership, and production figures; (ii) transfers to local government; and
(iii) social and infrastructure investments. The extended scope of the EITI
Standard is particularly relevant in Madagascar as transformation of raw
minerals to highly refined products, such as nickel (refined 99.8%) and
cobalt, takes place in the country. The on-going political instability and
unfavourable market conditions represent important threats to the
massive investments (over US $6 billion) in the last five years. The
International Secretariat provided training to the MSG on the new
Standard on 25 July 2013 in Antananarivo. Further technical support is
needed to update the workplan in line with the new Standard, and to
explore opportunities to extend the scope of the EITI to other governance
challenges.
17
Board Paper 25-3-A
Mali
Compliant
Country manager:
Wouter Biesterbos
Mozambique
Compliant
Country manager:
Jurgen Reitmaier
Timor Leste
Compliant
Country manager:
Sam Bartlett
Mali is still going through a challenging time, both politically and
economically. Presidential elections took place in July and August of this
year, with the new President Ibrahim Boubacar Keïta promising to be
tough on corruption and the new Mining Minister Boubou Cissé
announcing a complete inventory on all existing mining contracts, titles
and licenses. The Government of Mali has paid its outstanding dues for the
2010 report and has secured funding for the elaboration of the 2011 report
and is in the final stages of securing a reconciler. The report is scheduled
for publication early December 2013. Further support to the process is also
anticipated, with a large German-funded programme proposed and
possible engagement by the IMF. Mali aims to publish its 2011 report
according to the EITI Rules, but will consider including elements from the
Standard, also linked to efforts to strengthen decentralisation, public
financial management and taxation. There are still areas of concern, with
National Coordinator Mr Togola’s retirement at the end of the year, and
delays in finalising the MDTF grant agreement.
Reluctance to devote own budgetary resources, a tendency to keep civil
society participation in the MSG fragmented, and hesitation towards
independent scrutiny suggest a fragile commitment to the principles of
the EITI. Work on the 2011 EITI Report—due by end-2013—may only start
in October, potentially comprising the quality of the report and limiting
any ambition to break new ground in anticipation of the EITI Standard.
While EITI Reporting is high quality and up-to-date, the relationship
between stakeholders remains difficult following the publication of the
2010 and 2011 EITI Reports without MSG approval. The MSG has met
regularly over the past months, but with limited industry participation.
Stakeholders should encourage the government and industry to use the
EITI as a platform for restoring trust. The transition to the EITI Standard
provides an opportunity to reengage stakeholders and ensure wide
consultations on the scope of the 2012 EITI Report (deadline 31 December
2014) and the broader outlook for the EITI process. Priorities for extractive
sector governance identified during a workshop facilitated by the
International Secretariat in mid-September include improvements to tax
collection systems, transparency in public expenditure, revisions of
relevant sector laws, and contract transparency. Development of a
transparency law is underway. The government is also contributing
significantly to EITI outreach in the region, including to Myanmar, Papua
New Guinea and Vietnam.
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Board Paper 25-3-A
Trinidad and
Tobago
Candidate
Country manager:
Francisco Paris
Zambia
Compliant
Country manager:
Eddie Rich
The FY 2010-2011 EITI Report was published on 30 September 2013
following longs delays. Despite a competent secretariat and a wellfunctioning MSG, Trinidad and Tobago has faced several obstacles in the
reporting process (including confidentiality clauses and tax information
incompatibilities). Following a request to extend the Validation deadline of
28 August 2013, the EITI Board set a new Validation deadline of 28
February 2014. The tender for the Validation firm is in progress with the
validator expected to be hired in late October 2013, leaving four months to
complete Validation. Dissemination of the report started with the
launching of the report on 30 September.
Increases in human and financial resources for the ZEITI Secretariat, a
broad stakeholder consultation on the objectives of the EITI under the new
EITI Standard, work on an updated mining cadaster, and an invitation to
the OECD to advise the Zambia Revenue Authority on combatting transfer
pricing, all augur well for ZEITI to be able to position itself closer to the
centre of the public debate on the role of extractive industries in Zambia.
Meanwhile, the lack of timeliness of EITI data raised questions in-country
on the relevance of the EITI. The renewed struggle for ZEITI to meet even
the two-year deadline for its 2011 report is unfortunate in this light. Efforts
to widen the sectoral scope of the EITI in Zambia and to combine the TORs
and procurement for the two subsequent reports (2012 and 2013) deserve
the support of development partners.
Green – on track and not experiencing any particular difficulties
Country
Status
Assessment
Albania
Compliant
Country manager:
Siri Farstad
Albania achieved EITI compliance in May 2013. The EITI is an important tool
for Albania to strengthen governance reforms and fight corruption to
attract foreign investment in line with the standards of other European
countries. Following elections in June 2013, there is a large and durable
parliamentary majority for a socialist led administration whose main
priorities are economic growth and seeking EU membership. The Trans
Adriatic Pipeline (TAP) to transport gas from the Caspian region to Europe
is an important project for Albania and will entail improved infrastructure
as well as transit revenues. Since achieving compliance, the EITI in Albania
has concentrated on communication and capacity building. Training on
the EITI Standard had started and will continue in the autumn of 2013. The
secretariat has begun work on the 2011 reconciliation report and is
collaborating with the National Agency of Natural Resources. There has
also been support to EITI outreach in Kosovo.
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Board Paper 25-3-A
Azerbaijan
Compliant
Country manager:
Siri Farstad
Reporting is on track, with the 2012 report already published. The MSG has
continued working on a revised MoU, to update the one originally signed
in 2004. Discussions have been on-going for nearly two years without
success. The most contentious issue has been disagreement between civil
society organsiations and the government on disaggregated reporting.
Azerbaijan will publish its 2013 Report in line with the EITI Standard which
requires disaggregated reporting, and generally a significant broadening
of Azerbaijan’s EITI implementation. Both sale proceeds from production
received in kind and SOCAR’s revenues and government payments will
have to be included. In accordance with the transitional arrangements,
Validation has been moved back to mid-2015. Azerbaijan is hosting an
international EITI conference at the end of September, celebrating ten
years since it commenced EITI implementation. The annual activity report
in 2012 was published in June, giving for the first time information about
the average oil price received for state profit oil sold. This, together with
public data on the Oil Fund accounts, gives an interesting picture of the
total receipts from the sector, together with some information on
spending. The challenge now is to make better use of EITI data in public
debate regarding governance of the sector. There are still concerns about
the narrow space for civil society to operate.
Cameroon
Candidate
Country manager:
Bady Baldé
Côte d’Ivoire
Compliant
Country manager:
John Kanyoni
Cameroon completed Validation by the 15 August deadline. Cameroon
has made significant progress in improving the quality of EITI reporting in
the 2009-2011 EITI Reports. The MSG addressed key issues, including
comprehensiveness and data reliability identified in the previous
Validation. The 2011 EITI Report, published on 31 July 2013, addresses key
provisions of the new Standard, including information on licensing,
production data, transit fees, and transfers to local governments. The MSG
in Cameroon requires continued technical assistance (i.e. updating
workplans, license registry, beneficial ownership) from partners in order to
build on the momentum of Validation and ensure full implementation of
the EITI Standard. The MSG is considering an extension of EITI reporting to
the forestry sector.
EITI implementation is on track, with the 2011 EITI Report published in
April 2013. Having achieved compliance in May 2013, the next step for
Côte d’Ivoire is to commence the transition to the EITI Standard. There is
significant potential for improving the depth and scope of the EITI
reporting process, which has so far been technically sound but
unambitious. The International Secretariat has initiated a discussion about
revisions to the workplan and the outlook of the EITI process. The EITI
Board meeting in October is an opportunity to renew political
commitment for reinvigorating the process.
20
Board Paper 25-3-A
Ghana
Compliant
Country manager:
Eddie Rich
Honduras
Candidate
Country manager:
Francisco Paris
Kazakhstan
Candidate
Country manager:
Dyveke Rogan
The 2010-2011 EITI Reports were published in February 2013. Preparations
for the next reporting cycle have not started in earnest and now should
include arrangements to transition to the EITI Standard. There is further
room to strengthen links between EITI and other efforts such as the work
of the Public Interest and Accountability Committee, the Inter-Ministerial
(Energy and Natural Resources) Committee, the Global Anti-corruption
Commission and the Parliament. The International Secretariat, together
with a mission from the Board, will visit later in mid-October to provide
guidance and support for the 2014 workplan.
Previous assessment: No assessment
Designated as an EITI Candidate on 22 May 2013, Honduras is making good
progress with EITI implementation. The MSG has agreed to produce the
first EITI Report in accordance with the EITI Standard and has worked on
the scope and the TORs. The International Secretariat together with the
World Bank visited Honduras on 29-30 July and provided training on the
EITI Standard and discussed MDTF funding. The MDTF grant, originally
expected to be available in early October, will be delayed at least another
month. The Secretariat also met the EITI Champion, Vice-President Maria
Guillen, who gave assurances that the government is determined to
progress rapidly with the EITI to ensure it is well grounded for the next
administration to be inaugurated in early 2014.
Kazakhstan completed Validation by the 15 August 2013 deadline.
Previous concerns regarding the comprehensiveness of the 2011 EITI
Report have been addressed through an addendum published on 6
August. The Secretariat has no concerns regarding the Validation. The
immediate challenge is to use the momentum generated by the Validation
activities and the launch of the EITI Standard as a catalyst for a more
ambitious EITI process. The MSG has identified issues such as real-time EITI
reporting, beneficial ownership, regional implementation and local
content as possible priorities post-validation. A study exploring these
issues is expected to be completed in November and will form the basis for
the 2014 workplan. The outlook for the EITI will also be a key focus of the
national EITI conference in Astana on 9 October.
21
Board Paper 25-3-A
Liberia
Compliant
Country manager:
Siri Farstad
Mauritania
Compliant
Country manager:
Wouter Biesterbos
Mongolia
Compliant
Country manager:
Wouter Biesterbos
Liberia has an impressive record of EITI implementation and has been
using the process to investigate key areas of concern (are companies
paying what they should?, is earmarked funding going where it should?,
were contracts allocated correctly?). These efforts were only marginally
successful in answering those broad questions since other data collection
systems (especially production data) are weak. In addition, there is a need
to revisit the comprehensiveness and reliability of the EITI reconciliation
process. The 2010/11 Report was published in mid-May 2013 and there are
unresolved issues with regard to lack of reporting from a number of
companies and two government agencies. In addition, many companies
and agencies failed to provide audited data. LEITI does use sanctions, as
authorised by the LEITI Act. These issues require urgent attention. The LEITI
office is well staffed and new recruitment is under way. In mid-September
concerns were raised about the environment for civil society participation.
The International Secretariat is monitoring the situation.
Mauritania missed the deadline to publish the 2010 EITI Report by 31
December 2012 and was subsequently temporarily suspended. Suspension
was lifted after it published both the 2010 and 2011EITI Reports on 12 June
2013. The suspension seems to have increased momentum and debate incountry, and Mauritania aims to publish its 2012 EITI Report according to
the 2013 Standard midway through 2014. The feasibility of this ambition
will need to be confirmed during the coming months. In September 2013,
the National Coordinator Sidi Ould Zeïne was appointed Minister of Justice.
There is a need to fill this gap soon also because the mandate for all
financial decisions for all activities organised by the EITI secretariat is linked
to this position.
The 2011 Report was published in December 2012, with a four page
summary published in Mongolian. Work on the 2012 report has begun, and
this report is expected to include even more information than the 1600
pages elaborated last year. The EBRD has hired Adam Smith International
(ASI) to support the implementation and communications process,
including making an assessment of the current EITI structure. The
International Secretariat undertook a mission to Mongolia from 23 – 25
September 2013 in close coordination with ASI, RWI and the World Bank to
build awareness on the EITI Standard, work with the Mongolian EITI to
make better use of data, enhance involvement of members of parliament
in the EITI and strengthen links between reports and in-country discussions
on extractives – for example on the Oyu Tolgoi mine, decreasing foreign
investment and falling commodity prices.
22
Board Paper 25-3-A
Niger
Compliant
Country manager:
Wouter Biesterbos
Nigeria
Compliant
Country manager:
Eddie Rich
The selection of the reconciler for the 2011 EITI Report has experienced
slight delays, but is still within contingency limits. This report will for the
first time include information on the oil sector. The MSG is meeting
regularly, and with active involvement by Members of Parliament in the
EITI, there are opportunities for linking the EITI to discussions on contract
disclosure; creating a ‘fund for future generations’; contract renegotiations;
and economic forecasting. This in particular seeing the clear signs of
increasing unrest in the north of the country, with a recent violent attack
on an Areva uranium mine. The International Secretariat is planning a
mission to Niger in November to work on integrating the Standard in the
workplan and addressing the opportunities identified.
NEITI remains at the forefront of using EITI data, including identifying
outstanding debts by the national oil company to the Federal government,
recovering uncollected taxes, identifying weaknesses in the regulatory
bodies, auditing oil-related transfers to subnational government, and
investigating oil theft. It is also making extensive contributions to national
debates such as on the Petroleum Industry Bill and fuel subsidies. Despite
these efforts, NEITI’s impact on policy reform is, at present, minimal. It has
also been challenging to deliver: NEITI has sought an extension of its 2011
mining audit (deadline 31 December 2013) until 31 May 2014. There has
been no progress on coverage of the Joint Development Zone with Sao
Tome and Principe. Most concerning, NEITI has, as yet, been unable to get
information from other agencies to explain a transaction related to Block
OPL245 in which the companies ENI and Shell paid US $1.3bn to the
Government of which only US $210m from Shell appears to be accounted
for in the NEITI report. Undeterred, NEITI’s agenda remains ambitious. Even
whilst reforms remain stuck, NEITI will continue to contribute to an
environment of accountability. However, the process will need political
support, strong leadership, and international backing. The visit by the
delegation of the EITI Board in October will be an opportunity to recognise
NEITI’s work and motivate further political sponsorship for the process.
23
Board Paper 25-3-A
Norway
Compliant
Country manager:
Anders Kråkenes
Philippines
Candidate
Country manager:
Wouter Biesterbos
Republic of the
Congo
Compliant
Country manager:
Bady Baldé
Two years after becoming EITI Compliant, and after four years of bestpractice EITI reporting, the process is firmly on-track. Norway's stated
reason for implementing the EITI is to set an example for other
countries. There has thus far been little movement towards exploring how
Norway's EITI can add value domestically. For the first time since Norway
started implementation, there has been a change of government. Together
with the EITI Standard, this is presents an opportunity for Norwegian EITI
stakeholders to re-think their EITI and to re-anchor EITI at the political level.
Norway has now a real opportunity to innovate along the lines outlined in
the EITI Standard, such as by simplifying parts of their process, merge with
other processes in the ministry and directorate and piloting reporting on
beneficial ownership, and thus lead by example. The Secretariat will meet
with the new government and work with Norwegian EITI Stakeholders to
encourage such innovation in the 2014 workplan.
The Philippines was admitted as an EITI Candidate on 22 May 2013. The
National Coordinator has since moved to a position outside of
government, but continues to be involved in EITI implementation. A new
National Coordinator– Alessandra ‘Gay’ Ordenes – has been assigned and
is working with the International Secretariat and a host of supporting
parties such as the World Bank to prepare a workshop on the Standard and
the workplan at the end of September. Issues to be explored are how to
use the EITI to better harness wealth and manage mining, look at benefit
sharing mechanisms, and be an instrument in conflict mitigation (the
Mindanao peace agreement contains text on revenue sharing). The
Philippines aims to publish its first report before the end of 2014.
Congo is making significant progress in timely reporting and the
implementation of key provisions in the new Standard. The Ministry of
Finance published three reports covering the first three quarters of 2012 in
July 2013, including information on licenses, production data, sale of
state’s share of production and transfers from the state-owned enterprises
(SOE) to the Treasury. Production Sharing Agreements (PSAs) are now
publicly available on the EITI Congo website. A consolidated 2012 Report is
due to be published by 31 December 2013. On 27 - 29 August, EITI Congo
organised a training seminar for parliamentarians on the drafting of
transparency law. The World Bank is providing technical assistance. The
AfDB is providing technical assistance for a database of revenue flows that
will allow disclosure of data in a machine readable format in real time.
Congo requires further technical assistance in training of parliamentarians
and civil society groups, updating the 2013-15 workplan in line with the
new Standard, and in building and maintaining a public register of
licenses.
24
Board Paper 25-3-A
Tajikistan
Candidate
Country manager:
Dyveke Rogan
Tanzania
Compliant
Country manager:
Jurgen Reitmaier
Togo
Candidate
Country manager:
John Kanyoni
Tajikistan was admitted as an EITI Candidate on 26 February 2013.
Implementation has been slow because of delays with establishing the
national secretariat. This has affected access to WB-MDTF funding. The
agreement was signed by the government in mid-September and is now
being processed. Some of the requirements in the EITI Standard, including
license transparency, will be challenging. The Secretariat visited in June to
discuss transitions and the EITI Standard with the MSG. An immediate next
step is to update the workplan to include activities required for the
implementation of the Standard. The MSG has also begun preparing for a
scoping study for the first EITI Report to address any potential obstacles
with EITI reporting under the EITI Standard.
Tanzania is presently hiring the Independent Administrator for its 2011/12
Report and aims for publication in early 2014, seeking to avoid a rush near
the mid-year deadline, which had contributed to slippages in the approval
process of the most recent report. Resulting strains within the MSG have
not yet healed. Preparations for the 2012/13 Report, under the EITI
Standard, will start in September. The intended speeding-up of the
reporting cycle has yet to be reflected in a detailed operational workplan.
Tanzania requires help with a communications strategy and production of
popular information and outreach material on its reports in Swahili.
The EITI process in Togo is advancing slowly. Togo became a Compliant
country on 22 May 2013. The national secretariat is preparing a draft EITI
Workplan for 2014 for submission to the MSG. This workplan will allow
Togo to produce the 2012 EITI Report according to the new Standard.
Technical support is needed at the national secretariat level to ensure the
development of a sound workplan.
5. EITI reporting
Since the Board meeting in Sydney, EITI Reports have been published in Azerbaijan, Cameroon,
Chad, Guatemala, Indonesia, Liberia, Mauritania, Tanzania, and Yemen. This brings the total
number of fiscal years covered by EITI Reports to 180. Table 2 provides an update on implementing
country compliance with the requirement for timely EITI Reporting.
An up-to-date table with all the published reports can at all times be found at http://data.eiti.org. In
addition to the individual reports, summary information from all the reports can be downloaded in
one dataset.
Table 2: Overview of EITI reporting – September 2013
Country
2006
2007
2008
2009
2010
2011
2012
25
Board Paper 25-3-A
Azerbaijan
Albania
Burkina Faso
Central African Republic
Congo
Côte d’Ivoire
Ghana
Iraq
Kyrgyz Republic
Liberia
Mali
Mauritania
Mongolia
Mozambique
Niger
Nigeria 3
Norway
Peru
Tanzania
Timor-Leste
Yemen
Zambia
Afghanistan
Cameroon
Chad
DR Congo
Indonesia
Guatemala
Guinea
Honduras
Kazakhstan
Madagascar
Philippines
Sao Tome & Principe
Sierra Leone
Solomon Islands
Tajikistan
Togo
Trinidad and Tobago
Published prior to 2013
Published in 2013
Publication required in 2013
3
Nigeria has published the 2011 oil and gas audit. The 2011 solid minerals is outstanding.
26
Board Paper 25-3-A
27
Board Paper 25-3-A
6. Validation
Twelve countries have Validation deadlines in 2013. Of these, six countries (Albania, Burkina Faso,
Cameroon, Côte d’Ivoire, Democratic Republic of the Congo and Kazakhstan) will be conducting
their second Validation. The EITI Standard specifies that countries that achieve meaningful progress
but do not achieve compliance following a second Validation will be suspended.
Country
Afghanistan
DRC
Indonesia
Togo
Albania
Burkina Faso
Côte d’Ivoire
Chad
Cameroon
Kazakhstan
Guatemala
Trinidad & Tobago
Deadline
09.02.2013
01.03.2013
18.07.2013
18.04.2013
25.04.2013
25.04.2013
25.04.2013
23.05.2013
13.08.2013
15.08.2013
28.08.2013
28.08.2013
Status
Complete
Complete
Complete
Complete
Complete
Complete
Complete
Complete
Complete
Complete
28.11.2013 TBC
28.02.2014
Since the last Implementation Progress Report covering May-July 2013, Cameroon and Kazakhstan
have submitted Validation reports. Validations are underway in Guatemala and Trinidad & Tobago
which have both been granted an extension of the Validation deadline.
7. Outreach Update
The Outreach and Candidature Committee recently concluded a review of the outreach update for April-June
2013, and will review a report covering July – September for inclusion in the Board Papers. Commitments
from France, Germany, Italy and the UK, together with the focus on “tax, trade and transparency” at the G8
meeting in Lough Erne, has significantly boosted EITI outreach efforts. Candidature applications from
Ethiopia, Senegal and Ukraine are being assessed.
8. Training and capacity building
There is considerable demand for training and capacity building related to the transition to the EITI
Standard. In the short term, the priority is to encourage multi-stakeholder groups to the review the
EITI Standard and to integrate their training and capacity building needs into: updated workplans,
addressing new priorities for EITI implementation, EITI reporting and Validation deadlines. Further to
the preliminary assessment of the training and capacity building needs presented in Sydney (Board
paper 24-6), the Secretariat has begun rolling out the Standard through MSG workshops in
implementing countries. A number of regional training events are scheduled for the coming months
(see http://eiti.org/eiti-training). The Secretariat is also producing a number of guidance notes and
case studies with guidance and examples on how to implement the EITI Standard. Strong
collaboration with partners, including GIZ, PWYP, Revenue Watch, and the World Bank is needed.
28
Board Paper 25-3-A
In July 2013, the International Secretariat, the World Bank (SEGOM) and RWI met to discuss the
implementation of the new Standard and the measures the three organisations could take to ensure
a consistent and more joined-up approach to the support provided to EITI countries. It was
recognised that while the three organisations had common objectives and generally worked well
together, there was room for improvement in the coordination of on-the-ground support,
collaboration prior to missions, and in the consistency of messages delivered to partner
governments, national secretariats, MSGs and when undertaking outreach activities.
Based on reporting time frames and an assessment of where the capacity gaps were likely to be
greatest, a short-list of countries that would be priorities for support was agreed. It was also agreed
that the three organisations should, where feasible, aim to conduct joint missions to these countries
to brief governments and MSGs on the changes under the Standard and identify the additional
support likely to be needed by those countries to comply with the new requirements.
9. Secretariat activities
In August-September, there have been country visits by the EITI Chair and International Secretariat
staff to Finland, Guinea, Indonesia, Kuwait, Liberia, Mongolia, Mozambique, the Philippines, Sierra
Leone, Tanzania, Timor Leste, Yemen and Zambia. These country visits provided an important
opportunity to strengthen policy dialogue, offer training to MSG members and gather contributions
from stakeholders on the new EITI Standard.
In August 2013, the EITI has been featured in 347 articles in the media (Source: Factiva.com). Of
these, one appeared in the Financial Times (about Nigeria and oil theft).
In August and September 2013, eiti.org had 34412 visits or 21472 unique users. The website is
constantly being improved and changes to come shortly include: an EITI “impact corner” to feature
stories about countries where EITI has had a real impact; a Frequently Asked Questions section to
limit misconceptions about EITI; and an EITI glossary which will explain the different terms and
jargon. Visitors to the website came from 199 countries and territories. The top 5 countries with the
most visitors during this period include:
1. The US
2. The UK
3. Norway
4. France
5. Australia
The EITI newsletter now has 5721 subscribers and in August alone the newsletter received 623 new
subscribers. On Twitter EITIorg has 3007 followers and on Facebook 2498 followers. As a means to encourage
use of data and spark debate, the EITI International Secretariat has hosted an Infographic competition, which
is open until 14 October 2013. So far the Secretariat has received five submissions from the following
countries: Azerbaijan, Indonesia, Kazakhstan, Nigeria and Ukraine. The submission from Nigeria has been
shared 81 times on Facebook through the EITI timeline, received 698 likes and 258 comments.
29
Board Paper 25-3-A
Annex A: Briefing note for Board delegation to the Democratic Republic of
Congo
Annex B: Briefing note for Board delegation to Ghana
Annex C: Briefing note for Board delegation to Guinea
Annex D: Briefing note for Board delegation to Nigeria
30
Briefing for Board visit to DRC
14 October 2013
Important contact information:
Bady Baldé
Tel: + 47 960 43 105
Email: BBalde@eiti.org
Professor Mack Dumba
National Coordinator, EITI DRC
Tel: +243 81 222 14 15
Email: mack.dumba@itierdc.org
Fleuve Congo Hôtel
119 Boulevard Tshatshi
Kinshasa DRC
Tel: +243.82.5000.300
Executive Summary ........................................................................................................................................................................... 1
1
Draft programme for the visit ................................................................................................................................................ 4
2
Members of the delegation .................................................................................................................................................... 7
3
Key objectives and suggested messages ............................................................................................................................ 7
4
Implementation progress ....................................................................................................................................................... 9
4.1
Overview of EITI Reports.............................................................................................................................................. 10
4.2
World Bank Indicators .................................................................................................................................................. 10
4.3
Revenue Watch Institute Indicators .......................................................................................................................... 11
4.4
Key Challenges .............................................................................................................................................................. 11
4.5
EITI in the context of wider reforms .......................................................................................................................... 12
5
Logistics and practical information .................................................................................................................................... 13
6
Biographies .............................................................................................................................................................................. 14
7
Relevant articles and publications ...................................................................................................................................... 15
8
Annex A: The Board decision agreed on 17 April............................................................................................................. 17
Executive Summary
The DRC has vast natural resources and produces 54% of the world’s cobalt and 34% of industrial diamonds, but
suffers daunting challenges to manage these resources for the benefit of its citizens. Competition for mineral
resources has fuelled conflicts, which have claimed more than five million lives in the last 15 years. Despite
multiple challenges, EITI implementation has contributed to ensure that taxes collected by government entities
are effectively deposited at the Central Bank.
Having failed to achieve compliance following two Validations, the Board suspended DRC in April 2013. The MSG
has a tight deadline to produce a high quality 2011 EITI Report by year end in order to meet the requirement for
timely reporting. In recent weeks, the MSG has been engaged in detailed discussions regarding which revenue
streams, companies, and government entities need to be covered in the 2011 EITI Report. This critical step will
ensure that the report is comprehensive and reliable, but publication of the report for the mining sector by the 31
December deadline is in doubt. The DRC risks failing to meet the requirement for timely and regular reporting.
The objectives of the visit are to:
(i)
(ii)
Encourage strong political commitment to use the EITI as a platform for wider reforms.
(iii)
Explore with key stakeholders the ways in which the EITI Standard can contribute in improving the
governance of the country’s vast natural resources.
Looking ahead, the opportunities for deepening the EITI process include:
1. Allocation of licenses and license registers: 30% of the country’s 2.3 million square kilometre surface
area is under exploration, with more than 3500 exploration and production licences. The country’s
cadastre system could be improved by maintaining a register of licenses as required by the EITI
Standard (Requirement 3.9).
2. Sub-national reporting and certification schemes: In July 2013, the DRC launched a certification
scheme of conflict-free minerals, in compliance with provision 1502 of the Dodd-Frank Act. The
International Conference on the Great Lakes Region, or ICGLR, is implementing the five-part certification
scheme. In addition to the traceability of the minerals from the conflict zone (3T), EITI implementation at
the local level will ensure the traceability of payments to local governments in Eastern DRC.
3. Greater transparency of infrastructure provisions and barter agreements: In April 2008, the DRC
signed a cooperation agreement with a consortium of Chinese enterprises involving a US $3.2 billion
mining project and a set of US$6 billion public infrastructure projects to be implemented in two phases.
According to IMF Reports (IMF Country Report N10/88), the agreement was amended in October 2009 to
exclude the second phase public infrastructure projects, leaving just a single phase totalling US $3 billion
to be implemented over the period 2009–14. The agreement establishes a joint venture Sino–Congolais
des Mines (Sicomines, registered and operating in the DRC) between GECAMINES (32%) and a consortium
of Chinese enterprises, China Railway Engineering Corporation (CREC) and Sinohydro (68%). Global
Witness analysed the agreement and raised concerns that the potential of the deal risks being
undermined, because the agreement remains opaque and the terms of the agreement are not clearly
2
defined. This controversial agreement has been characterised as a barter agreement. The issue remains
politically sensitive, but if barter transactions are material under this agreement, then EITI Requirement 9
calls for full disclosure at a level that is commensurate with other contracts. As part of the
implementation of the EITI Standard (Requirement 4.1 d), the DRC is required to disclose any
barter type agreements. Transparency in the implementation of this particular contract will also
diffuse suspicions surrounding the agreement and improve the government credibility at the
international level.
4. Beneficial ownership: The 2013 Africa Progress Panel’s report states “between 2010 and 2012, the DRC
lost at least US $1.36 billion in revenues from the under‐pricing of mining assets that were sold to
offshore companies”. This figure is based on the valuation of assets sold to five offshore mining
companies, which were then “flipped”, or sold by these companies without additional investment. The
estimated lost revenues in this report are almost twice the total revenues of US $800 million that DRC
reported in its 2010 EITI Report. The real owners of the companies benefitting from these deals remain
secret as the companies are based in offshore tax havens.
Should the DRC decide to publish beneficial ownership in accordance with the EITI Standard,
(Requirement 3.11), the EITI could contribute in addressing this issue of tax evasion. However,
building and maintaining a register of the natural person(s), who directly or indirectly ultimately
owns or controls companies operating in the extractive sector in the DRC will require strong
government commitment and significant technical assistance from partners.
5. Enhance transparency and governance in the management of state-owned enterprises: A key
factor in the lost revenues highlighted above is poor governance and weak oversight of state-owned
enterprises (SOE). The World Bank economic governance matrix for the DRC includes similar measures
that will require seven SOEs (including Gecamines; and COHYDRO) to publish their audited accounts.
Implementation of the provisions in the EITI Standard (Requirement 3.6) will bring greater
transparency and accountability in the management of SOEs.
6. Contract transparency: The government issued a decree in 2011 requiring that contracts for “any
cession, sale or rental of the state’s natural resources be made public within 60 days of their execution”.
More than 100 contracts are publicly available as part of this measure, but the exhaustiveness of the
contracts published remains unclear. Should the DRC decides to publish its contracts in accordance
with the EITI Standard (Requirement 3.12), the EITI can provide the necessary quality assurance
and ensure an equal playing field between companies operating in DRC.
7. Extension of the scope of EITI reporting to the forestry sector. In 2012, the government announced
its commitment to extending the scope of EITI reporting to the forestry sector. EITI can facilitate the
monitoring and enforcement of the forestry code by local communities and bring transparency to
payments made by logging companies.
3
1
Draft programme for the visit
TIME
ACTIVITIES
VENUE
PARTICIPANTS/NOTES
Monday 7 October 2013
17:45
Arrival of
Civil Society Participants
Kinshasa
Airport
Mr Eelco de Groot and other participants
arrive via Brussels Airlines.
Participants will be met by staff from the
national secretariat. If your arrival time
changes, please let Bady Baldé know.
Tuesday 8 October 2013
17:35
Arrival of
Ms Marinke van Riet and Mr Carlo Merla
arrive via Air France.
Kinshasa
Airport
Wednesday 9 October 2013
Mr Gubad Bayramov and Ms Natalya Yantsen
arrive via Turkish Airlines TK671 at 19:40.
Mr Ali Idrissa arrives via Asky KP40 at 20:20.
Evening
Arrival of
Kinshasa
Airport
Ms Radhika Sarin arrives via Brussels Airlines at
20:25.
Saturday 12 October 2013
20:20
Arrival of International
Secretariat staff
Kinshasa
Airport
Mr Bady Baldé arrives
via Asky KP40.
Participant will be met by staff from the
national secretariat.
Sunday 13 October 2013
Mr Jonas Moberg and other participants
arrive via Air France AF888 at 17:35.
Afternoon
Arrival of the rest of the
delegation
Kinshasa
Airport
Other participants arrive
via Brussels Airline SN351 at 19:20.
national secretariat.
4
TIME
ACTIVITIES
VENUE
PARTICIPANTS/NOTES
Fleuve
Congo Hotel
International Secretariat staff
(preparation of MSG meeting)
Fleuve
Congo Hôtel
Members of delegation only
18:30
Meeting with the
Minister of Environment,
Conservation, and Tourism,
N'sa Mputu Elima Bavon
Welcome dinner and
debrief
20:00
7:30-8:30
Breakfast
Fleuve
Congo Hôtel
EITI delegation, MSG members, and
observers.
9:00–12:30
MSG meeting
Fleuve
Congo Hôtel
12:30–13:30
Working lunch with private
sector representatives
Fleuve
Congo Hôtel
The MSG meeting will cover the following:
• Opening remarks by the Minister of the
Environment, Mr N'sa Mputu Elima
Bavon.
• Brief overview of EITI implementation in
DRC, by Professor Mack Dumba,
National Coordinator• Opportunities and challenges of the
extractive sector in the DRC, by Mr
Claude Polet, President, Chamber of
Mines.
• Using revenues for the benefit of
citizens, by Mr Joseph Bobia, CSO (RRN
Network).
• The current state of the mining sector in
the DRC, by Mr Jean Felix Maupande,
Director General of CAMI.
• The role of oversight institutions in EITI
implementation, by Mr Victor
Batubenga, IGF and Senator Mr Nkongo
Budina.
• Role of the EITI as a platform for wider
reforms, by delegation representative
(tbc).
• Mr Claude Polet, Chamber of Mines
• Ms Yvonne Mbala, Corporation des
Petroliers
• Mr Bin Nassor, VP, External Relations,
TFM
• Mr Simon Tuma Waku, CEO, Groupe
Dan Gertler
• Mr Steve Panzu, Representative, MMG
Kinsevers
• Ms Yvette Mwanza, Secteur des
Comptoirs de Goma
5
TIME
ACTIVITIES
VENUE
PARTICIPANTS/NOTES
13:00–14:30
Meeting with
Parliamentarians
Fleuve
Congo Hôtel
14:30–16:00
Parallel field visit to the
Inspector General’s Office
IGF
14:30-16:00
Parallel field visit to the
EITI technical secretariat
EITI
technical
secretariat
16:00-17:00
Visit to HE Joseph Kabila’s
Office
Office of the
President
17:00-18:00
Visit to HE Augustin Matata
Ponyo’s Office
Office of the
Prime
Minister
18:30
Reception/working dinner
Fleuve
Congo Hôtel
(tbc)
Meeting theme: good practice in drafting
and adopting legislation applicable to the
extractive sector.
EITI delegation, Honorable Senateur
Nkongo Budina and members of the EITI
Parliamentary Commission.
Round trip transportation from the hotel to
the IGF will be provided by the Secretariat.
EITI delegation group 1: Interested
participants should contact Bady Baldé.
Round trip transportation from the hotel to
the secretariat will be provided by the
national EITI secretariat.
EITI delegation group 2: Interested
participants should contact Bady Baldé.
Round trip transportation will be provided
by state protocol.
To be confirmed: delegation will meet with
either the President or members of his cabinet.
Round trip transportation will be provided
by state protocol.
To be confirmed: delegation will meet with
either the Prime Minister or members of his
cabinet.
Partners invited include AfDB, EU, GTZ, WB, and
embassies from supporting countries.
7:35
Delegation departs for
Abidjan
Kinshasa
Airport
Transportation to the airport will be
provided by state protocol and the
technical secretariat.
Via Asky KP40
Please let Bady Baldé know when you have
booked your flight.
6
2
Members of the delegation
Confirmed Participants
Mr
MOBERG
Jonas
Head, EITI International Secretariat
Mr
BALDE
Bady
Country Manager, EITI International Secretariat
Mr
BAYRAMOV
Gubad Ibadoglu
Senior Researcher, Economic Research Center, Azerbaijan
Mr
DE GROOT
Eelco
Senior Policy Officer, Cordaid, The Netherlands
Mr
DIAMOND
David
Director Global Co-Head of ESG, Allianz Gl Europe
Mr
FINDLEY
Gbehzohngar M
MSG Member, President Pro Tempore of the Liberian Senate, Liberia
Ms
GILFILLAN
Corinna
Head, Global Witness, USA
Mr
IDRISSA
Ali
Coordinateur National du ROTAB PCQVP, Niger
Mr
KATENDE
Jean-Claude
Coordinator PWYP, DRC
Mr
MILLER
Jim
Mr
TOLLAN
Harald
Vice President, Environmental Affairs, Freeport-McMoRan, Copper&Gold Inc.
Senior Advisor, Ministry of Foreign Affairs, Norway
Ms
VAN RIET
Marinke
International Director, Publish What You Pay (PWYP)
Ms
YANTSEN
Natalya
Director, PA "Tax Standards Formation", member of the NSG Kazakhstan
from dialogue platform of NGOs and NGO Coalition "Oil revenues - under the
control of society", Kazakhstan
3
Key objectives and suggested messages
The objectives of the visit are to:
1.
Key messages include (the full text of the Board decision is in Annex A):
•
Commend all stakeholders for the recent progress in implementing the corrective actions.
•
Highlight the necessity of MSG oversight of EITI implementation, particularly the technical
secretariat activities.
•
Inquire about the decision making process within the MSG and the approach adopted by the
MSG to ensure that the 2011 EITI Report is comprehensive and reliable.
•
Emphasise the need for wide consultation of stakeholders for key decisions made by the MSG.
•
Draw attention to the need for full and free civil society participation.
2. Encourage strong political commitment to use the EITI as a platform for wider reforms.
Key messages include:
•
Commend the government for the recent progress in implementing the corrective actions.
•
Give recognition to the strong commitment of key government officials for their role in the EITI
process: Mr Celestin Vunabandi, Minister of Planning, Chair of the MSG; Mr Martin Kabelulu,
Minister of Mines; Prime Minister Matata Ponyo.
•
Highlight key provisions of the EITI Standard of particular relevance in the context of the DRC.
7
•
Encourage strong commitment to full implementation of the EITI Standard, Requirement 3.11 on
beneficial ownership in particular.
•
Recognise the challenges involved in the implementation of the EITI Standard in the context of
DRC.
•
Draw attention to the need for full and free civil society participation.
3. Explore with key stakeholders the ways in which the EITI Standard can contribute in improving
the governance of the country’s vast natural resources.
Key messages include:
•
Commend the government in the publication of contracts and licenses, and disclosure by the
Ministry of Finance of quarterly reports on revenues from the oil, gas and mining sectors.
•
Encourage strong government commitment for building and maintaining a register of the
natural person(s), who directly or indirectly ultimately owns or controls companies operating in
the extractive sector in the DRC.
•
Recommend enhanced transparency and governance in the management of state-owned
enterprises. Encourage full implementation of the provisions in the EITI Standard (Requirement
3.6) to bring greater transparency and accountability in the management of SOEs.
•
Recommend that the government maintains license registers and makes the process of license
allocation open and transparent. The country’s cadastre system could be improved by
maintaining a register of licenses as required by the EITI Standard (Requirement 3.9).
•
Commend the government effort in contract transparency. As part of the implementation of the
EITI Standard (Requirement 3.12), the EITI can provide the necessary quality assurance and
ensure an equal playing field between companies operating in DRC.
•
Encourage more disclosure on infrastructure provisions and barter agreements. As part of the
implementation of the EITI Standard (Requirement 4.1(d)), the DRC is required to disclose any
barter type agreements. Transparency in the implementation of this particular contract will also
diffuse suspicions surrounding the agreement and improve the government credibility at the
international level.
•
Encourage the government and partners to take the necessary measures for sub-national
reporting. EITI implementation at the local level will ensure the traceability of payments to local
governments in Eastern DRC.
•
Commend the government commitment for the extension of the scope of EITI reporting to the
forestry sector.
8
4
Implementation progress
The government committed to implementing the EITI in 2005. The DRC has published three EITI Reports since it
was admitted as a Candidate country in September 2007. Despite the challenges, EITI implementation has
contributed in ensuring that taxes collected by government entities are effectively deposited at the Central Bank.
However, the quality of EITI reporting is still not up-to-standard, particularly as it relates to the comprehensiveness
of the reports and data reliability.
The Board temporarily suspended the DRC on 17 April 2013 following a second Validation that did not
demonstrate compliance. The EITI continues to play an important role in the DRC, despite the temporary
suspension. The Inspector General’s Office completed its investigations of discrepancies identified in the 2010
report and is systematically reviewing the accounts of government agencies to improve data reliability in the 2011
report. More than one hundred contracts are now publicly available. There has been significant progress in
addressing the corrective actions agreed by the Board. The MSG, however, faces a tight deadline for the
publication of the 2011 report by 31 December 2013. The MSG plans to publish the mining, oil and gas reports
separately. On 13 September, following an extensive review and comments on the scoping study by stakeholders,
the MSG reportedly approved a materiality threshold and a list of companies and government entities required to
report.
On 21 August 2013, the Board agreed the transition procedures to the new Standard. The practical implications of
this decision for EITI implementation in the DRC are as follows:
•
The multi-stakeholder group is expected to publish an updated workplan in line with Requirement 1.4 of
the EITI Standard by 31 December 2013.
•
DRC is required to publish the 2011 EITI Report in accordance with the EITI Rules by 31 December 2013
and undertake a Secretariat Review in accordance with the EITI Standard by 17 April 2014. Subject to the
outcomes of the Secretariat Review, the Board will establish a new deadline for DRC to be revalidated. In
accordance with Requirement 7.1(b), in the event that the suspension is lifted, the EITI Board will consider
setting new reporting and Validation deadlines as appropriate.
•
DRC is required to publish a 2013 annual activity report by 1 July 2014.
9
4.1 Overview of EITI Reports
Period
covered
Publication
date
Sectors
covered
Government
revenues
(US$ millions)
Company
payments
(US$ millions)
Number of
companies
reporting
2007
November
Oil, Gas, Mining
404 700 000.00
404 900 000.00
26
2009
2008
January 2012
Oil, Gas, Mining
516 128 552.00
571 958 552.00
41
2009
January 2012
Oil, Gas, Mining
255 218 632.00
293 448 340.00
41
2010
January 2013
Mining, Oil, Gas
875 938 727.00
773 021 963.00
58
4.2 World Bank Indicators 1
Indicator
2012 or latest available data
Population
65.71 million
GDP; GNI per capita
$17.87 billion; $220, (low income country)
Poverty headcount ratio at national poverty line (% of 71.3%
population)
Life expectancy at birth, total (years)
1
49
Source: World Bank website: http://data.worldbank.org/country/congo-dem-rep
10
4.3 Revenue Watch Institute Indicators 2
4.4 Key Challenges
Key issues include:
1. Tax evasion and risks of corruption. Combined revenues from oil, gas and mining sector are less than US
$1billion per year, according to the 2010 EITI Report. As outlined in the 2013 Africa Progress Panel’s report,
DRC loses as much revenue as it collects every year.
2. Regulatory framework and enabling environment: The hydrocarbon and mining sectors are managed by
two separate ministries under different rules and regulations. Management and accountability of SOEs (seven,
including Gecamines being the largest) and government’s shares in different joint ventures remain an
important challenge. The mechanism of oversight of SOEs, such as Gecamines, is weak and its supervising
ministry is often unclear. The EITI new reporting requirements for SOEs could be useful in improving the
corporate governance of these entities and increase their accountability. The DRC received a failing grade of 6
out 100 on its enabling environment as measured in the 2013 Resource Governance Index (Revenue Watch
Institute).
3. Mineral smuggling and conflict: The long running conflict in Eastern DRC is largely a struggle over the
control of mines. In 2010, the government announced a mining ban in the eastern region, alleging mineral
2
Source Revenue Watch Institute website http://www.revenuewatch.org/countries/africa/drc/overview
11
smuggling, but lacked military control over the region to enforce the ban. A number of certification schemes
(KPRC for diamond, Dodd-Frank for coltan and cobalt) have been tested. A regional approach to resolving the
conflict has gained momentum in the first quarter of 2013. Members of the International Conference on the
Great Lakes Region have committed to transparency and traceability of their mineral trade, and have included
EITI implementation as one if their policy streams.
4. Artisanal mining: Part of the challenge in Eastern Congo stems from the fact that most mining is small-scale
and artisanal. On one hand export of minerals from artisanal mining contributes to funding the conflicts, on
the other hand, artisanal mining contributes to the livelihoods hundreds of thousands of artisanal miners and
their families. Local governments and business associations are promoting EITI implementation as one way to
formalise the sector. Given the small amounts collected at the local level, including artisanal mining and subnational reporting will slow EITI reporting.
5. Lack of infrastructure: Development of mining projects (e.g. aluminium smelter by BHP, cobalt by Freeport,
copper by Anvil) requires significant investments in infrastructure and energy. The government has also
negotiated agreements with Chinese companies to develop non-mining related infrastructure in exchange for
its minerals. Controversies arise in some cases as local communities lack the capacity to monitor full
implementation of these complex agreements. EITI could contribute in building a framework for disclosure
and monitoring of contracts.
4.5 EITI in the context of wider reforms
EITI can contribute in addressing these issues by ensuring:
•
•
•
•
•
timely reporting
comprehensive reports that include relevant information
data reliability
efficient management of the technical secretariat and effective MSG oversight
full participation of civil society in the EITI process.
The government is implementing important reforms to improve the management of the oil, gas and mining
sectors. Until now the role of EITI has been very limited. The agreed time-bound reforms between the IMF and the
Government of the Democratic Republic of Congo to enhance governance of the extractive industries include
contract transparency, and information on licensing and regulations. The World Bank updated economic
governance matrix for the DRC monitors the implementation of these reforms.
Democratic Republic of Congo Updated Economic Governance Matrix 3
N°
Actions
Deadline
Responsible Agency
Observation
Strengthen transparency and governance in the extractive industries
1
Adoption of competitive, transparent
and open procedures for the sales of
mining assets of State’s portfolio, and for
the establishment of joint ventures.
2
Publication within 60 days of all
Continuous
information related to (i) assets sales in
State’s portfolio, (ii) joint ventures
established and (iii) investments projects
3
Source: World Bank May 2013
December 2013
Ministry of Mining
Mining Cadaster
(CAMI)
Ministry of Portfolio
Prime Minister’s
Office
Ministry of Mining
Ministry of Portfolio
Prime Minister’s
Office
This is relevant to
the implementation
of the new EITI
Standard as per
Requirement 3.6
This is relevant to
the implementation
of the new EITI
Standard as per
12
N°
3
4
Actions
already initiated by mining SOEs; and
publication of procedures used to the
sale each asset.
Publication of statistics on production
and exports (by quantity and value) for
(i) total export data for the mining
sector, and (ii) export data for mining
SOEs.
Preparation by government and
submission to Parliament of the annual
report on the sale of assets and joint
ventures carried out by mining SOEs.
Deadline
Responsible Agency
Observation
Requirement 3.6
Twice a year and
annually (July;
January)
Ministry of Mining
Annually
(March)
Prime Minister’s
Office
Ministry of Mining
This is relevant to
the implementation
of the new EITI
Standard as per
Requirements 3.4
and 3.5
This is relevant to the
implementation of
the new EITI
Standard as per
Requirement 3.6
Strengthen the Legal and regulatory framework in the petroleum sector
6
7
8
9
5
Publication of the legal and regulatory
framework as well as oil agreements and
mapping of the blocks:
a) Publication and dissemination
of the new hydrocarbon law on
the Ministry of Hydrocarbon
website
December 2013
Ministry of
Hydrocarbon
b) Publication within 60 days
Continuous
following agreement, of all oil
agreements as well as
exploration and development
permits; and publication of
existing oil agreements
c) Publication on the Ministry of
December 2013
Hydrocarbon website of the
map of oil blocks, granted or
open, including the holders of
the exploration and exploitation
rights as well as the expiration
dates of those rights.
Ministry of
Hydrocarbon
implementation of
the new EITI
Standard as per
Requirement 3.12
implementation of
the new EITI
Standard as per
Requirements 3.9
and 3.12
Ministry of
Hydrocarbon
implementation of
the new EITI
Standard as per
Requirements 3.10
and 3.11
Logistics and practical information
Visa: Participants will receive a visa upon arrival at the airport. The government has issued two documents to all
confirmed participants, who require a visa upon arrival: 1) invitation from the government and 2) authorisation for
visa upon arrival in the DRC. These letters will facilitate obtaining a visa upon arrival. Please note that a fee of US
$80 will apply; this fee is payable in cash only at the airport in Kinshasa. Please print both letters and make sure to
carry them with you at all time during your travel.
Transportation to/from airport: Transportation between the Kinshasa Airport and Fleuve Congo Hôtel is
arranged by the national EITI secretariat with support from the state protocol.
13
Hotel: The government recommends the Fleuve Congo Hôtel. Reservations can be made online
at www.fleuvecongohotel.net, or by email (reservations@fleuvecongohotel.net) or phone: +243 817 111 684.
Flight to Abidjan: It is recommended that participants make a reservation with ASKY KP40 to Abidjan, which
departs from Kinshasa on 15 October at 7:35. See http://www.flyasky.com/asky/
6
Biographies
HE Joseph Kabila
President
Joseph Kabila rose to the Presidency on 26 January 2001, after the assassination of his father Laurent-Désiré
Kabila. He was 30 years old at the time. Following changes of the constitution that lowered minimum age for
running for President to 35, Kabila was elected for President in November 2006, and re-elected in December 2011
for 5 year term. More information about his background can be found
at http://en.wikipedia.org/wiki/Joseph_Kabila
HE Matata Ponyo
Prime Minister
Augustin Matata Ponyo Mapon (born 5 June 1964) was appointed Prime Minister in April 2012. Previously he
served as Minister of Finance, which he retains as Prime Minister. He is widely seen as competent and a reformer.
Originally from the Maniema province in the central-eastern region of the country, Ponyo worked previously at the
Congolese Central Bank (BCC). On several occasions, he had served as an advisor to the Congolese finance
ministry.
Mr Daniel Mukoko Samba
Deputy Prime Minister and Minister of Budget
Daniel Mukoko is leading an ambitious reforms agenda and he is widely seen as competent and dedicated
government official. He holds a PhD in Economics from the University of Tsukuba in Japan. Previously he was a
university professor and also worked for the UN.
Mr Céléstin Vunabandi
Minister of Planning
Chair of the MSG
Lecturer in Taxation and Public Finance Céléstin Vunabandi entered Kabila’s transitional government in 2003 as
Minister of National Economy. In 2006, Celestin Vunabandi was elected Member of Parliament and re-elected in
2011. In April 2012 he was appointed Minister of Planning and Monitoring the Revolution and Modernity.
Other important officials taking part in the EITI process are:
14
Mr Martin Kabwelulu
Minister of Mines
Vice-Chair of the MSG
Martin Kabwelulu Labilo was appointed Minister of Mines on 5 February 2007, and retained this post through the
reshuffle of 25 November 2007, and 2011, sometimes cumulating positions as Minister of Mines and Transport. He
is a key leader of the Parti Lumumbiste Unifié (PALU) and widely seen as part of President Kabila’s inner circle.
Kabwelulu was born on 13 April, 1948 in the Katanga province. More information about his key decision some of
which has been controversial can be found at http://en.wikipedia.org/wiki/Martin_Kabwelulu
Mr Bruno KAPANJI Kalala
Minister of Energy & Hydraulic Resources
Member of the MSG
Mr Bavon BAVON N'sa Mputu Elima
Minister of the Environment, Conservation, and Tourism
Member of the MSG
7
Relevant articles and publications
The latest EITI Report is available at http://eiti.org/report/democratic-republic-congo/2010
The report published on 1 January 2010; covering oil and mining revenues for 2007 is available
at http://www.itierdc.org/123.pdf.
Publication of revenue (mining, oil, forests) - 2nd Quarter 2012 http://www.congomines.org/fr/publication-desrecettes-mines-petrole-forets-%E2%80%93-2e-trimestre-2012/
The World Bank updated economic governance matrix for DRC provides tabular information on actions,
deadline, responsible agency, and remarks of the following activities: The document is available
at http://documents.worldbank.org/curated/en/2013/05/17724170/democratic-republic-congo-updatedeconomic-governance-matrix
•
The 2013 Africa Progress Panel’s report includes a case study on DRC and is available
at http://www.africaprogresspanel.org/en/publications/africa-progress-report-2013/apr-documents/
•
The contracts in the oil, gas and mining sectors are accessible on the Ministry of Mine website
at http://mines-rdc.cd/fr/index.php?option=com_content&view=article&id=92
•
A Bloomberg article published in December 2012 provides a case in point of the risk of
corruption http://www.bloomberg.com/news/2012-12-05/gertler-earns-billions-as-mine-deals-leavecongo-poorest.html
15
•
Global Witness analysis of the Congo-China partnership: http://www.globalwitness.org/library/6bncongo-china-resource-deal-urgent-need-tighter-anti-corruption-measures
•
Launch of the 3T and gold certification scheme for DRC conflict-free minerals http://www.minesrdc.cd/fr/documents/Communique_cirgl_160713.pdf
•
A comprehensive list of the DRC’s Ministers can be found
at https://www.cia.gov/library/publications/world-leaders-1/world-leaders-c/congo-democratic-republicof-the.html
•
A list of the MSG members in the DRC can be found
at http://www.itierdc.com/cadre%20legalde%20l%20itie%20rdc.php?valeur=%20%C2%BB%C2%BB%20
Cadre%20l%C3%A9gal
16
8
Annex A: The Board decision agreed on 17 April 2013
The Board agreed that the Democratic Republic of Congo is temporarily suspended. The suspension will be
lifted if the Board was content that the remedial actions recommended to achieve compliance had been
completed satisfactorily. Compliance will be verified through a Secretariat Review conducted within the next
12 months. If the suspension is in effect for more than one year, i.e. beyond (17 April 2014), the Board will
consider delisting the Democratic Republic of Congo.
The Board noted the progress in reporting payments and revenues from the oil and mining sectors and
commended the MSG for its efforts and leadership in EITI implementation. The Board called on the government
and multi-stakeholder working group to ensure that the corrective actions agreed by the Board are
implemented in full, and tasked the EITI International Secretariat with providing regular progress reports to the
EITI Board.
The Board agreed the following corrective actions:
•
In accordance with requirement 9, agree a clear definition of materiality addresses which revenue
streams are included within the scope of the reporting process, including addressing payments to and
from state owned enterprises, the coverage of payments and revenues to sub-national government
entities and the coverage of in-kind payments, infrastructure provision or other barter-type
arrangements. The Board welcomed that the 2010 report covers the “Chinese contract”, which is
required in order to meet requirement 9(f).
•
In accordance with requirement 11, the government is required to ensure that all relevant companies
and government entities participate in the reporting process, including the full participation of state
owned enterprises. The Board highlights the suggestion in requirement 11(b) that where a number of
small operators pay revenues which are individually not material, but collectively material, the
government discloses the combined benefit streams from such small operators.
•
In accordance with requirement 12, the government ensures that company reports to the
independent administrator are based on accounts audited to international standards.
•
In accordance with requirement 13, the government ensures that government reports to the
independent administrator are based on accounts audited to international standards.
•
In accordance with requirement 14, the government ensures that all companies within the agreed
scope of the reporting process comprehensively disclose all material payments in accordance with the
agreed reporting templates.
•
In accordance with requirement 15, the government ensures that all government entities within the
agreed scope of the reporting process, including at the sub-national level where relevant,
comprehensively disclose all material revenues in accordance with the agreed reporting templates.
These corrective actions could be addressed by publishing a supplementary 2010 EITI Report, or through the
2011 EITI Report. It is a requirement that the 2011 EITI Report is published by 31 December 2013.
17
Briefing for Board visit to Ghana
14-15 October 2013
Important contact information :
Eddie Rich
Tel: + 44 7805 57 4549
Email: erich@eiti.org
Franklin Ashiadey
Ghana Ministry of Finance and Economic Planning
EITI National Coordinator
+233 24 689 819
Email: fmashiadey@gmail.com
Francisco Paris
Tel: +47 95 428 370
Email: fparis@eiti.org
Sheila Naah
Ministry of Finance and Economic Planning
Tel: +233 207 333 779
Email: sheilanaah@hotmail.com
Summary .............................................................................................................................................................................................. 1
1
2
Key objectives of visit and suggested speaking points .................................................................................................... 3
3
Background................................................................................................................................................................................ 5
4
Logistics and practical information ...................................................................................................................................... 6
5
Relevant articles/references ................................................................................................................................................... 7
6
GHEITI National Steering Committee .................................................................................................................................. 7
7
Biographies ................................................................................................................................................................................ 8
Summary
Ghana is the second-largest gold producer in Africa. In 2012, the mining sector alone contributed 27% of the total
tax and 6% of the country’s Gross Domestic Product in 2012 while corporate tax exceeded royalties for the first
time. The extractive sector accounted for 56% of exports in 2011, up from 12% in 2010 due to oil discoveries.
However, its overall contribution to state revenues is relatively small, leading the government to increase royalties
for most commodities (including gold) from 3% to 5% in 2011. But this looks set to be offset by falling commodity
prices, especially gold, as the government’s deficit continues to widen.
Oil production began in 2011. Oil revenues have probably already surpassed mining receipts, and gas production
looks promising in the future. Ghana is establishing an Exploration and Production Bill: a piece of legislation
designed to strengthen regulation of Ghana’s extractives sector, management of oil blocks, inspection
requirements and management of the social and environmental impact of the extractives industries. This builds
on a fairly sound legal and policy framework for mining which mostly drives its reasonable performance on RWI’s
index (15th/58)1. However, it is too soon to assess its implementation in the oil sector.
The 2010 and 2011 Ghana EITI Reports were published in February 2013 and are being rolled out throughout the
country. These include oil and gas revenues, production volumes, mineral export values, the names of companies
operating in the country, production data by company, production stream values, royalties, special taxes,
dividends, license fees, and acreage fees. Information on applications for mining concessions is available for a fee,
but there is no clear explanation of how licenses are allocated. Mining contracts are not published and it is difficult
to evaluate the actual fiscal terms that apply to companies. However, many oil contracts are available on
government websites. Some Ghanaians allege that MPs from the ruling party have been appointed to the boards
of mining companies. There is therefore further room to strengthen links between EITI and other efforts such as
the work of the Public Interest and Accountability Committee, the Inter-Ministerial (Energy and Natural Resources)
Committee, the Global Anti-corruption Commission and the Parliament.
It is not yet clear that EITI implementation is making a significant impact on government policy or hitting its
potential in informing wider debates such as tax rates and contract terms (in mining and in oil) or other aspects.
The story of the GHEITI data is not well told. Public debate on the implications of the reports and on the use of the
EITI could be more ambitious (see below). We have not seen any analysis of how gold or oil terms compare with
other countries in the region.
On the positive side, the GHEITI is functioning well and successfully incorporated oil through capacity building and
expanding of the MSG. The coverage of the reports is impressive, including the first coverage of subnational
transfers.
The programme has been arranged by GHEITI. The report should remain confidential to the EITI Board.
1
TIME
ACTIVITIES
VENUE
PARTICIPANTS/NOTES
Ministry of
Finance
(Conference
Room
opposite
Main MoF
Building)
Hon. Ministers of:
Finance: Hon Seth Terkper
Energy: Hon Emmanuel Armah Kofi Buah
Lands and Natural Resources:
Hon Inusah Fuseini,
Hon Mike Allen Hammah
Chief Directors of
Finance
Energy
MLNR
Members GHEITI Secretariat and National
Steering Committee (NSC)
Donors:
GIZ
09:00 – 12.30
1
Government of Ghana
Welcome address by
Major M.S. Tara (Rtd)
Statements:
Hon Minister Finance
Rep EITI Board
Minister for Energy
Minister MLNR
Rep of CSO
Closing Remarks
Coordinator GHEITI
Revenue Watch Index 2012, http://www.revenuewatch.org/rgi
2
WB
Press:
GTV,TV3, Metro TV, TV Africa, Joy FM, Radio
Ghana, GNA, Citi FM
Snack/lunch break
Role of Companies within
the new EITI Standard
Chair Mr Koney /Rep of E&P
Forum
Reporting issues:
14.30-16.30
- SAP reporting
- Sustainability
- Funding
Mining/oil/gas companies
GHEITI Secretariat
Ministry of
Finance
(Conference
Room
opposite
Main MoF
Building)
Ghana Chamber of Mines
Tullow Ghana
Kosmos Ghana
Members GHEITI NSC
Other Rep of companies (Mining & Oil/Gas)
GHEITI Secretariat
Cocktail Reception to be hosted by the Ghana Chamber of Mines- venue yet to be confirmed
09.00-12.30
Roundtable with civil
society organisations
Chair Dr Steve Manteaw
RWI-Africa Coordinator
Emmanuel Kuyole
Ministry of
Finance
(Conference
Room
opposite
Main MoF
Building)
CSOs
Members GHEITI NSC
GHEITI Secretariat
Ministry of
Finance
(Conference
Room
opposite
Main MoF
Building)
Members GHEITI NSC
GHEITI Secretariat
Snack/lunch break
14.30-15.30
2
Wrap-up
Concluding statements
Rep EITI Board Member
Chair GHEITI
Key objectives of visit and suggested speaking points
•
Congratulate GHEITI and the government on Ghana’s important achievements: the publication of eight
financial years of revenues from mining from 2003 to 2010. The 2010 and 2011 reports included revenue
from the oil and gas sector for the first time.
•
Emphasis the support of the EITI Board, for GHEITI’s efforts to contribute to good governance of the
sector, including consolidating the regulatory framework with the proposed Minerals Revenue
Management Law in addition to the Petroleum laws.
•
Drawing on the new EITI Standard, stimulate a broad discussion in preparing the 2014 workplan about
how the EITI can contribute to improving the governance of the country’s natural resources. The
workplan is a major opportunity for the GHEITI to become more integrated and relevant (see below).
•
Encourage the GHEITI to be more integrated into other reform processes. The GHEITI multi-stakeholder
group could be used as a platform for integrating other processes:
3
•
•
•
•
the Public Interest and Accountability Committee and Parliamentary oversight bodies;
the mining cadastre and Minerals Agency;
the Petroleum Commission efforts to regulate the fledgling oil and gas sector;
inter-ministerial coordination especially between the Ministries of Finance, Energy, and Natural
Resources;
• discussions on the Exploration and Production Bill; and
• the global anti-corruption commission.
GHEITI could, for example, support the following objectives of the G8 partnership:
• Improved extractives management by strengthening policy, legislation and regulation. Initial focus
on passing a high-quality Exploration and Production Bill (in Parliament) and Petroleum Commission
regulation in line with international best practice.
• Improved transparency and accountability: civil society oversight and debate on taxation, regulation,
oil block allocations and major investments. This will turn extractives transparency data into
accountability for how these resources are managed. Short-term focus on enabling local debate and
creating links between local and specialised international civil society on taxation. Civil Society will
proactively review, analyse and debate data – and outline gaps and risks and comparing Ghana’s
arrangements with other countries and whether government is receiving what it should from agreed
fiscal terms and production (“should be paid” audit).
• Improved strategy for management of extractives and legislation through better stakeholder
dialogue: facilitate dialogue between the executive, parliament, civil society and industry players.
•
Encourage the GHEITI to explore ways to make their reports more relevant. The below is a list of some
potential areas that stakeholders might consider – some of which are required or encouraged in the EITI
Standard.
• Forecasts - as in other countries in the region, management of expectations of the oil and gas sector
is a major concern. Forecasts apparently exist but are either not public or not widely
distributed. They might be included in future GHEITI reports.
• Contract transparency. There appears to be willingness to publish future contracts though no
confirmed decision yet. This might be a way to address the concerns about the gold contracts and the
complexity of the production sharing oil and gas deals. More clarity on the ownership arrangements
of the national oil and gas companies could be encouraged.
• Beneficial ownership. License holder transparency will be a requirement of the EITI Standard and the
cadastre information appears to be available, but it is not clear how to get beneficial ownership
information from existing systems. The GHEITI could look into this.
• Artisanal and small scale mining. World Bank is helping Ghana on this, but not necessarily on the
revenue aspects. Might be good to pull this information together as background (not for
reconciliation) in the GHEITI report, to get a sense of whether any significant revenue is being lost.
• Process audit. It might be good to look at the way the revenues streams arrive into the government
royalties to the line ministry, tax to the Min of Finance, etc., and also how licenses and contracts have
been awarded. This might be included in the GHEITI reports to encourage greater public scrutiny
and assessment of the efficacy of this. Coverage of the operations of the state-owned petroleum
company and comparisons with models from elsewhere would be helpful in this regard.
• Destination of goods survey. A study of where the gold, etc., is exported might be helpful in
assessing whether there is greater opportunity for increasing local content.
The next steps would therefore be:
• To use the introduction of new standard to energise the process and inject more ambition into the
2014 workplan.
• To liaise with the Natural Resource Charter, and the UK/G8 fast track project.
4
3
2
Background
•
Gigantic Jubilee oil reservoir is starting to bring significant fiscal revenues – US$440m in 2011 (of
which US $240m were in-kind payments to the national oil company). Tullow Oil, Kosmos Energy and
Anadarko share of total oil crude production was 80 2 % in 2011 from the Jubilee field.
•
Mining revenues have also become more significant – more than doubling between 2010 and
2011 from US $210m to US $500m in 2011. This was due to the end of tax holidays leading to a 75%
increase in corporate tax revenues, a change in royalty and tax rates in the sector, and increased gold
prices. In the mining sector, the four largest taxpayers in 2011 were Tarkwa/Goldfields, Newmont
and Abosso/Goldfields and Chirano Gold (Kinross) account for 87% of total revenues.
•
The country is generally praised for good macroeconomic management, for political stability and
better governance indicators that other regional peers. It has established a good legal framework for
the sector. However, it faces considerable economic and political challenges in the sector. With
expectations sky-high, extractives policy pronouncements are often seen as subject to populist
rhetoric and vested interest.
•
Still further need for transparency – especially in allocation of licenses, fiscal terms, and beneficial
ownership.
•
There is increasingly civil society dissatisfaction with the management of the sector, most recently
with the government’s alleged failure to amend or harmonise the Petroleum Income Tax Law which
is said have cost Ghana almost US $70m potential revenue, especially related to the capital gains tax
related to the transfer of the EO Group’s transfer of its 3.5% stake in Kosmos Energy to Tullow Oil.
•
There are concerns about the size of illicit financing and transfer pricing in the sector. The Global
Financial Integrity Report claims that US $4.9 billion was lost through illicit financial flows from 1970
to 2008 in the extractive sector, included loss of revenue from resource taxes. The 2012 budget
statement also indicated that the nation lost US $36 million annually from the mining sector through
abusive transfer pricing.
•
There are concerns about the terms of the PSAs in the oil sector with 15% allocated as the
government share.
•
Accountability of subnational payments - 80% of mining royalties are kept by the central
government, 10% is deposited into a Mineral Development Fund for distribution to mining
communities, and 10% goes to the Office of the Administrator of Stool Lands. The agencies then
distribute legally-established shares to local authorities. Information on revenue transfers is
published in EITI reports, but local authorities do not publish data on the funds they receive. The
national audit office reviews the finances of Ghana's district assemblies, but revenues are not audited
at the local level, creating the potential for mismanagement.
•
Many international partners have supported Ghana’s efforts to ensure good governance in managing
natural resources including the UK, who lead on a G8 fast-track partnership, and Norway, who
advised on the regulatory structure in preparation for oil exploitation. The UK-led G8 ‘fast track’
partnership in extractives will provide targeted support to government and to civil society groups, to
Total lifting for these three companies in 2011 were 95% of the total with the Ghana National Petroleum company sharing
16% of total listings.
5
empower them to oversee the extractives sector, built around the 12 Principles of the Natural
Resource Charter. There will be a focus on creating links between local and specialised international
civil society groups to coordinate this process effectively. The partnership will also seek to facilitate
dialogue between the extractives sector, Parliament, civil society and private sector stakeholders.
•
4
The GHEITI Secretariat (two staff members) is hosted by the Ministry of Finance and Economic Policy
(MOFEP) with support from the Champion and MSGH Chair, Minister Seth Terkper, and the Chief
Director of MOFEP, Enoch Cobbinah.
Travel and accommodation
All International flights are through Kotoka International airport at Accra (ACC). Kotoka International airport is very
central and there are always Airport Shuttles and lots of taxis available to connect you to other parts of the City.
The recently refurbished airport is small, with a departure lounge that can become cramped when multiple flights
are due for takeoff. 3
In case you have not booked:
Flights to Accra 13 October: Several - Lufthansa arrival18:50, KLM 20:00, BA 20:15
Flights from Accra to Abidjan 15 October: Departure 18:10 arrive 19:10, South African Airways
Hotels: Mövenpick Ambassador Hotel and NOVOTEL
Airport Pick-ups:
GHEITI has recommended that participants arrange with their Hotels for airport pick- ups and drop offs. The Hotels
mentioned have good arrangements for guest pick-ups and drops off.
We recommend that visitors arrange airport pick- ups and drop off with their hotels. The hotels mentioned have
good arrangements for guest pick-ups and drops off.
Visa for Ghana: All visitors entering Ghana must have valid entry visas issued by a Ghana Diplomatic Mission or
Consulate abroad or any other visa-issuing authority mandated by the Government of Ghana to act on its behalf.
Economic of West African States (ECOWAS) nationals and those of other countries with which the Government of
Ghana has specific bilateral agreements are exempted. All visa applicants are strongly advised to submit their
applications and passports for visas two weeks to one month prior to the intended date of departure. For more
information, please visit the following website: http://www.ghanaembassy.org/index.php?page=visas
Security
Ghana is not in the list of countries advised against travelling by the UK Foreign Office or the US State Department
See UK’s Foreign Office travel advice: https://www.gov.uk/foreign-travel-advice/ghana
See US State Department travel advice (Security) http://travel.state.gov/travel/cis_pa_tw/cis/cis_1124.html#safety
3
For more travel information see: http://wikitravel.org/en/Ghana
6
5
Relevant articles/references
EITI Board transition arrangement
(Ghana): http://eiti.org/files/2013_31%20Aug_Clare%20letter%20Transition_Standard_Ghana.pdf
EITI Ghana Validation report, annual report and GHEITI Workplan: See¸http://eiti.org/Ghana/implementation
GHEITI website: http://www.geiti.gov.gh/site/index.php?option=com_content&view=frontpage&Itemid=1
GHEITI 2012 Annual
Report: http://www.geiti.gov.gh/site/index.php?option=com_phocadownload&view=category&id=24%3A2011&
Itemid=54
GHEITI last report: http://eiti.org/news/ghana-eiti-reports-revenue-oil-and-gas-first-time
GHEITI newsletter (May 2013): http://eiti.org/files/GHEITI%20newsletter_may_2013.pdf
Public interest and accountability committee report 2012: http://piacghana.org/PIAC%20SemiAnnual%20Report%202012.pdf
RWI Governance Index : http://www.revenuewatch.org/rgi
PWYP Map on Contracts : http://www.publishwhatyoupay.org/about/advocacy/world-map-who-has-publishedcontracts
Various articles:
http://www.thebftonline.com/index.php?option=com_content&view=article&id=4448:hedged-prices-reducemineral-revenues&catid=9&Itemid=207
http://politicsofpoverty.oxfamamerica.org/2013/08/21/in-ghana-government-welcomes-us-eu-transparencylaws/?utm_source=rss&utm_medium=rss&utm_campaign=in-ghana-government-welcomes-us-eutransparency-laws&utm_source=twitterfeed&utm_medium=twitter
http://allafrica.com/stories/201308131304.html
6
GHEITI National Steering Committee
(as listed in GHEITI website on 27 September
2013 http://www.geiti.gov.gh/site/index.php?option=com_content&view=article&id=82&Itemid=59 )
Major M. S. Tara (Rtd), Ministry Of Finance And Economic Planning
Prof Thomas Akabzaa, Ministry Of Energy
Mr. Franklin Ashiadey, Ministry Of Finance And Economic Planning
Mr Roger Angsomwine, Office Of The President-Castle
Mr Wayo Abubakari, Office Of The President-Castle
Mr Sulemanu Koney, Ghana Chamber Of Mines
Ms Victoria Benson, Ministry Of Finance And Economic Planning
Dr Gad Akwensivie, Office Of The Administrator Of Stool Lands
Mrs Philomena Johnson, ISODEC/IFP
Ms Sheila Naah, Ministry Of Finance And Economic Planning
Mr J.B. Okai, Ministry Of Energy
Mr B.C.D. Ocansey, Ghana Revenue Authority
7
Dr Steve Manteaw, Publish What You Pay-Ghana / ISODEC -Ghana
Mr Chris Afedo, Ghana Revenue Authority
Mr Amponsah Tawiah, Minerals Commission
Mr Sam Addo Nortey, Ghana National Petroleum Cooperation
Mr Kevin Quinn, Tullow Oil Ghana Limited
Mr Dela Klubi, Ghana Revenue Authority
Mr Frank Turkson, Ghana Manganese Company
Mr Ellis P. Atiglah, Ministry Of Lands And Natural Resources
Mr Duodu A. Acheampong, Jomoro District Assembly
Mr George Sarpong, Kosmos Energy
Mrs Hannah O. Koranteng, Wassa Association Of Communities Affected By Mining.
7
Biographies
Seth Terkper, Minister of Finance and Economic Planning
Mr. Terkper was born in Somanya in the Eastern Region of Ghana, where he started his Elementary School
education in the Presby cluster of schools. He obtained his first degree in Bachelor of Commerce (B.Comm.) from
the University of Cape Coast (UCC) in Ghana. He is also a Chartered Accountant who holds a Master of Public
Administration (MPA) degree from the Kennedy School, Harvard University. As a Deputy Minister in the Ministry of
Finance and Economic Planning (MOFEP) from March 2009 to January 2013, Mr. Terkper worked mainly on the
Budget and Medium-Term Expenditure Framework (MTEF) as well as on revenue policy and administration.
He is a member of the Board of Directors of the Bank of Ghana (BOG) and chaired the joint Steering Committee of
the Ghana Revenue Authority (GRA) and Ghana Integrated Financial Management Information System (GIFMIS)
reforms. During the period, he became very active in working on government business in Parliament, including
the passage of Bills and approval of International Agreements. Between July 1999 and February 2009, Mr. Terkper
held various positions (last as Senior Economist) in the Fiscal Affairs Dept. (FAD) of the International Monetary
Fund (IMF). He participated in, and led, several technical assistance (TA) missions to member-states to improve the
organization, process and legislation for revenue institutions. In so doing, he worked with colleagues in the Tax
Policy [TP] and other Divisions in FAD; the African and Legal departments; the Caribbean Technical Assistance
Centre [CARTAC]; and other IMF units to achieve critical TA goals. As a chartered accountant and public
administrator, he follows fiscal, accounting, and other economic trends closely. Before joining the IMF, Mr. Terkper
worked in staff and management positions—including National VAT Coordinator and Deputy Commissioner—in
the National Revenue Secretariat (MOFEP) and revenue agencies in Ghana. He played a key role in the introduction
of the Value Added Tax (VAT) in Ghana. He has consulted for the IMF; Harvard Institute for International
Development (HIID), Harvard International Tax Program (ITP); African Development Bank [AfDB], and UN
Committee of Tax Experts. He was a correspondent for Tax Analysts, USA. Mr. Terkper has been part of—and
participated in leadership positions in—local government (including membership of the Yilo District Assembly),
social, religious, and student bodies. Mr. Terkper published a book on VAT (VAT Handbook by Thompson-Reuters)
in 2011 and continues to maintain a keen interest in research, publications, reviews and teaching. He promotes a
team effort and uses leadership and motivational skills to achieve challenging goals.
Emmanuel Armah Kofi Buah, Minister of Energy
Hon. Emmanuel Armah-Kofi Buah is a native of Ellembele in the Western Region of Ghana. He is a management
professional. Hon. Kofi Buah has academic qualifications in law and management from the Kwame Nkrumah
University of science and technology of Ghana and the University of Maryland, USA respectively. He has held
8
several management positions locally and internationally, in the process deepening his expertise in project
management, finance, marketing and investor and international relations. In the last few years, he has applied
these management skills in his position as Member of Parliament for Ellembele, working with the District
Assembly in his constituency to deliver on their respective district planning and development obligations. He was
Deputy Minister of Energy in a period when Ghana gained global attention for commercial oil and gas production
from the Jubilee field. In this capacity, he supported the Minister in managing the various sector agencies and
departments under the Ministry to deliver effectively. He has managed various local and national stakeholders
with regard to Ghana’s Energy sector, all the while employing his management skills. His legal knowledge has also
been applied in the development of various legislative instruments pertaining to the Energy sector. Hon. Kofi Buah
has a deep appreciation of local community needs and national development expectations with regard to Energy
and is constantly exploring and developing innovative initiatives for meeting them.
Inusah Fuseini, Minister of Lands and Natural Resources
Inusah Abdulai B. Fuseini (born 23 January 1962) is a Ghanaian lawyer and politician. He is the Member of
Parliament for Tamale Central and the Minister for Lands and Natural Resources in the Ghana government. Mr
Inusah Fuseini, from Tishiegu-Tamale, in the Northern Region, Ghana was a senior associate with the Law Trust
Company in Accra. This was before he went into politics. Mr Fuseini, who is a member of the National Democratic
Congress, became a Member of Parliament when Wayo Seini defected from the NDC to the New Patriotic Party.
This triggered a by-election in the Tamale Central constituency on 4 April 2006. Fuseini Inusah, won the election
with a majority of 17,502.He successfully held his seat in the Ghanaian general election in December 2008 with
66% of the votes cast. He again retained his seat in the Ghanaian general election in December 2012.
9
Briefing for Board visit to Guinea, 18 October 2013
John Kanyoni
Mamadou Diaby
Hotel Palm Camayenne
National Coordinator, EITI Guinea
Tel: +224 628 59 30 62
Commune de Dixinn
Sise Quartier Camayenne Corniche
Conakry
Tel: +224 656 10 10 10
Tel: +243 990104400
Email:JKanyoni@eiti.org
Abdoulaye Soumah
Tel: +224 664 26 61 94
Email: diabyitie@yahoo.fr
1
2
3
Key objectives of the mission and suggested messages ................................................................................................. 3
4
4.1
Summary........................................................................................................................................................................... 5
4.2
Remedial actions ............................................................................................................................................................. 5
4.3
Situation analysis ............................................................................................................................................................ 6
4.4
EITI Guinea’s impact ....................................................................................................................................................... 7
4.5
Challenges ahead............................................................................................................................................................ 7
4.6
EITI Guinea background and facts ............................................................................................................................... 7
4.7
Key EITI facts – a reminder, as of 26 September 2013 ............................................................................................ 8
5
6
Biography ................................................................................................................................................................................... 9
7
Relevant articles/references ................................................................................................................................................... 9
Executive Summary
Guinea has large mineral reserves and mining accounts for 26% of GDP. There is also growing interest in the oil
sector. Since the election of President Alpha Condé in December 2010, the country has undergone a series of
reforms. However the EITI process has not been significantly linked to these efforts. An 18 person Technical
Commission comprised mainly of government representatives and overseen by a Strategic Committee has been
tasked with undertaking a review of the mining contracts. The aim is to review all of the 18 contracts by the end of
2013.
The new mining code, adopted in September 2011, was a significant improvement in terms of transparency, anticorruption and environmental safeguards, but imposed increased direct state shareholding in mining operations
and more onerous tax provisions. Key amendments included reduction of royalties, custom duties and corporate
income tax, longer fiscal stabilisation period and clearer rules on transfers of interests and calculation of tax bases.
The code has also been revised to allow for more progressive application of the new provisions to existing
contracts.
The visit of the Board will be a good opportunity to show how the EITI process could be better integrated and
linked to these efforts. For example the EITI could be used to address beneficial ownership and license allocation,
as well as extractive revenue management at central and sub-national levels. Additional technical support is
needed to address weaknesses in EITI reporting regarding the comprehensiveness and reliability of data.
The visit also provides an opportunity to discuss a revised EITI workplan that addresses some of the
broader issues in the mining and oil sector and to provide advice on the gaps from the scope for the
2011-2012 EITI Report.
1
TIME
ACTIVITIES
Thursday 17 October 2013
18:20
Arrival of some
representatives of the EITI
delegation with the Asky
Flight KP0016
Friday 18 October 2013
7:00-8:00
Breakfast
8.00-9.30
9.00-9.30
Meeting with National
Coordinator Mr Mamadou
Diaby
Meeting with Mining
Minister, Mr Lamine Fofana
VENUE
PARTICIPANTS/NOTES
Airport
A representative from EITI Guinea will meet
you upon arrival. If your arrival time
changes, please let John Kanyoni know.
Hotel Palm
Camayenne
Hotel Palm
Camayenne
An ‘EITI table’ has been reserved in the
breakfast hall.
Overview of the programme of the visit of the
Board.
Overview of the implementation of EITI in
Guinea, challenges and next steps.
10.00-10.30
Meeting with Prime
Minister, Mr Mohamed Said
Fofana
Ministry of
Mines and
Geology
Prime
Minister’s
office
11.00-11.45
Meeting with President
Alpha Condé
Presidential
Palace
- Presentation of the new Standard.
- How to make government agencies as
Cadastre Minier, Direction Nationale du Trésor,
Direction Nationale des Douanes, Fond
d’investissement minier in the line with EITI
reporting.
-Law on the Cour des Comptes among top
priorities in the next parliament.
-Briefing on the role of EITI as component in the
ongoing reforms and how to make EITI more
relevant.
2
Lunch with the Chamber of
Mines and other
representatives of private
sector
Meeting with the EITI Guinea
steering committee
Hotel Palm
Camayenne
16.30-18.30
Working meeting with multiand bilateral partners
US Embassy
in Conakry
19.00
Departure for airport
Flight Air France AF751
departure at 21:30
Hotel Palm
Camayenne
12.30-13.30
14.30-15.30
2
Conference
room of
ministry of
mines and
geology
- Discussion on the mining code and its impact
on investment and business in Guinea.
- Role of extractive industries in implementing
EITI in Guinea.
- Progress in the implementation of the agreed
corrective actions (preparation for the 2011
Report).
- Key objectives of the 2014 workplan.
- Issues of funding of EITI implementation in
Guinea.
- Role of donors in supporting EITI.
- Technical and financing support of donors to
EITI.
-G8 partnership with US.
Transportation is arranged by the EITI.
Please meet in the lobby.
Clare Short, EITI Chair
Bob Cekuta, Principal Deputy Assistant Secretary, State Department, USA
Eelco De Groot, Senior Policy Officer, Cordaid, the Netherlands
Obiageli Katryn Ezekwesili, Senior Economic Advisor with the Open Society Foundations
Laurel Green, Chief Adviser Policy, External Affairs, Rio Tinto
Clare Murphy, Transparency and Governance Advisor, State Department, USA
Michel Okoko, Chairman of the Executive Committee, Republic of Congo
Kåre Stormark, Deputy Director General, Ministry of Foreign Affairs, Norway
Debra Valentine, Group Executive, Legal & External Affairs, Rio Tinto
From the EITI International Secretariat:
John Kanyoni, Advisor EITI Secretariat
3
Key objectives of the mission and suggested messages
General
•
Welcome Guinea’s commitment to achieve Compliance.
•
Assess progress of the implementation of detailed action plan of corrective actions by the steering
commitee required in order to become EITI compliant.
•
Encourage further efforts to link EITI to national reforms, including contract negotiation and transparency,
reforms related to the governance of the mining sector (mining code).
•
Brief the government and the multi-stakeholder group on the EITI new Standard, and encourage swift
transition.
President Alpha Condé
3
•
Welcome the government commitment to transparency and accountability as demonstrated by the
publication of contracts and the judicial process to cancel licences issued in violation of the law.
•
Commend the President for his ambitious reform agenda including progress in reviewing licenses and
recent efforts to catch up on the backlog of EITI reporting last year and urge the government to ensure
publication of a comprehensive and reliable 2011 EITI report by the end of the year so that Compliance
can be achieved.
•
Encourage the government to make better use of the EITI process and reports so that it doesn’t remain
disconnected from wider governance and extractive sector reforms.
•
A first step in connecting the EITI to the government’s wider reforms agenda, is to ensure that the
forthcoming EITI Report verify whether company payments are effectuated in accordance with
contractual obligations.
•
A second step is to show how these revenues enter in the budget, subnational payments and transfers to
local governments. This will show the impact the government effort in improving the management of
revenues from the sector.
•
The revised EITI Standard provides a wide array of opportunities, including: a framework for publishing
information about licenses and the process of issuing licences; a framework for maintaining a public
register of beneficial owners; a framework for monitoring the sector’s overall contribution in the
economy, not just fiscal revenues, but also employment, investment, and export.
•
EITI can be a tool for the President to alleviate suspicions and build trust, by ensuring that oversight
institutions are effectively doing what they are supposed to do. The EITI process could be an effective
mechanism to ensure that “la cour compte” is fulfilling its mandate to audit government accounts on a
regular basis.
•
EITI can be a tool for effective enforcement of contracts and the new mining code (adopted in March
2013).
Minister of Mines Mohamed Said Fofana
•
If used well, the EITI can become a key tool for governance and mining sector reform:
o Reliable EITI data in 2011/2012 Reports can help analyse and monitor contracts and licences.
o Nation-wide communication about the EITI can help build citizen trust in government.
o Compliance with the EITI can build the confidence of the right investors.
•
The EITI process in Guinea is still weak and needs full government support (political and financial)
o Improve the quality of reports to make data usable (high quality disclosure and certification).
o Build the capacity of the EITI Steering Committee and Permanent Secretariat.
o Consider down-sizing of the EITI structures and a renewal of Committee and Secretariat.
Open society /CSOs
• Encourage better use of EITI data and dissemination efforts, in particular in the regions.
• Involvement of CSO in commissions of steering committee.
4
• Build capacities of CSO in Guinea.
4
4.1 Summary
Guinea steering committee is currently addressing the remedial actions (see below) with a detailed
workplan as requested by the Board following its Validation in 2012. An Independent Administrator,
Moore Stephens, was recruited in late July to conduct a scoping study and produce the 2011 and 2012
EITI Report. The scoping study does not appear to be sufficiently comprehensive and lacks information
from the cadaster on mining licenses and on revenues collected at sub-national level. Following a
Secretariat visit in mid-September, the government agreed to provide all of the missing information. The
EITI Reports for 2011 and 2012 are due to be published at the end of November 2013.
With support from the World Bank, a consultant has been recruited to provide technical assistance to the
national secretariat and the MSG over the next 10 months. A key priority for the coming months will be to
raise the profile of the EITI, engage new actors and make sure that the EITI is connected to the wider
debates, including the review of the mining contracts and implementation of the many important
transparency provisions in the revised mining code.
4.2 Remedial actions
At its meeting in Lusaka in October 2012, the EITI Board agreed that Guinea had made meaningful
progress in implementing the EITI and requested that the following remedial actions be undertaken by
the Validation deadline of 26 April 2014 1:
1. The Steering Committee should agree and publish a comprehensive (time-bound and costed) work
plan (requirement 5) that: (1) covers the publication and dissemination of the next EITI report and
steps toward regular and timely EITI reporting thereafter; (2) addresses the recommendations from
previous reconciliation reports and from the validator; and (3) addresses the corrective actions
highlighted below. The Steering Committee should agree a clear definition of “material payments
and revenues” and incorporate this definition into the reporting templates and reconciliation
process for the next EITI report (requirement 9). This should specifically address the materiality of
payments by companies in the exploration phase, and barter agreements.
2. The next EITI report should clearly demonstrate that all entities that make or receive material
payments are participating in the reporting process (requirement 11).
3. The Steering Committee should take steps to ensure that company and government disclosures to
the reconciler are based on audited accounts to international standards and agree an approach for
addressing these issues (requirements 12 & 13);
4. In accordance with the agreed definition of materiality (see point 2, above), the Steering Committee
should ensure that all material mining payments by companies to government have been disclosed
to the reconciler and incorporated into the next EITI Report (requirement 14);
26
1
In accordance with the transition procedures to the EITI Standard Guinea is (1) expected to produce an updated workplan by
the end of 2013; (2) required to produce the 2011 and 2012 EITI Reports in accordance with the EITI Rules by 31 December
2013 and 31 December 2014 respectively; (3) required to produce the 2013 EITI Report in accordance with the EITI Standard
by 31 December 2015; (4) required to undertake a Secretariat Review by 26 April 2014; and (5) required to produce the 2013
annual activity report by 1 July 2014.
5
5. In accordance with the agreed definition of materiality (see point 2, above), the Steering Committee
should ensure that all material mining revenues received by the government have been disclosed to
the reconciler and incorporated into the next EITI Report (requirement 15);
6. The Steering Committee should agree a process for addressing recommendations for remedial
actions outlined in previous EITI reports and document progress in addressing these (requirement
17);
7. The Steering Committee should ensure that EITI reports are publicly accessible in such a way as to
encourage that its findings contributemoza to public debate (requirement 18).
4.3 Situation analysis
Contract Transparency: Reviewing all mining contracts issued under the former regime has been
President Alpha Condé’s top priority since taking office in December 2010. An 18 person Technical
Commission with mainly government representatives overseen by a Strategic Committee that reports
directly to the President have been tasked with undertaking the review (see TORs). The commission has
published all the contracts, but the review of the contracts has been slow due to lack of funding. A special
account has been created to mobilize funding; the Africa Legal Support Facility from the AfDB is the main
contributor to the fund. The process was stalled pending the amendments to the 2011 Mining Code, but
the commencement of the first review (Alliance Mining Commodities) was recently announced. The aim
is to review all 18 mining contracts by the end of the year. The pending uncertainty from the review of
the contracts combined with deteriorating market conditions for Guinea’s main commodities have led to
the freezing of large iron ore projects. For bauxite, eight projects are under development, representing a
total investment of possibly US$ 24 billion that would boost annual production to 61 million tons of
bauxite and about 20 million tons of alumina by 2016/2017.
Revisions to the mining code: The new mining code adopted in September 2011 was a significant
improvement in terms of transparency, anti-corruption and environmental safeguards, but imposed
significantly increased direct state shareholding in mining operations and more onerous tax provisions.
The government took advice from CSOs and academics but recommendations from the private sector
were not sufficiently taken into account. . In April 2013, the unelected temporary national assembly
agreed amendments to the mining code seeking to make the legal framework more investment friendly.
Key amendments include reduction of royalties, custom duties and corporate income tax, longer fiscal
stabilization period and clearer rules on transfers of interests and calculation of tax bases. The code has
also been revised to allow for more progressive application of the new provisions to existing contracts.
Tense relationship between the government and companies: The president of BSGR (Asher Avidan,
who runs the mining arm of billionaire Beny Steinmetz's Business Empire) has been barred from entry in
Guinea. The dispute between the government and BSGR/Vale over mining rights for half of the Simandou
project is likely to end in court. Two BSGR employees have been arrested.
Overlapping mandates of state actors: The mining sector is still managed by two parallel institutions.
The overlapping mandate between the President’s office and the Ministry of Mines brings more
uncertainty in the sector as key decisions are made by both the President’s advisor on mining issues and
the Minister of Mines.
6
The mining cadaster is not updated and includes inaccurate information on licenses.
Government ownership in mining and oil companies is managed by a newly created SOE, with limited
capacities.
The Supreme audit institution is not yet functioning, which hinders the reliability of data disclosed by
government entities.
4.4 EITI Guinea’s impact
The debate generated by EITI is pushing the public opinion to pay more attention on the wealth of Guinea in
managing the natural resources and there is an emerging culture of accountability from government bodies
linked to extractive industries.
4.5 Challenges ahead
The government has not recognised the EITI as a significant component in their ambitious reform agenda
(contract transparency, contract review, new mining code and relationship with investors and infrastructure
developments). The last three reporting periods were published too late and not disseminated sufficiently to make
any meaningful contribution to the debate. Comprehensiveness and reliability of data is still not up-to standard.
The EITI Secretariat is not functioning, and lacks capacities and strong leadership to make EITI more relevant.
Future reports must take into account the most pressing issue of contract monitoring.
It is necessary to more clearly set out the political significance and benefits of EITI implementation in Guinea. The
government urgently needs to give EITI higher priority, including appointing a senior person to lead on EITI,
refresh the MSG and establish a well-functioning secretariat.
4.6 EITI Guinea background and facts
EITI Status: The government of Guinea committed to implement EITI and was admitted as EITI Candidate on 27
September 2007. Due to the political crisis, Guinea was suspended voluntarily with the approval of Board on 19
December 2009 and its suspension was lifted on 1 March 2011 after a democratically elected government took
office. Guinea completed Validation in August 2012 . The Board subsequently agreed that Guinea had made
meaningful progress in implementing the EITI. Guinea has until 26 April 2014 to address outstanding
requirements and undertake a Secretariat Review that demonstrates compliance with the 2011 EITI Rules.
EITI Reporting: Guinea has produced three EITI reports since 2007, covering fiscal periods 2005-2010. The last
report was published in August 2012 and covers fiscal years, 2007, 2008, 2009 and 2010. According to the report,
the government of Guinea collected a total of US $218.5 million in taxes and other payments in 2010, equalling
just over US 20$ per citizen. Guinea has taken steps to address the corrective actions required by the EITI Board to
meet EITI compliance." The multi-stakeholder working group has agreed that any extractive company making
payments in excess of US$100,000 is required to participate in the reporting process. The number of companies
reporting has increased from 6 in the 2005 EITI Report to 7 in the 2010 EITI Report. All extractive companies and all
central, provincial and local authorities are required by law to submit EITI reporting templates annually regardless
of the size of the payments/revenues collected. Revenues from entities that fall below the threshold are published
in a separate report prepared by the government. The next EITI reports covering 2011 and 2012 figures are
expected to be published by the end of theyear. The deadline for publishing the 2011 EITI Report is 31 December
2013.
Governance: The Guinean Steering Committee is a multi-stakeholder group in charge of implementation and
follow-up of the EITI in Guinea. It is overseen by a high-level Supervisory Council which has met twice to date. The
7
Secretary General of the Ministry of Mines and Energy, Guillaume Curtis, chairs the EITI Steering Committee. Mr.
Mamadou Diaby is the Executive Secretary of EITI Guinea. Presidential Decree D/2012/014/PRG/SGG of 3 February
2012 establishes the EITI structures and process, and it makes disclosure of information mandatory for EITI
purposes.
The National Council has developed a mid-term strategy for implementation (2010-2014). Priorities include
establishing a legal background, extending the scope of EITI reporting, ensuring quality and reliability of data, and
expanding implementation to include revenue disbursement, licensing and contract transparency.
4.7 Key EITI facts – a reminder, as of 26 September 2013
•
•
•
•
•
5
39 countries are implementing the EITI. 23 are Compliant and 16 are Candidates.
About 400 civil society organisations are engaged in EITI implementation both at local and international
levels.
86 major international oil, gas and mining companies support the EITI.
Over 80 institutional investors support the EITI, with total assets under management of over US $19 trillion.
EITI Reports have been published by 34 countries covering 180 fiscal years and over US$ 1 trillion in
government revenues.
Travel advice to Conakry
Travellers to Guinea are advised to consult the UK Foreign Advice pages for Guinea at
https://www.gov.uk/foreign-travel-advice/guinea
Visa upon arrival
Participants who requested invitation letters for Guinea are informed that they will get their visa upon arrival. For
further information, please contact Leah (lkrogsund@eiti.org) at the Secretariat.
Transportation to/from airport
Transportation between Conakry Airport and Hotel Palm Camayenne is arranged by EITI Guinea. A representative
from EITI Guinea will meet you upon arrival at the airport. Please ensure that you have communicated your arrival
time and flight number to John (jkanyoni@eiti.org). Travel distance from the airport to Palm Camayenne Hotel is
approximately 20 minutes.
Hotel
The Government of Guinea recommends the Palm Camayenne Hotel. Reservations can be made online at
http://palmcamayenne.com/, or by email (reservations@palmcamayenne.com), or by phone: +224 656 10 10 10.
Contact in Conakry
National Coordinator Mamadou Diaby (tel: +224 628 59 30 62) and Mr abdoulaye Soumah (tel: +224 664 26 61
94) will be your main contact point in Conakry and will facilitate meetings with key officials. Interpretation has
been arranged. You contact at the International Secretariat is John Kanyoni (+243 990104400) and
email:JKanyoni@eiti.org
Local information
According to the weather forecast, you can expect some 27 C during the day with rain.
8
6
Biography
Alpha Condé
President of the Republic of Guinea
Alpha Condé (born 4 March 1938) was elected President of Guinea in December 2010 at the age of 72. He spent
decades in opposition to a succession of regimes in Guinea, most of the time living in exile in France. He
unsuccessfully competed against President Lansana Conté in the 1993 and 1998 elections. Following unofficial
reports that he had won the elections in 1998, he was arrested and spent two years in prison. Condé was elected
as President of Guinea in a bitterly though election that divided the country along ethnic lines.
Mohamed Lamine Fofana
Minister of Mines and Geology
Mohamed Lamine Fofana was appointed Minister of Mines by the newly elected President in December 2010.
Previously, he was advisor to the Prime Minister of Guinea in charge of the mining sector from 2004 to 2010. Prior
to that, Fofana worked in various USAID funded projects in Guinea.
7
Relevant articles/references
EITI Guinea publications
•
•
•
Guinea’s 2010 EITI Report
http://eiti.org/files/Guinea-2010-EITI-Report.pdf
Board Paper on Guinea’s Validation
http://eiti.org/files/BoardPaper_Validation_Guinea.pdf
http://eiti.org/French_BoardPaper_Validation_Guinea.pdf
Guinea’s Scoping Study for the 2011 Report
http://eiti.org/files/Etude_de_Cadrage_ITIE_Guinee_20112012.pdf
Other articles and publications
•
FT (15 March 2013). Guinea: resource nationalism, or just getting things straight?
http://blogs.ft.com/beyond-brics/2013/03/15/guinea-resource-nationalism-or-just-getting-thingsstraight/#axzz2NygUYsrQ
•
Aminata.com (11 April 2013). Guinea : CSOs in conclave on the EITI reports
http://www.aminata.com/des-osc-en-conclave-sur-lanalyse-des-rapports-de-litie/#.UWgbz6Iybzw
•
GulfNews (13 June 2013). Guinea’s current agenda mirrors that of the G8 by President Alpha Condé
http://gulfnews.com/opinions/columnists/guinea-s-current-agenda-mirrors-that-of-the-g8-1.1196996
•
Visionguinee.info (18 June 2013 – in French). Lancaster House London. Discours d’Alpha Condé au G8
http://www.visionguinee.info/2013/06/18/lancaster-house-london-ce-qualpha-conde-a-dit-au-sommetdu-g8/
•
Chatham House (June 2013). Guinea in Transition : Reform, Resources and Regional Relations. President’s
Condé Speech and Q and A.
http://www.chathamhouse.org/sites/default/files/public/Meetings/Meeting%20Transcripts/140613Cond
é.pdf
http://www.chathamhouse.org/sites/default/files/public/Meetings/Meeting%20Transcripts/140613Cond
éQA.pdf
9
•
Transformation Index BTI 2012
http://www.bti-project.org/countryreports/wca/gin/
•
Africa Economic Outlook Guinea (2012)
http://www.africaneconomicoutlook.org/en/countries/west-africa/guinea/
•
LesAfriques.com (August 2013 – in French). Guinée début du dégel du mega projet de Simandou
http://www.lesafriques.com/actualite/guinee-debut-de-degel-du-mega-projet-desimandou.html?Itemid=89
•
The Independent (17 June 2013). The corruption deal of the century: how Guinea lost billins of pounds in
Simandou mining licensing
http://www.independent.co.uk/news/world/africa/the-corruption-deal-of-the-century-how-guinea-lostbillions-of-pounds-in-simandou-mining-licensing-8662534.html
•
The New Yorker (8 July 2013). Buried secrets
http://www.newyorker.com/reporting/2013/07/08/130708fa_fact_keefe
•
The Guardian (30 July 2013). The tycoon, the dictator’s wife and the $2.5bn Guinea mining deal
http://www.theguardian.com/world/2013/jul/30/africa-guinea-mining-bsgr-steinmetz
•
The Guardian (8 August 2013). Guinea permits at risk if mining firm BSGR is found guilty of corruption
http://www.theguardian.com/world/2013/aug/08/guinea-mining-permits-bsgr-corruption
•
Business Spectator (9 August 2013). Rio Tinto eyes Simandou blocks
http://spectator01.businessspectator.com.au/news/2013/8/9/resources-and-energy/rio-tinto-eyessimandou-blocks
•
LesAfriques.com (August 2013 – in French). Georges Soros, l’éclaireur du president Alpha Condé
http://www.lesafriques.com/banque-assurances/george-soros-l-eclaireur-du-president-alpha-conde3.html?Itemid=308
•
All Africa.com (19 September 2013). Guineans finally go to the polls to end the political impasse
http://allafrica.com/stories/201309190282.html?page=1
10
Briefing for Board visit to Nigeria
14 October 2013
Dyveke Rogan
Tel: + 47 907 97 937
Email: Drogan@eiti.org
Zainab Ahmed
Executive Secretary, NEITI
Tel: +234 803 347 9751
Email: ahmedzainab16@hotmail.com
Transcorp Hilton hotel
1 Aguiyi Ironsi Street, Maitama,
Abuja, 900001
Tel: +234 708 060 3000
1
2
3
Key objectives and suggested messages ............................................................................................................................ 4
4
4.1
Summary........................................................................................................................................................................... 4
4.2
Situation analysis ............................................................................................................................................................ 5
4.3
NEITI’s impact .................................................................................................................................................................. 5
4.4
Challenges ahead............................................................................................................................................................ 6
4.5
NEITI background and facts .......................................................................................................................................... 6
4.6
Key EITI facts – a reminder, as of September 2013 .................................................................................................. 7
5
6
Relevant articles and publications ........................................................................................................................................ 7
7
Biographies ................................................................................................................................................................................ 9
Executive Summary
The oil and gas sector in Nigeria has long been mismanaged. Revenues, especially at state level, have not always
been put to good use and corruption is relentless. It is estimated that Nigeria is losing somewhere between US$
3bn and US$ 8bn in revenue due to large-scale oil theft and pipeline sabotage. Reforms aimed to address these
maladies have been announced and discussed for many years, but have barely materialized. Wide-ranging reforms
are under way, even the results are patchy. NEITI’s work, including financial, physical and process audits covering
financial years 1999-2011 has contributed to the debate. It has promoted solutions on challenges such as unpaid
royalties, crude oil and refined products theft and unpaid subsidies by NNPC, the national oil company. It has
identified US$9.8 bn owed to the Federal Government, of which US$2 billion has been recovered through NEITI’s
efforts. Efforts are also undertaken by NEITI to track the derivation transfers and to make other policy
recommendations. The mismanagement of the mining sector might be the next big untold story in Nigeria with
NEITI leading the way with its first solid minerals audit produced in December last year.
Despite these achievements, it is less clear that the work is having any effect on policy reforms. The visit in October
presents an opportunity to give NEITI its due recognition and express international support for NEITI’s efforts with
particular emphasis on creating space for the Inter Ministerial Task team, the institution mandated to undertake
remedial actions recommended through the NEITI audits.
Other objectives include getting an update on NEITI’s activities related to the Petroleum Industry Bill, NEITI’s work
on the missing signature bonus from the OPL 245 Block, and progress on EITI reporting related to the Joint
Development Zone with Sao Tome e Principe.
This report has been compiled by Dyveke Rogan and the assessments are those of the International Secretariat.
The programme has been arranged by NEITI. The report should remain confidential to the EITI Board.
1
TIME
ACTIVITIES
pm
20:00
Arrival of EITI delegation
Welcome drink
08:00-09:00
Breakfast
09:00 – 10:00
10:30 – 13:00
Meeting with Nigeria
Stakeholders Working
Group (NSWG) and NEITI
Management
Inauguration of InterMinisterial Task Team
13:00 – 14:00
Lunch
14:00 – 15:00
Meeting with Civil Society
VENUE
PARTICIPANTS/NOTES
Airport
A representative from NEITI will meet you
upon arrival. If your arrival time changes,
please let Dyveke know.
Transcorp
Hilton Hotel
Piano
Lounge.
Informal get-together.
Transcorp
Hilton Hotel
Transcorp
Hilton Hotel
An ‘EITI table’ has been reserved in the
breakfast hall.
EITI delegation, NSWG Members, ES, Senior
NEITI Management.
Transcorp
Hilton Hotel
EITI delegation, NSWG, Minister of Mines
and Steel Development, IMTT Members
Senior Management and Communications
Team.
Transcorp
Hilton Hotel
Transcorp
Hilton Hotel
EITI delegation, NSWG, IMTT Members,
NEITI Management.
EITI delegation, NSWG, Select Media, Select
Civil Society Organisations, Select
2
Professional Associations, NEITI
Management.
Press conference
15:30 – 17:00 Meeting with Ngozi OkonjoIweala, Minister of Finance
and Coordinating Minister
of the Economy
19:00 - 21:00
Cocktail/Dinner
07:00
Breakfast
08:00
Departure for airport
10:30
Departure flight ASKY KP33
2
Ministry of
Finance
Transcorp
Hilton Hotel
Transportation to/from the Ministry will be
arranged by NEITI.
EITI delegation, Chairman NSWG, Executive
Secretary, NEITI Management.
SGF, EITI delegation, NSWG, Gov.
Dankwambo, Hon. Ministers of Finance &
Coordinating Minister of the Economy,
Petroleum Resources, Mines and Steel
Development, GMD NNPC, CBN, Auditor
General of the Federation, Accountant
General of the Federation, FIRS, RMAFC,
National Assembly Committee Chairs on
Petroleum Downstream, Upstream, Gas,
Solid Minerals & Public Accounts, InterGovernmental Affairs, USAID, High
Commissioners of Britain, Australia and
Canada to Nigeria, Ambassadors of US,
Germany, Norway, Netherlands,
Switzerlandto Nigeria, Country Director,
WorldBank, African Development Bank, IMF,
DFID, FOSTER, European Union Delegation
Commission to Nigeria, UNDP, Select IOCs,
Select Marginal Fields Operators, Select
Mining Companies, Select Civil Society
Organisations, Select Media, Select
Professional Associations, Senior
Management, NEITI Communications Team
Transcorp
Hilton Hotel
Transportation is arranged by NEITI. Please
meet in the lobby.
Clare Short, EITI Chair
Manuel Adamini, Head of ESG-research, SNS Asset Management
Bob Cekuta, Principal Deputy Assistant Secretary, State Department, USA
Diana Corbin, Senior Operations Officer, World Bank
Amanda Lumun Feese, Extractive Industry Specialist, World Bank
Elda Guterres da Silva, National Coordinator, EITI Timor Leste
Jurriaan Jongsma, Legal Counsel Corporate, Royal Dutch Shell
3
Alan McLean, Executive Vice President, Tax and Corporate Structure, Royal Dutch Shell
Pascal Médieu, First Secretary Development, Department of Foreign Affairs, Trade and Development Canada
Clare Murphy, Transparency and Governance Advisor, State Department, USA
Faith Nwadishi, Executive Director, Koyenum Immalah Foundation/National Coordinator Publish What You Pay,
Nigeria
From the EITI International Secretariat:
Anders Tunold Kråkenes, Communications Manager
Dyveke Rogan, Regional Director
3
Key objectives and suggested messages
•
Congratulate NEITI with its implementation efforts: the publication of 13 financial years of oil and gas
financial, physical and process audits, recent progress with coverage of the mining sector, and excellent use of
the data generated by the EITI audits for the purpose of stimulating public debate.
•
Offer high level support for NEITI’s efforts to stimulate change and reforms in the extractive sector, including
through its work on the Petroleum Industry Bill, oil thefts, fuel subsidies and reform of the NNCP.
•
Motivate the government to ensure that there is follow up on the recommendations from NEITI’s audits
related to revenues that have been unaccounted for, including on issues such as OPL 245, as well as other
recommendations for strengthening tax collection and revenue management systems.
•
Ensure that NEITI addresses outstanding issues in implementation such as coverage of the Joint Development
Zone with Sao Tome and Principe, that there is rapid progress with the 2011 solid mineral audits, and that the
next steps and procedures for transitioning to the EITI Standard are well understood.
•
Encouraging using the new EITI Standard to ensure the EITI continues to be strengthened, including through
transparency in licensing processes, beneficial ownership, revenue allocations, subnational transfers and
through addressing other national priorities.
4
4.1 Summary
NEITI remains at the forefront of using EITI data, including identifying outstanding debts by the national oil
company to the Federal government, recovering uncollected taxes, identifying weaknesses in the regulatory
bodies, auditing oil-related transfers to subnational government, and investigating oil theft. It is making extensive
contributions to national debates such as on the Petroleum Industry Bill and fuel subsidies.
Despite these efforts, NEITI’s impact on policy reform is, at present, limited. It has also been challenging to deliver:
NEITI has sought an extension of its 2011 mining audit (deadline 31 December 2013) until 31 May 2014. There has
been no progress on coverage of the Joint Development Zone with Sao Tome e Principe. Most concerning, NEITI
has, as yet, been unable to get information from other agencies to explain a transaction related to Block OPL245 in
which the companies ENI and Shell paid US$1.3bn to the Government of which only US$210m from Shell appears
to be accounted for in the NEITI report. Undeterred, NEITI’s agenda remains ambitious. Even whilst reforms
remain stuck, NEITI will continue to contribute to an environment of accountability. However, the process will
need political support, strong leadership, and international backing.
4
4.2 Situation analysis
Nigeria is Africa’s largest oil exporter, and the world’s 10th largest oil producer, accounting for more than 2.2
million barrels a day in 2011. Nigeria’s oil and gas sector represents 80% of government revenues and 95% of
export earnings. In 2011, the country received nearly US $70bn from oil and gas and US$ 174 mn from mining.
There are significant challenges with revenue management from the oil, gas and mining industries. The
2012 Ribadu Report highlighted the following:
• US$ 749m of unpaid signature bonuses between 2005-2011. This does not include the missing US$ 1.1bn
for Block OPL 245.
•
Unpaid royalties of over US$3bn.
•
US $137m unreconciled gas flaring penalties, and a further US$58m unpaid penalties.
•
Crude oil theft of over US $10.9bn (over 136m barrels) between 2009-11. This represents almost 8% of the
total revenue. It is in addition to a loss of about 10 million barrels valued at $894 million as a result of pipeline
vandalism in downstream operations. Shell Nigeria Manager, Mutiu Sunmonu, said to This Day newspaper "At
some point this year, over 60,000 barrels of crude were being stolen from the Shell Petroleum Development
and Production Co. lines every day". This is having a significant impact on IOC profits.
•
US$1.1bn of refined products theft between 2001-2010.
•
US$8.6bn owed by NNPC, the national oil company, from subsidies on domestic crude oil sales according to
the NEITI report.
In addition the Nigeria is paying out over US $3bn in fuel subsidies and losing large sums on gas pricing fixing.
It is also difficult to know how much of the 13% ‘derivation’ transfer of all oil revenue to the oil rich states is
wasted.
On the OPL 245 Block, the Department Petroleum Resources (DPR) failed to provide the required information
requested by NEITI Auditors on the said transaction. The Federal Government Inter Ministerial Task Team is
expected to investigate this matter further.
In the mining sector, the government claims that Nigeria has lost about N8 trillion ($50 billion) to illicit gold
mining activities. Huge quantities of unprocessed gold are said to leave Nigeria through neighbouring nations,
particularly Ghana and are being processed in Ashanti gold mines. NEITI claims that regulatory failures in the
solid minerals sector cost Nigeria revenue losses of over N4 billion ($25bn) between 2007 and 2010 – compared to
the $50m that was shown to be coming in revenue. NEITI investigations show that the prices used for the
calculation of royalty payments in the sector were not the current market value leading to huge loss of revenue.
Nigeria is ranked 40th/58 resource-rich countries in Revenue Watch Institute’s Resource Governance Index.
Development partners, notably DFID and the WB MDTF, have been supporting NEITI and demand-side efforts for
reform generously. In particular, DFID has financed the FOSTER program (£12m for 5 years) targeted at facilitating
reforms by boosting NEITI work and wider stakeholder/debate.
4.3 NEITI’s impact
There is little doubt that NEITI is trying to investigate and raise debate and promote policy solutions on many of
the above challenges – data on signature bonuses, unpaid royalties, crude oil and refined products theft, unpaid
5
subsidies by NNPC are all covered by the audits. It has identified $9.8 billion owed to the Federal Government, of
which $2 billion has been recovered through NEITI efforts.
Efforts are also undertaken by NEITI to track the derivation transfers and to make other policy recommendations.
The mismanagement of the mining sector might be the great untold story in Nigeria with NEITI leading the way.
The International Ministerial Task Team established by President Goodluck Jonathan to take forward NEITI
recommendations has a strong mandate, and NEITI has not been afraid in recent years to confront the
government oil agencies: the NNPC, the Department for Petroleum Resources (DPR), and the Petroleum Products
Pricing Regulatory Agency.
Nigeria received the EITI Chair's award for its implementation efforts at the EITI Global Conference in Sydney in
May 2013.
4.4 Challenges ahead
Despite NEITI’s contribution to the public debate about the governance of the sector, it is far from clear that NEITI
reports are having any policy effect. The DPR remains particularly dismissive of NEITI’s accusations. Its efforts to
break up the DPR and the NNPC through the long-awaited Petroleum Industry Bill appear to be as far away as
ever. The lack of progress on resolving the OPL 245 Block is a case in point. The DPR does not appear to have
cooperated and no sanction has been taken. NEITI is somewhat stuck with an incomplete report.
Nor does NEITI seem to be able to make progress at the Federal level on covering (the relatively tiny) revenues
from the Joint Development Zone with Sao Tome e Principe (STP), which was set out as a Board request following
Nigeria’s compliance in March 2012 and is certainly now needed as STP progress to their first EITI Report. In
accordance with the transition procedures to the EITI Standard, NEITI is expected to produce an updated workplan
by the end of 2013 that sets out the priorities and objectives for EITI implementation.
4.5 NEITI background and facts
•
EITI Status: Nigeria was admitted as an EITI Candidate country on 27 September 2007. On 1 March 2011 the
EITI Board designated Nigeria as Compliant. Nigeria’s next Validation deadline is 1 January 2016.
•
EITI reporting: NEITI has published oil and gas audits covering financial years 1999-2011, and solid mineral
audits covering 2007-2010. NEITI audits go beyond financial audits and include physical and process audits.
The deadline for publishing the 2012 oil and gas audit is 31 December 2014 in accordance with the EITI
Standard. NEITI has requested an extension of the deadline for the 2011 solid minerals audit (31 December
2011) because of challenges in the procurement process. The request is currently under consideration by the
Board. An Inter-Ministerial Task Team (IMTT), established by President Dr Goodluck Jonathan, is tasked
with addressing the findings and recommendations of NEITI audit reports. It is comprised of government
agencies that are involved in the management of Nigeria’s oil and gas revenue. It is expected that the IMTT
will be reconstituted during the visit by the Board delegation.
•
Governance: In August 2012, President Goodluck Jonathan appointed a new National Stakeholders Working
Group (NSWG), which is the governing body of NEITI. The mandate runs for the next five years. The first NSWG
was appointed by the President Umaru Musa Yar'Adua on 29 January 2008. The NSWG comprises
representatives from civil society, government, and extractive industry companies and representatives of
communities (the six Nigeria geo-political zones), and the media. The Chairman of the NSWG is Mr Ledum
Mittee. The day-to-day work is carried out by the NEITI Secretariat, which is led by Executive Secretary Zainab
Ahmed and comprises about 50 staff. The NEITI Act, 2007 establishes the NEITI body, functions and MSG. It
6
requires reporting from related government bodies and from all extractive industry companies. It also sets out
sanctions in case of delay, refusion or false reporting.
4.6 Key EITI facts – a reminder, as of September 2013
•
•
•
•
•
5
39 countries are implementing the EITI. 23 are Compliant and 16 are Candidates.
About 400 civil society organisations are engaged in EITI implementation both at local and international
levels.
86 major international oil, gas and mining companies support the EITI.
Over 80 institutional investors support the EITI, with total assets under management of over US $19 trillion.
EITI Reports have been published by 34 countries covering 180 fiscal years and over US$ 1 trillion in
government revenues.
Visa: Participants are advised to apply and obtain appropriate visas from the nearest Nigerian Mission (Embassy,
High Commission or Consulate) before entry into Nigeria as visas cannot be issued at the port of entry. A visa letter
was provided in Board circular 157.
Transportation to/from airport: Transportation between Nnamdi Azikiwe Airport and Transcorp Hilton is
arranged by NEITI. A representative from NEITI will meet you upon arrival at the airport. Please ensure that you
have communicated your arrival time and flight number to Dyveke (drogan@eiti.org). Travel distance from the
airport to Transcorp Hilton Hotel is approximately 40 minutes.
Hotel: It is recommended that participants stay at Transcorp Hilton Abuja. Participants are responsible for making
their own reservations.
Flight to Abidjan: It is recommended that participants make a reservation with ASKY KP33 to Abidjan, departing
Abuja on 15 October at 10.30 am. http://www.flyasky.com/asky/
6
Relevant articles and publications
NEITI publications
•
NEITI oil and gas financial audit 2009-2011
http://eiti.org/files/NEITI-EITI-Core-Audit-Report-Oil-Gas-2009-2011-310113-New_4.pdf
•
NEITI oil and gas physical and process audit 2009-2011
http://neiti.org.ng/sites/default/files/pdf_uploads/EITI-Physical-And-Process-Final-Audit-Report-20092011.pdf
•
NEITI solid minerals financial audit 2007-2010
http://neiti.org.ng/sites/default/files/pdf_uploads/NEITI-EITI-Core-Audit-Report-Solid-Minerals-FinancialFlows-2007-2010-310113.pdf
•
NEITI solid minerals physical and process audit 2007-2010
http://neiti.org.ng/sites/default/files/pdf_uploads/NEITI-EITI-Core-Audit-Report-Solid-Minerals-PhysicalProcess-2007-2010-310113.pdf
7
•
NEITI 2012 annual activity report
http://neiti.org.ng/sites/default/files/publications/uploads/neiti-2012.pdf
•
NEITI 2013 workplan
http://neiti.org.ng/index.php?q=pages/neiti-annual-work-plans#
•
NEITI Ten years of NEITI Reports – What we have
learnt? http://neiti.org.ng/sites/default/files/publications/uploads/ten-years-neiti-reports.pdf
Other articles and publications
•
Chatham House (September 2013). Nigeria's Criminal Crude: International Options to Combat the Export of
Stolen Oil, http://www.chathamhouse.org/publications/papers/view/194254
•
FT (19 September 2013). Criminal networks blamed for Nigeria oil theft,
http://www.ft.com/intl/cms/s/0/ffea48b6-2133-11e3-8aff
00144feab7de.html?siteedition=intl#axzz2fuuemv5F
•
NEITI (5 September 2013) NEITI calls for transparency in the acquisition and awards of oil prospecting licences
and mining leases, http://neiti.org.ng/index.php?q=news/2013/09/05/neiti-calls-transparency-acquisitionand-awards-oil-prospecting-licences-and-mining-
•
FT (27 August 2013). Theft and disruptions knock Nigeria oil output to four-year
low, http://www.ft.com/intl/cms/s/0/fdd74c5e-0f09-11e3-8e5800144feabdc0.html?siteedition=intl#axzz2dAmp1ino
•
NEITI (16 July 2013). NEITI seeks support of the national assembly on contract transparency in the petroleum
industry bill, http://neiti.org.ng/index.php?q=news/2013/07/16/neiti-seeks-support-national-assemblycontract-transparency-petroleum-industry-bill
•
Economist (15 July 2013). Safe sex in Nigeria,
http://www.economist.com/news/business/21579469-court-documents-shed-light-manoeuvrings-shell-andeni-win-huge-nigerian-oil-block
•
allAfrica.com (1 July 2013). Nigeria: N13.3 Billion Unpaid Tax - NEITI Lauds Tribunal's Ruling On Mobil,
http://allafrica.com/stories/201307011420.html
•
NEITI (30 May 2013). Nigeria wins best EITI implementing country
award, http://neiti.org.ng/index.php?q=news/2013/05/30/nigeria-wins-best-eiti-implementing-countryaward
•
NEITI (23 April 2013). NEITI position on the petroleum industry
bill, http://neiti.org.ng/sites/default/files/news/uploads/neiti-position-pib.pdf
•
This Day Live (21 March 2013). NEITI to Tackle Oil Theft, Pipeline
Vandalism, http://www.thisdaylive.com/articles/neiti-to-tackle-oil-theft-pipeline-vandalism/142770/
•
National Mirror (28 February 2013). NEITI to audit utilisation of 13% derivation funds,
http://nationalmirroronline.net/new/neiti-to-audit-utilisation-of-13-derivation-funds/
8
•
BusinessDay (28 February 2013). N8trn lost to illicit gold mining, FG
bemoans, http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/52384-n8trn-lost-to-illicitgold-mining-fg-bemoans
•
One.org (4 January 2013). Making transparency work for development in Nigeria,
http://www.one.org/africa/blog/making-transparency-work-for-development-in-nigeria/
•
Revenue Watch Institute (2013) Resource Governance Index –
Nigeria, http://www.revenuewatch.org/sites/default/files/countrypdfs/nigeriaRGI2013.pdf
•
This Day Live (25 October 2013). Ribadu Report Uncovers Sleaze in Oil and Gas
Sector, http://www.thisdaylive.com/articles/ribadu-report-uncovers-sleaze-in-oil-and-gas-sector/128633/
7
Biographies
Anyim Pius Anyim, Secretary to the Government of the Federation
Anyim Pius Anyim is a Nigerian politician. On the 30th of May 2011, Pius Anyim was appointed as Secretary to the
Government of the Federation (SGF), Federal Republic of Nigeria. In January 2010 he led a delegation of 41
eminent Nigerians that called on President Umaru Yar'Adua to urgently transmit a letter of his incapacitation to
the National Assembly to salvage the nation's democracy from danger. He praised the Senate when they passed a
resolution on 9 February 2010 to make Vice President Goodluck Jonathan Acting President. He was previously the
President of the Senate.
http://www.osgf.gov.ng/content?id=54
Ngozi Okonjo-Iweala, Minister of Finance
Ngozi Okonjo-Iweala was appointed Minister of Finance for the Federal Republic of Nigeria in July 2011. Prior to
this appointment, she was the Managing Director of World Bank (October 2007 - July 2011) and has also held the
position of a Finance Minister and Foreign Minister of Nigeria, between 2003 and 2006. She is notable for being
the first woman to hold either of those positions. She served as finance minister from July 2003 until her
appointment as foreign minister in June 2006, and as foreign minister until her resignation in August 2006.
Her support for the EITI was hugely important in the early days of the initiative and she remains a strong
supporters of NEITI and the EITI.
http://www.fmf.gov.ng/the-ministry/management-team/honourable-minister.html
Musa Mohammed Sada, Minister of Mines and Steel Development
Musa Mohammed Sada is an architect by profession. He was previously Commissioner of Works, Housing and
Transport in Katsina State in 2007, a position he held until his present appointment in 2010 as Honourable
Minister of Mines and Steel Development. He served as Chairman and member of various Committees both at
State and Federal level. Amongst many awards, he was a Winner of “Build Environment Professional of the Year
2011”from Nigeria’s Construction and Engineering Digest Forum. Musa Mohammed Sada is a graduate of Ahmadu
Bello University, Zaria, Nigeria where he obtained Masters Degrees in Architecture and Business Administration.
He is also an Alumnus of Harvard Kennedy School of Government, Harvard University, Massachusettes USA.
http://www.mmsd.gov.ng/sub-people/36-home-pages/people-pages/157-ministers-full-profile
Ledum Mitee, NSWG Chairman
9
The Chairman, Ledum Mitee is a Legal Practitioner of repute, renowned Human Rights Activist, Environmentalist,
Social Commentator and a man who has spent greater part of his life to agitate for prudent use of extractive
resources revenue to improve the life of citizens, host communities and the environment in Nigeria. He was until
January 2012, President, Movement for the Survival of Ogoni people in the oil-rich Niger Delta. Ledum Mitee, a
house hold name in the civil society movement in Nigeria has served in several government committees on
development, resource management, governance, conflict prevention, management and resolution
Zainab Ahmed, NEITI Executive Secretary & Secretary, NSWG
Zainab Ahmed, an accountant and public sector executive, was appointed Executive Secretary of NEITI by
President Goodluck Ebele Jonathan in November 2010. She was previously the Chief Finance Officer of the
Nigerian Mobile Telecommunications Limited (MTEL).She was also Managing Director Kaduna Investment
Company Ltd .She holds a B.Sc in Accounting from the Ahmadu Bello University, Zaria and Masters of Business
Administration (MBA) .Mrs Ahmed is a member of Association of National Accountants of Nigeria(ANAN) and
Fellow, Institute of Certified Company Commercial Accountants of Nigeria among other professional
organizations.
A full overview of NEITI NSWG members, including biographies is available
here: http://neiti.org.ng/sites/default/files/pdf_uploads/NEW%20NEITI%20NSWG%20MEMBERS.pdf
10
11
1 October 2013
Board Paper 25-3-B
Template Terms of Reference
for Independent
Administrators
For discussion
Summary
The Secretariat suggests that the Board reviews progress in developing template Terms of Reference for
Independent Administrators (see Annex A). The Independent Administrator is the agent (typically an accounting
or audit firm) mandated by the multi-stakeholder group to reconcile payments and revenues for the EITI Report.
The EITI Standard requires that the Independent Administrator follows a Board approved procedure (requirement
5.2).
The Secretariat suggests that the process relies as much as possible on existing procedures and institutions in
order for the EITI process to complement, assess, and improve existing reporting and auditing systems. The EITI
Standard requires that the Independent Administrator critically reviews existing audit and assurance practices
(requirement 5.2), and encourages the Independent Administrator to make recommendations for strengthening
the strengthening systems to bring them into line with international standards (requirement 5.3).
Subject to further refinements following consultations with implementing countries and Independent
Administrators, it is expected that the Implementation Committee will make a recommendation to the Board to
approve the template via Board circular shortly following the Abidjan Board meeting. Implementing countries that
are producing their next EITI Reports under the EITI Standard would then be asked to follow the procedure.
Board Paper 25-3-B
Template Terms of Reference for Independent Administrators
Template Terms of Reference for Independent
Administrators
Contents
1
Summary ............................................................................................................................................................................................................2
2
Background .......................................................................................................................................................................................................2
3
Consultations ....................................................................................................................................................................................................4
Annex A – Template terms of reference ............................................................................................................................................................... 5
1
Summary
The Secretariat suggests that the Board reviews progress in developing template Terms of Reference for
Independent Administrators (see Annex A).
The Independent Administrator is the agent (typically an accounting firm) mandated by the multi-stakeholder
group to reconcile payments and revenues in the EITI Report. Drawing on best practice reporting and feedback
from Independent Administrators, the Secretariat has drafted template Terms of Reference for Independent
Administrators (annex B). It sets out the Independent Administrator’s role in agreeing the scope of EITI reporting,
the development of reporting templates/forms, the assurance of data, data collection, and the investigation of
discrepancies in accordance with the EITI Requirements.
The Secretariat suggests that the process relies as much as possible on existing procedures and institutions in
order for the EITI process to complement, assess, and improve existing reporting and auditing systems. The EITI
Standard requires that the Independent Administrator critically reviews existing audit and assurance practices
(requirement 5.2), and encourages the Independent Administrator to make recommendations for strengthening
the strengthening systems to bring them into line with international standards (requirement 5.3).
The template Terms of Reference for Independent Administrators will be accompanied by a guidance note for
MSGs. Multi-stakeholder groups will be encouraged to explore opportunities to ensure that the EITI process builds
on, complements and evaluates existing data collection and auditing systems.
Subject to further refinements following consultations with implementing countries and Independent
Administrators, it is expected that the Implementation Committee will make a recommendation to the Board to
approve the template via Board circular shortly following the Abidjan Board meeting. Implementing countries that
are producing their next reports under the EITI Standard would then be asked to follow the procedure. Based on
the experience with these reports, the Board (via the Implementation Committee) could consider further
refinements to the template.
2
Background
The strategy review process highlighted some significant weaknesses in the reliability of EITI reporting and EITI
data. The EITI Criteria called for “payments and revenues are reconciled by a credible, independent administrator,
applying international auditing standards and with publication of the administrator’s opinion regarding that
2
Board Paper 25-3-B
reconciliation including discrepancies, should any be identified”. However, the EITI Rules did not specify
procedures for collecting and analysing data in line with “international auditing standards”, and these issues were
not covered adequately in Validation.
To date, implementing countries have developed a variety of different reporting procedures. Validation has
focused on assessing whether “the multi-stakeholder group [was] content that the organisation contracted to
reconcile the company and government figures did so satisfactorily” (EITI Rules, Requirement 16). Validation
revealed that MSGs often agreed that they were content, even where the reporting procedure and the EITI Reports
were inadequate. The result was that countries could be validated as compliant based on poor quality reports that
provided no guarantees as to the comprehensiveness or reliability of EITI data.
The EITI Standard includes a number of provisions to addresses these issues:
•
Consistent EITI reporting. The multi-stakeholder group is required to use a standard Terms of Reference
and 'agreed upon procedure for EITI Reports', endorsed by the EITI Board, when hiring an Independent
Administrator (Requirement 5.2). The standard Terms of Reference sets out the work to be undertaken by
the Independent Administrator. It is typically attached to the contract between the Independent
Administrator and the government. "Agreed upon procedures" refers to Board-endorsed procedures for
how the Independent Administrator should undertake this work. This includes procedures for: agreeing
the scope of EITI reporting, the development of reporting templates/forms, the assurance of data, data
collection, and the investigation of discrepancies in accordance with the EITI Requirements. The purpose
of a standardised reporting process is to ensure greater consistency and quality across EITI Reports. The
Independent Administrator is also required to apply international professional standards in undertaking
this work (Requirement 5.1).
•
Comprehensive and accurate disclosures. The EITI Report should include an assessment by the
Independent Administrator of whether all material payments and revenues are disclosed in the report,
and the reliability of the data (Requirement 5.3(c)). These changes seek to ensure that EITI Reports give an
accurate and complete picture of the revenues received from the extractive industries. The Independent
Administrator should also provide an assessment of whether all companies and government entities
participating in the EITI reporting process provided the information requested by the multi-stakeholder
group and the Independent Administrator (Requirement 5.3(d))
•
MSG endorsement. The multi-stakeholder group is required to endorse the EITI Report prior to its
publication (Requirement 5.4). Previously, EITI Reports could be published without the consent of all
stakeholders. This change seeks to increase ownership and ensure that all stakeholders have an
opportunity to review the quality and content of the EITI Report before it is published. Where
stakeholders wish to include additional comments in, or opinions on, the EITI Report, the authorship
should be clearly reflected.
As noted above, a guiding principle has been that the process relies as much as possible on existing procedures
and institutions. Ideally, the EITI process will complement, assess, and improve existing reporting and auditing
systems. The EITI Standard requires that the Independent Administrator critically reviews existing audit and
assurance practices (requirement 5.2), and encourages the Independent Administrator to make recommendations
for strengthening the strengthening systems to bring them into line with international standards (requirement
5.3).
The changes are expected to significantly increase the quality and consistency of EITI reporting and address the
aspects of EITI implementation that have proven to be most problematic in Validation (i.e. demonstrating
compliance with Requirements 9, 11 -15 in the EITI Rules / Requirements 4 and 5 in the EITI Standard).
3
Board Paper 25-3-B
3
Consultations
The template has been distributed to all EITI implementing countries, dozens of Independent Administrators, and
a number of other interested stakeholders. The World Bank, which plays a key role in financing EITI reporting
through the MDTF has provided detailed comments which the Secretariat has sought to address in the version
attached. It also has been noted that a guidance note is needed addressed to MSGs and national Secretariats,
highlighting the issues that need to be addressed in advance of completing the template, and key issues to
consider in overseeing the reporting process to ensure compliance with the EITI Standard.
Further comments from stakeholders are expected in early October. A final draft will then by submitted to the
Implementation Committee for review. It is expected that the Implementation Committee will make a
recommendation to the Board to approve the template via Board circular shortly following the Abidjan Board
meeting.
4
Board Paper 25-3-B
5
Annex A
Draft Template Terms of Reference for
Independent Administrator services in
accordance with the EITI Standard
Draft - 27 September 2013
This document provides a template Terms of Reference for Independent Administrator services in
accordance with the EITI Standard, endorsed by the EITI Board on <date TBA>.
The Terms of Reference sets out the work to be undertaken by the Independent Administrator. It is
typically attached to the contract between the Independent Administrator and the government. It is a
requirement the multi-stakeholder group (MSG) approves the Terms of Reference (Requirement 5.2).
The template is addressed to the Independent Administrator. A guidance note on the EITI reporting process
is also available to guide MSGs and national secretariats on the issues that need to be addressed in
advance of completing this template, and key issues to consider in overseeing the reporting process to
ensure compliance with the EITI Standard.
Section 4 of this template includes “agreed upon procedures” for EITI reporting (requirement 5.2).
“Agreed upon procedures” refers to Board-endorsed standardised procedures for key steps in the
reporting process, including: agreeing the scope of EITI reporting, the development of reporting
templates/forms, the assurance of data, data collection, and the investigation of discrepancies in
accordance with the EITI requirements.
The Board has developed these procedures to promote greater consistency and reliability in EITI
reporting. The Board recommends that the process relies as much as possible on existing procedures and
institutions. The EITI process can be used to complement, assess, and improve existing reporting and
auditing systems. The Board recommends that the process relies as much as possible on existing
procedures and institutions, i.e., so that the EITI process draws on, complements and critically evaluates
existing data collection and auditing systems. In this way, the EITI process has the potential to generate
important recommendations to strengthen other oversight systems.
The template enables MSG to list additional objectives and activities to be undertaken by the
Independent Administrator in accordance with the MSG’s workplan.
The template includes sections [bracketed and highlighted in blue] that should be completed by the
implementing country. It also includes comment boxes to guide implementing countries in completing
each section. This cover page should be deleted in the final Terms of Reference approved by the MSG.
The Board will review the procedures and the template on a regular basis. Comments on the template
should be directed to the EITI International Secretariat (contact: sbartlett@eiti.org).
Comment [EITI1]: Not yet available. To
be reviewed by the Implementation
Committee
Board Paper 25-3-B
6
Terms of Reference
Independent Administrator for the [year] EITI Report, [country]
Approved by the [MSG] on [date]
1. Background
[The Extractive Industries Transparency Initiative (EITI) is a global standard that promotes revenue
transparency and accountability in the oil, gas and mining sectors. It has a robust yet flexible
methodology for disclosing and reconciling company payments and government revenues in
implementing countries. The EITI process may be extended and adapted to meet the information needs
of stakeholders.
EITI implementation has two core components:
•
Transparency: oil, gas and mining companies disclose their payments to the government, and the
government discloses its receipts. The figures are reconciled by an Independent Administrator,
and published in annual EITI Reports alongside contextual information about the extractive
sector.
•
Accountability: a multi-stakeholder group with representatives from government, companies and
civil society is established to oversee the process and communicate the findings of the EITI
Report.
It is a requirement that the Independent Administrator is perceived by the multi-stakeholder group to be
credible, trustworthy and technically competent (Requirement 5.1). The Independent Administrator’s
report will be submitted to the [MSG] for approval and made publically available.
The requirements for implementing countries are set out in the EITI Standard 1. Additional information is
available via www.eiti.org.
These terms of reference include “agreed upon procedures” for EITI reporting (see section 4) in
accordance with EITI Requirement 5.2. The Board has developed these procedures to promote greater
consistency and reliability in EITI reporting. The Board recommends that the process relies as much as
possible on existing procedures and institutions. The EITI process can be used to complement, assess,
and improve existing reporting and auditing systems. The Board recommends that the process relies as
much as possible on existing procedures and institutions, i.e., so that the EITI process draws on,
complements and critically evaluates existing data collection and auditing systems. In this way, the EITI
process has the potential to generate important recommendations to strengthen other oversight
systems.
2. EITI Implementation in [country]
[This section should provide further general background information on EITI implementation in the
country. This should include clearly specifying the EITI’s objectives, as agreed by the MSG, and as
elaborated in the EITI workplan. A link should be provided to the EITI workplan, with additional
commentary as required on the history and current status of EITI reporting and Validation].
3. Objectives
1
http://eiti.org/document/standard
Comment [EITI2]: It is recommended
that the first section provides a general
introduction to the EITI. A suggestion is
included below.
Board Paper 25-3-B
7
On behalf of the [government] and [MSG], the [contracting party] seeks a competent and credible firm to
provide Independent Administrator services in accordance with the EITI Standard. The objective of the
assignment is to:
[Produce an EITI Report for [year/s] in accordance with the EITI Standard and section 4, below.
or
Contribute to an EITI Report for [year/s] to be published by [organisation] in accordance with the EITI
Standard and section 4, below].
[Summarise any additional objectives and work to be undertaken by the Independent Administrator].
4. The EITI Reporting process
The EITI reporting process has five phases (see figure 1). The Independent Administrator’s responsibilities
in each phase are elaborated below.
Figure 1 – Overview of the EITI Reporting process and deliverables
Based on [scoping reports/previous EITI Reports/other investigations] the MSG’s expectation is that the
EITI Report will cover [XX types of payments, made by YY companies and ZZ government agencies]. The
MSG proposal for the scope of the EITI Report, to be revised and confirmed with the Independent
Administrator during the inception period, is set out in data sheet in annex 1 of the template Terms of
Reference.
For discussion
Further clarification may be needed in sections 3 and 4 above (and in the detail below) so that it is clear
that the MSG is able to issue a number of reports (in advance of the reporting deadline) dealing with
different subjects / EITI requirements. For example, the contextual information may be prepared by a
separate body and published independently of the Independent Administrator’s report. In some case, it
may be useful to differentiate between the EITI Report/s published by national secretariat’s and the
Independent Administrator’s report.
Phase 1 – preliminary analysis and inception report
The objective of the first phase of work is to clearly establish the scope of the EITI reporting process, the
reporting templates, data collection procedures, and the schedule for publishing the EITI Report. It is
imperative that the scope of EITI reporting is clearly defined, in line with the EITI Standard and with the
MSG’s agreed objectives and expectations for the EITI process. The findings from the first phase should
be documented in an inception report (see 1.11 below). The Independent Administrator is expected to
undertake the following tasks:
Comment [EITI3]: The MSG should
specify whether the Independent
Administrator will produce the EITI report, or
prepare sections or chapters of a report that
will be issued by another party. In particular,
the MSG should agree the procedures and
responsibilities for the preparation of the
contextual information for the EITI Report.
The information should be clearly sourced
and attributed.
Comment [EITI4]: The MSG may wish
to list additional objectives, particularly if the
MSG wishes to task the Independent
Administrator to undertake work not required
by the EITI Standard
Comment [EITI5]: Indicate the basis
for the scope proposed below. In Annex 2,
provide links to the documentation, or
attach to the ToR.
to elaborate on this point, e.g., if special
attention in needed
Board Paper 25-3-B
1.1
The Independent Administrator should review the relevant background information,
including the governance arrangements and tax policies in the extractive industries, the findings
from any preliminary scoping work, and the conclusions and recommendations from previous
EITI Reports and Validations. (A list of relevant documentation is provided as Annex 2).
1.2
The Independent Administrator and MSG should agree on the procedures for incorporating
contextual information in the EITI Report. The information should be clearly sourced and
attributed. Additional information on the MSG’s proposed approach to collating contextual
information is attached in annex 1 of the template Terms of Reference, including any specific
tasks that the Independent Administrator is expected to undertake in this regard.
1.3
Comment [EITI7]: Where MSGs wish to
compile all or parts of the contextual
information in accordance with requirement
3, the MSG and Independent Administrator
should agree the procedures for how to
incorporate this in the EITI Report’.
The Independent Administrator should review the taxes and revenues to be covered in the
EITI Report as proposed by the MSG in Annex 1 and in accordance with EITI Requirement 4.
[The MSG wish to mandate the Independent Administrator to conduct a detailed scoping study,
to investigate specific issues in detail, or to suggest refinements to the scope]. The inception
report should clearly indicate:
•
The revenue streams to be included, and related materiality definitions and thresholds in
accordance with Requirement 4.1(b).
•
The sale of the state’s share of production or other revenues collected in-kind in
accordance with Requirement 4.1(c).
•
Coverage of infrastructure provisions and barter arrangements in accordance with
Requirement 4.1(d).
•
Coverage of social expenditure in accordance with Requirement 4.1(e).
•
Coverage of transportation revenues in accordance with Requirement 4.1(f).[any other
aspects as agreed by the MSG].
[Where the MSG wishes that the Independent Administrator undertakes scoping work related to
defining materiality and the revenue streams to be covered, specific tasks should be indicated
here. A template Terms of Reference for scoping is available from the International Secretariat.]
1.4
8
The Independent Administrator should review the companies and government entities that
are required to report as defined by the MSG in Annex 1 and in accordance with EITI
Requirement 4.2. [As above, the MSG wish to mandate the Independent Administrator to
conduct a detailed scoping study, to investigate specific issues in detail, or to suggest
refinements to the scope]. The inception report should :
•
Identify and list the companies that make material payments to the state and will be
required to report in accordance with Requirement 4.2(a).
•
Identify and list the government entities that receive material payments and will be
required to report in accordance with Requirement 4.2(a).
•
Identify any barriers to full government disclosure of total revenues received from each of
the benefit streams agreed in the scope of the EITI report, including revenues that fall
below agreed materiality thresholds (Requirement 4.2(b)).
•
Establish a position on disclosure and reconciliation of payments to and from state
owned enterprises in accordance with Requirement 4.2(c).
•
Establish a position of the materiality and inclusion of sub-national payments in
to list additional benefit streams not required
by the EITI Standard.
Board Paper 25-3-B
9
accordance with Requirement 4.2(d).
•
Establish a position of the materiality and inclusion of sub-national transfers in
accordance with Requirement 4.2(e).
•
[Any other aspects as agreed by the MSG].
[Where the MSG wishes that the Independent Administrator undertakes scoping work related to
defining reporting entities, specific tasks should be indicated here. A template Terms of
Reference for scoping is available from the International Secretariat.]
1.5
The Independent Administrator should provide advice to the MSG on agreeing the reporting
templates based on the agreed benefit streams to be reported and the reporting entities
(1.3 – 1.4 above). Sample templates are available from the International Secretariat. It is
recommended that the templates include a provision requiring companies to report “any other
material payments” above an agreed threshold.
[Where the MSG wishes to task the Independent Administrator to draft reporting templates for
consideration and approval by the MSG, this should be indicated here.]
1.6
The Independent Administrator should provide advice to the MSG in examining the audit and
assurance procedures in companies and government entities participating in the EITI
reporting process in accordance with Requirement 5.2(b). This includes examining the relevant
laws and regulations, any reforms that are planned or underway, and whether these procedures
are in line with international standards. It is recommended that the EITI Report includes a
summary of the findings.
1.7
The Independent Administrator should provide advice to the MSG and agree on what
information should be provided to the Independent Administrator by the participating
companies and government entities to assure the credibility of the data in accordance with
Requirement 5.2(c). The multi-stakeholder group and the Independent Administrator should
document the options considered and the rationale for the assurances to be provided. Where
deemed necessary by the Independent Administrator and the multi-stakeholder group,
assurances may include:
•
Requesting that reporting entities provide detailed “payment-by-payment” data so that
each transaction can be reconciled.
•
Requesting sign-off from a senior company or government official from each reporting
entity attesting that the completed reporting form is a complete and accurate record.
•
Requesting a confirmation letter from the companies’ external auditor that confirms that
the information they have submitted is comprehensive and consistent with their audited
financial statements. The MSG may wish to phase in any such procedure so that the
confirmation letter may be integrated into the usual work programme of the company’s
auditor. Where some companies are not required by law to have an external auditor and
therefore cannot provide such assurance, this should be clearly identified, and any reforms
that are planned or underway should be noted.
•
Where relevant and practicable, requesting that government reporting entities obtain a
certification of the accuracy of the government’s disclosures from their external auditor or
equivalent.
The Independent Administrator should exercise judgement and apply appropriate international
to list additional aspects not required by the
EITI Standard.
Board Paper 25-3-B
10
professional standards in developing a procedure that provide a sufficient basis for a
comprehensive and reliable EITI Report.
For discussion – additional guidance on determining what assurances are needed.
For example, adding criteria that the Independent Administrator should consider. e.g., cost,
sanctions for false attestations, etc.
1.8
The Independent Administrator should provide advice to the MSG on agreeing appropriate
provisions relating to safeguarding confidential information.
1.9
The Independent Administrator should provide advice to the MSG on confirming the level of
disaggregation for the publication of data. It is required that EITI data is presented by
individual company, government entity and revenue stream. Reporting at project level is
required, provided that it is consistent with the United States Securities and Exchange
Commission rules and the forthcoming European Union requirements.
1.10
The Independent Administrator should document the results from the inception phase in an
inception report for consideration by the MSG. The report should include:
•
Details on how contextual information will be incorporated into the EITI Report.
•
An overview of the proposed scope of the reporting process, including a proposal on an
appropriate definition of materiality and associated thresholds.
•
A list of the entities that will be asked to report.
•
The reporting templates to be completed by the reporting entities.
•
Details on the assurances and supporting documentation to be requested from reporting
entities.
•
The data collection and reconciliation procedures, including appropriate training and
guidance to reporting entities.
•
A timeframe for finalisation of the EITI Report.
Where necessary the inception report should highlight any unresolved issues or potential barriers
to effective implementation, and possible remedies for consideration by the MSG.
The MSG will review the Independent Administrator’s inception report and approve the
proposed scope, data collection and reconciliation procedures prior to the commencement
of data collection. The MSG may wish to make the inception report publically available.
Phase 2 – data collection
2.1
2.2
The recommended procedure is that the Independent Administrator is mandated to distribute
the reporting templates and collect the completed forms (and associated supporting
documentation) directly from the participating reporting entities. The government will provide
contact details for the reporting entities and assist the Independent Administrator in ensuring
that all reporting entities participate fully. [Where an alternative approach is proposed - e.g.
where a national EITI secretariat assists with data collection, or where the data is collected as part
of existing reporting mechanisms - the Independent Administrator should provide advice on
ensuring that appropriate safeguards are in place to protect the integrity of the process].
The Independent Administrator should provide advice to the MSG on ensuring that the request
Comment [EITI10]: Where an
alternative approach is proposed, additional
details should be provided or attached.
Comment [EITI11]: Multi-stakeholder
groups are encouraged to mainstream EITI
reporting by incorporating it into existing
reporting mechanisms.
Board Paper 25-3-B
11
for data includes appropriate guidance to the reporting entities, and advice on where to seek
additional information and support.
2.3
The Independent Administrator is mandated to contact the reporting entities directly to clarify
any information gaps or discrepancies.
For discussion – sequenced data collection.
A common challenge is identifying the companies that have made material payments, and verifying that
all of these companies have participated. One way to address this is a two-step process whereby the
Independent Administrator first collects government data, disaggregated by company, above the
predetermined materiality threshold. Reporting templates are then sent to all companies reported to
have made material payments, together with a randomised sample of companies below the threshold.
This method assumes that the government records are centralised and sufficiently complete. Experience
indicates however that this is often not the case, and that the process of defining materiality has been an
iterative process.
Phase 3 – initial reconciliation and initial reconciliation report
3.1
The Independent Administrator should compile a database with the data provided by the
reporting entities.
3.2
The Independent Administrator should comprehensively reconcile the information disclosed by
the reporting entities, identifying any discrepancies (including offsetting discrepancies).
3.3
The Independent Administrator should prepare an initial reconciliation report based on the
reported (unadjusted) data for consideration by the MSG.
3.4
[The Independent Administrator should identify any discrepancies above the agreed margin of
error established at X% of total revenues]
Phase 4 – investigation of discrepancies and draft EITI Report
4.1
The Independent Administrator is mandated to contact the reporting entities in seeking to clarify
any discrepancies in the reported data.
4.2
The Independent Administrator should prepare a draft EITI Report that comprehensively
reconciles the information disclosed by the reporting entities, identifying any discrepancies.
4.3
The draft report should describe the methodology adopted for the reconciliation of company
payments and government revenues, and demonstrate the application of international
professional standards
4.4
The draft EITI Report should include a description of each revenue stream, related materiality
definitions and thresholds (Requirement 4.1).
4.5
The EITI Report should include an assessment from the Independent Administrator on the
comprehensiveness and reliability of the data presented, including an informative summary of
the work performed by the Independent Administrator and the limitations of the assessment
provided.
4.6
Based on the government's disclosure of total revenues as per Requirement 4.2(b), the
Independent Administrator should indicate the coverage of the reconciliation exercise.
4.7
The report should include an assessment of whether all companies and government entities
within the agreed scope of the EITI reporting process provided the requested information. Any
gaps or weaknesses in reporting to the Independent Administrator must be disclosed in the EITI
Comment [EITI12]: The MSG and the
Independent Administrator may wish to
agree an acceptable margin of error in
determining which discrepancies should
be further investigated. Where this has
been agreed, it should be noted in point
3.4.
Board Paper 25-3-B
12
Report, including naming any entities that failed to comply with the agreed procedures, and an
assessment of whether this is likely to have had material impact on the comprehensiveness of the
report (Requirement 5.3(d)).
4.8
The EITI Report should document whether the participating companies and government entities
had their financial statements audited in the financial year(s) covered by the EITI Report. Any gaps
or weaknesses must be disclosed. Where audited financial statements are publicly available, it is
recommended that the EITI Report advises readers on how to access this information
(Requirement 5.3(e)).
4.9
Where previous EITI Reports have recommended corrective actions and reforms, the Independent
Administrator should comment on the progress in implementing those measures (Requirement
5.3(e)). [The Independent Administrator should make recommendations for strengthening the
reporting process in the future, including any recommendations regarding audit practices and
reforms needed to bring them in line with international standards.]
4.10
The Independent Administrator may wish to make recommendations on strengthening the
template Terms of Reference for Independent Administrator services in accordance with the EITI
Standard for the attention of the EITI Board.
Comment [EITI13]: Where the MSG
wishes that the Independent Administrator
makes recommendations for strengthening
the reporting process in the future, this
should be indicated here.
Phase 5 – final EITI reconciliation report
5.1
The Independent Administrator should produce electronic data files that can be published
together with the EITI Report.
5.2
[The Independent Administrator should provide machine readable files and/or code or tag EITI
Reports and data files].
5.3
Following approval by the MSG, the Independent Administrator is mandated to submit summary
data from the EITI Report electronically to the International Secretariat according to the
standardised reporting format available from the International Secretariat (Requirement 5.3(b).
The MSG should endorse the EITI Report prior to its publication. Where stakeholders wish to include
additional comments in, or opinions on, the EITI Report, the authorship should be clearly reflected.
Reporting Schedule
The assignment is expected to commence on [date], culminating in the finalisation of the EITI Report by
[date]. The proposed schedule is set out below:
Signing of contract
[date]
Inception period
[date] - [date]
Inception report
[date]
Data collection & initial reconciliation
[date] - [date]
Initial reconciliation report
[date]
Draft report
[date]
Final report
[date]
[Add any additional information regarding other deliverables requested by the MSG]
Requirements for Independent Administrators
Comment [EITI14]: Where the MSG
agrees to include this, additional information
should be provided.
Board Paper 25-3-B
The reconciliation of company payments and government revenues must be undertaken by an
Independent Administrator applying international professional standards (requirement 5.1). It is a
requirement that the Independent Administrator is perceived by the MSG to be credible, trustworthy and
technically competent (ib id). Bidders must follow (and show how they will apply) the appropriate
professional standards for the reconciliation / agreed-upon-procedures work in preparing their report.
The Independent Administrator will need to demonstrate:
•
Expertise and experience in the oil, gas and mining sectors in [country].
•
Expertise in accounting, auditing and financial analysis.
•
A track record in similar work. Previous experience in EITI reporting is not required, but would be
advantageous.
•
[Add information about any other skills and competencies required].
In order to ensure the quality and independence of the exercise, Independent Administrators are
required, in their proposal, to disclose any actual or potential conflicts of interest, together with
commentary on how any such conflict can be avoided.
Schedule of payments
The schedule of payments shall be as follows:
[<x%> following contract signing
<x%> following delivery of the inception report
<x%> following delivery of the draft EITI report
<x%> following MSG approval and publication of the EITI report]
Administrative arrangements
[Add information about reporting lines, support to the Independent Administrator during the
assignment, other logistical and administrative arrangements.]
[Other comments]
[The MSG may wish to included additional commentary on the assignment not addressed above]
13
Board Paper 25-3-B
14
Annex 1 – Data Sheet on scope of services
Based on [scoping reports / previous EITI Reports / other investigations] the MSG proposes the following
scope for the EITI, to be revised and confirmed with the Independent Administrator in the inception
period.
Comment [EITI15]: Indicate the basis
for the scope proposed below. Provide
links to the documentation, or attach to
the ToR.
1. Contextual Information
Comment [EITI16]: This section may
be removed where the Independent
Administrator has no role in collating
contextual information.
The Independent Administrator is tasked with collating the following contextual information in
accordance EITI Requirement 3.
Contextual information to be provide in
the EITI Report
Commentary on work to be undertaken by the
Independent Administrator
A description of the legal framework and
fiscal regime governing the extractive
industries (Requirement 3.2), in particular
laws relevant to the information disclosed
in the EITI report.
…
An overview of the extractive industries,
including any significant exploration
activities (Requirement 3.3)
…
Where available, information about the
contribution of the extractive industries to
the economy for the fiscal year covered by
the EITI Report (Requirement 3.4)
…
Production data for the fiscal year covered
by the EITI Report (Requirement 3.5)
…
Information regarding state participation in
the extractive industries (Requirement 3.6) 2
…
Distribution of revenues from the extractive …
industries (Requirement 3.7);
Any further information further information
requested by the MSG on revenue
management and expenditures
(Requirement 3.8)
…
Information on the licencing process and
register (Requirement 3.9) 3 and the
allocation of licenses (Requirement 3.10) 4
…
Any information requested by the MSG on
beneficial ownership (Requirement 3.11) 5
…
2
Add reference to Guidance Note
3
4
Comment [EITI17]: Outline the scope
of work required from the Independent
Administrator in collating contextual
information, including likely sources of
data. Indicate “not applicable” where the
Independent Administrator has no role in
collating contextual information. It is also
possible to note that “the proposed scope
has not been agreed” or “the MSG has not
yet considered this issue”.
Board Paper 25-3-B
Any information requested by the MSG on
contracts (Requirement 3.12) 6
…
[Add any other contextual information that
the MSG has agreed to provide]
…
2. The taxes and revenues to be covered in the EITI Report 7
Benefit stream
Commentary on work to be undertaken by the
Independent Administrator
…
…
15
Comment [EITI18]: Alternatively, the
MSG may wish to attach the scoping study
where available.
Comment [EITI19]: List here the
MSG’s proposal for the benefit streams to
be covered by the EITI Report.
Comment [EITI20]: For each benefit
stream, indicate which companies make
such payments, which government
entity/ies collect the payments, and any
other relevant commentary, e.g.,
proposed materiality threshold.
3. List of reporting entities (companies and government agencies)
4. Additional commentary on scope
The materiality and inclusion of subnational payments (Requirement 4.2(d)) 8
5
6
7
8
Comment [EITI21]: Alternatively, the
MSG may wish to attach the scoping study
where available.
Board Paper 25-3-B
The disclosure and reconciliation of
payments to and from state-owned
enterprises (Requirement 4.2(c)) 9
The materiality and inclusion of subnational transfers in accordance with
Requirement 4.2(e)) 10
9
10
16
Board Paper 25-3-B
Annex 2 – Supporting documentation
Documentation on governance arrangements and tax policies in the extractive industries, including
relevant legislation & regulations
•
[…]
•
[…]
•
[…]
EITI workplans & other documents
•
[…]
•
[…]
•
[…]
Findings from preliminary scoping work
•
[…]
Previous EITI Reports
•
[…]
•
[…]
Commentary on previous EITI Reports
•
[…]
•
[…]
Validation Reports
•
[…]
•
[…]
Other relevant documentation (e.g. annual activity reports)
•
[…]
•
[…]
17
Validation Committee
16 September 2013
Board paper 25-5-A
Confidential
Validation: Cameroon
For decision
Recommendation:
The Validation Committee recommends to the Board that Cameroon is designated EITI Compliant.
Board paper 25-5-A
VALIDATION: CAMEROON
Table of Contents
1
Recommendation ........................................................................................................ 2
2
Background .................................................................................................................. 3
3
Assessing Compliance ................................................................................................. 4
4
Procedures for achieving Compliance ....................................................................... 4
5
Assessment of the final Validation report ................................................................. 6
Annex A – Coverage 2009-2011 EITI Reports ................................................................. 14
1 Recommendation
The Validation Committee makes the following recommendation to the EITI Board:
The EITI Board designates Cameroon as EITI Compliant as of 17 October 2013. In accordance
with the EITI Standard:
•
Cameroon must be revalidated within 3 years, i.e. Validation will commence on 17
October 2016, or earlier upon request of the EITI Follow-up Committee. Validation will
be conducted in accordance with the EITI Standard.
•
Stakeholders in the process may call for a new Validation at any time within that period
if they think the process needs reviewing.
•
Where valid concerns exist that a country has become EITI Compliant, but its
implementation of the EITI has subsequently fallen below the standard required for
Compliance, the Board reserves the right to require the country to undergo a new
Validation or face delisting from the EITI.
•
In accordance with the EITI Standard, Cameroon is expected to produce EITI Reports
annually in accordance with EITI requirements. To maintain Compliant status, the 2012
EITI Report must be published by 31 December 2014 in accordance with the EITI
Standard.
•
In accordance with Requirement 7.2, Cameroon is required to publish an annual report
on the previous year’s activities, detailing progress in implementing the EITI. The annual
report for 2013 should be published by 1 July 2014.
2
Board paper 25-5-A
•
In accordance with the transition procedures for the EITI Standard, Cameroon is
expected to publish an updated workplan aligned with requirement 1.4 of the EITI
Standard by 31 December 2013.
In all decisions on Validation, the Board places a priority on the need for comparable treatment
between countries and the need to protect the integrity of the EITI brand. The Board reviewed
the Validator’s report in detail. The Board agreed with the Validator’s assessments on all
requirements.
The Board congratulates the Government of Cameroon for its sustained commitment and
leadership in the implementation of the EITI process. The Board welcomed Cameroon’s effort to
implement the new Standard with the publication in the 2011 Report of information on
licencing, state ownership, production data transit fees and transfers to local government. The
Board also congratulates Cameroon’s EITI Follow-up Committee, its Technical Secretariat and
all stakeholders involved for their efforts and effective leadership in EITI implementation.
2 Background
The Government of Cameroon announced its commitment to implement the EITI in March 2005. A
Prime Ministerial decree of June 20051 created an EITI Follow-up Committee, which is the multistakeholder group (MSG) mandated to oversee EITI implementation in Cameron. The MSG
published its first EITI Report covering 2001-2004 data in November 2006. A second report
covering 2005 data was published in March 2007. On 27 September 2007, the EITI Board admitted
Cameroon as a Candidate country implementing the EITI.
In July 2010, Cameroon published its third EITI Report covering 2006-2008 data. This report
extended the scope of the reporting process from oil and gas to include the mining sector.
Following the publication of its first Validation Report in July 2010, the Board designated
Cameroon as Candidate country that is “close to compliance” and agreed on corrective actions. A
Secretariat review completed in December 2012 concluded that Cameroon had not met all
requirements to achieve Compliant status. The Board established a second Validation deadline of
15 august 20132. While there were delays in implementing the agreed workplan, the 2009 and
2010 reports (published in February 2013) expanded the scope of EITI reporting to include transit
fees. The 2011 EITI Report, published in August 2013, addresses key requirements of the Standard,
such as information on licenses, state ownership, production data, transit fees, and transfers to
local government. The report was not published in time to be assessed by the validator but has
been reviewed by the Secretariat. The Report was published, while Validation was on-going. The
Validator made his assessment of EITI Reporting requirements (requirements 9 to 18) based on the
2009 and 2010 Reports. The Validator reviewed the draft 2011 Report, commented on the scope
and took note of the approval and publication of the final Report. The Secretariat has reviewed the
comprehensiveness and reliability of the data for 2009-2011 (see Annex A below).
Cameroon has completed the Validation process in accordance with the EITI Rules. The EITI
Decree N°2005/2176/PM of 16 June 2005, defines the composition and functioning of the MSG “Comite de suivi”, which has the
mandate to oversee EITI implementation in Cameroon.
2
At its 19th meeting, the EITI Board decided that the EITI Candidate status of Cameroon is renewed for 18 months (until 15 August
2013). The Board decision is available here.
1
3
Board paper 25-5-A
International Secretariat received Cameroon’s draft Validation report on 27 July 2013. On behalf of
the EITI Board, the Validation Committee agreed comments3 on the report for the attention of the
Validator and the MSG. The final report was endorsed by Cameroon’s MSG and submitted to the
International Secretariat on 15 August 2013.
The Validator concludes that Cameroon has met all the requirements. The Validation Committee
has reviewed the report and its assessment by the EITI International Secretariat. The International
Secretariat’s assessment is that the report provides sufficient information for a Board decision, and
that the Validator has satisfactorily addressed the Validation Committee’s comments on the draft
Validation report (see assessment below).
The International Secretariat concurs with the Validator’s assessment on all requirements.
Table 1 – Validator and secretariat assessments of Validation requirements.
Validator's assessment
Secretariat's assessment
Requirement
1
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
                 
                 
3 Assessing Compliance
In accordance with the Board decision on 15 February 2012, Cameroon is required to complete an
EITI Validation that demonstrates compliance with the 2011 edition of the EITI Rules.
Policy Note 3 in the EITI Rules including the Validation Guide (February 2011) states that:
Where Validation verifies that a Candidate country has met all of the requirements, the
Board will designate that country as EITI Compliant.
In the International Secretariat’s view, Cameroon has met all of the requirements in order to be
considered EITI Compliant.
4 Procedures for achieving Compliance
The Board recently agreed the transitional procedures for the EITI Standard. Cameroon’s deadlines
are as follows:
Country
Cameroon
Status
EITI Reporting Deadlines
(Deadlines to avoid suspension)
Candidate
2011 Report (EITI Rules) by 15 August
2013
2012 Report (EITI Standard) by 31 Dec
2014
New Validation Deadline
(Validation to commence)
15 August 2013 (EITI Rules)
The approach addresses three scenarios:
The draft validation report for Cameroon was distributed to members of the EITI Validation Committee on 29 July 2013. The
Committee met on 2 August 2013 to discuss the report.
3
4
Board paper 25-5-A
1. The Board finds that Cameroon is Compliant. Cameroon would be given a new Validation
deadline (date of Board decision + three years). This Validation would be undertaken in line
with the EITI Standard.
2. The Board finds that Cameroon is not compliant, but has made meaningful progress. In
this case, Cameroon would be suspended while undertaking corrective actions. A
Secretariat Review would be conducted in line with the EITI Rules after implementation of
the agreed correctives actions within 12 months following the Board decision, or earlier on
request of the MSG.
3. The Board finds that Cameroon is not Compliant, and has not made meaningful progress.
This implies that Cameroon should be delisted.
In light of the findings from the Validation process, the Secretariat’s recommendation reflects
scenario 1.
5
5 Assessment of the final Validation report
CAC 75 conducted the Validation of Cameroon’s implementation of the EITI. The EITI International Secretariat received the draft Validation report on 27
July 2013. On behalf of the EITI Board, on 2 August the Validation Committee agreed comments on the draft report for the attention of the Validator and
the Follow-up Committee, which is Cameroon’s multi-stakeholder group. The Validation report was subsequently revised and approved by Cameroon’s
MSG on 14 August 2013. The Validator has been paid and the Validation report has been made publically available.
The International Secretariat has reviewed the final report to verify that the Validation Committee’s comments on the draft have been addressed. The
Committee’s comments are assessed in details, as outlined below:
Table 2 – International Secretariat’s Assessment of the final Validation report from Cameroon
Requirement
1
2
3
4
The government is required
to issue an unequivocal
public statement of its
intention to implement the
EITI.
to commit to work with civil
society and companies on
implementation of the EITI.
to appoint a senior individual
to lead on the
to establish a MultiStakeholder group to oversee
the implementation of EITI
Comments by the Validation Committee on the
draft Validation report, issued on 02 August 2013.
International Secretariat’s assessment of the final Validation report
No comments
The Validator concludes that the requirement is met. The
International Secretariat concurs with this assessment.
No comments
No comments
The Validator notes that the MSG was created by a
Prime Minister Decree of 16 June 2005, but its
composition (24 members) has evolved over time.
The Validator should elaborate further on the
following issues:
The Validator should assess whether the group
comprises the appropriate stakeholders, and whether
each stakeholder group had the right to appoint their
The Minister of Finance, Mr Alaminie Ousman Mey, chairs the MSG,
which meets regularly.
The Validator confirms that 14 of the 24 members of the MSG are civil
society representatives, including two Members of Parliament. The
companies ‘constituency is somewhat under represented with four seats
instead of six according to the MSG statutory documents. The Validator
explains that this is due to mergers, acquisition and transfers of assets
between companies. The six government representatives include the
Minister of Finance, Mr Alaminie Ousman Mey, who is chairing the
committee. The Validator explained that the Anti-corruption
Observatory (OLCC) was closed in 2006 and replaced by the National
Board paper 25-5-A
Requirement
own representatives. This should also include an
assessment of the process for changing group
members (Requirement 4(iv)). In particular, the
Validator should clarify on the reasons why the
President of the Anti-Corruption Observatory has not
taken his seat in the MSG (page 30).
Similarly the Validator should elaborate on the weak
representation of civil society from the decentralised
territorial units (1 instead of 3 as intended in the
Prime Minister Decree).
The Validator should assess the decision-making
process of the MSG (Requirement 4(b)) and any
internal governance rules and procedures
(Requirement 4(g)).
Anti-Corruption Commission (CONAC). Stakeholders commented that
their respective constituencies are adequately represented.
The Validator noted that the Prime Minister’s decree of June 2005
explicitly describes the mandate and functioning of the MSG. In cases of
lack of clarity, the MSG takes decisions by reaching a consensus. The
committee is quorate if half of all members are present, and decisions
can be taken by vote with a clear majority of ¾ of the members present.
The Validator finds that the MSG’s decision-making process is open and
transparent.
In accordance with Requirement 4(f), the Validator
should assess whether members of the MSG have the
capacity to carry out their duties.
5
The multi-stakeholder group,
in consultation with key EITI
stakeholders, should agree
and publish a fully costed
workplan, containing
measurable targets and a
timetable for implementation
and incorporating an
assessment of capacity
constraints.
The MSG has addressed the Committee’s concerns on timely and regular
reporting. The MSG adopted the 2011 Report on 30 July. A final version
of the Report was published on 14 August. In his transmission letter of
the final Validation Report, the Validator noted the following:
Requirement 5(e) states “EITI Reports should cover
data no older than the second to last complete
accounting period (e.g. an EITI Report published in
calendar/financial year 2010 should be based on data
no later than calendar/ financial year 2008)”. The
Validator should comment on progress with the
publication of the 2011 EITI report.
“We understand that the 2011 EITI draft Report was approved by the
MSG on 30 July 2013 and was officially presented to the public on 31 July
2013 during a ceremony at the Hilton Hotel, in which we were present.”
(p. 8)
The Validator notes that the 2012-2014 workplan, which included
measurable objectives and implementation timetable, was adopted and
published by the MSG in May 2012 (p. 36). Its implementation is on
going.
7
Board paper 25-5-A
Requirement
6
7
8
to ensure that civil society is
fully, independently, actively
and effectively engaged in
the process.
to engage companies in the
to remove obstacles to the
No Comments
No comments.
No comments.
In accordance with Requirement 9(a) and (b), the
Validator needs to clarify whether the MSG has
agreed a definition of materiality and endorsed the
reporting templates for the 2009-2010 Report.
9
The multi-stakeholder group
is required to agree a
definition of materiality and
the reporting templates.
The Validator identifies two companies - Tullow
(partner in the Ngosso field) and Trophy, (partner in
the Etindé field) - that were not included in the scope
of the 2009 and 2010 reports. The Validator notes
however that the “operators”, Addax and Euroil,
maybe have reported the payments of these
companies in 2010 respectively. The Validator should
clarify whether payments from Tullow and Trophy
were captured in the report. Depending on the
finding, the materiality of any omitted company/ies
should be assessed under Requirement 11.
The Validator notes that a materiality threshold was
established for benefit streams related to the oil and
gas sector. In accordance with Requirement 9(b), the
Validator should provide information about the
options considered by the MSG and the rationale for
The Validator notes that the scoping study for the 2009 and 2010 Reports
includes a clear definition of materiality. The scoping study suggested a
materiality threshold of USD 100 000 with targeted coverage of 99.9% of
all revenues collected from the oil, gas mining and transit sector. The
scoping study states that “the materiality threshold of the reconciliation
scope is set at 50 million FCFA (or USD 100K) which is equivalent to
0.01% of the total income of the extractive sector as declared by the
Treasury. The target covered is 99.9%.” (p. 5) “This meant that companies
excluded did not exceed FCFA 500 million which is equivalent to US$ 1
million” (p. 13). Stakeholders confirmed that the MSG discussed the
coping study (p. 52).
The Validator explained that Pronodar and Euroil acquired Tullow and
Trophy’s rights in the Ngosso and Etindé field respectively in 2008 (p 57).
The operators of these fields, Addax and Euroil reported payments for
both entities in the 2010 report. The Validator verified that Pronodar did
not have an office in Cameroon and did not make material payments to
the government during the reporting period.
The scoping study identified 31 revenue streams (16 for the oil sector, six
for the transit sector and seven for the mining sector) and other
significant payments. The Validator’s analysis of the tax code and other
relevant legislations concluded that the scope of the 2009 and 2010
8
Board paper 25-5-A
Requirement
establishing the threshold at this particular level. The
Validator should also confirm whether materiality
threshold(s) were established for the mining sector.
The Validator should provide further information
regarding on what basis the MSG concluded that
subnational revenue streams were insignificant.
report were comprehensives. The Validator verified that revenue streams
that were not included in the scope were either immaterial due to tax
exemptions or captured by “other significant payments and revenues” in
the report. The Validator cites the scoping study that found “no in-kind
payments, infrastructure provision and other barter type arrangements”
during the reporting period. The state-owned enterprise SNH reported
on its commercial (SNH-operating) and fiscal (SNH-mandate) activities
including the sale of in-kind revenues.
The MSG excluded sub-national payments estimated at about USD
130,000, which exceeds the materiality threshold of USD 100,000 (p. 55).
The Secretariat has verified that subnational payments have been
included in the 2011 Report, published during the Validation exercise.
Based on the draft 2011 Report, the Validator noted the following:
•
•
•
•
•
10
must perceive the
organisation appointed to
produce the EITI
reconciliation report as
credible, trustworthy and
technically competent.
No comments
The Report covers the oil, gas, transit and mining sectors.
The list of companies reporting is the same as in the 2010 Report.
Revenues received from artisanal miners were unilaterally disclosed
by the government.
DGI (Direction Générale des Impôts) and DGTCFM (Direction
Générale du Trésor et de la Coopération Financière et Monétaire)
unilaterally declared sub-national transfers to the FEICOM (Fonds
Special d’Intervention Intercommunale).
In addition to revenue streams covered in the 2010 Report, the
2011 Report includes tax on the payment of dividends, the costs of
inspection and control, the tax of the sales of shares in the mining
sector (p. 8).
The Validator observed that the Terms of Reference for the reconciler
were discussed and agreed by the members of the EITI Follow-up
Committee in January 2012. Stakeholders confirm that the reconciler is
perceived as credible, independent, trustworthy and technically
competent (p. 62).
9
Board paper 25-5-A
Requirement
The issue of Tullow and Trophy was clarified under Requirement 9 above.
These two companies sold their stakes in the Ngosso and Etindé oil fields
in 2008, and did not make material payments to the states in 2009 and
2010.
11
to ensure that all companies
and government entities
report.
The Validator notes that all 22 companies identified
in the scoping study submitted reporting templates.
The Validator also verified “all state agencies have
participated in the reconciliation process for the data
disclosed in the 2009 and 2010 EITI reports (p. 53).”
The Validator should provide further information
about the two companies (Tullow and Trophy) that
were potentially omitted from the EITI Report,
including whether:
these companies did make payments in 2009 and
2010;
the omission, if any, had a material impact on the
comprehensiveness of the EITI Reports; and
the government has disclosed the revenues received
from these companies.
The Validator concludes that all companies and government entities
identified as making or receiving material payments and revenues
submitted their reporting templates for the 2010 EITI Report. In
accordance with the scope, 22 companies were identified as material
taxpayers. The payments made by these companies have been
reconciled with government receipts. Mining companies at the
exploration phase made payments below the materiality threshold. The
Validator confirms that the government unilaterally disclosed the
revenues from these companies.
For the mining sector where, not all operating companies were included,
given their size and limited activities, the Follow-up committee
requested disclosure of the combined sum of the revenues by the
government (p. 28). The following payment flows were unilaterally
declared in the 2009 and 2010 Reports:
• other material payments declared by extractive companies;
• voluntary or non-voluntary contributions to social projects declared
by extractive companies; and
• revenues of mining companies not included in the reconciliation
scope but declared by Government Agencies
The percentage of revenues reconciled with payments is 98,3% in 2009,
and 98% in 2010.
12
to ensure that company
reports are based on audited
accounts to international
standards.
In the assessment of Requirement 17, the Validator
notes that the reconciler provides contradictory
information related to company compliance with the
approach for assuring company figures. In the
assessment of Requirement 12, the Validator should
confirm whether C&K mining complied with the
approach agreed by the MSG.
The Validator confirms that all 22 companies submitted reporting
templates that had been certified by their external auditor in accordance
with the agreed reporting templates.
The Validator noted that external auditors raised doubts on the reliability
of a particular revenue stream (customs duty) from two companies
(COTCO and Pecten Cameroon) but the Validator concluded that the
10
Board paper 25-5-A
Requirement
disagreement could not affect the reliability of the Report as the
payments in doubt represent 0.7% of the total revenues reported (p. 68).
13
to ensure that government
reports are based on audited
accounts to international
standards.
No Comments
The Validator noted that reporting templates from the government
agencies were signed by their respective mangers. In the case of SNH
(the state-owned enterprise) an external auditor attested the reporting
templates. The Supreme Audit Institution certified4 reporting templates
for all government entities. The Validator verified documents of the
Supreme Audit Certification, and concluded that the work was thorough
and sufficient to guarantee the reliability of the data disclosed (p.71).
14
15
Companies comprehensively
disclose all material
payments in accordance with
the agreed reporting
templates.
Government agencies
comprehensively disclose all
material revenues in
The Validator notes under Requirement 9 that while
the MSG agreed to include all benefit streams related
to the transportation of oil, gas and minerals, some of
these benefit streams (flat fees and land royalty) were
excluded. The Validator should assess the materiality
of these omissions.
The Validator notes under Requirement 17 that
‘customs duty had been removed from the amounts
initially reported by the 2 quarrying companies’ (p.
82). According to requirement 9, customs duties are
one of the benefit streams agreed to be material by
the MSG. The Validator should clarify the reasons for
why customs duties were subtracted from the reports
provided by these two companies, and indicate the
materiality of this omission.
The Validator notes under requirement 17 that
‘customs duty had been removed from the amounts
initially reported by the 2 quarrying companies’ (p.
The Validator clarified under requirement 9 that COTOCO (the company
managing the Chad-Cameroon pipeline) was exempted by the tax
authorities from paying flat fees and land royalties (p. 56). These two
revenue streams were therefore immaterial for the oil-transit sector.
The Validator explained that freight forwarders –entities importing
goods- support the settlement of customs duty on behalf of the
companies. Many oil companies book the overall amount of the invoice
and do not identify the customs duty in a separate account (p.74).
The Validator verified that corrections made by the reconciler on the
reporting templates of certain companies were justified.
International Secretariat concurs with this assessment
As noted under Requirement 14, the Validator confirmed that
government agencies have unilaterally disclosed all significant revenues.
The overall discrepancy showed that revenues reported by the
4
acte de Certification N°001/2013/CDC/CSC du 16 janvier 2013 portant certification des formulaires de déclarations des recettes du secteur extractif des exercices 2009 et 2010 des
administrations et entités publiques.
11
Board paper 25-5-A
Requirement
accordance with the agreed
reporting templates.
82). According to requirement 9, customs duties are
one of the benefit streams agreed to be material by
the MSG. The Validator should whether the
government reported receipts of customs duties
from these two companies.
government were slightly bigger than the payments declared by the
companies.
In his assessment of requirement 9, the validator noted “The multistakeholder group excluded [from the 2010 report] subnational
payments, estimated at about 65 MFCFA72 [about USD 13000] by the
reconciler, as insignificant. Though it exceeds the materiality threshold
[of USD 100 000], we understand that this flow is well below the
threshold of cumulated omissions”(p. 55). The Independent
administrator for the 2011 Report noted the following:
“In accordance with Article 89 of the Mining Code, the population
affected by mining activities is entitled to a compensation based on ad
valorem and extraction taxes as follows:
• 10% for the benefit of the riparian population ; and
• 15% for the benefit of the relevant local council
The analysis of the payment mechanism of these taxes and the process
of their reimbursement is that subnational payments are made by
extractive companies to DGT and DGTFMC. These are recorded in the
beneficiary accounts and subsequently allocated to the councils and
municipalities;
The 2011 Report showed, transfers to local government amounted to
USD 1.5 million.
16
17
must be content that the
organisation contracted to
reconcile the company and
government figures did so
satisfactorily.
The reconciler must ensure
that the EITI Report is
comprehensive, identifies all
discrepancies, where possible
explains those discrepancies,
and where necessary makes
No comments
No Comments
The EITI Follow-up Committee approved the 2009 and 2010 Report on 21
February 2013.
International Secretariat concurs with this assessment
The Validator noted that the Independent Administrator explained the
discrepancies identified in the 2009 and 2010 report. The reports also
include recommendations to improve EITI reporting and a follow-up on
implementation of the recommendations in the 2006-2008 EITI Report.
12
Board paper 25-5-A
Requirement
18
19
20
recommendations for
remedial actions to be taken.
The government and the
multi-stakeholder group
must ensure that the EITI
Report is comprehensible
and publicly accessible in
such a way as to encourage
that its findings contribute to
public debate.
Oil, gas and mining
companies must support EITI
implementation.
The government and the
multi-stakeholder group
must take steps to act on
lessons learned, address
discrepancies and ensure
that EITI implementation is
sustainable. Implementing
countries are required to
submit Validation Reports in
accordance with the
deadlines established by the
Board.
No Comments.
The Validator confirms that the 2009 and 2010 EITI Reports were widely
disseminated, in both official languages English and French, which
stimulated a public debate (p.85).
No comments.
No Comments.
13
Annex A – Coverage 2009-2011 EITI Reports
2009
2010
2011
Total Revenues received by
the Government from the
extractive
sector,
after
adjustments, (see page 8 and
9 in the respective Reports)
579 737 289 041
554 907 785 778
677 932 431 194
Unilaterally
disclosed
revenues and payments
10 016 078 919
11 166 674 205
697 158 598
1,728 %
2,0123 %
0,1028 %
98,272 %
97,99 %
99,90 %
Percentage of unilaterally
disclosed revenues
Percentage
reconciled
of
revenues
16 September 2013
Board paper 25-5-B
Confidential
Validation: Indonesia
For decision
Recommendation
The Validation Committee recommends that the Board agrees the following:
Having assessed Indonesia’s final validation report dated 17 July 2013, the Board finds that
Indonesia is not compliant but has made meaningful progress in implementing the EITI. The
Board has agreed corrective actions regarding requirements 5, 9, 11, 14 and 15. In accordance
with the transitional procedures for the EITI Standard, the Board tasks the International
Secretariat with undertaking a Secretariat Review, assessing compliance with required corrective
actions and outstanding requirements, within 15 months (i.e., by 17 January 2015). Failure to
achieve compliance by this date will result in suspension or delisting in accordance with the EITI
Standard.
Board paper 25-5-B
VALIDATION: INDONESIA
Table of Contents
1
Recommendation .........................................................................................................................................................................................2
2
Background .....................................................................................................................................................................................................4
3
Assessing Meaningful Progress ...............................................................................................................................................................6
4
Procedures for achieving Compliance ..................................................................................................................................................6
5
Assessment of the final Validation report ...........................................................................................................................................8
1 Recommendation
Having assessed Indonesia’s final validation report dated 17 July 2013, the Board finds that
Indonesia is not compliant but has made meaningful progress in implementing the EITI. The
Board has agreed corrective actions regarding requirements 5, 9, 11, 14 and 15. In accordance
with the transitional procedures for the EITI Standard, the Board tasks the International
Secretariat with undertaking a Secretariat Review, assessing compliance with required
corrective actions and outstanding requirements, within 15 months (i.e., by 15 January 2015).
Failure to achieve compliance by this date will result in suspension or delisting in accordance
with the EITI Standard.
The Board congratulated the government, companies and civil society organisations in Indonesia for
the progress made in implementing the EITI. The Board also thanked the Validator and all
stakeholders involved in the validation process.
The Board took note of the complexity of the extractive industries in Indonesia, and the efforts by
stakeholders to provide a comprehensive EITI report. The Board noted, in particular, the work to
address issues not required by the EITI Rules, which have recently been addressed in the EITI Standard.
The Board welcomed this work and the demonstrable commitment to achieving greater transparency.
The Validator found that Indonesia has not met requirements 12 and 13. In all decisions on Validation
the Board places a priority on the need for comparable treatment between countries and the need to
protect the integrity of the EITI brand. The Board reviewed the Validator’s report and the MSG’s
comments. On several issues, the Board tasked the International Secretariat to provide additional
information, particularly in relation to the comprehensiveness of the 2009 EITI Report. The Board also
took into account actions undertaken by the MSG during the validation process in relation to
requirements 12 and 13.
2
Board paper 25-5-B
The Board determined that requirements 5, 9, 11, 14, and 15, were not met, and established the
following corrective actions that need to be addressed in order for Indonesia to achieve compliance:
1.
The government and Multi-Stakeholder Group should take decisive action to address the delays
that have characterized EITI implementation to date. The Multi-Stakeholder Group should agree
and publish a detailed (time-bound and costed) work plan that addresses:
i. the publication and dissemination of the EITI Reports for 2010 – 2013 with a view to
ensuring regular and timely EITI reporting (requirement 5e);
ii. the recommendations from the 2009 EITI Report and from the Validator; and
iii. the corrective actions highlighted below. In accordance with the transitional procedures
for the EITI Standard.
Indonesia is expected to agree and publish a workplan for 2014 by 31 December 2013.
2.
The MSG is required to agree a clearer definition of “material payments and revenues” and
incorporate this definition into the reporting templates and procedures for the next EITI Report.
This should specifically address the procedures for identifying all companies that have made
material payments, and the coverage of material payments to regional and local governments
(Requirement 9).
3.
Future EITI reports should clearly demonstrate that all entities that make or receive material
payments are participating in the reporting process (requirement 11). The Board highlights the
suggestion in requirement 11(b) that 'where a number of small operators pay revenues which are
individually not material, but collectively material, the MSG may wish to request that the
government discloses the combined benefit streams from such small operators', (see also
requirement 4.2(b) in the EITI Standard).
4.
In accordance with the agreed definition of materiality (see point 2, above), the Multi-Stakeholder
Group should ensure that all material payments by companies to government have been
disclosed to the reconciler and incorporated into the next EITI Report (requirement 14. The EITI
Report should clearly state if any companies failed to participate in the reporting process, and
assesses whether this is likely to have had a material impact on the stated figures. (see also
requirement 5.3(c) and 5.3(d) in the EITI Standard));
5.
In accordance with the agreed definition of materiality (see point 2, above), the Steering
Committee should ensure that all material revenues received by the government have been
disclosed to the reconciler and incorporated into the next EITI Report (requirement 15). The EITI
Report should clearly state if any government entities failed to participate in the reporting
process, and assesses whether this is likely to have had a material impact on the stated figures.
(see also requirement 5.3(c) and 5.3(d) in the EITI Standard);
Furthermore, the Multi-Stakeholder Group should ensure that the agreed approach for assuring the
data submitted by companies and government entities is implemented, and that any gaps or
weaknesses in reporting to the Independent Administrator are comprehensively disclosed in the must
be disclosed in the EITI Report.
The Secretariat Review will be undertaken in accordance with the EITI Rules. In addressing these
corrective actions, the MSG is encouraged to take steps towards achieving compliance with the EITI
3
Board paper 25-5-B
Standard. In accordance with the transitional procedures for the EITI Standard, Indonesia is required
to publish a 2013 annual activity report by 1 July 2014.
2 Background
Indonesia was admitted as an EITI candidate on 19 October 2010 and it published its first EITI report in
May 2013, covering 2009.
Indonesia’s original validation deadline was 18 April 2013. Following an application from the MSG the
Board agreed to extend the deadline to 18 July 2013 1.
Indonesia has completed the validation process in accordance with the EITI Rules and a final report was
endorsed by the MSG and submitted to the International Secretariat on 17 July 2013. In submitting
report, the MSG requested that the Board takes into account their objections. The comments from MSG
were received by the Secretariat on 31 July.
The Validator concludes that Indonesia has not met all of the requirements. Specifically, the Validator
concludes that requirements 12 and 13 are not met. The final validation report was endorsed by the
Indonesia EITI Multi-Stakeholder Group on 16 July 2013 and submitted to the International Secretariat on
18 July.
The Validation Committee has reviewed the report, the MSG’S comments, and an assessment prepared
by the EITI International Secretariat. The International Secretariat’s assessment is that the validation
report is generally satisfactory, and that the Validator has addressed many of the Validation Committee’s
comments on the draft validation report (see assessment below). However, there were a number of
requirements, particularly in relation to the comprehensiveness of the 2009 EITI Report, where the
validation report provided insufficient detail. The Secretariat therefore collated supplementary
information, drawing on the 2009 report and discussions with the EITI Indonesia Secretariat.
The Validator expresses concerns about: (1) the lack of a clear definition of materiality, (2) the failure of
companies and government entities to comprehensively disclose all material payments and revenues,
and (3) the lack of a clear approach for ensuring that company and government figures submitted for the
EITI report were based on accounts audited to international standards. Notwithstanding those concerns,
the validator’s assessment was that all requirements except 12 and 13 were met. The International
Secretariat concurs with the Validator’s assessment on many of the requirements. However, in the
Secretariat’s view, there is insufficient evidence to demonstrate compliance with requirement 9, 11, 14
and 15. In additional, taking into account work undertaken by the MSG in recent months, the Secretariat
is satisfied that requirements 12 and 13 are met. . The areas of disagreement are summarised in table 1,
and set out in more detail in the secretariat assessment (see table 2).
Table 1 – Validator and Secretariat assessments of Validation Requirements.
Requirement
1
2
3
Validator's Assessment


        

     
Secretariat's Assessment


        

     
1
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18
http://eiti.org/files/Minutes%20from%20the%2023rd%20EITI%20Board%20meeting%20Sydney_0.pdf
4
Board paper 25-5-B
In summary, the main issues of concern relate to:
•
Extensive delays in EITI implementation. The EITI process to date has been characterised by
extensive delays in EITI reporting and validation. The MSG and national secretariat have faced
significant challenges in executing agreed workplans, particularly in relation to disbursement of
funding and procurement procedures. By way of illustration, at the time of writing the reconciler had
not been paid in full for his work on the 2009 report and the validator had not received any payment
for their work on the validation report. Decisive action from the government and Multi-Stakeholder
Group is needed to overcome the delays that have characterized EITI implementation to date;
•
Timely reporting. The delays highlighted above are most clearly manifest in the irregularity and
untimeliness of EITI Reporting. Indonesia first report covering 2009 was published in May 2013,
exceeding the “2 year” deadline by 17 months. The transitional arrangements associated with the
2011 EITI Rules stated that Indonesia is:
Required to meet Requirement 5(e) of the new Rules on regular and timely reporting by 31 December
2012 or the end of their maximum candidacy period, whichever is later. In the interim (prior to 31 Dec
2012), the Board may apply the previously established principle that countries where EITI reporting is
irregular and/or the published data is substantially out of date will not be designated Compliant
(emphasis added).
Indonesia’s maximum candidacy period is July 2013 + 15 months, i.e., October 2015. The question
arises as to whether “the published data is substantially out of date”. There is no agreed basis for
determining whether a report is “substantially out of date”. Several other countries have been
granted compliant status with “untimely” data. For example, Yemen was declared compliant on 1
March 2011 based on 2005-2007 EITI Reports published in September 2010 (exceeding the “2 year”
deadline by 9 months). Indonesia 2009 report exceeded the “2 year” deadline by 17 months.
The complexity of the extractive industries in Indonesia is relevant mitigating factor. However,
expected delays in the publication of the 2010 and 2011 Reports is a serious concern. The latest
workplan indicates that these reports will not be published until March 2014 at the earliest. (An
extension request would be required to avoid temporary suspension under the recently agreed
transitional arrangements for the EITI Standard). Compliance with the EITI requirements for timely
reporting is not expected until the 2012 report scheduled for publication in late 2014.
The Secretariat considers this to be a decisive factor. The Secretariat takes the view is that Indonesia’s
reporting is “substantially out of date”. Accordingly, notwithstanding the latitude afforded by the
transitional arrangements, the Secretariat’s assessment is that Indonesia is not eligible to be granted
compliant status.
•
Scoping, defining materiality & ensuring that all companies and government entities disclose
all material payments. The validator argues that a clearer definition of materiality and a more
comprehensive approach to scoping and disclosure is required so that the report comprehensively
covers all material payments and revenues. The validation report highlights weaknesses in scoping
and the coverage of all companies that make material payments, particularly in the mining sector.
The materiality of payments to regional and local governments requires closer scrutiny. The
Independent Administrator highlights extensive problems with the completion of the reporting
templates. Commenting on the reconciliation process he writes: “the numbers of adjustments and
the amounts of adjustments identified above are unacceptable based on any objective assessment”.
The EITI Indonesia Secretariat has sought to demonstrate the coverage of the2009 EITI Report (see
Annex A). However, the large disparity in the largest revenue stream (corporate income tax) in the
mining sector highlights the concerns regarding the reliability of the data. The corporate income tax
payments disclosed in the EITI Report exceed the total government revenues for all companies in the
sector by over USD 300 million.
5
Board paper 25-5-B
In the absence of reliable data regarding total government revenues, there is insufficient evidence to
conclude that “all material oil, gas and mining payments by companies to government” and “all
material oil, gas and mining revenues received by the government” have been disclosed to
reconciler. The Secretariat’s assessment is that, based on the information currently available, there is
insufficient evidence to conclude that requirements 9, 11, 14 and 15 have been met.
•
Ensuring that company and government reports are based on audited accounts to
international standards. It is clear from the validation report that government and company
disclosures to the reconciler are not consistently based on accounts audited to international
standards. The validator highlights the weaknesses in the procedures employed for the 2009 report,
and notes that the MSG has not agreed a credible workplan for addressing these issues in the future.
Following the publication of the 2009 Report, the EITI Indonesia Secretariat and MSG have taken
steps to address these weaknesses. In July the MSG agreed a technical paper setting out it approach
for addressing these issues in the 2010 and 2011 Report, taking into account the procedures outlined
in the EITI Standard. The EITI Rules stipulates that “where figures submitted for reconciliation are not
to audited standards, the multi-stakeholder group is content with the agreed way of addressing this,
for example, by developing a time-bound action plan for ensuring that company reports are based
on audited accounts to international standards (Requirement 12(a)(vi)”. A similar provision applies for
requirement 13. The Secretariat’s assessment is that the approach outlined in the technical paper
satisfies these requirements. However, it is recommended that the Secretariat Review assesses
whether the agreed approach has been implemented effectively.
3 Assessing Meaningful Progress
If an EITI Candidate country has completed Validation within two and a half years, but the Validation
shows that no meaningful progress has been made toward achieving EITI Compliance, and that there is
little evidence of a sincere intention to implement EITI in line with the Principles and Criteria, the Board will
de-list the country from the list of Candidate countries. In assessing “meaningful progress” the Board will
have regard to:
1. The EITI process – in particular the functioning of the multi-stakeholder group and clear, strong
commitment from Government; and
2. The status of EITI Reporting. The Board will take into account progress in meeting the requirements for
regular and timely reporting as per Requirement 5(e).
In the International Secretariat’s view, Indonesia has satisfied the requirements in order to be considered
to have made “meaningful progress”.
The Board recently agreed the transitional procedures for the EITI Standard. Indonesia’s deadlines are as
follows:
Country
Indonesia
Status
Candidate
2010 & 2011 Report (EITI Rules) by 31
Dec 2013
2012 Report (EITI Standard) by 31
Dec 2014
18 July 2013 (EITI Rules). If compliant, Validation
(EITI Standard) after + 3 years. If not compliant:
Secretariat Review (EITI Rules) after 15 months, or
earlier on request of the MSG.
6
Board paper 25-5-B
Country
Status
1. The Board finds that Indonesia is not compliant, but has made meaningful progress. In this case,
a Secretariat Review is conducted in line with the EITI Rules after implementation of the agreed
correctives actions in 15 months following the Board decision, or earlier on request of the MSG.
2. The Board finds that Indonesia is not compliant, and has not made meaningful progress. This
implies that Indonesia should be delisted.
3. The Board finds that Indonesia is compliant, Indonesia would be given a new Validation deadline
+ 3 years, and this validation would be undertaken in line with the EITI Standard.
In light of the findings from the validation process, the Secretariat recommendation reflects scenario 1.
7
EITI Board Paper 25-5-B
5
8
Assessment of the final Validation report
The validation of Indonesia’s implementation of the EITI was conducted by Deloitte. A draft report was completed on 24 April 2013. The Validation Committee
agreed comments on the draft (see below), which were sent to the national coordinator and the Validator on 21 May 2013. The Validation report was
subsequently revised, approved by the Indonesian Steering Committee on 16 July 2013. The Validation report has been made publically available 2. However,
the validator has not yet been paid, and was thus reluctant to undertake further work in the lead up to the deadline for submitting the final report. This has led
to a number of comments by the Validation Committee not having been fully addressed.
Committee’s comments are assessed in turn, below:
Table 2 – International Secretariat’s Assessment of the final Validation report from Indonesia
Requirement
1
2
2
Comments by the Validation Committee on the draft
Validation report, issued on 14 May 2013
The government is required to
issue an unequivocal public
statement of its intention to
implement the EITI.
No comments
commit to work with civil society
and companies on
The Validator notes that “Civil Society has mainly been represented
in the EITI process by PWYP Indonesia, representing 38 civil society
organisations.” However, there is no assessment as to whether and
to what extent PWYP Indonesia, and the CSO members on the
MSG, can be seen as representing broader Civil Society in
Indonesia. It is unclear if these broader Civil Society actors, such as
anti-mining groups, religious organisations, or academia, have
been given the opportunity to be formally engaged. The Validator
should address this issue, and whether the current arrangement in
any way undermines effective CSO engagement.
http://eiti.ekon.go.id/uploads/downloadfiles/2013-07-18-74_1_Final_Validators_Report_-_after_QAR.pdf
International Secretariat’s assessment of the final
Validation report
International Secretariat is also satisfied that this requireme
The Validator concludes that “PWYP is a broad coalition of CSO
across several provinces and represents an important initial
step in engaging Civil Society in the Indonesia EITI. There is
evidence of a wider debate in the media regarding the EITI”
and recommends that “given the size and diversity of
Indonesia the Implementing Team should consider
broadening Civil Society representation across Indonesia to
include more anti-mining organisations, religious groups and
academia.”
The Validator confirms that at the moment Civil Society
engagement is limited to PWYP Indonesia and CSO members
Requirement
9
Validation report
on the MSG.
International Secretariat is also satisfied that this
requirement is met, but supports the recommendation by
the Validator that broader Civil Society engagement is
needed.
The Validator has addressed the comments by the Validation
Committee.
3
appoint a senior individual to lead
on the implementation of the EITI.
The Validator should address the frequency with which the
steering team meets, and whether this has been sufficient to
provide effective oversight of the EITI process.
The Validator should address the changes to the senior individual
leading on the implementation since Indonesia became a
candidate country.
The Validator recommends that “an individual with sufficient
authority be appointed officially to chair all the
Implementation Team meetings”
The Validator also recommends that “(…) when there is a clear
impasse with any of the reporting entities (…) these issues
should be escalated to the Steering Committee for resolution”.
requirement is met and supports the recommendations by
the Validator.
The Validator has addressed the Committee’s comments.
4
establish a multi-stakeholder
group to oversee the
implementation of EITI
The Validator should address whether the “The “Kerangka Acuan
Tim pelaksana Transparansi lndustri Ekstraktif” (“TOR”) are
publically available. The Validator should also address whether the
MSG has provided effective oversight of the EITI process (e.g., how
often has it met, has it been able to effectively address challenges
encountered during the implementation process). Given the
“concern expressed by some stakeholders about the length of time
taken to arrive at this point” the Validator is encouraged to make
recommendations to increase the effectiveness of MSG oversight
of the process.
The Validator provides a link to the latest version of the Terms
of Reference.
The Validator does not specifically note whether the MSG has
provided effective oversight of the EITI process, and does not
mention how often the MSG has met. The Validator does
indicate that the MSG “held regular meetings” and mentions
some challenges the MSG faced, that they were addressed and
how they were ultimately resolved. The Validator also makes
recommendations on how to increase the effectiveness of
MSG oversight of the process.
The Validator concludes that this requirement is met. The
International Secretariat is also satisfied that the
requirement is met.
Requirement
5
The multi-stakeholder group, in
consultation with key EITI
stakeholders, should agree and
publish a fully costed workplan,
containing measurable targets
and a timetable for
implementation and incorporating
an assessment of capacity
constraints.
Publication of a 2009 Report in April 2013 does not meet the
requirement for timely EITI Reporting. The Validator correctly
highlights but misunderstands the transitional arrangements that
apply to Indonesia. These require that Indonesia is “required to
meet Requirement 5(e) of the new Rules on regular and timely
reporting by 31 December 2012 or the end of their maximum
candidature period, whichever is later”. Indonesia’s maximum
candidature period ends in October 2014. As set out in the
transitional arrangements: “In the interim … the Board may apply
the previously established principle that countries where EITI
reporting is irregular and/or the published data is substantially out
of date will not be designated Compliant”. The Validator need not
address this point, as the Board will make the final assessment.
However, in determining whether “EITI reporting is irregular and/or
the published data is substantially out of date” the Board will have
regard to why the reporting process has been delayed, and the
MSG’s plans for meeting this requirement in the future.
To this end, it is imperative that the Validator provides a more
detailed account of why the 2009 report has been delayed (noting
that the MSG workplan indicated that the 2009 report should have
been published by the end of 2011), and the steps taken by the
government and MSG to address this issue. Moreover, the Validator
should assess whether EITI Indonesia is expected to publish reports
for 2010 and 2011 by year end.
10
Validation report
The Validator provides an account of why the 2009 report has
been delayed, but does not explain what the government and
the MSG have done to address these issues.
The Validator indicates that “The timeframe to complete the
second EITI Report covering 2010 and 2011 will be challenging
to achieve.”
The Validator concludes that the requirement has been
met, with the exception of requirement 5(e). The
International Secretariat, taking into account progress
with the 2010/2011 reports, considers reporting to be
“substantially out of date”. Accordingly, notwithstanding
the latitude afforded by the transitional arrangements, the
Secretariat’s assessment is that Indonesia is not eligible to
be granted compliant status.
See comments under Requirement 2, above.
6
ensure that civil society is fully,
independently, actively and
effectively engaged in the process.
See comments under Requirement 2, above.
7
engage companies in the
No comments.
requirement is met, but supports the recommendation by
the Validator that broader Civil Society engagement is
needed.
requirement is met.
Requirement
11
Validation report
The Validator states that:
“Approximately 10 mining entities had failed to return
their statements authorizing the Directorate General of
Tax to report taxes paid by the units, the EITI Indonesia
Secretariat followed up with these units asking them to
submit these statements. All but 6 had done so, as of 25
February 2013.
These figures should be updated in accordance with the final 2009
report, and the implications of any no participation assessed.
8
remove obstacles to the
The Validator also states that:
“Certain companies cited that they have not yet provided
permission for the data to be reported on a company by
company basis, rather the data should only be used by the
reconciler at an aggregate level. Certain oil and gas
industry companies commented that they had provided
approval for their company information to be published,
but reporting templates were only provided to reconcilers
so that information could be provided for reporting on an
aggregated basis”.
The Validator has updated the figures, noting that “All but 5
had done per the 2009 Report”, but does not assess the
implication of the fact that a number of companies did not
participate. This issue is addressed in more detail below.
The Validator concludes that the arguments put forward by
non-reporting companies are “inconsistent with the
commitment made by their representative bodies on the
MSG”
requirement is met, while noting that further work may be
needed to ensure the full participation of all government
entities, which may be constrained by tax confidentiality
regulations.
The Validator should explain how these issues was addressed /
resolved prior to the publication of the final EITI Report.
9
The multi-stakeholder group is
required to agree a definition of
materiality and the reporting
templates.
The Validator quotes at length the national secretariat’s approach
to defining materiality. However there is insufficient critical analysis
by the Validator as to whether this approach is sufficient and meets
the EITI requirements. The Validator should give his view as to
whether the definition of materiality and the design of the
reporting templates were appropriate, addressing each of the
sub-requirements listed in requirement 9, highlighting in each
case whether the approach outlined by the national secretariat has
been follow through comprehensively in the final 2009 EITI Report.
For example, requirement 9(e) states:
In agreeing a definition of “material payments and
revenues”, it is a requirement that the multi-stakeholder
The Validator addresses each of the sub-requirements listed in
requirement 9. The Validator notes that “the methodology to
calculate materiality was not clearly explained”, and that
“certain material revenue streams and payments [such as local
fees and charges] were not addressed”. In kind payments and
social payments and transfers were also not addressed in the
Scoping Note, and there is no explanation of on what basis the
MSG concluded that payments to local governments were
deemed to be not material. However, the Validator is of the
opinion that “The approach taken by the MSG may be
considered reasonable given the information available at that
point in time.”
Requirement
group clearly establishes whether payments to regional
and local government entities are material. Where
material, the multi-stakeholder group should take steps to
ensure that the reconciliation of company payments to
sub-national government entities and the receipt of these
payments are incorporated into the EITI reporting process.
The multi-stakeholder group may wish to consider
extending the scope of the EITI reporting and
reconciliation process to transfers between national and
sub-national tiers of government, particularly where such
transfers are mandated by a national Constitution or
statute.
12
Validation report
The Validator concludes is that the requirement is met.
The International Secretariat considers that there is
insufficient evidence that this requirement is met and
recommends a more comprehensive scoping study in
advance of the 2010 and 2011 Reports.
The Validator notes that “…it was decided that fees paid by firms
to local governments were not material. (..) To be clear, no national
data was available then or now on what percentage local revenues
make up of total revenues paid by EI companies. (…) …could only
rely on the statements of the majority of the members of the
Scoping Subcommittee that these payments are not material.” If
no national figure is available, it would seem difficult to
substantiate the claim that these payments and revenues are not
material. It was however decided that local fees paid by Mineral
and Coal companies would be unilaterally reported by companies,
and that local fees paid by Oil and Gas companies would be
unilaterally disclosed by government. If this is the case, it should
now be possible to verify the materiality of these payments and
revenues. Further explanation is needed as to why this data were
disclosed but not reported.
In addition (VC minutes): critically assessing the MSG’s approach to
scoping, e.g., assessing the materiality of payments to local
government (requirement 9);
10
The organisation appointed to
produce the EITI reconciliation
report must be perceived by the
multi-stakeholder group as
credible, trustworthy and
technically competent.
No comments.
requirement is met.
Requirement
11
ensure that all companies and
government entities report.
Validation report
The Validator should provide a clearer assessment of whether the
government has ensured that all companies and government
entities report. This has two elements: (1) whether the scope of the
EITI report was adequate (as assessed at requirement 9 above) and
whether all companies and government entities within the agreed
scope participated fully. Requirement 18(b) iii requires that the EITI
Report clearly states if any companies or government entities failed
to participate in the reporting process, and assesses whether this is
likely to have had a material impact on the stated figures. The
committee notes the Validator’s assessment that the draft EITI
report does not include such an assessment, and asks that the
Validator verifies this assessment with reference to the final report.
The Validator notes that “20 PSC partners were not required to
report. There was no evidence that these partners were
contacted and formally requested to report”. The MSG
comments that these 20 partners “were required to report, but
that it was not always easy to identify who these partners
were.” The Validator does not provide a clear assessment of
whether the government has ensured that all companies and
Requirement 9(b) states that “Where a number of small operators
pay revenues which are individually not material, but collectively
material, the MSG may wish to request that the government
discloses the combined benefit stream from such small operators”.
The Validator should address whether this option has been
considered and implemented.
The Validator also does not separately assess whether (with
reference to requirement 9(b)) small operators whose
payments are collectively material have been disclosed.
The Validator sets out the MSG approved procedure, but later
reports that a number of changes were made during the reporting
process and that compliance was uneven. The scope and
significance of these changes should be assessed.
The Validator notes that “The minutes of MSG meetings record
only limited discussions on how company reports are to be
based on accounts audited to international standards on
auditing.” and that “(…) there is no evidence that the
information provided in the reporting templates was subject
to audit other than when companies confirmed that this
occurred.”
The Validator should:
12
ensure that company reports are
based on audited accounts to
international standards.
13
1.
Provide further details on the MSG’s discussions on these
issues (i.e. what options were considered? Was the final
approach agreed by the MSG?);
The Validator does not state separately the total number of
companies that did not participate and notes that “The 2009
EITI Report does not record the number of instances of noncompliance.” (p64, under requirement 14)
International Secretariat considers that there is
insufficient evidence to demonstrate that this requirement
is met.
2.
Was the agreed procedure was followed, i.e., did all
companies comply? The commentary from companies
appears to indicate that compliance with the agreed
approach presented difficulties. How were these
overcome?
The Validator also notes that in a number of cases the agreed
procedure was not followed, for example where companies
did not utilize the ‘standard wording’. The Validator then
notes that “The extent of non-compliance was not quantified
in the 2009 EITI report.” The Validator does not address the
question if any measures were taken to overcome difficulties
in reporting.
3.
Elaborate on what measures should be considered in the
In its comments, the MSG maintains that in the MSG meeting
Requirement
future.
The Validator highlights the applicable accounting standards. He
should also comment on whether these are generally complied
with.
14
Validation report
on 21 March 2012 “(…)there was much more than a limited
discussion” 3 The Secretariat is seeking additional information
on this matter.
The Validator concludes that the requirement is unmet.
The International Secretariat finds the validator’s
judgment to be sound.
However, in July the MSG agreed a technical paper setting out
it approach for addressing these issues in the 2010 and 2011
Report, taking into account the procedures outlined in the EITI
Standard. The EITI Rules stipulates that “where figures
submitted for reconciliation are not to audited standards, the
multi-stakeholder group is content with the agreed way of
addressing this, for example, by developing a time-bound
action plan for ensuring that company reports are based on
audited accounts to international standards (Requirement
12(a)(vi)”. A similar provision applies for requirement 13. The
Secretariat’s assessment is that the approach outlined in
the technical paper satisfies these requirements. However,
it is recommended that the Secretariat Review assesses
whether the agreed approach has been implemented
effectively.
13
3
ensure that government reports
are based on audited accounts to
The Validator sets out the MSG approved procedure, but later
reports that a number of changes were made during the reporting
process and that compliance was uneven. The scope and
significance of these changes should be assessed. The Validator
should provide additional information on the auditing of
government data. The Validator mentions that the first complete
set of INTOSAI / ISSAIS were introduced in 2010, which would
imply that they were not applied for the 2009 report. Also, as
mentioned by the Validator “INTOSAI has called upon its members
To note: the reporting templates were approved by the MSG during its meeting on 24 August 2011.
The Validator does not assess the scope and significance of the
changes that were made to the MSG approved procedure. The
Validator also does not specify whether the first set of INTOSAI
/ ISSAIS were in fact implemented in 2010 and applied to the
2009 report. The Validator does note that “(…) there is no
evidence that the specific data submitted by the Government
Reporting entities to the Reconciler was subject to audit.”. The
Secretariat is seeking additional information on this matter.
In its comments, the MSG maintains that as it was “content
Requirement
15
Validation report
to…” which does not confirm whether or not Indonesia
implemented these ISSAIS even in 2010. There is therefore no
indication as to whether or not the government’s accounts were
audited to international standards.
with the agreed way of addressing [the fact that figures
submitted for reconciliation are not to international audited
standards]”. It is not clear from the available documentation
that the MSG discussed these issues in any detail. The
validator’s assessment indicates that MSG discussion of this
matter was superficial. The Secretariat is seeking additional
information on this matter.
The Validator concludes that the requirement is unmet.
The International Secretariat finds the validator’s
judgment to be sound. However, as noted above,
subsequent work undertaken by the MSG is sufficient to
satisfy requirement 13. Again, it is recommended that the
Secretariat Review assesses whether the agreed approach
has been implemented effectively.
14
disclose all material payments in
The Validator is asked to update his assessment based on the final
report and the comments above. The Validator should give a
definitive assessment as to whether all companies within the
agreed scope of the report comprehensively disclosed all material
payments in accordance with the agreed reporting templates,
noting any instances where: (1) companies could not be reached;
(2) companies did not participate as requested, or (3) reporting
templates were incomplete (e.g., failed to include the appropriate
tax number information, changed the wording referring to
international auditing standards).
The Validator notes that 3 mining companies did not report,
and that 23 companies did not provide complete information
by the 2009 EITI report due to issues with tax authorisations. In
total, this means that for 2.3% +17.8% = 20.1% of mining
companies, the report did not provide (complete) information,
for a total of 0.41% non-reported revenue. However, this does
not include those companies that changed or deleted audit
wording from the template.
The Validator notes that out of 76 PSC participants, 20
participants did not report tax payments, but does not provide
a further calculation.
The Validator concludes that the requirement is met, “given
the relative value of the amounts not reported by companies.”
The International Secretariat finds that this conclusion is
premature given the lack of data on this matter.
International Secretariat disagrees with the Validator’s
conclusion. The International Secretariat notes that in the
absence of a clear definition of materiality and
comprehensive scoping (requirement 9), it is not possible
to establish whether all material oil, gas and mining
Requirement
16
Validation report
payments by companies to government have been
disclosed to the reconciler. The International Secretariat
considers that there is insufficient evidence that this
requirement is met.
The Validator is asked to update his assessment based on the final
report and the comments above (in particular the approach on
Requirement 9(b)). The Validator should give a definitive
assessment as to whether all government agencies
comprehensively disclose all material revenues in accordance with
the agreed reporting templates.
15
Government agencies
material revenues in accordance
with the agreed reporting
templates.
The 2009 EITI report mentions that a number of mineral companies
did not include “appropriate tax number information to enable the
DG Tax to release tax information” It is unclear for how many
companies this was the case.
The Validator notes that “The 2009 EITI Report does not include the
aggregate of each revenue stream for mineral and coal companies
that were scoped out as immaterial”. This should be confirmed
with reference to the final report, as it appears to contradict the
MSG’s agreed approach as set out in requirement 9.
16
The multi-stakeholder group must
be content that the organisation
contracted to reconcile the
company and government figures
did so satisfactorily.
The Validator should provide a summary of the MSG’s concerns
with the report.
17
The reconciler must ensure that
the EITI report is comprehensive,
identifies all discrepancies, where
The Validator should update his assessment based on the final
report, including comments from stakeholders.
4
The Validator notes that “there were instances where the
Directorate General of Taxation did not report all tax paid by
Companies” and that “The 2009 report does not disclose the
value of the total amounts received by Government for
Minerals and Coal. Accordingly users of the report are unable
to determine if amounts received by the reporting entities
provide sufficient coverage. However, the reporting entities
reported as requested by the Implementing Team.”
International Secretariat disagrees with the Validator’s
conclusion. The International Secretariat notes that in the
absence of a clear definition of materiality and
comprehensive scoping (indicator 9) is not possible to
establish whether all material oil, gas and mining revenues
received by the government have been disclosed to
reconciler. The International Secretariat considers that
there is insufficient evidence that this requirement is met.
The Validator does not provide a summary of the MSG’s
concerns with the report, but provides a link to a press release
by the MSG containing its feedback about the EITI Report. 4
requirement is met.
The correct link to the document: http://eiti.ekon.go.id/uploads/downloadfiles/2013-04-22-77_2_Risalah_Rapat_Tim_Pelaksana_22_April_2013_English.pdf
Requirement
17
Validation report
requirement is met.
possible explains those
discrepancies, and where
necessary make recommendations
for remedial actions to be taken.
The Validator notes that “The EITI Report does not include an
assessment of the matters raised in 14 and 15 above and if
such matters were likely to have had a material impact on the
stated figures.” (18.b.iii)
18
The government and the multistakeholder group must ensure
that the EITI Report is
comprehensible and publicly
accessible in such a way as to
encourage that its findings
contribute to public debate.
The Validator should update his assessment based on the final
report, including comments from stakeholders.
The Validator notes that “To an informed reader with a deep
understanding of the issues the report would be
comprehensible” but also recommends under requirement 17,
that “(…) the EITI Secretariat (…) prepare an appropriate
Executive Summary (…) that will be more readily
understandable by CSO’s, the media, company executives,
senior government officials, the EITI Secretariat and the
general public.”
requirement is met.
19
Oil, gas and mining companies
must support EITI implementation.
No comments.
requirement is met.
20
The government and the multistakeholder group must take steps
to act on lessons learnt, address
discrepancies and ensure that EITI
implementation is sustainable.
Implementing countries are
required to submit Validation
Reports in accordance with the
deadlines established by the
Board.
No comments.
requirement is met.
Annex A – EITI Indonesia assessment of the coverage of the 2009 EITI Report
in the mining sector
Source: 2009 EITI Report, page 75
The EITI Indonesia Secretariat argues that for mining companies not included in the scope, the 2009
report provides accurate information on two types of non-tax revenues (royalties and land rent). It should
be noted, however, that ESDM is not the direct recipient of these payments, and has reported these
figures “second hand”. For the tax revenues, “the 2009 EITI report provides a figure from DG Tax for
income taxes paid by mining companies not included in the scope, but expresses concerns with the
accuracy of that figure”. However this figure has not been verified by DG tax. Moreover, the corporate
income tax payments disclosed in the EITI Report exceeds the figure for all companies by over USD 300
million. This clearly indicates that the total figure is unclear, and that the coverage of “all material
payments” cannot be established.
26 September 2013
Board paper 25-5-C
Confidential
Validation: Kazakhstan
For decision
Recommendation
The Validation Committee recommends to the Board that Kazakhstan is designated EITI Compliant.
Board paper 25-5-C
VALIDATION: KAZAKHSTAN
Table of Contents
1
Recommendation ............................................................................................................................................. 2
2
Background ...................................................................................................................................................... 3
3
Assessing compliance ...................................................................................................................................... 6
4
Procedures for achieving Compliance ............................................................................................................ 6
5
Assessment of the final Validation report ...................................................................................................... 8
1 Recommendation
The EITI Board designates Kazakhstan as EITI Compliant as of 17 October 2013. In accordance with the
EITI Standard:
•
Kazakhstan must be revalidated within 3 years, i.e. Validation will commence on 17 October
2016, or earlier upon the request of the National Stakeholder Council. . Validation will be
conducted in accordance with the EITI Standard.
•
Stakeholders in the process may call for a new validation at any time within that period if they
think the process needs reviewing;
•
Where valid concerns exist that a country has become EITI Compliant, but its implementation
of the EITI has subsequently fallen below the standard required for Compliance, then the
Board reserves the right to require the country to undergo a new Validation or face delisting
from the EITI;
•
In accordance with the EITI Standard, Kazakhstan is expected to produce EITI Reports annually
in accordance with EITI requirements. To maintain Compliant status the 2012 EITI Report must
be published by 31 December 2014 in accordance with the EITI Rules, and the 2013 Report by
31 December 2015 in accordance with the EITI Standard;
•
In accordance with requirement 7.2, Kazakhstan is required to publish an annual report on the
previous year’s activities, detailing progress in implementing the EITI. The annual report for
2013 should be published by 1 July 2014; and
•
In accordance with the transition procedures for the EITI Standard, Kazakhstan is expected to
publish an updated workplan aligned with requirement 1.4 of the EITI Standard by 31
December 2013.
In all decisions on Validation the Board places a priority on the need for comparable treatment
between countries and the need to protect the integrity of the EITI. The Board reviewed the Validator’s
report in detail. The Validator found that Kazakhstan did not meet requirements 5 and 18. The Board
2
Board paper 25-5-C
took note of the Validator’s assessment but considered that there was sufficient evidence to
demonstrate that these requirements were met.
The Board congratulates the government, companies and civil society organisations in Kazakhstan for
the progress made in implementing the EITI. The Board also thanks the Validator and all stakeholders
involved in the Validation process, and calls on the government and the National Stakeholders
Council to ensure that the recommendations in the Validation report are implemented.
2 Background
Kazakhstan was admitted as an EITI Candidate on 27 September 2007. Kazakhstan has produced a total of
seven EITI reports covering financial years 2005-2011, including an addendum the 2011 EITI Report 1.
Preparations for the 2012 EITI Report are underway.
Kazakhstan completed its first Validation in August 2010. At its meeting on 14 December 2010, the Board
designated Kazakhstan as an EITI Candidate country that is ‘close to Compliant’ 2. Kazakhstan was
granted six months i.e., until 12 June 2011, to complete the remedial actions needed to achieve
compliance. The International Secretariat subsequently conducted a review of the remedial actions 3.
Based on the findings of the review, the Board decided at its meeting on 15 February 2012 that not all
EITI requirements had been met. In accordance with the transition procedures to the 2011 EITI Rules, the
Board agreed that Kazakhstan would retain its Candidate status for another 18 months and established a
deadline of 15 August 2013 for Kazakhstan to undertake a second Validation 4.
Kazakhstan has completed the Validation process in accordance with the EITI Rules and a final report was
endorsed by the National Stakeholders Council (NSC) and submitted to the International Secretariat on
14 August 2013. In submitting report, the NSC requested that the Board takes into account their
comments on the Validation report and additional work undertaken during the Validation process. As
noted in the assessment of requirements 5, 11, 12, 13, 14, 15 and 18, the International Secretariat and the
Validator has reviewed the addendum report and comments provided by the MSG. In addition, the
International Secretariat has reviewed the updated workplan published by the MSG on 2 July 2013. This
work has been taken into account into account in the assessment of the requirements.
The Validator concluded that Kazakhstan did not meet all of the requirements. Specifically, the Validator
concluded that requirements 5 and 18 were not met. The Validation Committee has reviewed the report,
the NSC’s comments, and the assessment prepared by the International Secretariat. The International
Secretariat’s assessment is that the Validation report is of high quality, and that the Validator has
satisfactorily addressed the Validation Committee’s comments on the draft Validation report (see
assessment below).
The Validator expressed concerns regarding the comprehensiveness of the workplan (requirement 5) and
that the EITI report did not adequately describe the steps taken to ensure that disclosures are based on
accounts audited to international standards (requirement 18(b)(iv)). The International Secretariat concurs
1
On 6 August 2013, the MSG agreed and published an addendum to the 2011 EITI Report, providing additional information
on payments and revenues from companies not included in the initial 2011 Report. The addendum is available here. The MSG
also published an explanatory note to the addendum report, available here.
2
http://eiti.org/files/Minutes_14th_Board_Meeting_ENG.pdf
3
http://eiti.org/files/Secretariat%20Review%20Kazakhstan.pdf
4
http://eiti.org/files/2012-03-22_Minutes_from_the_19th_Board%20meeting.pdf
3
Board paper 25-5-C
with the Validator’s assessment on many of the requirements. However, in the International Secretariat’s
view, there is sufficient evidence to demonstrate that requirements 5 and 18 are met. The areas of
disagreement and other key issues are set out in more detail below.
Table 1 – Validator and Secretariat assessments of Validation Requirements.
Requirement
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18
Validator's Assessment


        

     
Secretariat's Assessment


        

     
In summary, the key issues are:
•
The adequacy of the EITI Workplan (Requirement 5). The Validator concludes that “Kazakhstan, at
the date of the Validation visit was not compliant with Requirement 5 based on the following specific
primary non-compliances:
o
The 2012-2015 Work Plan, and preceding plans, are incomplete with respect to the inclusion
of all EITI activities which incur costs and which are essential elements of the progress of the
overall EITI programme; therefore, these plans do not provide a fully costed plan of activities,
without which it is not possible to assess the robustness of the funding sources identified in
the current plan.
o
The omission of some key activities and the lack of cost information means that progress of
the overall EITI programme is not measurable in a relevant and effective manner; the
information provided in the Work Plan of the status of completion of key activities is in many
cases inadequate.
o
The 2012-2015 Work Plan, and preceding work plans, have made no provision for assessment
of capacity constraints whereas in our opinion such constraints do exist and have not been
formally recognised The 2012-2015 Work Plan, and preceding work plans, do not include a
list of all operating oil, gas and mining companies, as required by Rule 5(b)(iv).” (p.50-51)
The Validator also notes that “We have been informed that the NSC, at its meeting on 19 April 2013,
approved an enhanced workplan and placed it on the website. We have not reviewed it but have
been informed that all the issues raised in this report have been addressed in it” (p.51).
The International Secretariat supports the Validator’s assessment, but notes that a revised workplan
was agreed on 19 April 2013, and subsequently updated on 2 July 2013 5. This updated workplan was
not reviewed by the Validator during Validation. The International Secretariat has reviewed the
workplan and finds that it meets the provisions in requirement 5. It addresses the validator’s concerns
and includes information about funding sources, estimated expenditures and capacity building
activities, including the development of a plan to address capacity building needs related to the
implementation of the EITI Standard. It also indicates whether activities have been carried out or are
pending. A link to information about the list of extractive companies operating in Kazakhstan is
provided. It is also indicated that the NSC plans to produce a post-Validation workplan once
Validation is completed. Accordingly, the International Secretariat satisfied that this requirement is
met.
•
5
All companies and all government agencies participating (Requirement 11). The Validator
concludes that Kazakhstan is in compliance with this requirement, noting that “the supplementary
reconciliation undertaken by the NSC following the validation visit appears to have rectified
suspected gaps in the listings of companies [required to report]” (p.83). The International Secretariat
concurs with the Validator’s assessment. Having reviewed the additional work undertaken by the
Available from http://www.geology.gov.kz/images/stories/IPDO/2013/rab_plan2013.pdf
4
Board paper 25-5-C
NSC, the International Secretariat notes that not all companies were included in the initial 2011 EITI
Report. Specifically:
o
24 oil and gas companies that made material payments in 2011 were not included in the
report. Revenues from these companies represented 9 % of total revenues from the oil and
gas sector in 2011.
o
Seven mining companies that made material payments in 2011 were not included in the
report. Revenues from these companies represented 18.85 % of total revenues from the
mining sector in 2011.
o
183 oil, gas and mining companies that made immaterial payments in 2011 were not
included. Revenues from these companies represented 0.01 % of total revenues from the oil,
gas and mining sector.
o
Collectively these 201 companies together represent 6.7 % of total revenues from the oil, gas
and mining sector. Revenues from these companies are disclosed in the addendum report
and the explanatory note submitted by the NSC.
Together with the 170 companies included in the initial 2011 EITI Report, the International Secretariat
considers that there is sufficient evidence to conclude that revenues from all companies engaged in
exploration and production in Kazakhstan in 2011 have been disclosed. Accordingly, the
International Secretariat is satisfied that this requirement is met.
•
Company disclosures audited to international standards (Requirement 12). The Validator raises
concerns that although the NSC agreed an approach for how company figures would be assured, this
approach was not sufficiently communicated to the companies participating in the reporting process
and was therefore not complied with by all the companies. The Validator concludes that: “Seen in the
context of an evolving process, and placing emphasis on the clear intention of the NSC in accordance
with requirement 12(a)(vi), we consider that the requirement has been met” (p. 88). The International
Secretariat concurs with the Validator’s assessment. The International Secretariat notes that 144 of
the 170 companies attested that their accounts had been audited by the time of the reconciliation. In
addition, as noted by the validator, the reconciler undertook supplementary work whereby 50
companies were subject to a detailed verification of whether the information in the financial
statements provided to the reconciler were consistent with the data in the EITI reporting templates.
Revenues from these companies collectively represented 72.3 % of total revenues from the sector.
The NSC has also set out a clearer strategy for how to approach this issue in the future. Accordingly,
the International Secretariat is satisfied that this requirement is met.
•
Government disclosures audited to international standards (Requirement 13). The Validator
notes that the lack of alignment of the reconciliation process and the financial audit of the
government’s EITI data led to discrepancies that could otherwise have been avoided. The Validator
concludes that “the scope of the government audit was defined by listing the companies and tax
reference numbers that should be audited…For future years, the audit scope should be defined so
that the completeness of government reporting is also confirmed by the Accounts Committee. On
the basis that the NSC considers this or similar procedures as an integral feature of future
reconciliations, and strengthens the audit technical linkage between the government auditor and the
appointed auditor / reconciler, we consider that the requirement has been met” (p.90-91). Taking
into account that the approach agreed by the NSC for assurance of government data was followed,
and that the NSC has plans for improving this process in the future, the International Secretariat is
also satisfied that the requirement is met.
•
Reports coverall all material payments (Requirement 14). The Validator initially raised concerns
about the omission of dividend disclosures in the 2011 EITI Report. The Validator notes that”
Following the Validation visit, the NSC commissioned a special report on dividend payments and
receipts. This report has been published on the Kazakhstan EITI website. The report concludes that
dividends to government in 2011 amounted to 10 billion Tenge on a cash basis plus 9 billion Tenge
by book entry. This represents about 0.3% of total reported government income and is accordingly
5
Board paper 25-5-C
not material” (p.95). The Validator concludes that this requirement is met. Having reviewed the
supplementary work undertaken by the NSC, the International Secretariat concurs with this
assessment.
•
Reports coverall all material revenues (Requirement 15). The Validator initially raised concerns
about a discrepancy between the government data audited by the Accounts Committee and the
government data disclosed in the 2011 EITI Report. The Validator notes that “the difference was fully
explained, with the conclusion that the reconciler’s report was incorrect: the reconciler had included
data from entities and tax numbers that were not on the list of companies to be reconciled. These
errors were subsequently corrected by the reconciler and a supplementary report was issued after
the validation visit” (p.98). The Validator concludes that the requirement is met. Having reviewed the
supplementary work undertaken by the NSC and the reconciler, the International Secretariat concurs
with this assessment
•
Dissemination (Requirement 18). The Validator concludes that ‘the lack of clarity in the reporting
templates as to the meaning of company audit confirmations mean that Kazakhstan has not
complied with requirement 18.’ (p.120). The International Secretariat disagrees with this assessment.
Having reviewed the 2011 EITI Report, the International Secretariat’s view is that while the
methodology agreed by the NSC could have been better explained, the report provides an adequate
assessment of compliance with the agreed procedure for assuring company data. The International
Secretariat also notes that the addendum report and comments submitted by the MSG provides a
more detailed explanation of the agreed approach. The International Secretariat recommends that
this issue is more clearly explained in future EITI Reports. Given the approach adopted by validators
and the Board in other cases, the Secretariat considers it excessive to conclude that the requirement
is unmet.
3 Assessing compliance
Where Validation verifies that a Candidate country has met all of the requirements, the Board will
designate that country as EITI Compliant.
In the International Secretariat’s view, Kazakhstan has met all of the requirements in order to be
considered EITI Compliant.
The Board recently agreed the transitional procedures for the EITI Standard. Kazakhstan’s deadlines are as
follows:
Country
Status
Kazakhstan
Candidate
2012 Report (EITI Rules) by 31 Dec 2014
2013 Report (EITI Standard) by 31 Dec
2015
15 August 2013 (EITI Rules)
1. The Board finds that Kazakhstan is Compliant. Kazakhstan would be given a new Validation
deadline (date of Board decision + three years). This validation would be undertaken in line with
the EITI Standard.
6
Board paper 25-5-C
2. The Board finds that Kazakhstan is not compliant, but has made meaningful progress. In this
case, Kazakhstan would be suspended whilst undertaking corrective actions. A Secretariat
Review would be conducted in line with the EITI Rules after implementation of the agreed
correctives actions within 12 months following the Board decision, or earlier on request of the
MSG.
3. The Board finds that Kazakhstan is not Compliant, and has not made meaningful progress. This
implies that Kazakhstan should be delisted.
In light of the findings from the Validation process, the Secretariat’s recommendation reflects scenario 1.
7
Board Paper 25-5-C
5
Assessment of the final Validation report
The Validation of Kazakhstan’s implementation of the EITI was conducted by Hart Resources. A draft report was completed on 14 June 2013. The Validation
Committee agreed comments on the draft (see below), which were sent to the national coordinator and the Validator on 19 July 2013. The Validation report
was subsequently revised, approved by the Kazakhstan National Stakeholder Council on 14 August 2013. The Validation report has been made publically
available 6. The validator has been paid 7. The National Stakeholder Council has submitted detailed comments on the final Validation report. These comments
have been reflected in the below assessment and are available from www.eiti.org/internal.
Committee’s comments are assessed in turn, below:
Table 2 – International Secretariat’s Assessment of the final Validation report from Kazakhstan
Requirement
11
6
7
ensure that all companies and
Validation report, issued on 19 July 2013
Validation report
The Validator notes that the scoping study identified 195
companies that made material payments in 2011, collectively
representing in excess of 99% of benefit streams (p.78). It is further
noted that 170 companies were selected to report, out of which
167 reported (p.79). The Validator should clarify/assess:
• why 3 companies identified as making material payments
failed to report;
• why 25 companies that according to the scoping study met
the materiality threshold were not requested to report;
• whether the omission of these 28 companies had a material
impact on the comprehensiveness of the EITI Report;
• whether the government has disclosed the revenues received
The Validator has addressed the Committees comments,
noting that:
•
The three mining companies that were identified as
making material payments but did not report had
submitted statements that their payments were
insignificant. The Validator’s opinion is that this
justification is inadequate as all companies that have
been requested to report should do so. The Validator
notes that the payments from the three companies
collectively represent 0.02% of the payments from the
mining sector.
•
The NSC excluded 25 companies because either (i) the
http://geology.gov.kz/images/stories/IPDO/protocol/Kazakhstan_EITI_Validation_report_2013_RU_130813_.pdf
The validator has been paid the agreed fee for the Validation services. The issue of corporate income tax remains unresolved. The government of Kazakhstan requested an apostiled tax
document that the validator could not obtain from the UK tax authorities in time, with the result that the Kazakhstan authorities deducted tax that the validator have to reclaim from the
Kazakhstan government. According to the EITI secretariat in Astana the tax deducted amounts to US$ 10.000. The validator notes that a similar issue occured in the 2010 Validation and that to
date the validator has not been refunded despite the bilateral tax treaty between the UK and Kazakhstan.
8
Board Paper 25-5-C
Requirement
•
from these 28 companies; and
whether the government has disclosed the revenues from the
companies in the exploration/production phase that made
payments below the materiality threshold, and if so indicate
the significance of these payments compared to total
revenues.
The Validator notes that all subsoil users are required to file
quarterly reports with the government on their contractual
obligations, including taxes and payments (p.20-21). This
information was used to determine the materiality thresholds for
the 2011 EITI Report. Under requirement #14, the Validator
identifies that any company that is late in filing these reports will
appear as having made zero payments. The Validator notes that it
is possible that an additional 14 companies identified as making
zero payments in 2011 and therefore excluded from the scope,
may after all have made material payments to the government. The
Validator should provide further information about these 14
companies in the assessment of requirement #11, including:
• whether these companies did in fact make payments in 2011;
• whether the omission of these 14 companies had a material
impact on the comprehensiveness of the EITI Report; and
• whether the government has disclosed the revenues received
from these companies.
Validation report
subsoil use contract had been cancelled; or (ii) the
company was engaged in exploration only; or (iii) the
payments made were found to be less than the
threshold.
•
The Validator notes that ‘the reconciler, in respect of the
companies that failed to report, also did not include
government data for those companies. Subsequent to
the Validation visit, the NSC has followed up issues
raised in the validation and the reconciler has rectified
the 2011 reconciliation report’ (p.82).
•
The Validator notes that companies only undertaking
exploration were excluded from the reconciliation.
According to the national EITI secretariat there were no
licensing rounds within the reporting period and
consequently no payments of signature bonuses. The
International Secretariat notes that a moratorium on the
issuance of licenses for subsoil use was introduced in
2008 and was subsequently lifted in May 2013. The
Validator notes that ‘exploration company payments are
not material in the context of the sector as a whole,
representing 0.1% of the reconciled total for mining
companies, and 3.5% of taxes in the oil and gas sector
which the validator consider is sufficiently material to
justify inclusion in the report’ (p. 82-83).
With regards to the14 companies that were late with filing
their quarterly reports, the Validator notes that ‘the
supplementary work undertaken by the NSC following the
validation visit appears to have rectified suspected gaps in
the listings of companies. On that basis it may be concluded
that the technical problems initially encountered in the
listing the companies that should report have been
overcome’ (p.83).
The Validator further notes that ‘in response to the questions
that arose in the course of the validation visit, the NSC
undertook a comprehensive review of the listing of
companies that should report. The NSC identified several
companies that had been omitted from the initial listings.
The reconciler was engaged to obtain information from
9
Board Paper 25-5-C
Requirement
10
Validation report
those companies and to reconcile their data with
government data.’ (p.81).
The International Secretariat has reviewed the note prepared
by the NSC and the Addendum Report. The note and the
addendum report discloses revenues from a total of 384
companies, of which revenue data from 170 companies were
included in the 2011 Report. The revenues from the 42
omitted companies (28 + 14) mentioned by the Validator in
the draft Validation report are included in this
supplementary disclosure. The disclosures cover all
companies engaged in exploration only, exploration and
production, and production only. Of the 214 additional
companies (384 -170 companies),
•
Nine producing companies made payments above the
materiality threshold but were excluded from the scope
of the 2011 EITI Report because of technical weaknesses
in the data used to determine materiality thresholds.
Payments and revenues from these nine companies
have been disclosed and reconciled in the addendum
report prepared by the reconciler. These nine companies
collectively represent 6.5 % of total revenues from the
extractive sector in 2011.
•
22 companies made payments above the materiality
threshold but were excluded from the scope of the 2011
Report because but the contracts had been terminated
at the time of the reconciliation (3 companies) and
because they were in the exploration phase (19
companies). Revenues from these companies have been
unilaterally disclosed (disaggregated) by the
government. They collectively represent 0.2% of total
revenues from the extractive sector in 2011.
•
183 companies made payments below the materiality
threshold and were therefore not included in the 2011
Report. Revenues from these companies have been
unilaterally disclosed by the government (aggregated).
They collectively represent 0.01% of the total revenues
from the extractive sector in 2011.
Board Paper 25-5-C
Requirement
11
Validation report
International Secretariat notes that while not all
companies participated in the 2011 report, revenues
from the omitted companies have subsequently been
disclosed. The International Secretariat therefore
considers that there is sufficient evidence to
demonstrate that this requirement is met.
12
ensure that company reports are
based on audited accounts to
The Validator’s explanation of the approach agreed by the NSC for
assuring the data provided by the companies (p.81) is not
sufficiently clear. Further detail is needed regarding:
• whether companies were asked to report on whether that they
had audited financial statements, and/or to attach copies of
their audited financial statements;
• whether the sign off by company officials was an attestation
that audits had been carried out, or an attestation that the
figures on the reporting template had been checked against
the figures in the audited financial statements;
• whether companies were requested to provide statement
from their auditor that the data they had submitted was
consistent with their audited financial statements.
The Validator has addressed the Committee’s comments,
explaining that:
The Validator notes that of the 170 companies covered in the EITI
report, 141 companies had audited financial statements for FY
2011 (p. 81). It is further noted that ‘about 50 companies’ provided
copies of their audited financial statements. For these companies,
it is noted that the reconciler undertook a reconciliation of the
accruals-based information set out in the financial statements with
the cash-basis EITI reporting templates. The Validator should
confirm the exact number of companies that that provided copies
of their audited financial statements and were subject to the
detailed reconciliation undertaken by the reconciler. This should
also include an estimate of the significance of the revenues that
these companies represent relative to total revenues.
The Validator notes that the NSC is pursuing a process to follow up
on this issue (p. 84). The validator should elaborate on any plans
that the NSC has for addressing these issues in the future.
•
Companies were asked to declare whether their financial
statements had been audited. Companies were not
initially requested to supply a set of audited accounts.
The reconciler did request audited accounts later, but
some companies refused to provide them arguing that
they were confidential.
•
Companies were expected to provide an attestation
from their auditor that the data in the reporting
template was in conformity with the audited financial
statements but this requirement appears not to have
been prominently communicated to the companies.
•
50 companies provided copies of their audited financial
statements. For these companies, the reconciler
undertook an additional reconciliation of the accruals
based information set out in the audited financial
statements with the cash-based figures on the reporting
templates. The 50 companies collectively accounted for
73% of total revenue (72.2% of revenues from oil and
gas, and 83.4% of revenues from mining). The validator
notes that ‘SAPA consulting expressed a very high level
of confidence that the reported data was indeed in
conformity with financial statements that had been
audited in accordance with international standards – a
professional judgement made by UHY Sapa Consulting’
(p. 86).
International Secretariat notes that while there was some
confusion around the approach agreed for the 2011 report,
the additional work undertaken by the reconciler for a
Board Paper 25-5-C
Requirement
12
Validation report
sample of the companies indicates a high degree of
reliability for a significant amount of reported payments. The
NSC has in its note included additional commentary on how
it intends to approach this issue in the future. The EITI Rules
stipulates that “where figures submitted for reconciliation
are not to audited standards, the multi-stakeholder group is
content with the agreed way of addressing this, for example,
by developing a time-bound action plan for ensuring that
company reports are based on audited accounts to
international standards (Requirement 12(a)(vi)”. A similar
provision applies for requirement 13.
requirement is met.
The Validator notes that the work performed by the
Accounts Committee was a financial audit.
13
ensure that government reports
are based on audited accounts to
The Validator should clarify whether the work undertaken by the
Accounts Committee included a financial audit of the revenues
received from the companies included in the EITI Report.
The Validator should comment on how the NSC plans to align this
work in the future.
The Validator also notes that the main challenge in the 2011
reporting process was to align the reconciliation process and
the audit undertaken by the Accounts Committee. This led to
a discrepancy in the government figures audited by the
Accounts Committee compared to the government figures
disclosed in the 2011 EITI Report. This discrepancy has been
explained in the note provided by the NSC.
According to the Validator, ‘the NSC is taking steps to ensure
that the timing of the Accounts Committee work is better
coordinated for the 2012 reconciliation’ (p.90).
According to the note submitted by the NSC, the Accounts
Committee will in the future audit government data before
this data is submitted to the reconciler. The result of the
government audit will be published online.
requirement is met.
14
disclose all material payments in
The Validator should provide a more detailed assessment on
whether the omission of certain dividend disclosures has materially
The Validator notes that according to the addendum report
‘dividends to the government in 2011 amounted to KZT 10
Board Paper 25-5-C
Requirement
13
Validation report
affected the EITI report.
billion on a cash basis plus KZT 9 billion by book entry. This
represents about 0.3% of total reported government income
and is accordingly not material’ (p.94).
The International Secretariat has reviewed the dividend
disclosures in the addendum report, which includes a
reconciliation of dividends payments and revenues from 22
private companies in which the state-owned enterprises
Kazmunaigaz, Kazatomprom, Kazakhmys hold shares. It also
includes a reconciliation of dividend transactions between
these state-owned companies and Samruk Kazyna, the
Sovereign Wealth Fund, and subsequent transfers from
Samruk Kazyna to the state budget. Finally, it includes
dividend transactions between ENRC and Kazakhmys
(payers) and the State Property and Privatisation Committee
(recipient). Funds collected by the State Property and
Privatisation Committee are considered part of the state
budget.
requirement is met.
15
Government agencies
material revenues in accordance
with the agreed reporting
templates.
The Validator should provide a more detailed assessment on
whether the omission of certain dividend disclosures has materially
affected the EITI report.
In the assessment of requirement #18, the Validator comments on
the discrepancy between the Accounts Committee report and the
reconciler’s report. These comments should be included in the
assessment of requirement #15.
The Validator has addressed the Committee’s comment
noting that: ‘The NSC has subsequently commissioned a
comprehensive report on the dividend streams. The report
concludes that dividends amounted to approximately 0.3%
of total government revenues from the sector. This issue has
therefore not materially impacted the reported data’ (p. 97).
With regards to the discrepancy between the Accounts
Committee report and the reconciler’s report, the validator
notes that ‘the difference was fully explained with the
conclusion that the reconciler’s report was incorrect: the
reconciler had included data from entities and tax numbers
that were not on the list of companies to be reconciled.
These errors were subsequently corrected by the reconciler
and a supplementary report was issued after the validation
visit’ (p.98).
Board Paper 25-5-C
Requirement
14
Validation report
requirement is met.
Outreach and Candidature Committee
1 October 2013
Board Paper 25-6-A
TERMS OF REFERENCE OF THE
OUTREACH AND
CANDIDATURE COMMITTEE
For decision
Recommendation:
It is recommended that the Board approves the terms of reference for the Outreach and Candidature Committee.
These largely follow the work practices adopted by the previous Committee.
Board Paper 25-6-AOutreach and Candidature Committee: Terms of Reference
TERMS OF REFERENCE OF THE OUTREACH AND
CANDIDATURE COMMITTEE
1
Recommendation
It is recommended that the Board approves the terms of reference for the Outreach and Candidature Committee.
These largely follow the work practices adopted by the previous Committee.
2
Background
The EITI Board has agreed to establish an Outreach and Candidature Committee. The objective of the Committee is
to oversee the EITI Candidature application process. The Committee also serves as a focal point for the outreach of
EITI stakeholders to new countries, ensuring that the EITI Board is informed on outreach activities and providing
direction or support to these activities where necessary (Board Circular 152).
As of September 2013, the EITI is being implemented in 39 countries in five regions: Africa, Asia, Latin America,
Europe and the Middle East. However, many resource-rich countries are still not part of the EITI and should be
encouraged to join. While governments are primarily responsible for implementation, the EITI is a global
movement and its success also relies on the engagement of all the other stakeholders – supporting governments,
companies and civil society. Accordingly, targeted outreach efforts are also required to build and sustain support
from companies, investors and civil society organisations. These stakeholders should be encouraged to endorse
the EITI and to support outreach efforts. Outreach to companies and civil society organisations in priority outreach
countries is a priority.
The International Secretariat is responsible for providing guidance and support to countries applying for EITI
Candidate status and evaluating applications in consultation with stakeholders and partners. Much of the
outreach activities are being undertaken by EITI stakeholders, with the International Secretariat having a
coordinating and supportive role.
The EITI Outreach and Candidature Committee works to ensure that the views of the international Board, which
takes decisions on EITI Candidature, are reflected throughout the candidature process. The Committee oversees
the process of due diligence from initial contact to the decision to grant EITI Candidate status.
The Committee will work closely with the International Secretariat and should be consulted from an early stage by
all stakeholders who are engaged in EITI outreach.
The Committee will play a direct part in outreach to new countries or companies where appropriate. The
Committee will work closely with the Secretariat to assist and advise countries that are working towards applying
for EITI Candidate status.
3
Responsibilities
On behalf of the EITI Board, the Outreach and Candidature Committee (the “Committee”) shall:
3.1 Outreach:
a) Guide and monitor the implementation of the Secretariat’s work plan priorities and strategies for outreach,
including efforts to attract new Candidate countries and forge relations with supporting governments,
international agencies, companies, investors and civil society organisations.
b) Suggest targeted outreach activities to countries, including OECD member countries, companies, investors
and civil society.
1
Board Paper 25-6-AOutreach and Candidature Committee: Terms of Reference
c) Provide advice and recommendations on relations and communications with stakeholders from nonimplementing countries.
d) Act as a reference point on the Board for outreach by liaising regularly with governments, international
financial institutions, multilateral organisations, companies, investors and civil society groups.
3.2 EITI Candidature:
a) Assess whether countries seeking to apply for EITI Candidature are adequately prepared for successful and
timely implementation of the EITI in line with the EITI Standard.
b) Review and appraise Candidature applications status to ensure that the eligibility requirements set out in the
EITI Standard are fulfilled. In particular, the Committee will assess whether a country has fully completed the
four sign-up steps;
c) Make recommendations to the Board regarding Candidature applications. In cases where the Committee
considers that a country is not yet ready for candidature, it may recommend steps that can be taken by the
country so that the conditions for successful implementation of the EITI are put in place.
4
Composition
The committee was established through Board Circular 154 on 9 July. The members are:
Countries
Didier Vincent Kokou Agbemadon,
Robert Cekuta
Pekka Hukka
Companies/ Investors
Guillermo Garcia
Suresh Rajapakse
Civil Society
Marinke van Riet
Fabby Tumiwa
In was subsequently agreed that Mr Florent Michel Okoko would join the Committee. On 28 August 2013 the
Committee agreed to appoint Robert Cekuta as Chair of the Outreach and Candidature Committee with Marinke
van Riet acting as Vice Chair.
The Committee will be supported by the EITI International Secretariat to fulfil its Terms of Reference. The contact
points are Sam Bartlett (sbartlett@eiti.org) and Chantal Spit (cspit@eiti.org).
2
Outreach & Candidature Committee
1 October 2013
Board Paper 25-6-B
EITI Outreach Strategy 20132014
For discussion
Summary
The Outreach and Candidature Committee recommends that the Board agrees the EITI Outreach
Strategy 2013-2014.
Building on the recent expansion in the implementation of the EITI, and noting the aspiration to
further embed the EITI as a global standard, the EITI and its partners conclude that it is important
to reach out to other resource rich countries that have not yet committed to implement the EITI.
This document provides a strategy for how the EITI, together with supporting governments,
companies and organisations, commits to work towards wider implementation of the EITI. Parallel
outreach efforts are needed to prospective supporting countries, companies, investors and civil
society organisations.
This EITI Outreach Strategy was developed under the guidance of the EITI Board Outreach and
Candidature Committee appointed in July 2013. The strategy draws extensively on previous
outreach strategies.
Board Paper 25-6-B
EITI Outreach Strategy 2013-2014
EITI OUTREACH STRATEGY 2013-2014
Contents
1
Introduction .............................................................................................................................................. 2
3
Strategic objectives ................................................................................................................................ 4
2
4
5
6
7
8
1
Background and EITI outreach so far ............................................................................................. 3
Criteria ........................................................................................................................................................ 4
Strategic approaches ............................................................................................................................. 5
Priority countries.................................................................................................................................... 6
Resource implications........................................................................................................................... 7
Monitoring and evaluation .................................................................................................................. 8
Introduction
The implementation of the EITI continues to expand rapidly, and the EITI is increasing recognised as a
global standard. In 2011 the US announced its intention to implement the EITI. In June 2013, Italy, France
and the UK announced their intention to implement the EITI as part of their G8 commitments. Germany has
committed to an EITI pilot, and a pilot is underway in Australia. Senegal and Ukraine have submitted
candidature applications. Colombia, Ethiopia, Myanmar, and Papua New Guinea are preparing to do so. The
government of Mexico has indicted that it is likely to commit to implementing the EITI. The 2013 Lough
Erne G8 Leaders' Communique encouraged other countries to sign up to the EITI and noted that “Russia
and Japan support the goal of EITI and will encourage national companies to become supporters” 1.
The EITI is currently implemented by 39 countries across 5 regions and supported by over 80 companies
and institutional investors, hundreds of civil society organisations and a number of international agencies.
However, there are still a number of resource-rich countries that could greatly benefit from EITI
implementation (e.g., Brazil, Kenya, South Africa and Uganda). The adoption of an improved EITI Standard
presents an opportunity to revitalise discussions with stakeholders in these countries.
Various stakeholders are working to promote the EITI in these countries with the EITI International
Secretariat providing direct and indirect coordination and support. Parallel outreach efforts are needed to
prospective supporting countries, companies, investors and civil society organisations.
1
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/207771/Lough_Erne_2013_G8_Lea
ders_Communique.pdf
2
Board Paper 25-6-B
2
Background and EITI outreach so far
Most of the 39 countries implementing the EITI would not being doing so had it not been for activities by
the EITI’s supporters and Secretariat highlighting the benefits of EITI implementation. These activities are
referred to in this strategy as “outreach”. A wide range of supporters have throughout the brief history of
the EITI played key roles in this outreach work. In the very early days, the British government, mainly DFID
and British foreign missions in resource-rich countries, did most of the outreach. The World Bank also
became an early strong proponent of the EITI. The US government has long been actively involved.
Outreach to governments has taken many forms. Bilaterally, EITI implementation has been suggested at all
levels: sometimes it has been deemed appropriate to bring it up with heads of governments, other times at
a technical level. There have also been a wide range of multi-lateral efforts. The way the British, French,
German and US governments have used the G8 has been critically important to the success of the EITI.
Multilateral efforts such as supportive statements by the G8, G20, and the UN General Assembly resolution
from 2008, have also reinforced outreach efforts.
These efforts to ensure growing implementation of the EITI have focused on government representatives.
After all, without the government committing to implement the EITI there will be no implementation. A key
aspect in this work is to develop the rationale or business case for EITI implementation. Implementing
countries may benefit domestically from an improved investment climate by providing a clear signal to
investors and international financial institutions that the government is committed to greater transparency.
The EITI also assists in strengthening accountability and good governance, as well as promoting greater
economic and political stability. This, in turn, can contribute to the prevention of conflict based around the
oil, mining and gas sectors. In some countries the EITI has an explicit focus on reducing corruption. In other
countries this aspect is not emphasised. In many countries, it is also important to be seen to be contributing
to developing and reinforcing a global standard.
It is also recognised that parallel outreach efforts are needed to prospective supporting countries,
companies, investors and civil society organisations. Company and civil society representatives have played
important outreach roles. There is already strong support from International Financial Institutions (IFIs) and
a range of other partner organisations (see http://eiti.org/supporters/partnerorganisations). These
organisations often play a key role in EITI advocacy and technical assistance.
There have also been outreach activities to companies, state-owned companies and civil society
organisations. Russia and Japan, for example, have stated that they will encourage national companies to
become supporters. Outreach to citizens and civil society organisations has also been important,
particularly when a government has been ambivalent regarding implementation. This approach has been
important in several countries, such as Brazil, South Africa and Uganda.
The EITI developed a first outreach strategy in 2007, focused on the BRIC countries. A more formal global
strategy was approved in 2012. A Board committee devoted to the topic was established in 2011. The
intention behind these strategies has been to establish a framework for prioritising outreach activities and
to ensure effective Board oversight. A balance has been sought between bringing structure and clear
reporting on one side, and the need for flexibility on the other. Flexibility is important for two reasons in
particular. First, the EITI cannot direct its supporting partners. The EITI can appeal for support, but it is
obviously up to the partners themselves how extensively they engage in EITI outreach activities. Second,
successful outreach has often been opportunistic: it has for example often been dependent on meetings
and encounters the EITI Chair, Board Members and others have had for other reasons than the EITI.
3
Board Paper 25-6-B
It is acknowledged that the effectiveness of outreach activities in the short term can be challenging to
monitor and evaluate.. The objective of outreach activities, ultimately a commitment to implement the EITI,
may also take a long time to materialise. Establishing the effectiveness of this work is particularly
challenging when these activities are undertaken by external partners (where reporting may be limited).
Internally, the Secretariat is committed to reporting on any outreach activities, including addressing the
extent to which the key criteria have been followed, and the extent to which the objectives can be
considered to have been met.
Reporting and coordination of outreach activities poses some challenges. Since 2011 the Secretariat has
provided the Board with regular Outreach Progress Updates. These can be useful in that they provide a
general overview. However, for outreach to be successful, suggested messages often need to be adapted,
taking into account both the recipient and the messenger. Suggested speaking points for a senior
government official are likely to be subtly different to arguments and messages from a senior company
representative. The feedback on any engagement can also be complicated by the fact that those working
on the EITI may not even get full reporting from their senior’s conversations with for example a head of
state and the reporting may restricted. Thus, outreach efforts and the reporting thereof, require trust and
close contacts between those involved.
The Secretariat proposes to refine the format of the outreach progress reports, to provide a clearer
indication of the outreach strategy and activities in each priority country, highlighting key speaking points,
tracking feedback from stakeholders, and suggesting priorities for further work. This may include
recommendations to modify the list of priority countries.
3
Objectives
The overall goal is to pursue the following objectives:
•
•
•
•
4
Expand and diversify the implementation of the EITI.
Raise awareness in target countries about the importance of greater transparency and the
benefits of EITI implementation.
Strengthen the EITI’s standing as a global standard for revenue transparency and
accountability in the extractive industries.
Prepare countries to meet the sign-up requirements and to prepare for EITI
implementation in line with the EITI Standard, including early engagement with industry
and civil society.
Criteria
The EITI has developed a set of criteria to guide its outreach priorities and efforts, drawing on approaches
previously developed by the International Secretariat, the World Bank and the Revenue Watch Institute.
These criteria have not been significantly altered compared to earlier strategies. Rather, at least from the
Secretariat’s perspective, they have stood the test of time and have provided a reliable framework in
determining which outreach activities should be given priority. For example, the EITI Chair and the
Secretariat receive a considerable number of invitations to conferences and other events. The criteria have
proven to be useful in determining whether to accept invitations, explore if others involved with the EITI
can attend, or to simply decline the invitation.
4
Board Paper 25-6-B
Criterion 1 - Potential impact of the EITI
This criterion focuses on a country’s susceptibility to the resource curse and the potential for the EITI to
mitigate against this paradox and improve natural resource governance for poverty reduction and
development. It is widely acknowledged that resource wealth, if mismanaged, can have an adverse impact
on growth and fuel corruption, conflict and social unrest. Resource dependent developing countries in
particular have face significant challenges in addressing these risks. Indicators to be taken into
consideration include population, poverty levels, resource dependency, the effective of governance, and
the extractive industry outlook.
Criterion 2- Strategic importance for the EITI
This criterion puts an emphasis on a country’s potential to encourage the implementation of the EITI
regionally and/or internationally and to support the EITI’s credibility generally as an open and participative
multi-stakeholder platform. The size of a country’s natural resource sector and importance vis-à-vis the
national economy may be relevant. Some of these countries are middle -income countries that have not yet
committed to implement the EITI. At the same time, implementation by OECD countries and emerging
economies would enhance the credibility and legitimacy of the EITI. This would also facilitate the use of the
EITI standard for policy setting because new implementers would not only endorse the EITI but would also
be inclined to mobilise relevant support.
Criterion 3 - Regional diversity
The EITI Standard is making excellent progress in establishing itself as a global standard. The EITI is currently
implemented by 21 countries in Africa, nine countries in Asia, three countries in Europe, two countries in
the Middle East and four countries in Latin America and the Caribbean. Without detracting from further
outreach efforts in Africa, this regional imbalance gives rise to the perception that the EITI is not irrelevant
for middle income or advanced economies. The recent commitments from the US, UK France and Italy and
support from G8 countries is already having an important impact.
Criterion 4 - Likelihood of effective implementation
In order for implementation to be effective and sustainable, political commitment to the EITI from the
government and local ownership are paramount. Another factor for successful implementation includes an
enabling environment for company and civil society engagement in accordance with the EITI Standard.
Criterion 5 – Comparative advantage of EITI partners
A number of EITI partners are already active in target countries through policy dialogue, networks, local
offices, and capacity-building, institutional strengthening and development programmes. These could be
used to leverage outreach opportunities and streamline country specific interventions.
Notwithstanding these strategic criteria, the EITI Board and International Secretariat will continue to pay
close attention to the intentions expressed by other countries interested in becoming an EITI Candidate.
5
Strategic approaches
Strategic approaches will continue to focus on mobilising support from a wide range of stakeholders,
including supporting and implementing countries, companies, investors and institutions, complemented
by targeted outreach by the EITI Chair and International Secretariat. The following approaches, which draw
on current practices, will be adopted or further enhanced, encouraging a balanced stakeholder in-country
and global engagement:
5
Board Paper 25-6-B
►Country-specific programmes
The EITI will continue to work closely with international development partners to integrate outreach
interventions into their country-specific programmes. These interventions will seek to raise awareness
about the EITI, create dialogue and build capacity of local stakeholders.
►Ad hoc contact groups
The contact groups will bring together stakeholders with a common interest in particular countries to share
information, coordinate activities, promote synergies and agree concrete actions.
►Country visits
Targeted country visits will be conducted by the EITI Chair, Board members and/or the International
Secretariat to pursue a direct dialogue with government authorities and other relevant stakeholders.
Where the Secretariat undertakes country visits, a “back to office report” is typically distributed, with an
update on the prospects for EITI implementation and the priorities for further outreach activities.
►Use of strategic meetings, events and processes
The EITI will identify relevant meetings, conferences, summits and other events, and seek to maximise the
opportunities to leverage policy dialogue, public attention, political commitments, and media coverage.
The EITI Global Conference, for example, is an important vehicle to reach out to broader audiences and
enlist their support.
►Strategic collaboration with like-minded initiatives and networks
Every effort will be made to identify and collaborate with relevant initiatives and networks such as the
Natural Resource Charter and the Open Government Partnership in order to profile and communicate the
benefits of EITI implementation. Key partners not yet doing so will be encouraged to include the EITI in their
awareness programmes.
►Effective use of communications tools
The EITI will make extensive use of the wide variety of communication tools through which the different
target audiences can be engaged and informed, including regular correspondence (by letter, phone, or email), printed materials, and the EITI website.
►Engagement of the media
Media strategies will be integrated into outreach activities to promote awareness on EITI on a broad scale.
►Peer learning and exchange
The EITI encourages the active involvement of implementing countries in outreach efforts by providing
support for peer-to-peer sharing of information and best practices at the regional and international levels.
►Role of the EITI International Secretariat
In some cases, the EITI International Secretariat may need to provide direct and high level advocacy, and
coordinate the efforts of others directly. In other cases, the Secretariat’s role may include indirect support
and/or encouraging peer or regional coordination.
6
Priority countries
In light of the above key criteria, the EITI has identified a number of countries priority countries for EITI
outreach. In 2013-4, the EITI will prioritise the following countries:
6
Board Paper 25-6-B
Latin America and the Caribbean
Priority countries will include Brazil and Mexico. Both countries are major producers and regional players
and have agreed to consider implementing the EITI in the context of the Open Government Partnership
(OGP). In both countries, there is great public interest in strengthening governance of the extractive
industries. Other priority countries in the region include Chile, with its large mining sector.
Asia and the Pacific
Papua New Guinea and Myanmar will be an important focus for outreach, following up on government
commitments in 2013. Outreach will also focus on Australia, which is another OECD country that supports
the EITI and is piloting the EITI. There have been limited efforts to date to engage India, which is a large
mining industry. Indian companies have a growing roel internationally. There have been numerous efforts
in the past to engage China. A priority will be engaging with Chinese companies that are already
participating in the EITI in other implementing countries.
Africa and Middle East
A key priority for outreach efforts in the region remains South Africa. South Africa dominates the African
mining industry. In recent years, South Africa has increased its political and economic influence and has
become an important player on the international scene. The EITI will further strengthen policy dialogue
with South Africa through the G8, G20 and the OGP. Other priorities in Africa include South Sudan and
Uganda which have both committed to implementing the EITI. There have been efforts to engage Rwanda
and Burundi, which have small extractive industries but are important transit routes for minerals mined in
neighbouring countries. The EITI will monitor developments in Ethiopia and Zimbabwe, which are making
use of the EITI methodology. Efforts in Libya where stakeholders have signalled interest in the EITI may
intensify, depending on the political situation. Egypt and Tunisia are not given priority until the political
situation stabilises. The opportunities for outreach in Morocco, Jordan and Israel will be studied further,
Some priority is given to outreach to Kuwait, which has a similarly structured sector to that in Mexico.
There have been several commitments made to implement the EITI, but so far there has been limited
follow-up.
Europe
Building on the recent commitments from the UK, France, Italy and Germany, and the outreach
opportunities in Cyprus, Georgia, Greece, Poland and Turkey, will be studied further. In addition, an
effort will be made to engage with companies in Russia to participate in the EITI in implementing
countries.
7
Resource implications
Increased focus on outreach priorities does not always bring additional costs. It often requires more
involvement of the EITI Chair, the Head of the Secretariat and other senior representatives, requiring
changes of priorities rather than additional resources. It can mean adding a visit to a priority country to a
mission to an implementing country. It can sometimes entail use of conferences and bilateral
opportunities. Staff costs, which are the highest costs within the Secretariat, are generally not booked
against different secretariat activities. Nonetheless, the budgetary implications from the adoption of the
updated outreach strategy will include additional staffing, travel, communications and other administrative
costs for the International Secretariat.
The total annual budgetary impact related to the implementation of the outreach strategy for 2014 is
7
Board Paper 25-6-B
estimated at USD 180,000, which is the same as it was in 2012 and 2013. Should there be a demand for
additional expenditure, it would be possible to draw on contingencies during 2014.
Outreach budget detail, from the approved 2012 Secretariat workplan
Expenses
Total
Travel
$140,000
Personnel (consultant fees)
$25,000
Meetings
$5,000
Communications and other administrative costs $5,000
Contingency
Grand total
8
$5,000
$180,000
Monitoring and evaluation
As part of the Secretariat’s regular reporting to the Board, a monitoring and evaluation plan for the
outreach strategy should be developed. Expected outcomes and indicators should be spelled out in the
Secretariat’s workplans and progress should be reported. The outreach strategy should be reviewed at
appropriate intervals and adapted to changing circumstances and developments as necessary.
8
Oslo 1 October 2013
Board Paper 25-6-C
Draft EITI Outreach Progress
Report: July-September 2013
Summary
This paper provides an overview of EITI Outreach activities in July–September 2013.
Board Paper 25-6-C
Draft EITI Outreach Progress Report: July-Sept 2013
DRAFT OUTREACH PROGRESS REPORT: JULYSEPTEMBER 2013
Table of Contents
1
Summary............................................................................................................................. 3
2
Background ........................................................................................................................ 4
3
Update on Outreach Strategy 2013 ................................................................................... 4
4
Developments in priority outreach countries ................................................................... 5
5
Australia .......................................................................................................................................................................5
Brazil.............................................................................................................................................................................. 6
Chile ............................................................................................................................................................................... 7
Colombia ...................................................................................................................................................................... 8
Egypt ........................................................................................................................................................................... 10
Libya ........................................................................................................................................................................... 10
Mexico ........................................................................................................................................................................ 11
Myanmar (Burma) ................................................................................................................................................ 12
Papua New Guinea ................................................................................................................................................ 14
South Africa.............................................................................................................................................................. 15
South Sudan ............................................................................................................................................................. 16
Tunisia ....................................................................................................................................................................... 17
Uganda ....................................................................................................................................................................... 18
United States ........................................................................................................................................................... 19
Developments in other countries .................................................................................... 20
5.1 Candidate application pending / expected .............................................................................. 20
5.2 Committed to implement, but timeline unclear ..................................................................... 21
5.3 Uncommitted/limited progress ................................................................................................... 21
2
Board Paper 25-6-C
1
Summary
Since the last Outreach Update (April-June 2013), a key focus has been processing the candidature applications from
Senegal and Ukraine, and supporting stakeholders in Myanmar, Papua New Guinea, and the United States, which
are expected to submit candidature applications in 2013. There has been additional work to support Colombia,
France, Italy and the United Kingdom in their preparations to implement the EITI, and in Germany which is
planning to conduct an EITI pilot. Key developments include:
•
A candidature application from Ethiopia is imminent, according to the information the Secretariat has
received from the Government. A delegation visited Addis Ababa on 18-19 September to gain an
understanding of the implementation of the EITI-like process so far, including civil society representatives’
involvement, and to assess the government’s commitment to ensure that civil society representatives can
operate freely.
•
The Outreach and Candidature Committee reviewed the candidature application from Senegal, and has
recommended to the Board that Senegal is admitted as an EITI Candidate at the Board Meeting in Abidjan.
•
The Outreach and Candidature Committee reviewed the candidature application from Ukraine and a
preliminary assessment prepared by the International EITI Secretariat. The assessment highlighted concerns
regarding a number of issues, including the proposed exclusion of the coal sector from the first EITI Report
and the full, independent, active and effective participation of civil society. [A delegation visited Kiev 23-25
September to discuss these issues with stakeholders].
•
A joint statement1 on 4 September by Denmark, Finland, Iceland, Norway, Sweden, and the United
States of America reiterated strong support for the EITI:
In support of the Extractive Industries Transparency Initiative (EITI), we agree to promote
transparency and accountability of expenditures and revenues related to the extraction of natural
resources, including through support to the multi-donor trust fund for EITI or the EITI Secretariat.
EU member states Denmark, Finland, and Sweden intend to quickly transpose the EU Accounting
and Transparency Directive, which requires mandatory disclosures of payments made to
governments for extractive and logging projects.
•
The multi-stakeholder group in the United States of America is making good progress in exploring the
scope of the EITI reporting process and the preparations for applying for candidature. The next MSG
meetings are scheduled for 1-2 October and 11-12 December. A candidature application is expected in
December.
•
Following a change in government in Australia, on 18 September 2013 the Department of Resources,
Energy and Tourism (RET) was abolished and its functions transferred to the Department of Industry. RET is
leading the work on Australia’s EITI pilot. AusAID (Australia's overseas aid agency) will be integrated into the
Department of Foreign Affairs and Trade (DFAT). The International Secretariat is discussing the implications
with Australian supporters and stakeholders.
•
Important steps have been taken towards establishing a multi-stakeholder group in Myanmar, including
forming an inter-ministerial working group and work towards industry and civil society constituency
formation. It is expected that the MSG will be established in November.
1
http://www.whitehouse.gov/the-press-office/2013/09/04/joint-statement-kingdom-denmark-republic-finlandrepublic-iceland-kingdo
3
Board Paper 25-6-C
•
Stakeholders in Papua New Guinea are preparing to formalise the multi-stakeholder group, and agree
terms of reference and a workplan. A candidature application is expected in December.
•
The preparations in Colombia for the candidature application are progressing well. A new Minister of Mines,
Amilkar Acosta, was appointed in early September. The Secretariat and the EITI Champion, Vice-Minister of
Mines Natalia Gutierrez are collaborating on the program for a regional outreach event in Bogota in
November. A candidature application is expected in the first semester 2014.
•
Jonas Moberg visited Kuwait on 5 September. He met with Mohammed A. Al-Farhoud from the Kuwait
Petroleum Corporation. Further outreach efforts need a clear articulation of how the EITI can add value in
contexts where service agreements predominate.
•
On 18 July, the Government of Seychelles notified the Secretariat of its interest in submitting a Candidature
application in 2014. The World Bank is providing technical assistance for a scoping study. Following
discoveries of natural gas off the coast of Tanzania and Mozambique, oil and gas companies have increased
exploration activities in the Indian Ocean.
2
Background
The EITI is implemented by 39 countries including 21 in Africa, nine in Asia, four in Latin America and the Caribbean,
two in Europe, two in the Middle East, and one in the Pacific. An Outreach Strategy for 2013-2014 has been drafted
under the guidance of the EITI Board Outreach and Candidature Committee (see Board Paper 25-5-B). The strategy
draws extensively on previous outreach strategies, and sets out the following strategic objectives:
•
Expand and diversify the implementation of the EITI.
•
Raise awareness in target countries about the importance of greater transparency and the benefits of EITI
implementation.
•
Strengthen the EITI’s standing as a global standard for revenue transparency and accountability in the
extractive industries.
•
Prepare countries to meet the sign-up requirements and to prepare for EITI implementation in line with the
EITI Standard, including early engagement with industry and civil society.
It also refines the criteria for prioritising and maximising its outreach efforts to attract key resource-rich countries that
are still not part of the EITI. These include:
•
•
•
•
3
Risk of the resource curse – potentially high numbers of negatively affected people.
Strategic importance for the EITI, e.g. major economy or particularly significant for the scope of the EITI.
Government commitment to the EITI and likelihood of effective implementation.
Comparative advantage of the International Secretariat over other partner institutions.
Update on Outreach Strategy 2013
The EITI International Secretariat workplan for 20132 sets out ten outreach priorities: Australia, Brazil, Chile,
Colombia, Mexico, Papua New Guinea, the Philippines, South Africa, South Sudan and Uganda. At the EITI
Board Meeting in Oslo in February 2013, Myanmar was added to the list of priority countries.
2
http://eiti.org/files/EITI-Secretariat-Work-plan-and-Budget-2013.pdf
4
Board Paper 25-6-C
Section 4 below provides short term road maps outlining key objectives and priority actions to help mobilise relevant
stakeholders and monitor progress in these countries. While the Secretariat seeks to adhere to the priorities included
in the workplan, the political circumstances and likelihood of success make it necessary to alter the priorities during
the year.
In other countries, the Secretariat seeks to respond to interest and to encourage stakeholders’ engagement. Section 5
outlines recent progress in these non-focus countries.
The tables below compile information prepared by the Secretariat. With a large number of EITI stakeholders involved
in outreach activities, it is likely that the Secretariat is not aware of all on-going efforts. The Secretariat welcomes
contacts and seeks to respond with support, updates and documentation whenever stakeholders engage in outreach
activities.
4
Developments in priority outreach countries
Australia
Main contacts:
The pilot MSG meetings are chaired by Tania Constable
(tania.constable@ret.gov.au), head of the Resources Division
in the Department of Resources, Energy and Tourism (RET). A
secretariat has also been established within the department,
contact via EITI Pilot Secretariat.
EITIPilotSecretariat@RET.gov.au
Partners with particular interest (lead
coordinating partner underlined):
Not applicable.
International Secretariat contact:
Contact name: Sam Bartlett
Email and or telephone number:
sbartlett@eiti.org +47 9026 7530
Local stakeholders:
There is broad support for the pilot from
government, industry and CSOs. Rio Tinto, BP,
the Mineral Council of Australia, PWYP Australia,
Transparency International are represented on
the pilot MSG. A full list of MSG members is
available online.
BACKGROUND
Australia’s EITI Pilot (announcement) is underway. The MSG has been formed and has met regularly. The next
meeting is scheduled for Friday 27 SeptemberThere have been a number of challenges in developing the pilot. Privacy legislation prevents government
authorities from disclosing taxpayer information. A work-around has been proposed for the pilot. Given the role of
state governments in collecting royalties, full implementation would require all state and territory governments to
participate. Securing full participation (i.e., all state governments agreeing to participate) is unlikely. More broadly,
some MSG members have argued that the standard EITI methodology (i.e., “double disclosure and reconciliation”)
is costly and inefficient, as a full and reliable account of company tax and government revenues can be compiled
from existing data sources. An alternative model (the “state model”) has been proposed whereby the EITI
reporting process would draw on existing data sources, focusing on addressing information gaps and verifying
that existing systems (which ensure that the correct amount of tax is paid) are working as intended. It is argued
that this would be a more useful and interesting exercise than a standard EITI reconciliation. Further work is
needed to develop this proposal, and to consider its compatibility with the EITI Rules.
Updates on the pilot are available at http://www.ret.gov.au/resources/resources_programs/eiti/eitipilot/Pages/index.aspx, including communiques from MSG meetings. The Sustainable Minerals Institute (SMI) has
been engaged to perform an evaluation of the Pilot, in parallel to the Pilot’s delivery. SMI’s report will be included
in the MSG’s Report to Government, which will inform a decision on whether Australia will implement the EITI.
RECENT DEVELOPMENTS
Following a change in government in Australia, on 18 September 2013 the Department of Resources, Energy and
Tourism (RET) was abolished and its functions transferred to the Department of Industry. RET is leading the work
on Australia’s EITI pilot. AusAID (Australia's overseas aid agency) will be integrated into the Department of Foreign
5
Board Paper 25-6-C
Affairs and Trade (DFAT). The International Secretariat is discussing the implications with Australian supporters
and stakeholders.
OUTREACH STRATEGY/NEXT STEPS
Under review. Australia will host the 2014 G-20 Australia summit in Brisbane, 15-16 November 2014. Building on
the commitments from the UK, France, Italy and Germany, and the attention afforded to the EITI at the G8, there is
an opportunity to promote the EITI as part of the G20 agenda.
Brazil
Main contacts:
Ministry of the Comptroller General
Roberta Solis Ribeiro (Head of International affairs)
Roberta.ribeiro@cgu.gov.br
Other contacts in the Ministry include:
World Bank – Daniele La Porta
jaguilar@worldbank.org
Revenue Watch Institute - Anthony Richter
Contact name: Francisco Paris
fparis@eiti.org , +47 979 96 709
Local stakeholders:
Luis A. Balduino, Director, Department of
Financial Affairs and Services, Ministry of Foreign
Affairs (Itamaraty)
(luis.balduino@itamaraty.gov.br)
Sergio Gobetti. Deputy Economic Policy
Secretary, Ministry of Finance
(sergio.gobetti@fazenda.gov.br)
Petrobras:
Ouvidoria Geral/ Ombudsman:
Luiz Claudio Sampaio
(lsampaio@petrobras.com.br)
Vale:
Viviane Leffingwell, Corporate Affairs
(Viviane.leffingwell@vale.com)
ARichter@sorosny.org
European Commission
British Embassy
ExxonMobil
Marcio Senne (marcio.senne@vale.com) –
BACKGROUND
Brazil’s economy, although highly diversified (agricultural, industrial and service sectors are key) has important
hydrocarbons and mining sectors. Brazil’s oil output is currently 2.6 million barrels/day, but it is expected to
expand considerably with the exploitation of the so-called pre-salt reservoirs which is a priority for the
government. Brazil has large mineral resources (iron ore, aluminium, bauxite, nickel and manganese). The
exploitation of these resources has generated heated debates, especially on distribution of expected revenues.
The current legislation favours the producing states with the remaining states asking for a larger share of
revenues. The Federal Government is also seeking to shield revenues for centralized development policies. The
ongoing policy debates could provide a good opportunity to consider a tool like the EITI. A law recently passed by
Congress will regulate this.
The possibility of implementing the EITI has been considered on several occasions. The Open Government
Partnership initiative (OGP), which Brazil has been leading together with the US Government, has been conducive
to discuss EITI implementation despite some reluctance from the Ministry of Foreign Affairs and the Extractive
Sector Ministry.
Petrobras is an EITI Supporting Company and a former member of the Board. Vale is also supporting company (via
6
Board Paper 25-6-C
the ICMM).
RECENT DEVELOPMENTS
On 16 July 2013, the International Secretariat briefed the Brazilian Embassy in Oslo on recent international
developments (e.g., G8, Canada’s announcement to development mandatory reporting requirements). This
followed a period of little contact with the Government since the EITI workshop held in Brasilia in November 2012.
Former Vice-Minister Luis Navarro, who leads on OGP and was long an interlocutor on EITI issues, has left his post
and declined the invitation to participate in the EITI Global Conference in Sydney.
Jonas Moberg wrote to the Comptroller General, who leads on OGP, on 5 August 2013 to brief Minister Jorge Hage
on the developments related to the G8 announcements in June, and the progress in preparations in Colombia and
Mexico. We suggested a meeting with Clare Short around the next OGP summit in London in late October. The
Secretariat has not yet received a response.
The best strategy for the immediate future seems to continue engagement with the Office of the Comptroller
General within the Open Government Partnership (OGP) process, including engaging around preparations for the
next OGP summit in London in November 2013. In a vast and complex country as Brasil, there still are a number of
stakeholders that have not been sensitized about the EITI, including civil society organizations, parliamentarians,
regional bodies such as auditing bodies at local levels (“Tribunal de contas”), think tanks and media.
The International Secretariat will:
• Discuss outreach opportunities with the UK Government (hosting of the next OGP summit).
• Invite 3-4 participants (from government and CSOs in addition to Petrobras and Vale) from Brasil to the
LAC outreach workshop in Bogota planned for November 2013.
Continue to explore upcoming opportunities with partners working with Brazil including RWI/OSI. International
supporters are encouraged to further reaching out to local stakeholders including the government (especially
those working on the OGP implementation), civil society organizations and parliament.
Chile
Main contacts:
Ministry of Mining
Vice-Minister Francisco Orrego
British Embassy – Karl Zammit-Maempel
karl.zammit-maempel@fco.gov.uk
Chile Transparente – Jaime Bazan Ried
(jbazan@chiletransparente.cl)
European Commission
fparis@eiti.org; +47 979 96709
Local stakeholders:
Government:
Ministry of Finance: Vice-Minister Julio Dittborn
jdittborn@hacienda.gov.cl
Ministry of Mines: Vice-Minister Francisco Orrego
Bauza
pwagner@minmineria.cl
Minister of Economy: Vice-Minister Tomas Flores
tflores@economia.cl
Tax Office: Mario Vila Fernandez (Deputy directorLegal affairs) – mario.vila@sii.cl
Industry:
Codelco: Juan Pablo Schaeffer –
juan.schaeffer@codelco.cl
Anglo-American: Miguel Angel Duranmaduran@consejominero.cl and Felipe PurcellFelipe.purcell@anglochile.cl-
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Board Paper 25-6-C
Consejo Minero: Miguel Angel Duran
Xtrata: Nicolás Fuster –nfuster@xstratacopper.cl
Antofagasta: Helen Karikari (UKhkarikari@antofagasta.co.uk), Alejandra Tironi
(Chile) –atironi@aminerals.co.uk
Consejo Minero- Joaquin Villarino
(jvillarino@consejominero.cl)
Civil Society:
Chile Transparente (TI Chapter)
Juan Carlos Decano (President) –
jcdelano@chiletransparente.cl
Drina Rendic (Treasurer)drendic@chiletransparente.cl
BACKGROUND
As a leading mining country, Chile has recently been looking positively toward the EITI. Following discussions
steered by Senator Larrain within the OGP, the Secretariat explored the possibility of Chile implementing the EITI
with the Ministries of Finance, Mines and Economy, and the Tax Office Late in 2012, further discussions with the
Government helped to further mature the idea of the EITI if the Government considered that further discussions
were needed.
Traditionally a beacon of transparency in the region, Chile could benefit from better scrutiny in a number of areas
such as social payments and relations with mining communities.
The local TI Chapter, Chile Transparente, has led on promoting discussion of the EITI in the context of the OGP.
Mining companies have expressed interest in considering the EITI. The British Embassy has expressed interest in
continuing to promote dialogue with the mining constituency.
RECENT DEVELOPMENTS
Chile is in the midst of the presidential election campaign, with the election scheduled for November 2013.The
Secretariat contacted the office of leading candidate Michelle Bachelet to seek an opportunity to brief her on the
EITI. The Secretariat has also been in contact with Codelco (EITI supporting company via ICMM), agreeing to
discuss possible implementation toward the end of the year, and with the Chilean Embassy in Oslo.
Continuing engagement thought mechanisms such as the OGP and broadening engagement to other
stakeholders. These could include civil society organizations, parliamentarians, media and industry. As Chile will
hold elections for president in mid-November 2013, engaging with main political parties is also recommended.
•
Support Chile Transparente, which is leading on the discussions of transparency in the extractive sector
within the Open Government Partnership.
•
•
Continue to seek a meeting between Clare Short and Michelle Bachelet.
Invite 3-4 participants (from Government, Chile Transparente and Codelco) to the LAC outreach
workshop in Bogota planned for November 2013.
•
International supporters are encouraged to further reaching out to local stakeholders including the
Government, especially those working on the OGP implementation.
Colombia
Main contacts:
Ministry of Mines and Energy
Vice Minister Natalia Gutierrez
Alix Cortes (aacortes@minminas.gov.co)
Partners with particular interest (lead coordinating
partner underlined):
US government including USAID, Switzerland’s SECO,
European Commission, Canada’s CIDA, Cerrejon (Xstrata, BHP
Billiton, Anglo American) Shell, ExxonMobil, Pacific Rubiales,
8
Board Paper 25-6-C
Talisman. World Bank/MDTF, IADB and RWI.
Email and or telephone number: fparis@eiti.org;
+47 979 96 709
Local stakeholders:
Government:
Secretary General, Office of the President, Maria Lorena
Gutierrez
mariagutierrez@presidencia.gov.co
Industry
Oil Sector
Alejandro Martinez, Asociacion Colombiana de Petroleo
amartinez@acp.com.co
Camilo Duran, President ExxonMobil Colombia
Camilo.duran@ExxonMobil.com
Eduardo Rodriguez, President Shell Colombia
E.rodriguez@shell.com
Patricia Serrano, Corporate and Governmental affairs,
Chevron
serrap@chevron.com
Mining Sector:
Mineria a Gran Escala (Claudia Jiménez/Raúl Buitrago);
claudiajimenez@smge.org
Asomineros (Gloria Patricia Gamba)
ggamba@andi.com.co
Cámara Colombiana de Minería (Cesar Díaz, President &
Marcela Bayona)director@ccmineria.org
Civil Society
Fabio Velazquez, Foro Nacional por Colombia
fvelasquez@foro.org.co
Elisabeth Ungar and Andres Hernandez, TI Chapter
eungar@transparenciacolombia.org.co
Eduardo Villegas, Avina
Eduardo.villegas@avina.net
David Huey, Oxfam
dhuey@oxfam.org.co
Luis Celis, Corporacion Nuevo Arco Iris
lcelis@nuevoarcoiris.org.co
BACKGROUND
In May Colombia confirmed its determination to submit an EITI candidature application in the first semester of
2014, consistent with its commitment to implement the EITI as part of the OGP action plan presented in Brasilia in
April 2012. They particularly expressed interest in linking EITI implementation to the new royalty distribution
framework. A scoping study was completed in March 2013, following the World Bank and Secretariat joint scoping
and consultation mission in December 2011 and the engagement of a consulting firm in 2012. The Government
has appointed the Vice-Minister of Mines Natalia Gutierrez to lead on EITI implementation.
RECENT DEVELOPMENTS
Colombia has been preparing for submitting a candidature application in early 2014 as announced in Sydney.
Preparations have included establishing a CSO steering working group to coordinate the civil society constituency
preparations, reaching out to industry, and organizing government support for EITI implementation. The
Secretariat and the Colombian government have continued coordinating support from donors and partners
organizations (World Bank, IADB, USAID, and EU). A new minister of Mines and Energy, Amilkar Acosta, was
appointed in early September 2013 (the fourth minister in the 3-year old President Santos administration). The
Secretariat understands that Vice-Minister Natalia Gutierrez will continue as EITI Champion and commitment to
EITI implementation has not changed. Jonas Moberg wrote to former High Commissioner for good governance
Maria Lorena Gutierrez and leading on OGP (now Secretary General of the Office of the President) to reiterate our
willingness to support the Ministry of Mines in the planned preparations for EITI candidature.
9
Board Paper 25-6-C
•
Continue liaising with World Bank, IADB and EU and others supporters (USAID, UK) to support
Colombia’s preparations for applying for EITI candidature.
•
Consult with international civil society’s partners (RWI, Cordaid) possibilities of support for local CSOs.
•
Collaborate with the Ministry of Mines and other stakeholders in preparing a candidature application
•
Invite Colombian stakeholders to the LAC outreach workshop in Bogota planned for November 2013.
International supporters are encouraged to further reaching out to local stakeholders including the government,
especially those working on the OGP implementation.
Egypt
Main contacts:
Organisation: tbc
Contact name: tbc
Email and or telephone number: tbc
Additional info: Following the recent elections, government
counterparts have yet to be identified
Partners: British FCO and DFID, World Bank, BG,
Total, RWI, OSI (No specific lead)
Contact name:
Contact name: Bady Mamadou Balde
Email and or telephone number: bbalde@eiti.org
Local stakeholders:
Stakeholder: tbc
Contact name: tbc
Email and or telephone number: tbc
BACKGROUND
Gas is a growing sector and yields considerable revenues for Egypt. EITI implementation could be a significant part
of the transition and reforms underway in the country. The political situation in Egypt remains fragile. With the
ouster of the democratically elected president in June, the transition to a stable democracy is not clear.
RECENT DEVELOPMENTS
There has been practically no contact with Egyptian stakeholders given the recent political turmoil. Outreach will
recommence when the situation stabilises.
Outreach will recommence as soon as the political and security situation has improved.
Libya
Main contacts:
Organisation: Revenue Watch Institute
Contact name: Patricia Karam and Laury
Email and or telephone number: Laury Haytayan
lhaytayan@revenuewatch.org
Patricia Karam pkaram@revenuewatch.org
Partner: EITI Secretariat, Global Witness, RWI,
PWYP, Total, ENI, US,
Contact name: Francesca Ciardiello, ENI
Francesca.ciardiello@eni.com
Additional info: The International Secretariat is exploring the
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Board Paper 25-6-C
possibility of hosting a high level delegation from Libya to
further explore the possibility of government commitment to
implement EITI.
Local stakeholders:
Government:
February 17 Coalition, the Libya Finance Group
and Transparency Libya
Contact name:
Email and or telephone number: N/A
BACKGROUND
Libya's oil reserves are estimated at 47 billion barrels, the largest in Africa and the ninth-largest in the world. Libya
produced 1.8 million barrels a day in 2010, but the civil war in 2011 caused production and exports to drop by
more than two-thirds to 500 000. Libya’s production was quickly restored to pre-war level to reach 1.5 million
barrels a day in 2012, but has fallen back sharply to an estimated 500 000 in 2013. Libya was ranked 55/58 in the
2013 RWI’s Resource Governance Index.
Libyan civil society activists see transparency of revenue flows from the oil sector as a clear priority, and a key
departure from previous practices. The former National Transitional Council government had signalled an interest
in implementing the EITI. The Secretariat visited Tripoli in July to meet with the Deputy Prime Minister Dr. Awad
Barasy, who is in charge of the oil and gas portfolio in the newly appointed transition government to encourage
an affirmation of this commitment to implement the EITI. The Secretariat also met with key Parliamentarians from
the General National Congress (arranged by Revenue Watch).
Companies such as Total and ENI have confirmed their support for EITI implementation in Libya.
RECENT DEVELOPMENTS
The political situation in Libya remains unstable. The Secretariat’s previous main contact in the Government
Deputy Prime Minister Dr. Awad Barasy resigned in July. Members of parliament specifically requested training on
the EITI Standard. Revenue Watch Institute in collaboration with the Secretariat facilitated a training workshop for
parliamentarians and civil society on 25-26 June 2013, in Tripoli. The workshop was well attended and participants
expressed interest for learning more about the EITI process.
•
RWI to offer to help organise an EITI Conference if the government is ready to move ahead.
•
EITI to write to ENI and Total to encourage early commitment to EITI to send a strong signal to the
government about companies’ commitment to the EITI.
Mexico
Main contacts:
Ministry of Energy SENER
Guillermo Garcia and Pedro Meneses
Comision Nacional Hidrocarburos-CNH
Juan Carlos Zepeda
Ministry of the Public Function:
Teresa Gomez Del Campo
acerdan@funcionpublica.gob.mx
RWI
European Commission
British Embassy
Emb. of Norway
ExxonMobil
Email and or telephone number: fparis@eiti.org: +47 979 96
709
Local stakeholders:
Pemex
Antonio Dominguez (Comptroller General)
Froylan Gracia and Vanessa Zarate
Rogelio Gasca Neri – Pemex Board member
Rogelio.gasca@pemex.com
Fundar
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Board Paper 25-6-C
Miguel Pulido
Aroa de la Fuente
aroa@fundar.org.mxTransparencia Mexicana (TI
Chapter)
Eduardo Bohorquez
eb.black@gmail.com
BACKGROUND
Mexico’s oil sector is important to the economy. Oil output is at 2.9 million barrels/day in 2013. Pemex, the state
owned monopoly, is the largest source of government revenue. Mining is also significant. Mexico has the 4th and
6th largest worldwide reserves of copper and silver respectively. Pemex has supported the EITI since 2007,
including being represented on the EITI Board from 2007 to 2011. Pemex is keen on advancing the EITI. The
mining sector, considered obscure in comparison, is regulated by the Ministry of Economy.
The Open Government Partnership (OGP) provided an important space for dialogue on possible EITI
implementation which is mainly supported by civil society organizations (FUNDAR and Transparencia Mexicana).
RECENT DEVELOPMENTS
The Ministry of Energy (SENER) has confirmed the Government interest in implementing the EITI in meetings with
the Secretariat in late July 2013. During the mission, Jonas Moberg and Francisco Paris also met with the Mining
Office in the Ministry of Economy, Pemex and CNH, with all expressing their interest in the EITI. Jonas and
Francisco also participated in a workshop in the Chamber of Deputies (co-organized with Fundar and
Transparency International). Given the sheer size of the oil sector and the different institutional structures of the
oil and mining sector, Mexico will probably need an ad-hoc approach to bring the two sectors together in EITI
implementation. In the oil sector, the EITI is seen as tool to support broader reforms being discussed. President
Peña-Nieto introduced an ambitious oil reform to Congress in August 2013 with one of four pillars being
transparency. Timing of EITI implementation is tied to how these complex reform are implemented. Mining’
stakeholders have been less engaged in the discussions about the EITI. The Secretariat is collaborating with ICMM
on reaching out to largest companies.
•
Continue working with the Ministry of Energy, CNH and Pemex on preparations for a possible EITI
candidature application.
•
Seek to engage mining stakeholders including largest operators in the sector, in collaboration with
ICMM.
•
Invite 4-5 participants (from Government and CSOs in addition to Pemex) from Mexico to the LAC
outreach workshop in Bogota planned for November 2013.
Myanmar (Burma)
Main contacts:
Organisation: Myanmar Development Resource
Institute (MDRI) acts as an interim EITI Secretariat
Contacts:
Zaw Oo: Zaw.oo@mdri-cesd.org
Min Zar Ni Li: kolinmin@gmail.com
Partners with particular interest (lead coordinating
partner underlined):
World Bank/MDTF:
Morten Larsen (mlarsen@worldbank.org)
Edith Bowles (ebowles@worldbank.org)
AusAID:
Chakrika Bowman (Chakriya.Bowman@ausaid.gov.au)
Louis Henley (Louis.Henley@ausaid.gov.au)
Jennifer Herink (jen.herink@ausaid.gov.au)
DFID:
Declan Magee (d-magee@dfid.gov.uk)
EU:
Delphine Brissonneau
(Delphine.BRISSONNEAU@eeas.europa.eu)
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Board Paper 25-6-C
Silvia Facchinello (Silvia.FACCHINELLO@eeas.europa.eu)
NORAD/Oil for Development:
Solveig Andresen (Solveig.Andresen@norad.no)
Open Society Foundations:
Maureen Aung-Thwin (maureen.aungthwin@opensocietyfoundations.org)
Revenue Watch Institute (RWI):
Anthony Richter (ARichter@sorosny.org)
Erica Westenberg (ewestenberg@revenuewatch.org)
Matthieu Salomon (msalomon@revenuewatch.org)
Switzerland:
Corinne Henchoz Pignani
(corinne.henchozpignani@eda.admin.ch)
UNDP:
Elinor Bajraktari (elinor.bajraktari@undp.org)
Razi Latif (razi.latif@unep.org)
Paul Steele (paul.steele@undp.org)
US:
Victoria Ayer (vayer@usaid.gov)
Marti Flacks (FlacksMA@state.gov)
Brian Stout StoutBC@state.gov
Contact name: Dyveke Rogan
drogan@eiti.org +47 9079 7937
Local stakeholders:
Spectrum: David Allan(djallan777@gmail.com) and Maw
Htun Aung (spectrum.operation@gmail.com)
Paung Ku: Kyaw Thu Aung: kyawthutiger@gmail.com)
Pyoe Pin: Gerry Fox (gerry.fox@pyoepin.org)
Chevron
Total: Namita Shah (namita.shah@total.com)
Woodside
BACKGROUND
During 2012 President Thein Sein and other government representatives made several statements of the
government’s intention to commit to EITI. The commitment was officially confirmed in a public announcement by
President Thein Sein on 14 December 2012, which appointed U Soe Thein, Minister of the President’s Office, as EITI
Champion. The President also established a high level Committee to oversee the preparations for implementation,
including the establishment of a multi-stakeholder group and development of a work plan. Myanmar
Development Research Institute (MDRI) is acting as an interim Secretariat and is responsible for providing support
to the government in preparing for implementation, and to coordinate awareness raising efforts among
stakeholders. Although the government aims to submit an EITI candidacy application by the end of the year, it is
likely that it will take some more time before all the sign-up steps are completed.
RECENT DEVELOPMENTS
•
Preparations for implementation are currently focused on stakeholder consultations with a view to form an
interim MSG in October/November. The timetable for establishing a formal MSG in time for submitting a
candidature application by the end of the year is extremely tight. The consultation process is mainly
facilitated by MDRI. A government working group has been formed comprising ten ministries and other
government agencies. Outreach to regional governments (Karen, Mon, Shan and Tanintharyi) as well as
parliamentarians and civil society groups in the regions is also underway. An EITI CSO interest group has
been established among Yangon-based civil society organisations. A civil society workshop is scheduled for
the first week of October with a view to establish a civil society steering group. It is expected that a roadmap
for civil society nominations to the MSG will be agreed at the workshop. Outreach to industry has so far been
limited, but the government is stepping up efforts in this regard. A first meeting between industry and the
government EITI working group is scheduled for early October.
•
There is extensive financial and technical support to the preparations for implementation. There are several
13
Board Paper 25-6-C
ongoing studies to support implementation, including (1) an options study for the institutional set up of the
EITI; (2) political economy; and (3) a legal review. The World Bank is providing technical support and an EITI
resident advisor has been recruited to support implementation. Funding for preparatory activities is now
available, mainly from DfiD. With support from AusAid and DfID, Revenue Watch has started a two-year
programme focusing on support to local civil society on extractives governance, including the EITI.
•
EITI is a central part of the government’s reform agenda, in particular public financial management reforms.
EITI is seen as a tool for contributing to wider fiscal reforms, build trust between the government and
communities and contribute to the peace process.
•
The government plans to submit a candidature application by the end of the year. In order to achieve this,
the government and other stakeholders need to significantly speed up the preparation process, including
establishing an MSG.
•
The International Secretariat will provide guidance to MDRI and other stakeholders on development of the
Terms of reference for the MSG, workplan and candidature application as well as training on the EITI
Standard. The International Secretariat is planning a visit to Myanmar in November/December. International
partners are providing extensive support to the preparation for candidature. Ongoing and planned support
activities include advice on the institutional set-up, stakeholder and capacity building needs assessments,
support to constituency building and outreach, technical scoping work, legal and contractual analysis and
seminars, and support to preparations of the candidature application. A World Bank mission to Myanmar took
place in July. Another World Bank mission is scheduled for November.
•
MDRI is planning a study tour for government officials to visit EITI Mongolia in October as well as a study tour
for government, industry and CSOs representatives to Indonesia in later in the year.
•
Further support with outreach to private sector would be welcome. Support from companies active in
Myanmar with establishing an EITI network among private sector actors, including engaging state-owned
enterprises, would be particularly helpful.
Papua New Guinea
Main contacts:
Organisation: Department of Treasury.
Contact name: Donald Hehona
donald_hehona@treasury.gov.pg
Partner: World Bank/MDTF (Philip Chan:
pchan@worldbank.org), AusAID (David Osborne:
David.Osborne@ausaid.gov.au).
U.S. State Department (Susan May, MaySM@state.gov)
Local stakeholders:
Transparency International PNG is providing
coordinating energy for local CSOs. International oil,
gas and mining companies are supportive.
BACKGROUND
PNG has considerable natural resource wealth and rapidly increasing government revenues from oil, gas and
mining. The development of these industries and the revenues from the extractive sectors are expected to
transform the economy in the coming decade. However, PNG has long standing problems with governance and
corruption. Prime Minister Peter O'Neill has signalled a move toward greater transparency. In March, Jonas
Moberg met O'Neill and was advised that a decision had been taken to implement the EITI, and to appoint the
Minister for Treasury Don Poyle as EITI Champion. The Minister reaffirmed the government’s commitment at the
Global Conference in Sydney. He confirmed that the government and interim MSG are targeting an EITI
candidature application in December 2013.
RECENT DEVELOPMENTS
The Secretariat has provided comments on a draft workplan and ToR for the MSG. A launch event and signing of a
14
Board Paper 25-6-C
MoU has been delayed to allow CSO to conduct further consultations and to select their MSG representatives.
The Secretariat is planning a visit in November to provide training on the EITI Standard. The Secretariat is also
discussing the options for providing technical assistance during implementation. The Secretariat favours
recruiting a resident advisor.
South Africa
Main contacts:
Organisation: Ministry of Public Service and Administration
Contact name: Ayanda Dlodlo, Deputy Minister
Email and or telephone number: ayanda.dlodlo@gmail.com
Additional info: The Ministry of Mineral Resources is the lead
ministry for EITI and there have been several contacts, but no
single point of engagement.
International Secretariat, World Bank/MDTF, US
Govt, Swiss Govt and RWI.
Companies generally supportive including
Chamber of Mines.
Contact name: Eddie Rich
Email and or telephone number: erich@eiti.org
+44 7805574549
Local stakeholders:
Stakeholder: African National Congress
Parliamentary Committee on Mineral Resources
Southern Africa Revenue Watch/Open Society
Institute of Southern Africa
Individual advocates: Peter Leon
(peter.leon@webberwentzel.com)
South African Institute of International Affairs
Contact name: Claude Kabemba
claudek@sarwatch.org
Main: +27 (0) 11 587 5000
BACKGROUND
South Africa's mineral wealth is significant, with gold, platinum, coal, iron and diamonds being some of its key
exports. The mining sector has stirred considerable controversy around perceptions of poor management.
Implementation of EITI would be a strong symbol of African and emerging economy commitment.
The EITI held roundtables with government and with parliament in October 2010. Minister of Finance Pravin
Gordhan facilitated a panel at the 5th EITI Global Conference in February 2011 and concluded that he was
generally supportive of the EITI and that his government would carefully consider implementing the EITI.
Since then, Clare Short and the International Secretariat have written many times to various levels of government
to seek meetings to discuss EITI, but requests to meet have not been fruitful. The Minister of Mineral Resources
and her DG have not taken up the suggestions of hosting government roundtables on EITI implementation.
Last year’s strikes and disharmony in the mining sector offers a window of opportunity especially to engage and
encourage the unions, particularly COSATU - the national union coalition - to support the EITI. Kofi Annan wrote in
the New York Times that "the recent violence at the Marikana mine in South Africa shows what happens when
trust is in short supply at the local level".
Anthony Richter met with Ayanda Dlodlo, South Africa Deputy Minister of Public Service and Administration, at
the Open Government Partnership meeting in London in April, where she announced that her President has
instructed her to engage on extractives in the context of EITI. However, in follow-up discussions she said that this
was not a public statement or a public commitment. Furthermore, she is not the lead Minister. Nonetheless, it is
a step forward.
RECENT DEVELOPMENTS
The participation of Deputy Minister of Mines and Energy, Godfrey Oliphant, and the RSA High Commissioner to
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Board Paper 25-6-C
Australia appeared to confirm recent progress. However, the Minister knew little about what EITI was and what
background discussions have taken place. The GoRSA appears to lack any collective position.
The Friends of EITI South Africa group agreed to focus on invigorating a civil society/media/parliament push for
implementation. For example, ONE South Africa is making the case to the biggest union – COSATU – to support
the EITI and then garner support in the National Economic Development and Labour Council as the key interface
mechanism between labour and Cabinet.
If we get any further indication that President Zuma really has asked for EITI to be explored, we will write to
suggest a further government-only roundtable to explore the EITI. There is clearly much work on awareness
raising and on inter-ministerial discussions to be done.
•
Work with in-country partners to ensure that key EITI messages are transmitted to the Head of the
Chamber of Mines Chamber and the Chair of the Parliamentary Committee on Mineral Resources to
encourage progress on EITI implementation.
•
Pursue dialogue with local civil society including Southern Africa Resource Watch and ONE South Africa.
•
Follow-up with the government through the Open Government Partnership channel with the London
Summit in late October.
South Sudan
Main contacts:
Julia Akur Magot, Ministry of Petroleum and Mining
juliaakurm@gmail.com
Partner: Norwegian Embassy, UN Special
Representative Hilde Johnsen, Global Witness,
UN Anti-Corruption Adviser to President Kiir
John Githongo
Contact name: Ole Kirkvaag
ole.kirkvaag@adeb.no
Phone: +249 956087171
(erich@eiti.org
+44 7805574549); Jurgen Reitmaier (jreitmaier@eiti.org; +49151-56972390)
Local stakeholders:
Stakeholder: GADET-Pentagon
Contact name: Taban A Christopher
tabachris@yahoo.com
BACKGROUND
South Sudan is the most oil-dependent country in the world. Even post-independence, the oil sector of South
Sudan remains highly dependent on the cooperation of the North, especially as a transit route for the oil to Port
Sudan. This is the cause of the recent disputes, including the year-long halting of the oil production.
President Kiir announced South Sudan’s commitment to implement the EITI in December 2011. Global Witness
has criticised the Sudan and South Sudan oil deal agreed on 27 September 2012 for omitting any commitment on
public accountability.
RECENT DEVELOPMENTS
Although South Sudan's interest in the EITI has not (yet) regained the height it once had, the legislative processes
16
Board Paper 25-6-C
demonstrates strong commitment:
•
The Petroleum Act was signed into law in July 2012. It sets out a competitive bidding process for oil
contracts, a company registry, and mandates EITI implementation.
•
The Petroleum Revenue Management Bill was submitted to the National Assembly in March 2012 and
includes provisions for an annual report in accordance with the EITI Principles.
•
The Ministry also appointed a national coordinator for the EITI process, who participated in the Outreach
Seminar in Lusaka, and has presented next steps to the Minister.
Capacity in government remains poor and the country faces a wide number of challenges. Interest in the EITI is
strong at the technical level of government and among the foreign advisors, but no longer appears to extend up
to the political level of the South Sudan government. Invitations for the Global Conference did not receive
responses. Therefore progress on South Sudan is not expected to be swift.
The Secretariat is working with the Ministry of Petroleum and Mining, Norwegian Oil for Development, and Global
Witness on an appropriate launch conference. The next steps include:
1.
Verify passage, signature, and content of Petroleum Revenue Management Bill.
2.
Agree on modalities of launch conference.
3.
Prepare for selection and role of EITI multi-stakeholder group.
4.
Help establish the EITI by supporting the drafting of a workplan, including a timeline for
implementation, a scoping report, and an outline of resource implications.
All partners will need to provide extensive support to assist with preparations towards Candidature.
Tunisia
Main contacts:
Organisation: Minister of Good Governance
Contact name: Abderrahmane Ladgham
Email and or telephone number: The Chief of Staff Hichem
Hammi chem.elhammi@pm.gov.tn
Partners: RWI
Contact name: Patricia Jean Karam
MENA Regional Director, RWI
+19179750318 (US)
+9613614662 (Lebanon)
pkaram@revenuewatch.org
Local stakeholders:
Stakeholder: ATTEM (Association Tunisienne
pour Transparence dans le secteur de l’énergie
et des Mines)
Contact name: Sofiane Reguigui
sofianereg@yahoo.fr
BACKGROUND
The Chair of the EITI Board visited Tunisia in June 2012 and met the President, the Prime Minister and key
stakeholders. During this visit, the Government made commitment to implement EITI, but progress toward
candidature has been slow. This is due in part to the on-going political instability.
The extractive sector in Tunisia is small but significant (oil production of 100 000 bpd and important gas reserves).
A strong civil society group continues its campaign effort to implement EITI. The Government made commitment
17
Board Paper 25-6-C
to implement the EITI in June 2012. Mr Abderrahmane Ladgham, Minister of Good Governance was appointed to
lead on EITI implementation. Progress toward achieving candidature status has been slow. This is due in part to
the on-going political instability (the Prime Minister who made the commitment resigned shortly thereafter) The
appointed government champion remains interested. There is strong and highly committed civil society led by
ATTEM.
RECENT DEVELOPMENTS
The political crisis deepened with constant changes in government and assassination of leaders of secularist
parties. The International Secretariat sponsored the participation of a civil society representative in the global
conference in Sydney. Key officials in the new transition government are keen on implementing the EITI, but the
political situation remains unstable.
The Secretariat to provide guidance on the consultation process for the formation of an MSG. Support from
partners for the drafting of a work plan is need.
Technical assistance for a scoping study to assess the cost and benefit of EITI implementation is also needed.
Uganda
Main contacts:
Organisation: Ministry of Finance
Contact name: Charles Byarunhanga, Budget Advisor
Kenneth Mugambe, Commissioner, Budget Policy
charles.byaruhanga@finance.go.ug
Mobile: +47 909 14064
Additional info: The Ministry of Finance now leads on the EITI.
Partner: World Bank/MDTF, PWYP, KfW, EC, Irish
Aid, Norway (Oil for Development and Embassy),
Global Witness, Tullow Oil, and Total. The
International Secretariat.
Contact name: David Santley, World Bank
dsantley@worldbank.org
Steven SMOLDERS
steven.smolders@eeas.europa.eu
Main: +256 414 701 029
Elin Graae Jensen
elin.graae.jensen@mfa.no
+256 (0) 41 711 2016
cm3@dgf.ug (Democratic Governance Facility)
Email and or telephone number: erich@eiti.org +44
7805574549
Local stakeholders:
Stakeholder: PWYP-Uganda
Contact name: Winnie Ngabiirwe
winnie.ngabiirwe@gmail.com
Office: +256 312 514473
Dickens Kamugisha
Africa Institute for Energy Governance (AFIEGO)
afiego_ug@yahoo.com
BACKGROUND
According to Chatham House, “current reserves are estimated to have the potential to general over $2bn in
annual revenue for more than 20 years”. “Whilst the contribution of oil to the economy will be considerable, it will
not be immediately transformative”.
More specifically on the EITI, although the 2008 Oil and Gas Policy (mistakenly?) contained a commitment to EITI
implementation, there has been no progress on implementation. Efforts to introduce amendments on the three
key legislative bills – the Petroleum Upstream Act, the Midstream Bill, and the Public Finance Bill – have met rigid
18
Board Paper 25-6-C
opposition and passed without mention of EITI, though the latter is still to pass. Whilst the Ministry of Finance
appears much in favour of implementing the EITI (the Minister met with Jonas in Oslo in October and considered it
to be ‘only a matter of paperwork’ to get the process started), the Ministry of Energy appears not.
RECENT DEVELOPMENTS
Recent developments have been somewhat more positive. In May, the President was recorded as: “Museveni also
stressed the importance of good financial governance, a vibrant private sector and investments. He said he is
committed to transparency and has instructed the Government to move forward with preparations for accession
to the Extraction Industry Transparency Initiative”.
The Minister of Energy and Mines, Irene Muloni, came to the EITI Global Conference in Sydney in May and
reiterated the Government’s commitment though still with legislation as the prior action. The official line remains
that the commitment stands and implementation will be considered once the legislative process is complete.
Many parliamentarians including members of the Natural Resource Committee (chaired by Michael Mawanda)
and of the Parliamentary Forum on Oil and Gas (chaired by Hon Sekikubo) are strongly supportive. Many MPs will
continue to pursue EITI implementation through amendments to the Public Finance Bill.
Given development partners present negotiations over the halted budget support, it is difficult to know how best
to support these voices of reform. EITI sign-up was included in the budget support Joint Assessment Framework
which has been delayed following a corruption scandal in the PM’s office. In a follow-up meeting with some of the
MPs it appears that they will pursue EITI implementation through amendments to the Public Finance Bill. They
also expressed interest in visiting the EITI processes in Nigeria and Tanzania which they might pursue through the
Democratic Governance Facility.
The government disclosed to parliamentarians production sharing agreements it had signed with Tullow Uganda,
China’s National Oil Corporation (CNOOC Uganda), Total E&P Uganda Dominion Petroleum and Neptune
Petroleum.
Following the omission of the EITI from the key legislation, there needs to be an emphasis on the hard-headed
domestic reasons for implementation. International stakeholders need to continue to engage and support
national civil society and the national PWYP, and prepare the stakeholders for selection and role of EITI multistakeholder group.
International supporters can also support the drafting of a workplan, including a timeline for implementation, a
scoping report, and an outline of resource implications.
United States
Main contacts:
The Secretary of the Interior Sally Jewell is leading
implementation. Karen Senhadji, Jennifer Goldblatt, Greg
Gould and Paul Mussenden are amongst those at the
Department of Interior involved.
The USEITI Advisory Committee, established
under the Federal Advisory Committee Act,
serves as the initial USEITI Multi-Stakeholder
Group (MSG) and oversees the implementation
of USEITI. Details here:
http://www.doi.gov/eiti/FACA/index.cfm
number:
BACKGROUND
As part of the US government’s launch and commitment to the Open Government Partnership, President Barack
Obama announced on 19 September 2011 that the US will implement the EITI. Following an extensive public
consultation process, the USEITI Advisory Committee (MSG) has been established to prepare for EITI candidature.
Detailed information regarding the MSG’s work is available online: http://www.doi.gov/eiti/index.cfm. Meetings
19
Board Paper 25-6-C
are open to the general public (in person and via teleconference).
RECENT DEVELOPMENTS
The MSG is planning to meet on 5-6 November to discuss a draft candidacy application, which is available online.
The MSG has had extensive discussions regarding the scope of the EITI reporting process. It appears likely that the
MSG will seek to make use of the provisions for adapted implementation (EITI Standard, requirement 1.6), citing
constitutional barriers to compelling State governments to participate.
The EITI Secretariat is providing advice and support to DOI and other stakeholders, and will join the MSG meeting
on 1 October.
5
Developments in other countries
5.1 Candidate application pending / expected
Country
Progress against
the 5 sign-up
Requirements
Current status and next steps
Ethiopia
Provided an
application with
outline of
Requirements 1-5.
Board questioned
ability to engage
civil society
effectively.
A delegation visited Addis Ababa on 18-19
September to gain an understanding of the
implementation of the EITI-like process so
far, including civil society representatives’
involvement, and to assess the government’s
commitment to ensure that civil society
representatives can operate freely.
Partners with particular
interest (lead
coordinating partner
underlined) & local
stakeholders
The Government of
Ethiopia, the World
Bank/MDTF.
Regional Director contact
Eddie Rich
Senegal
Candidature
application
received 23 July.
The government of Senegal declared its
intention to implement the EITI on 20
February 2012. Stakeholders have
nominated their MSG representatives. The
first MSG meeting took place on 31 January
2013. The workplan and terms of reference
for the MSG have been developed, and on 20
June 2013 Minister Ismaila Madior Fall was
appointed as the National Champion. A
candidature application has been reviewed
by the Outreach and Candidacy Committee.
USAID, World Bank/MDTF,
ADB, CIDA. Osiwa and
Oxfam America, La Lumière,
Le Forum Civil.
Wouter Biesterbos
20
Board Paper 25-6-C
Ukraine
Candidature
application
received 23 July.
The Outreach and Candidature Committee
has reviewed the candidature application
from Ukraine and a preliminary assessment
prepared by the International EITI
Secretariat. The assessment highlighted
concerns regarding a number of issues,
including the proposed exclusion of the coal
sector from the first EITI Report and the full,
independent, active and effective
participation of civil society. [A delegation
visited Kiev 23-25 September to discuss
these issues with stakeholders].
The National Coordinator and MSG
representatives will participate in a training
workshop in Astana 7–9 October.
World Bank/MDTF,
International Secretariat,
European Union and United
Kingdom. National CSOs
(DIXI Group, NOMOS), RWI,
OSI and Renaissance
Foundation), Shell.
Siri Farstad
5.2 Committed to implement, but timeline unclear
Country
Guyana
Kuwait
Progress against
the 5 sign-up
Requirements
Some progress
towards sign-up
Government has
reportedly
committed to
implement in
2011, but it has not
been well
publicised.
Slow progress in following up the
commitment to implement the EITI
expressed in mid-May 2012. We understand
that the Government is asking the InterAmerican Development Bank support to
fund a scoping study. The Secretariat
continues collaborating with PWC, hired by
the Guyanese government to support REDD’s
enabling activities on drafting ToRs for that
study.
The government acknowledges that
corruption is a major issue. With the oil
sector being 100% government-owned,
serious consideration should first be given to
establish what an EITI Report would look like
and what would be reconciled. International
Secretariat plans to visit in next few months
to help the government development ToRs
for a scoping study.
interest (lead
underlined) & local
stakeholders
Norway, World Bank , InterAmerican Development
Bank
and EU Delegation
Francisco Paris
US and Transparency
Kuwait.
Eddie Rich
5.3 Uncommitted/limited progress
Country
Progress against
the 5 sign-up
Requirements
interest (lead
underlined) & local
stakeholders
21
Board Paper 25-6-C
World Bank/MDTF and
Norway.
Angola
Progress unlikely
No recent discussion.
Eddie Rich
Armenia
Bulgaria
Burundi
Denmark
Dominican
Republic
Georgia
No progress
towards sign-up
No progress
towards sign-up
The government
has committed to
implement the
EITI.
Some progress
towards sign-up
Some progress
towards sign-up
Some progress
towards sign-up
The WB/MDTF team has, in the context of the
mining sector policy dialogue and a new
mining law, held EITI information-sharing
sessions with government counterparts and
will monitor developments on further
interest in EITI implementation. Interest has
again been shown and the World Bank is
following up with presentations, supported
by the Secretariat.
Discussions have been underway with the
government and civil society since 2009
about implementing the EITI. Despite
repeatedly expressing its interest, the
government is yet to publically commit to
implementation. The Secretariat is not aware
of any recent developments or outreach
efforts. .
Minister of Energy and Mines Moïse Bucumi
announced Burundi’s intention to implement
the EITI at a regional mining conference in
Bujumbura on 23 November 2012. The
Secretariat is still waiting for a letter
confirming this decision. The Government is
considering a visit to the International
Secretariat. GIZ Is proding technical
assistance for the preparation of a
candidature application.
Danish government is considering EITI
implementation from some time in 2014.
The World Bank (MDTF) visited the country in
March 2013. The new authorities have
reasserted its interest in EITI implementation.
The Secretariat is not aware of any recent
developments or outreach efforts..
There have been regular requests for
information on EITI implementation since
2006, most often from CSOs interested in
bringing greater transparency to the issue of
transit payments. However government
interest has varied, with no firm commitment
to implement.
World Bank/MDTF
Siri Farstad
World Bank/MDTF, RWI, OSI,
Centre for the Study of
Democracy.
Siri Farstad
GIZ, International
Secretariat, World Bank,
Transparency International.
Tim Bittiger
EU Delegation and the
World Bank/MDTF. Barrick
Francisco Paris
Open Society Georgia
Foundation, RWI
Siri Farstad
22
Board Paper 25-6-C
Kenya
Kosovo
Lao PDR
Malawi
Uncommitted/
limited progress
No progress
towards sign-up
No progress
towards sign-up
Some progress
towards sign-up
For at least six years now, Kenya has been
asked by donors and, on at least one
occasion, by an oil exploration company
(Woodside Petroleum), to consider joining
the EITI. At times, the Government seemed to
consider; the most promising expression of
interest so far was issued in June 2013 by the
new Cabinet Secretary for Mining, Najib
Balala, in the wake of extensive oil and
mineral finds and the new Government’s
policy of expanding the extractive sector.
Clare Short wrote to Balala on the new EITI
Standard and offering Secretariat support for
preparatory steps. Expression of interest also
received from Kenya Chamber of Mines.
Kosovo NGOs and IFIs have suggested that
the government implements the EITI. GIZ
Kosovo is interested in supporting outreach
efforts. A first exchange took place with the
Kosovo Mining Directorate. RWI Eurasia Hub
held training for civil society in July and EITI
in Albania has been following up with
support.
The government expressed an interest in
learning more about the EITI and its
application in the mining sector. The World
Bank provided financial support for an EITI
scoping study. However government
commitment appears unlikely. The
Secretariat is not aware of any new
developments or outreach efforts, but will
encourage the government to send a
representative to the next training
workshop.
The government appears close to
committing. There is strong civil society
support. The International Secretariat has
been providing examples of EITI workplans
and has advised on sign-up steps. A
delegation including government and civil
society representatives attended the Sydney
Conference where the representative of the
Ministry of Finance spoke affirmatively on
Malawi sign-up. GIZ appears ready to finance
an EITI launch event but is waiting for a clear
in-country signal from the Government. In
January, the Government established an EITI
website: www.eiti.org.mw.
No development partner
(yet) in forefront;
Turkana Basin Institute
(Richard Leakey), Northern
Aid (Jarso Mokku), Cedmac
(Abubakar Said).
Jurgen Reitmaier
GIZ, World Bank/MDTF
Kosovo Foundation for
Open Society
EITI in Albania
Siri Farstad
AIDB and the International
Secretariat. ICMM/MMR
(Minmetals Resources
Limited).
Sam Bartlett
Germany (GIZ) and World
Bank. Citizens for Justice.
Jurgen Reitmaier
23
Board Paper 25-6-C
Poland
Some progress
towards sign-up
Romania
No progress to
sign-up
Rwanda
Surinam
Turkey
No progress
towards sign-up
No progress
towards sign up
No progress
towards sign-up
The Polish government has communicated
that it is considering EITI implementation. As
proposed at the Jakarta Board meeting in
October 2011, the International Secretariat
wrote a letter to the Government of Poland
to encourage EITI implementation. The
Deputy Minister of the Environment, in
charge of natural resource questions,
expressed interest in the EITI. The Secretariat
also met with the Minister of the Economy
and the Foreign Minister of Poland in March.
The Secretariat is not aware of any new
developments or outreach efforts.
The Secretariat is assessing the readiness of
the government to implement the EITI. A
letter to the government was sent in April
2012, but progress halted with May vote of
no confidence. December elections secured
victory for incumbent government, and with
the recent award of large areas for shale gas
exploration, EITI implementation might be
even more relevant. The Secretariat is not
aware of any new developments or outreach
efforts.
The government publicly committed to
implementing the EITI in February 2010,
including organising a launch seminar with
companies and civil society, moderated by a
consultant from the World Bank. There has
been no follow-up since the 2010 national
elections.
Following Suriname participation in
the IADB-funded Caribbean EITI outreach
workshop in early December 2012 there has
not been any further contacts with the
Government. However, recent
announcement of a big investment with
Newmont/IAMGold has prompted interest
from several stakeholders. The Secretariat
will re-approach the Government.
The International Secretariat met with Taner
Yıldız, Minister of Energy, in March 2012 and
has sent a letter to suggest that Turkey
implements the EITI. The Secretariat has also
established first contacts with CSOs dealing
with energy issues in Turkey. The Secretariat
is not aware of any new developments or
outreach efforts.
Siri Farstad
Siri Farstad
World Bank/MDTF, Germany
(BMZ), and Belgium.
Transparency Rwanda.
Tim Bittiger
World Bank and InterAmerican Development
Bank.
EU Delegation
US Embassy.
Francisco Paris
Siri Farstad
24
Board Paper 25-6-C
Turkmenistan
Vietnam
Zimbabwe
No progress
towards sign up
No progress
towards sign-up
No progress
towards sign-up
The British Embassy and Soros Foundation
hosted an EITI information-sharing workshop
in Ashkabat with national stakeholders and
interested partners on 28 September 2011.
The Secretariat is not aware of any new
developments or outreach efforts.
There is renewed interest in the benefits of
EITI implementation, with the Prime
Minister’s office reportedly seeking
comments from relevant line Ministries.
However there is significant scepticism in
some quarters, particularly with regard to
engaging with CSOs. The UK Embassy and
World Bank are supporting further outreach
efforts. The Secretariat will encourage the
government, indsury and CSOs to send
representatives to the next training
workshop.
The Zimbabwe Chapter of the Publish What
You Pay (PWYP) campaign was launched in
Harare in August 2011. A Zimbabwe Mining
Revenue Transparency Initiative (ZMRTI) has
been established by the government with a
multi-stakeholder oversight group and a
workplan. The NGO, Zimbabwe
Environmental Law Association, has
developed draft ToRs for a first report for the
ZMRTI and participated in the Global
Conference. The Secretariat is not aware of
any new developments or outreach efforts.
World Bank/MDTF, British
Embassy, Soros Foundation.
Sam Bartlett
RWI and Norway.
Sam Bartlett
World Bank/MDTF, PWYP,
SARW.
Eddie Rich
25
ABIDJAN, 16-17 SEPTEMBER 2013
Outreach & Candidature Committee
1 October 2013
Board Paper 25-6-D
Candidature Assessment –
Senegal
For decision
Recommendation:
That the Outreach and Candidature Committee makes the following recommendation to the Board:
The EITI Board admits Senegal as an EITI Candidate country on 17 October 2013. In accordance with the EITI
Standard and associated transitional arrangements, Senegal is required to publish its first EITI Report
within two years of becoming a Candidate (by 17 October 2015). If the EITI Report is not published by this
deadline, Senegal will be suspended. Validation will commence within three years of becoming a Candidate
(by 17 October 2016).
Board Paper 25-6-D
Candidature Assessment – Senegal
CANDIDATURE ASSESSMENT – SENEGAL
Table of Contents
1.
Recommendation ............................................................................................................... 2
2.
Summary............................................................................................................................. 2
3.
Background ........................................................................................................................ 3
4.
Candidature Assessment.................................................................................................... 7
EITI Requirement 1.1 .......................................................................................................................... 7
EITI Requirement 1.4 ........................................................................................................................ 11
Annex A – Senegal Candidature Application .......................................................................... 14
1. Recommendation
That the Outreach and Candidature Committee makes the following recommendation to the Board:
The EITI Board admits Senegal as an EITI Candidate country on 17 October 2013. In accordance
with the EITI Standard and associated transitional arrangements, Senegal is required to
publish its first EITI Report within two years of becoming a Candidate (by 17 October 2015). If
the EITI Report is not published by this deadline, Senegal will be suspended. Validation will
commence within three years of becoming a Candidate (by 17 October 2016).
2. Summary
The Secretariat received a Candidature application from Senegal on 23 July 2013. The application is publicly
available on the EITI website 1. The procedures for assessing Candidature applications are set out in the EITI
Standard, which specifies four “sign-up” requirements:
1.1 The government is required to issue an unequivocal public statement of its intention to implement the
EITI.
1.2 The government is required to appoint a senior individual to lead the implementation of the EITI.
1.3 The government is required to commit to work with civil society and companies, and establish a multistakeholder group to oversee the implementation of the EITI
1.4 The multi-stakeholder group is required to maintain a current workplan, fully costed and aligned with
the reporting and Validation
In addition, under requirement 1.5, the multi-stakeholder group can appeal to exceptional circumstances
that necessitate deviation from the implementation requirements, in which case it must seek prior EITI
1
http://eiti.org/files/Senegal-EITI-application.pdf
2
Board Paper 25-6-D
Board approval for adapted implementation. Senegal has not included a reference to adapted
implementation in its application.
In accordance with agreed procedures, the application was assessed by the Outreach and Candidature
Committee based on an assessment prepared by the International Secretariat (see sections 3 and 4, below).
In addition to reviewing the application, the Secretariat sought comments from government, industry and
CSO representatives in Senegal, and from other stakeholders at the international level. 2 The Secretariat
visited Senegal in December 2012 (and will visit again on 14 and 15 October 2013), and met with the
government, companies, civil society and international partners. 3
The Secretariat’s assessment is that Senegal has satisfied the requirements in order to be admitted
as an EITI Candidate.
The EITI Standard also outlines the requirements relating to reporting and Validation deadlines (see
requirements 1.6 and 2.1):
Requirement 2.1: Implementing countries are required to produce their first EITI Report within 18 months of
being admitted as an EITI Candidate.
Requirement 1.6 a): If the EITI Report is not published by the required deadline, the country will be
suspended.
Requirement 1.6 b): EITI Candidate countries are required to commence Validation within two and a half
years of becoming an EITI Candidate.
On 21 August the Board agreed the procedures for transitioning to the EITI Standard (Board Circular 157). It
was agreed that:
Any countries that apply for Candidature in 2013 (and are subsequently accepted as Candidates) will have
their reporting and Validation deadlines extended by six months to allow the MSG to make adjustments to
their workplans (i.e. required to publish an EITI Report within two years and conduct Validation within three
years, with their maximum candidature period extended accordingly). The standard deadlines will apply to
countries that lodge applications for Candidature after 1 January 2014.
Should Senegal be admitted as a Candidate on 17 October 2013, this implies publication of the first EITI
Report by 17 October 2015. Validation will commence no later than 17 October 2016.
3. Background
Senegal’s economy is dominated by the production of low-valued added goods and is highly reliant on
donor assistance and foreign direct investment. Its key export products are phosphate, fertilizer and fish.
Real growth in GDP averaged over 5% annually between 1995 and 2007, due to an economic reform
programme backed by the donor community 4. Growth slowed between 2009 and 2011 in part due to the
global financial crisis, but picked up again to reach 4.3% in 2013. The construction of several large
infrastructure and mining projects has been a key factor, although some of these projects have been
2
The International Secretariat approached all of the members of the Senegal MSG and received comments from a
number of individual MSG members. Furthermore, the Secretariat held bilateral discussions with PWYP, the World
Bank, and the Canadian Embassy in Dakar and obtained additional information from the National Coordinator.
3
Additional details on these visits are available on request.
4
https://www.cia.gov/library/publications/the-world-factbook/geos/sg.html
3
Board Paper 25-6-D
delayed. In the medium term, growth is expected to return to about 5% per year 5.
This scenario, however, assumes the full implementation of the government’s ambitious plan to reform the
state, address the energy sector crisis, and improve the business environment. Many challenges need to be
addressed, such as: administrative red tape; poor land-use planning; a lack of a land registry; lack of
effectiveness of public expenditure; inadequacy of human capital; generally weak governance at the central
and decentralized level; poor infrastructure; and limited access to electricity. As a result, Senegal’s business
environment is considered unattractive and the level of foreign direct investment is below its potential. The
World Bank’s 2013 Doing Business report ranks Senegal 166 out of 185 countries 6, despite being one of the
most stable democracies in Africa 7 and the presence of untapped minerals and oil and gas deposits. In fact,
Randgold Resources recently declared Senegal its most highly rated destination based on geological
opportunity, political stability and its fiscal competitiveness model. 8
The period 2005 – 2011 has seen a relative decline of poverty along with an absolute increase in the
number of poor 9. The government in place since the 2012 elections has embarked on an ambitious reform
programme in an effort to change this, with the full support of the international community. This
programme for 2013 – 2017, captured in the Stratégie Nationale de Développement Economique et Social (or
Poverty Reduction Strategy Paper) 10 is based on three pillars:
1) growth, productivity and wealth creation;
2) human capital, social protection and sustainable development;
3) governance, institutions, peace and security.
Under this framework, Senegal will focus on addressing challenges such as in infrastructure; Public Financial
Management and taxation; private sector development; mines and quarries; education; transparency,
accountability and corruption. The Senegalese government has committed itself to implement these
reforms in close coordination and cooperation between government, civil society and the private sector.
Extractive Industries
The extractive industries in Senegal are dominated by the mining industry, with oil and gas in an
exploration phase.
Mining
The main minerals mined in Senegal are phosphate, iron ore and gold, and the minerals industry accounts
for 20% of Senegal’s export earnings and GDP. A 10 Mt titanium resource has been identified located in
heavy mineral sands deposits near the coast. 11
According to Senegal’s 2013-2017 reform programme: 12
5
http://www.imf.org/external/pubs/ft/scr/2012/cr12337.pdf
http://www.doingbusiness.org/data/exploreeconomies/senegal/
7
8
http://www.bdlive.co.za/business/mining/2013/07/11/senegal-rated-above-sa-on-gold-mining
9
http://www.imf.org/external/pubs/ft/scr/2013/cr13194.pdf (EN) Or http://www.gouv.sn/IMG/pdf/SNDES_20132017_-_version_finale_-_08_novembre_2012.pdf (FR)
10
idem
11
http://www.mbendi.com/indy/ming/af/sn/p0005.htm
12
6
4
Board Paper 25-6-D
The mining sector has experienced a recent renewal with the launching of gold production, in addition to
phosphates and the prospects for the exploitation of iron deposits. It is widely thought to be underperforming, mostly due to poor infrastructure for access to mining sites and markets, access to water,
electricity and export processing capacities.
This reform programme aims to address a number of these wider challenges, such as poor infrastructure
and the lack of reliable power supplies, but also aims to improve the taxation system and public financial
management. The immediate priority is to ensure satisfactory implementation of the new tax code, but
once this is done the authorities intend to focus on other outstanding issues such as the taxation of
mining. 13 The Government has also initiated an inter-ministerial review of the Mining Law and the standard
Mining Convention. 14
More specifically, the reform programme defines a number of specific strategic objectives for the mining
and quarry sub-sector: 15
1. increase production and improve the productivity of mines and quarries by reinforcing national private
sector involvement in the exploitation of mines and quarries, simplifying mining rights and permit
processing procedures, consolidating infrastructure in support of geological and mining activities and
supporting quarry operators;
2. promote the participatory and all-inclusive management of extractive activities, with the creation of
clusters, in regions with a strong mining orientation, with a view to polarizing mining activities,
supervising the local populations involved in mining activities, reducing the effects of mining and
quarry exploitation on the environment and health of the local populations, promoting mining
exploration and improving transparency in the management of contracts;
3. step up the competitiveness of the mining sector by strengthening actors of the mining sub-sector
Oil and gas
Oil and gas exploration is active, with seismic studies indicating prospective resources of almost 3.6 billion
barrels of oil 16 and at least 13 billion cubic feet of natural gas. 17
Also in the hydrocarbons sector, reforms are under way. According to the IMF: 18
The Société Africaine de Raffinage (SAR) receives direct or indirect support from the State of about CFAF 40
billion per year. Various options may be considered in order to address this problem; a strategy will be
finalized by end-August 2013. Revision of the petroleum code and standard contracts for research and
sharing of hydrocarbon production are continuing. The aim is to improve the framework of laws and
regulations governing the exploration and production of oil and gas as well as to establish regulations
applicable to petroleum operations, while enhancing the attractiveness of the sector (albeit without having
recourse to new tax exemptions). The process, which began in February 2013, will be completed in 2013.
13
Debriefing of a WB mission to Senegal in June 2013
15
16
http://www.proactiveinvestors.com.au/companies/news/42101/far-limited-to-drill-senegal-oil-and-gas-explorationwell-in-early-2014-42101.html
17
http://www.bloomberg.com/news/2011-09-02/senegal-plans-offshore-oil-drilling-in-2012-as-west-african-outputgrows.html
18
14
5
Board Paper 25-6-D
Use of the EITI
The government of Senegal sees the EITI as a tool to (help) address a number of the challenges in the
extractives sector such as those related to harnessing wealth, getting a fair deal, sustainability, benefit
sharing, sub-national transfers, managing mining, and data reliability. As such, the EITI is part of the broad
array of general and more specific reform measures as defined in the national reform programme.
The work plan followed extensive stakeholder consultation and aims to address a number of jointly defined
concerns. In the application these concerns are defined as follows:
-
How can extractive industry governance practices be improved, in line with the government policy that
forms part of the component entitled 'Governance of strategic structures (mines, land, health)'?
How can exploitation of natural resources be made more profitable in order to increase and secure the
revenues and benefits from mining activities for the country?
How can there be better supervision of the impact of mining activity on the environment and on local
populations?
How can transparency and traceability of revenues and payments be promoted in order to increase the
accountability of companies and the Senegalese government to citizens and communities?
How can information be made accessible and, in addition, how can transparency be institutionalised in
all sectors of economic activity, especially in the mining, oil and gas sectors?
How should the impact and contribution of mining companies be documented, referring to both the
Senegalese economy and to sustainable development?
Senegal aims to make its EITI process ‘fit for purpose’ to address these concerns, and indicated that it will go
beyond standard implementation, for example by including the publication of contracts. 19
Technical assistance
The World Bank, the IMF and other international partners provide support to the various reform efforts
mentioned. The WB supports Senegal’s reform programme with a total portfolio of 1.190 million USD. 20 This
includes a US$55 m governance and growth support credits programme to improve economic governance
by strengthening government accountability and private sector development. 21 It also includes a US$15
million USD Financial Management Technical Assistance Project to enhance credibility, transparency and
accountability in the management and use of central government finances. 22 In addition, the IMF
completed a non-dispersing Policy Support Initiative programme in 2010 and approved a new three-year
policy support instrument in December 2010 to assist with economic reforms. 23 Senegal also receives
disbursements from a US$540 million Millennium Challenge Account for infrastructure and agriculture
development, 24 and several technical assistance projects supported by the AfDB are underway, focusing for
example on infrastructure development25 (a EUR185 million investment to enable the construction of a toll
19
H.E. Presi dent Macky Sall on national t el evision i n the mar gi ns of the G8 confer enc e in London:
http://www.rts.sn/en/t elevis ions/ jour naux-t el evis es/journaux- 20h/ jt- 20h-16- jui n- 2013. html (mi n. 3. 30)
20
http:// www.worldbank.or g/ en/ news/pr ess-release/ 2013/02/19/ part ners hip- built- on-vision-f oremergi ng-senegal
21
http://www.worldbank.org/projects/P128284/sn--first-governance-growth-support-project?lang=en
http://www.worldbank.org/projects/P122476/public-financial-management-strengthening-technical-assistanceproject?lang=en
23
24
idem
25
http://www.afdb.org/en/news-and-events/article/technical-assistance-to-four-complementary-infrastructure-pppprojects-in-senegal-12197/
22
6
Board Paper 25-6-D
highway and a power plant at Sendou, and an expansion of the Dakar port and airport). Another active
donor is CIDA, which is implementing a multi-year partnership programme with Senegal focusing, amongst
others, on strengthening governance.
These examples of support programmes mostly focus on important conditions for improving management
of the extractive industries (such as public financial management, or infrastructure development). In terms
of support to the EITI, the World Bank has indicated that MDTF funding will be available when EITI
Candidate Status is confirmed, and discussions with the AfDB and CIDA for additional support are on-going.
4. Candidature Assessment
EITI Requirement 1.1
The government is required to issue an unequivocal public statement of its intention to implement
the EITI.
The statement must be made by the head of state or government, or an appropriately delegated
government representative.
Secretariat’s Assessment
The Government of Senegal has made several public statements of its intention to implement the EITI,
including on:
1) 2 February 2012, through a statement of the Council of Ministers, publicised on national television and
published on the government website 26 and in the official gazette. In this statement, the Hon. Minister Aly
Ngouille Ndiaye, Minister of State and Minister of Mines, Industry and SMEs indicated and explained “(…)
the decision of Senegal to sign up to the EITI”. The Minister confirmed this intention through a letter to the
EITI International Secretariat on 9 February 2012.
2) 6 November 2012, when in his opening address at the Salon International des Mines in Dakar, the newly
elected President H.E. Mr. Macky Sall renewed this government commitment.
3) 26 September 2012, when Minister Aly Ngouille Ndiaye of Mines, Industry and SMEs reiterated this
commitment during his address at the opening ceremony of the Stakeholder briefing on 26 and 27
September 2012.
4) 16 June 2013, in the margins of the UK G8 summit, H.E. President Macky Sall again declared Senegal’s
commitment to implement the EITI, as part of his government efforts to increase transparency and improve
good governance in the extractives sector. 27
The application includes evidence that the government’s commitment has been widely publicised,
including references to websites and declarations on national television.
Sustained high-level political support is demonstrated through the high-profile public commitment of the
President and his government to the EITI process, and the engagement and commitment of the
government agencies involved. This engagement has become apparent throughout the application
26
27
http://www.gouv.sn/Conseil-des-ministres-du-2-fevrier.html
http://www.rts.sn/en/televisions/journaux-televises/journaux-20h/jt-20h-16-juin-2013.html (min. 3.30)
7
Board Paper 25-6-D
process, and is formally enshrined in Presidential Decree 213-881. The EITI in Senegal forms part of a
broader reform programme by the Senegalese government, as described above.
The Secretariat’s assessment is that the requirement is met.
The government is required to appoint a senior individual to lead on the implementation of the
EITI.
a) The appointee should have the confidence of all stakeholders
b) The appointee should have the authority and freedom to coordinate action on the EITI across
relevant ministries and agencies
c) The appointee should be able to mobilize resources for EITI implementation.
On 20 June 2013, through Decree 2013-887, the President of the Republic of Senegal appointed Professor
Ismaila Madior Fall, holding the rank of Minister, as national EITI Champion. The appointment followed a
consultative process involving the relevant government offices (the Minister for Good Governance, the
Minister of Energy and Mines, the Minister of the Economy and Finance, and the Office of the President of
the Republic). The Decree designates Professor Fall as responsible for the implementation of the EITI and
gives him the mandate and the authority to ensure that these government offices perform their duties
accordingly.
During its meeting of 3 July 2013, the Senegal EITI Multi-Stakeholder Group agreed with the appointment
of Professor Fall as national EITI Champion and chair of the MSG. In the Secretariat’s view, Professor Fall has
the confidence of all stakeholders.
The government is required to commit to work with civil society and companies, and establish a
multi-stakeholder group to oversee the implementation of the EITI.
a) The government, companies and civil society must be fully, actively and effectively engaged in the
EITI process.
b) The government must ensure that there is an enabling environment for company and civil society
participation with regard to relevant laws, regulations, and administrative rules as well as actual
practice in implementation of the EITI. The fundamental rights of civil society and company
representatives substantively engaged in the EITI, including but not restricted to members of the
multi-stakeholder group, must be respected.
c) The government must ensure that there are no obstacles to civil society or company participation
in the EITI process.
d) The government must refrain from actions which result in narrowing or restricting public debate in
relation to implementation of the EITI.
8
Board Paper 25-6-D
e) Stakeholders, including but not limited to members of the multi-stakeholder group:
i.
ii.
f)
must be able to speak freely on transparency and natural resource governance issues;
must be substantially engaged in the design, implementation, monitoring and evaluation
of the EITI process, and ensure that it contributes to public debate;
iii.
must have the right to communicate and cooperate with each other; and
iv.
must be able to operate freely and express opinions about the EITI without restraint,
coercion or reprisal.
In establishing the multi-stakeholder group, the government must:
i.
ii.
iii.
iv.
ensure that the invitation to participate in the group is open and transparent;
ensure that stakeholders are adequately represented. This does not mean that they need
to be equally represented numerically. The multi-stakeholder group must comprise
appropriate stakeholders, including but not necessarily limited to: the private sector; civil
society, including independent civil society groups and other civil society such as the
media and unions; and relevant government entities which can also include
parliamentarians. Each stakeholder group must have the right to appoint its own
representatives, bearing in mind the desirability of pluralistic and diverse representation.
The nomination process must be independent and free from any suggestion of coercion.
Civil society groups involved in the EITI as members of the multi-stakeholder group must
be operationally, and in policy terms, independent of government and/or companies;
ensure that senior government officials are represented on the multi-stakeholder group;
and
consider establishing the legal basis of the group.
g) The multi-stakeholder group is required to agree clear public Terms of Reference (ToRs) for its
work. The ToRs should at a minimum include provisions on:
The role, responsibilities and rights of the multi-stakeholder group:
i.
ii.
iii.
Members of the multi-stakeholder group should have the capacity to carry out their
duties.
The multi-stakeholder group should undertake effective outreach activities with civil
society groups and companies, including through communication such as media, website
and letters, informing stakeholders of the government’s commitment to implement the
EITI, the central role of companies and civil society, as well as widely disseminating the
public information that results from the EITI process such as the EITI Report.
Members of the multi-stakeholder group should liaise with their constituency groups.
Approval of workplans, EITI Reports and annual activity reports:
iv.
The multi-stakeholder group is required to approve annual workplans, the appointment of
the Independent Administrator, the Terms of Reference for the Independent
Administrator, EITI Reports and annual activity reports.
v.
The multi-stakeholder group should oversee the EITI reporting process and engage in
Validation in accordance with chapter 3.
Internal governance rules and procedures:
vi.
vii.
The EITI requires an inclusive decision-making process throughout implementation, with
each constituency being treated as a partner. Any member of the multi-stakeholder group
has the right to table an issue for discussion. The multi-stakeholder group should agree
procedures for nominating and changing multi-stakeholder group representatives,
decision-making, the duration of the mandate and the frequency of meetings. This should
include ensuring that there is a process for changing group members that respects the
principles set out in Requirement 1.3(f).
There should be sufficient advance notice of meetings and timely circulation of documents
prior to their debate and proposed adoption.
9
Board Paper 25-6-D
viii.
The multi-stakeholder group must keep written records of its discussions and decisions.
Applicants should also take note of protocol note #4 regarding the participation of civil society 28
a) Government, companies and civil society have been fully, actively and effectively engaged in the EITI
process. A number of activities have been organised by the government to a wide arrange of stakeholders
to explain the EITI process; to shape and agree to in-country structures and procedures; and to identify
priorities and concerns. Consultation sessions and workshops have been organised by and for stakeholders
such as the CSO coalition, journalists and the Chamber of Mines. These meetings have served to provide
input and follow-up, for example by agreeing to joint policy and selecting representatives in the MSG.
b) In the Secretariat’s view, there is an enabling environment for company and civil society participation
with regard to relevant laws, regulations, and administrative rules as well as actual practice in
implementation of the EITI. In addition to the Presidential Decrees that support EITI implementation
directly, as referred to under the assessment of requirement 1.1., the protection of individual and collective
freedoms is enshrined in articles 8, 10 and 12 of the Senegalese constitution. There is an NGO decree29
which according to some NGO leaders undermines the autonomy of CSO’s 30, but there is no evidence to
suggest that this limits the possibilities for CSO’s to participate freely and actively in the EITI process.
In practice, as indicated in for example the US Department of State Human Rights report for 2012,
individuals can generally criticize the government publicly or privately without reprisal, although there
have been reports of intimidation, harassment and limits on freedoms of speech, press and assembly. 31
These reports, however, seem to have been mostly related to the period leading up to and during the 2012
elections. 32 The International Secretariat has received confirmation from a number of stakeholders in
Senegal that they do not feel limited in any way to freely and actively participate in the EITI process.
c) The government has committed itself to ensuring that all parties can participate in the process – also in
line with its broader commitment to make its national reform programme an inclusive endeavour. As an
example, in its candidature application the government has confirmed that it will cover the transport and
accommodation costs when MSG members who do not live in the capital will attend National EITI
Committee meetings. Stakeholders cite the biggest challenges to be related to issues such as capacity
building, data disclosure, financing, communication and whether or not the process actually contributes to
improving the lives of citizens – not the question of whether or not parties are free to participate.
d) In the Secretariat’s view, there is no evidence to suggest that the government has taken actions resulting
in narrowing or restricting public debate in relation to implementation of the EITI. This is also reflected in
the strong and visible commitment by the government through its reform programme to strengthen
governance and increase transparency.
e) In the Secretariat’s view, there is no evidence to suggest that civil society and company representatives
cannot speak freely on transparency and natural resource governance issues, and that they cannot
communicate and cooperate with each other. This is confirmed by a number of stakeholders the
International Secretariat approached. All parties have been actively engaged in the design of the EITI
28
See The EITI Standard: http://eiti.org/document/standard,p. 41-42.
http://www.demarches.gouv.sn/textes/D-fixant-mod-interv-ong.pdf
30
http://www.icnl.org/research/trends/trends3-3.html#_ftn48
31
http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?year=2012&dlid=204160
32
http://www.amnesty.org/en/region/senegal/report-2013
29
10
Board Paper 25-6-D
process and in the run up to the candidature application.
f) In the Secretariat’s view, the process to establish the multi-stakeholder group has been inclusive. This is
confirmed by a number of stakeholders approached by the International Secretariat. A number of activities
and seminars have been organised to reach out to a variety of stakeholders including members of the press;
the national assembly; the private sector; civil society organisations; and government offices. There has
been a credible process to elect representatives: on26-28 September 2012, during a national seminar
involving all stakeholders, procedures were established and agreed for preparing the application; quotas
for stakeholders were determined; and a consultation process was elaborated. Following this meeting
Minister Aly Ngouille Ndiaye of Mines, Industry and SMEs formally invited stakeholders to propose
representatives for the MSG, following the quotas agreed. In the Secretariat’s view, stakeholders are
represented adequately and at senior level, and a legal basis for the MSG has been established.
g) In combination, Presidential Decree 2013-881 and the rules of procedure adopted by the MSG:
i) explain the role, responsibilities and rights of the MSG, including ensuring that members of the MSG have
the capacity to carry out their duties, the responsibility that they undertake outreach activities and that they
liaise with their constituency groups;
ii) define the duties of the MSG to create and approve work plans and reports, and to oversee the reporting
process and validation;
iii) explain the internal governance rules and procedures, including procedures for decision making,
changing group members, meetings and record-keeping.
The assurance that members of the MSG have the capacity to carry out their duties is not explicitly defined
in these documents, but in practice stakeholders seem to be represented at a sufficiently high level. In
combination, these documents provide a satisfactory framework and guiding document for the work of the
Multi-Stakeholder Group.
The multi-stakeholder group is required to maintain a current workplan, fully costed and aligned
with the reporting and Validation deadlines established by the EITI Board.
The workplan must:
a) set EITI implementation objectives that are linked to the EITI Principles and reflect national
priorities for the extractive industries. Multi-stakeholder groups are encouraged to explore
innovative approaches to extending EITI implementation to increase the comprehensiveness of
EITI reporting and public understanding of revenues and encourage high standards of
transparency and accountability in public life, government operations and in business;
b) reflect the results of consultations with key stakeholders, and be endorsed by the multistakeholder group;
c) include measurable and time bound activities to achieve the agreed objectives. The scope of EITI
implementation should be tailored to contribute to the desired objectives that have been
identified during the consultation process. The workplan must:
11
Board Paper 25-6-D
i.
ii.
iii.
assess and outline plans to address any potential capacity constraints in government
agencies, companies and civil society that may be an obstacle to effective EITI
implementation;
address the scope of EITI reporting, including plans for addressing technical aspects of
reporting, such as comprehensiveness and data reliability (Requirements 4 and 5); and
identify and outline plans to address any potential legal or regulatory obstacles to EITI
implementation, including, if applicable, any plans to incorporate the EITI Requirements
within national legislation or regulation.
d) identify domestic and external sources of funding and technical assistance where appropriate in
order to ensure timely implementation of the agreed workplan;
e) be made widely available to the public, for example published on the national EITI website and/or
other relevant ministry and agency websites, in print media or in places that are easily accessible to
the public;
f)
be reviewed and updated annually. In reviewing the workplan, the multi-stakeholder group should
consider extending the detail and scope of EITI reporting including addressing issues such as
revenue management and expenditure (3.7-3.8), transportation payments (4.1.f), discretionary
social expenditures (4.1.e), ad-hoc subnational transfers (4.2.e), beneficial ownership (3.11) and
contracts (3.12) 33. In accordance with requirement 1.3 (g)(viii), the multi-stakeholder group is
required to document its discussion and decisions;
g) include a timetable for implementation that is aligned with the EITI reporting and Validation
deadlines established by the EITI Board 34 and that takes into account administrative requirements
such as procurement processes and funding.
The MSG endorsed the workplan for 2013 – 2016 on 10 July 2013.
a) The workplan has set implementation objectives that reflect national priorities for the extractive
industries, as described in the national reform programme. Examples are strengthening possibilities for
citizens and parliament to monitor government revenues; increasing the availability of information and
strengthening debate on local and national level; and stimulating dialogue with and engagement of civil
society and industry in reform processes. The MSG has also defined a number of higher order goals in its
candidature application, such as improving management of extractive industries; increasing revenue;
improving supervision of the impact of mining activities on the environment and on local populations;
increasing accountability. There is, however, opportunity for clearer translation of these higher order goals
to the workplan.
b) The workplan is a reflection of consultations with key stakeholders. A number of workshops and
consultations were organised with stakeholders, to identify priorities for the EITI in Senegal. This stock
taking formed the basis of a draft workplan that was endorsed by the MSG on 10 July 2013.
c) The workplan includes activities to achieve the objectives, identifies capacity constraints and plans to
address these. Constraints concern, for example, Article 66 of the Mining code which defines a
confidentiality clause for information and documents received from holders of mining rights. Efforts are
already under way to remove this constraint. As for the reporting scope, initially the MSG charged the
Ministry of Energy and Mines to elaborate the scoping study included as an annex to the application. This
study proposes that the mining sector be covered from the prospecting phase through to the
commercialisation phase, including production. As such, operators holding prospecting permits,
33
34
See The EITI Standard for specifications of these issues: http://eiti.org/document/standard,p. 35-39.
See The EITI Standard, paragraph 1.6 a) EITI reporting deadlines, p. 15.
12
Board Paper 25-6-D
exploitation permits and mining or quarry concessions will all be included. In the case of mines
disaggregation will occur by operator and by phase; for quarries it has been decided to disaggregate by
geographical area or region.
However, as this exercise brought to the surface a number of difficulties in gathering the necessary
information, the MSG decided to hire an external expert to conduct a more detailed study to define the
scope and materiality of the reporting process. The MSG also took advantage of this opportunity to include
an analysis of the oil and gas sector in the ToR for this study, so as to assist in the decision on whether or not
to include this sector in the reporting scope. The results of this study are expected in October 2013.
d) The Government has indicated it will ensure that the work-plan is fully costed. The total cost is estimated
at between US$0.9m and US$1.1m, to which the government in Senegal has committed US$0.4m. The
World Bank has indicated that MDTF funding will be available when EITI Candidate Status is confirmed, and
discussions with the AfDB and CIDA for additional support are on-going.
e) The workplan has been made available to all members of the MSG, which have committed to widely
distributing the plan within their networks. Many, but not all, have followed up on this commitment. The
document has also been sent to technical and financial partners, and is published on the website of the
Ministry of Mines. 35
f) The MSG is charged with updating the workplan annually and in documenting its decisions.
g) The timetable is aligned with the reporting and validation deadlines established by the EITI Board. The
Secretariat does not foresee any difficulties in adhering to this timeframe.
35
http://www.dirmingeol.sn/accueil.php
13
Board Paper 25-6-D
Annex A – Senegal Candidature Application
Publicly available at:
•
Application: http://eiti.org/files/Senegal-EITI-application.pdf, with an English translation available
through http://eiti.org/files/EN_Candidature_Application_Form_EITI_Standard_Senegal.pdf
•
Annexes: http://eiti.org/files/Senegal%20-%20Annexes%20Application.zip
14
Outreach and Candidature Committee
1 October 2013
Board Paper 25-6-E
Candidature Assessment –
Ukraine
For decision
Recommendation:
The Outreach and Candidature Committee makes the following recommendation to the Board:
The EITI Board admits Ukraine as an EITI Candidate country on 17 October 2013. In accordance with the EITI Standard and
associated transitional arrangements, Ukraine is required to publish its first EITI Report within two years of becoming a
Candidate (by 17 October 2015). If the EITI Report is not published by this deadline, Ukraine will be suspended. Validation will
commence within three years of becoming a Candidate (by 17 October 2016).
The Board noted that the MSG plans to include the iron ore and coal sectors in the second EITI Report before commencing
Validation. The Board considers this approach sub-optimal given the significance of these industries, and emphasised that
compliance requires coverage of all material oil, gas and mining industries. Achieving compliance will require coverage of
these sectors unless the MSG can demonstrate that they are not material.
Board Paper 25-6-E
Candidature Assessment - Ukraine
CANDIDATURE ASSESSMENT – UKRAINE
Contents
1
Recommendation ............................................................................................................................................................................................ 2
2
Summary ............................................................................................................................................................................................................ 2
3
Background ....................................................................................................................................................................................................... 4
4
Candidature assessment ................................................................................................................................................................................ 6
EITI REQUIREMENT 1.1 .......................................................................................................................................................................................... 6
EITI REQUIREMENT 1.4 ........................................................................................................................................................................................11
Annexes ..................................................................................................................................................................................................................12
1
Recommendation
The Outreach and Candidature Committee makes the following recommendation to the Board:
The EITI Board admits Ukraine as an EITI Candidate country on 17 October 2013. In accordance with
the EITI Standard and associated transitional arrangements, Ukraine is required to publish its first
EITI Report within two years of becoming a Candidate (by 17 October 2015). If the EITI Report is not
published by this deadline, Ukraine will be suspended. Validation will commence within three years
of becoming a Candidate (by 17 October 2016).
The Board noted that the MSG plans to include the iron ore and coal sectors in the second EITI Report
before commencing Validation. The Board considers this approach sub-optimal given the importance
of these industries, and emphasised that compliance requires coverage of all material oil, gas and
mining industries. Achieving compliance will require coverage of these sectors unless the MSG can
demonstrate that they are not material.
2
Summary
The Secretariat received a Candidature application from Ukraine on 23 July 2013. The application is available on
the EITI website.1 The agreed procedures for assessing Candidature applications are set out in the EITI Standard.
The new EITI Standard specifies four “sign-up” requirements:
1.1 The government is required to issue an unequivocal public statement of its intention to implement the EITI.
1
http://eiti.org/Ukraine
2
Board Paper 25-6-E
1.2 The government is required to appoint a senior individual to lead on the implementation of the EITI.
1.3 The government is required to commit to work with civil society and companies, and establish a multistakeholder group to oversee the implementation of the EITI.
1.4 The multi-stakeholder group is required to maintain a current workplan, fully costed and aligned with the
reporting and Validation deadlines established by the EITI Board.
In accordance with agreed procedures, the application was assessed by the Outreach and Candidature Committee
based on an assessment prepared by the International Secretariat (see section 4, below). In addition to reviewing
the application, the Secretariat has sought comments from government, industry and CSO representatives at the
national level and stakeholders at the international level. The Secretariat visited Ukraine 23-25 September 2013,
together with Marinke van Riet and colleagues from the World Bank. The delegation met with the government,
companies, civil society and international partners, and participated in a multi stakeholder group meeting. The
firm commitment to the EITI process was reiterated by all parties.
A particular focus of discussions was the MSG’s proposal to exclude the coal and iron ore industries from the first
EITI Report. During the Secretariat’s visit to Kiev a background note on the coal sector was produced. The MSG it
agreed that work to facilitate inclusion of both the coal and iron ore sectors will start as soon as Ukraine becomes a
Candidature country, with the intention of including both sectors in the second EITI Report prior to undertaking
Validation. The Secretariat’s assessment is that this approach sub-optimal given the importance of these
industries. The Secretariat recommends that the Board emphasises that compliance requires coverage of all
material oil, gas and mining industries, and that achieving compliance will require coverage of these sectors
unless the MSG can demonstrate that they are not material.
The Secretariat’s assessment is that Ukraine has satisfied the requirements in order to be admitted as an
EITI Candidate.
The EITI Standard also outlines the requirements relating to reporting and Validation deadlines (see requirements
1.6 and 2.1):
Requirement 2.1: Implementing countries are required to produce their first EITI Report within 18 months of being
admitted as an EITI Candidate.
Requirement 1.6 a): If the EITI Report is not published by the required deadline, the country will be suspended.
Requirement 1.6 b): EITI Candidate countries are required to commence Validation within two and a half years of
becoming an EITI Candidate.
On 21 August the Board agreed the procedures for transitioning to the EITI Standard (Board Circular 157). It was
agreed that:
Any countries that apply for Candidature in 2013 (and are subsequently accepted as Candidates) will have
their reporting and Validation deadlines extended by six months to allow the MSG to make adjustments to
their workplans (i.e. required to publish an EITI Report within two years and conduct Validation within three
years, with their maximum candidature period extended accordingly). The standard deadlines will apply to
countries that lodge applications for Candidature after 1 January 2014.
Should Ukraine be admitted as a Candidate, this implies publication of the first EITI Report by 17 October 2015.
Validation will commence no later than 17 October 2016.
3
Board Paper 25-6-E
3
Background
Historically, Ukraine relied heavily on importing energy from other states in the Soviet Union. After the breakup of
the Union in 1991, Ukraine was left dependent on Russia for energy supplies. Its economy weakened over the
course of the next few years and the government suffered because of this dependence. For the past decade the
Ukrainian government has sought ways of diversifying its energy supply and making better use its domestic
resources.
Governments have committed to reforms, but have been less successful with implementation. There have been a
range of initiatives in partnership with international organisations, led by the Word Bank and the IMF. Today
Ukraine remains highly sensitive to external financial shocks.2
Extractive sector
Ukraine is trying to strengthen its economy by shifting away from the agricultural sector and developing the
higher value energy sector. According to the International Energy Agency, Ukraine has access to abundant mineral
resources, including energy resources – oil, gas, coal, hydro and biomass – and is a large energy market in its own
right. Ukraine has potential to substantially increase its production of natural gas and reduce demand, particularly
in the residential sector, to fully meet domestic demand by 2030 and thus entirely cut imports.3
The energy sector is highly inefficient and one of the key development challenges for the government.4 In recent
years the government of Ukraine has been trying to attract more foreign extractive companies to address lack of
capital investment in the sector and increase hydrocarbon production.5 Ukraine rates poorly on the World Bank’s
Doing Business Report and Transparency International’s Corruption Perception Index. Stakeholders contacted by the
EITI International Secretariat, noted that the coal sector in particular is affected by corruption and poor
management.
Technical assistance
The International Monetary Fund, European Union, the World Bank, Open Society Foundations6 and a number of
other international partners are providing support to various reform efforts in Ukraine. In 2008 the IMF signed a US
$16.4 billion loan7 to the government of Ukraine and provided them with an additional US $15.2 billion in 20108.
Financial support was aimed at rebuilding Ukrainian economy after the 2008 financial crisis.9 The government of
Ukraine requested an additional US $15 billion in April 2013 from the IMF. Discussions around this are still ongoing. The World Bank has also provided significant financial support.10
Political situation and civil society liberties
Reports from a number of international organisations suggest that civil society has limited freedom to operate in
Ukraine.11 The US Department of State writes in its 2011 Ukraine country report12:
See Country Overview: Ukraine (2013) by Economic and Political Intelligence Centre: http://www.edc.ca/EN/CountryInfo/Documents/ukraine.pdf
2
3
See the Executive Summary on key recommendations to Ukraine (2012) from the International Energy Agency:
http://www.iea.org/publications/freepublications/publication/UK_Summaryplus.pdf
See Ukraine Overview: http://www.worldbank.org/en/country/ukraine/overview
http://www.ukrainian-energy.com/en/news/show/oil_gas/details/654
6
http://www.opensocietyfoundations.org/
7
IMF (5.11.2008) IMF approves US$ 16.4 billion stand-by arrangement for Ukraine.
8
Bloomberg (29.07.2009) Ukraine secures new US$ 15.2 billion IMF bailout loan to cover budget deficit.
9
BBC News (16.07.2009) Ukraine’s economy ‘to shrink 15%
10
The World Bank (27.09.2012) The World Bank in Ukraine: 20 years of partnership.
11
See Human Rights Watch World Report (2013) Ukraine
4
5
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There were no reports that the government or its agents committed any politically motivated killings;
however, two persons died in police custody after allegedly being abused.
Human rights problems included reports of serious police abuse and deaths in custody, beatings, and
torture of detainees and prisoners, harsh conditions in prisons and detention facilities, arbitrary and
lengthy pre-trial detention, and an inefficient and corrupt judicial system. […]Corruption in government
and society was widespread. There were reports that the government's security service harassed and
intimidated civil society organizations. ….
Section 2: Respect for Civil Liberties:
Freedom of Speech: Following changes in government leadership after the presidential elections in 2010,
there were numerous reports that central authorities attempted to direct media content. There were also
reports of intimidation and violence against journalists by national and local officials.
Freedom of Press: Individuals could criticize the government publicly and privately, and independent and
international media were active and expressed a wide variety of opinions.
Censorship or Content Restrictions: Private media outlets generally operated free of direct state control or
interference; however, both independent and state-owned media increasingly demonstrated a tendency
toward self-censorship on matters that the government deemed sensitive. Although private newspapers
operated on a commercial basis, they often depended on their owners (political patrons or wealthy
businessmen with government connections) for revenue and did not enjoy editorial independence.
Section 4: Official Corruption and Government Transparency: The law provides criminal penalties for
official corruption; however, corruption was ineffectively prosecuted, and penalties were rarely imposed.
Officials, including high-ranking officials, often engaged in corrupt practices with impunity. [In April
2011], the president announced that the PGO (Prosecutor General’s Office) had opened more than 30
criminal cases on charges of embezzlement of state funds by members of the previous government. It is
however, alleged that these charges are politically motivated.
Publishing Restrictions: In previous (to 2011) years a variety of international organisations operated
without a strict government control, however, there were numerous complaints of government pressure
and intimidation since 2010.
A number of other organisations highlight sensitivity of human rights issues and the role of the civil society in
Ukraine, although the Secretariat has also been told during consultations that CSOs have played an important role
in the development of the freedom of speech and the introduction of many initiatives in the region (including the
EITI).
The Secretariat has assessed the environment for civil society participation in EITI in accordance with requirement
2 (see section 4 below).
12
See Country Reports on Human Rights Practices for 2012: Ukraine (US State Department)
http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?year=2012&dlid=204349#wrapper and
http://www.state.gov/documents/organization/160481.pdf, Sounding the Alarm Round 2: Protecting Democracy in Ukraine (Freedom House,
July 2012): http://www.freedomhouse.org/report/special-reports/sounding-alarm-round-2-protecting-democracy-ukraine; and Amnesty
International Annual Report 2013: Ukraine http://www.amnesty.org/en/region/ukraine/report-2013
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4
Candidature assessment
The government is required to issue an unequivocal public statement of its intention to implement the EITI.
The statement must be made by the head of state or government, or an appropriately delegated government representative.
Secretariat assessment
•
The government of Ukraine has made several unequivocal statements of the government’s intention to implement the
EITI, including Resolution No. 1098 on EITI implementation (attached to the application). The resolution was issued by
the Cabinet of Ministers on 30 September 2009. The resolution included a declaration by the Cabinet of Ministers of
Ukraine announcing the government’s intent to implement the EITI. The declaration was published in the Official Bulletin
of Ukraine on 23.10.2009, and in the Uriadovy Courier on 28.10.2009.
•
Public statements have been delivered by a number of senior government representatives.13
•
EITI implementation is a part of Ukraine’s Open Government Partnership action plan. The application includes a copy of
Resolution No. 514 on approving the OGP action plan. EITI implementation is point 12, out of 30. (Attached in the
application).
•
Commitment to EITI implementation was reiterated by senior government officials when the Head of the International
Secretariat Jonas Moberg visited Kiev 23-25 September 2013.
The government is required to appoint a senior individual to lead on the implementation of the EITI.
a) The appointee should have the confidence of all stakeholders
b) The appointee should have the authority and freedom to coordinate action on the EITI across relevant ministries
and agencies
c) The appointee should be able to mobilize resources for EITI implementation.
On 12 March 2012 the Cabinet of Ministers of Ukraine adopted Resolution no. 230 which appointed the Minister of Energy and
Coal Industry as the senior government representative to oversee the EITI implementation in its early phases. At the time, this
position was held by Yuriy Boiko14. Subsequent to this appointment, Minister Yuriy Boiko nominated Volodymyr Makukha,
then Deputy Minister of Energy and Coal Industry, to act as the Chair of the MSG (Order no. 785 issued on 10 October 2012,
attached to the application). Deputy Minister Volodymyr Makukha was replaced by Andrei Bondarenko in July 2013. Deputy
Minister of Energy and Coal Industry Andrei Bondarenko is the current Chair of the MSG. Although he has not yet chaired an
MSG meeting, there is no evidence to suggest that he does not have the confidence of all the stakeholders. The International
Secretariat has consulted civil society members and concluded that Mr. Bondarenko is committed to the EITI but has little
understanding of its process. Nonetheless, MSG members expressed their confidence in further work led by Andrei
Bondarenko. The Head of the International Secretariat Jonas Moberg attended an MSG meeting on 25 September and met
with Mr. Bondarenko. It can be confirmed that Mr. Bondarenko is committed and appears to have the confidence of all
stakeholders.
The current process and procedures throughout the preparations for EITI implementation demonstrate that the government
By former Minister of Fuel and Energy and current Vice Prime Minister of Ukraine Yuriy Boyko (11.10.2012), Prime Minister of Ukraine,
Mykola Azarov (29.11.2012), and by former Deputy Minister for Energy and Coal Industry Volodymyr Makukha on several occasions.
14
On 24 December 2012, Yuriy Boiko was appointed Vice Prime Minister of Ukraine. He was replaced by Eduard Stavytsky, current Minister
of Energy and Coal Industry.
13
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appointee has the sufficient freedom and authority to coordinate the EITI activities throughout the relevant ministries and
agencies. Establishing a National EITI Secretariat has been issue. It was discussed at the second MGS meeting on 30 October
2012, but it was not until the fifth MSG meeting on 22 March 2013XXX that the Ministry of Energy and Coal Industry is referred
to as a MSG Secretariat. MSG members contacted by the Secretariat expressed concern regarding the lack of funding for the
National Secretariat. The government has reportedly expressed reservations about formally establishing the secretariat until a
Candidature status is achieved.15 According to a follow up note that was sent to the Secretariat 30 August 2013, the functions
of the national secretariat are currently carried out by the Ministry of Energy and Coal Industry. While financing is a significant
obstacle to establishing a secretariat, representatives of the ministry are negotiating terms for approving an EITI expert
through the World Bank.
Head of Sector in the Ministry of Energy and Coal Industry, Larysa Mykyto is assigned as an executive secretary of the EITI
multi-stakeholder group and is a government contact throughout the EITI implementation.
The application demonstrates that there has been a close coordination with international donors for mobilisation of
additional resources for EITI implementation, where necessary.
EITI REQUIREMENT 1.3
The government is required to commit to work with civil society and companies, and establish a multi-stakeholder
group to oversee the implementation of the EITI.
a)
The government, companies and civil society must be fully, actively and effectively engaged in the EITI
process.
b) The government must ensure that there is an enabling environment for company and civil society
participation with regard to relevant laws, regulations, and administrative rules as well as actual practice in
implementation of the EITI. The fundamental rights of civil society and company representatives
substantively engaged in the EITI, including but not restricted to members of the multi-stakeholder group,
must be respected.
c)
The government must ensure that there are no obstacles to civil society or company participation in the
EITI process.
d) The government must refrain from actions which result in narrowing or restricting public debate in relation
to implementation of the EITI.
e)
f)
15
Stakeholders, including but not limited to members of the multi-stakeholder group:
i.
must be able to speak freely on transparency and natural resource governance issues;
ii.
must be substantially engaged in the design, implementation, monitoring and evaluation of the
EITI process, and ensure that it contributes to public debate;
iii.
must have the right to communicate and cooperate with each other; and
iv.
must be able to operate freely and express opinions about the EITI without restraint, coercion or
reprisal.
In establishing the multi-stakeholder group, the government must:
i.
ensure that the invitation to participate in the group is open and transparent;
ii.
ensure that stakeholders are adequately represented. This does not mean that they need to be
equally represented numerically. The multi-stakeholder group must comprise appropriate
stakeholders, including but not necessarily limited to: the private sector; civil society, including
independent civil society groups and other civil society such as the media and unions; and
relevant government entities which can also include parliamentarians. Each stakeholder group
must have the right to appoint its own representatives, bearing in mind the desirability of
pluralistic and diverse representation. The nomination process must be independent and free
from any suggestion of coercion. Civil society groups involved in the EITI as members of the multistakeholder group must be operationally, and in policy terms, independent of government and/or
companies;
Interviews were held with CSO members of the MSG, as well as the EITI representative in the Ministry of Energy and Coal Industry.
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iii.
ensure that senior government officials are represented on the multi-stakeholder group; and
iv.
consider establishing the legal basis of the group.
g) The multi-stakeholder group is required to agree clear public Terms of Reference (ToRs) for its work. The
ToRs should at a minimum include provisions on:
The role, responsibilities and rights of the multi-stakeholder group:
i.
Members of the multi-stakeholder group should have the capacity to carry out their duties.
ii.
The multi-stakeholder group should undertake effective outreach activities with civil society
groups and companies, including through communication such as media, website and letters,
informing stakeholders of the government’s commitment to implement the EITI, the central role of
companies and civil society, as well as widely disseminating the public information that results
from the EITI process such as the EITI Report.
iii.
Members of the multi-stakeholder group should liaise with their constituency groups.
Approval of workplans, EITI Reports and annual activity reports:
iv.
The multi-stakeholder group is required to approve annual workplans, the appointment of the
Independent Administrator, the Terms of Reference for the Independent Administrator, EITI
Reports and annual activity reports.
v.
The multi-stakeholder group should oversee the EITI reporting process and engage in Validation in
accordance with chapter 3.
Internal governance rules and procedures:
vi.
The EITI requires an inclusive decision-making process throughout implementation, with each
constituency being treated as a partner. Any member of the multi-stakeholder group has the right
to table an issue for discussion. The multi-stakeholder group should agree procedures for
nominating and changing multi-stakeholder group representatives, decision-making, the duration
of the mandate and the frequency of meetings. This should include ensuring that there is a
process for changing group members that respects the principles set out in Requirement 1.3(f).
vii.
There should be sufficient advance notice of meetings and timely circulation of documents prior
to their debate and proposed adoption.
viii.
The multi-stakeholder group must keep written records of its discussions and decisions.
a) The application demonstrates that government, companies and civil society are actively engaged in the EITI process. MSG
members often take part in the EITI outreach activities through the wider region, participating in conferences and training
seminars. (see (e) iv. below)
b) There is some evidence suggesting that there is a sufficiently enabling environment for companies and civil society
participation. Minutes from MSG meetings demonstrate active participation in discussions, and that issues raised are taken
into account and followed up. According to the application, the MSG has established that there are no legislative,
administrative, procedural and other obstructions for civil society participation in the MSG’s activities. It is noted that the
Energy Transparency Association, the CSO coalition, has established ‘an effective interaction with senior officials of the Ministry
of Energy and Coal Industry’ (p.12). That said, as noted in section 3, various international organisations have expressed
concerns regarding the full, independent, active and effective participation of civil society in Ukraine that warrant further
discussion and consultation with stakeholders.
The availability of financing for technical assistance, training and capacity building has been noted as a concern. The
government has committed to provide funding, and international donors have expressed a willingness to provide support.
Actions to overcome capacity constraints among civil society representatives have been included in the workplan and
discussions are underway on financing training and capacity building.
c) The Secretariat is not aware of any specific obstacles to civil society and/or company participation in the EITI process to
date. However further discussion and consultation with stakeholders is needed regarding the full, independent, active and
effective participation of civil society.
d) There is no evidence to suggest that the government has attempted to restrict or narrow public debate in relation to
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implementation of the EITI to date. CSO members highlighted that they are free to engage in public debate on the EITI,
however they noted that it often did not result in effective government involvement.
e)
i. Resolution no. 1098 on the decision to implement the EITI sets out the objectives of EITI implementation: ‘...to improve
management practices applied to in extractive industries, strengthen the struggle against corruption, ensure civil society
participation in monitoring receipts to the state budget from activities related to mining’ (annex x). The MSG ToR further
mandates the MSG to ensure that EITI reports are exhaustive, public, and that its conclusions encourage public discussions
(ToR, §5). Evidence suggests that to date all stakeholders can speak freely on topics related to the EITI Implementation at the
MSG meetings and outside. Civil Society confirmed with the International Secretariat that activities are carried out to raise
awareness about the EITI in Ukraine. Most of this is done electronically, through www.ua-energy.org and through regional
meetings.
ii. The application suggests that stakeholders are engaged in the design and implementation of the EITI process. The
application notes in particular civil society involvement in the development of the workplan, and in disseminating
information to the broader public about EITI implementation. Minutes from MSG meetings suggest that all stakeholders have
the rights and possibilities of raising their voice in influencing the EITI process. See also point (a) above.
Further outreach activities were planned July and August 2013, including an establishment of a working group to (1) study
the financing issues, (2) eliminate potential barriers to the EITI implementation, (3) prepare the necessary grounds for legal
framework, (4) hold capacity building and training activities, (5) design the EITI reporting template, and (6) prepare the first
EITI report.
iii. To date there do not appear to be any specific obstacles to communication and cooperation between the stakeholders.
iv. To date MSG members report that they have been able to express their opinions about the EITI freely. No concerns were
raised throughout the consultations held by the Secretariat with the MSG members. Representatives of civil society have
expressed their satisfaction with the EITI process, although slow at times, noting that CSOs have played an important part in
promoting the EITI in Ukraine. As noted above, further discussion and consultation with stakeholders is recommended
regarding the full, independent, active and effective participation of civil society.
Representatives of the Ukrainian EITI multi-stakeholder group regularly take part in the EITI activities throughout the wider
region. In the past they have taken part in the Eurasian Hub trainings, EITI Communications training in Cologne, and the EITI
Global Conference in Sydney. Representatives from Ukraine’s MSG are also expected to attend the EITI training seminar in
October in Astana.
f)
i. According to the application, the invitation to participate in the MSG was sent to all interested ministries and departments,
private and state-owned companies, including the American Chamber of Commerce European Business Association, and the
Energy Transparency Association. Each constituency was invited to nominate six members. Civil society representatives were
nominated by the resolution of the semi-annual General Meeting of the Energy Transparency Association to serve on the MSG
for a period of three years. Company representatives were nominated after consultations with the World Bank. There is a good
mix between foreign and Ukrainian companies - Shell Ukraine Exploration and Production I, Chevron Ukraine, TNK Ukraine,
PJSC Ukrtransgas, Ukrgasdobuvannya and Naftogas Ukrainy. It has been noted that an outreach campaign will be held to
inform and involve more local companies throughout the next few months.16
Following submissions from each of the constituencies, the MSG was formally established on 10 October 2012 through
Ministerial Order no.785.
ii. Available documentation suggests that there is a broad cross section representation of government, industry and civil
society groups within the MSG, and that stakeholders are adequately represented. All stakeholders are represented equally
within the MSG, with six representatives from each constituency. Government representation appears to include the key
ministries and agencies concerned with the extractive sector. Industry representation includes both private and state-owned
actors. Civil society representatives include journalists, research institutes and other NGOs operating both at national and
local levels. The Secretariat’s assessment is that the civil society groups involved in the EITI as members of the MSG appear to
be independent of government and industry. There is no evidence of coercion in the nomination process.
16
Letter to the Secretariat, 30 August 2013. Attached.
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iii. Senior government officials are represented in the MSG, mainly at Head of Department level.
iv. The EITI multi-stakeholder group is established through the Order of the Deputy Minister of Fuel and Energy on 10 October
2012. The MSG regulations state that the “MSG’s activities shall be governed by the Constitution and laws of Ukraine, deeds of
the President of Ukraine, Cabinet of Ministers of Ukraine, EITI Rules, MSG ToR and this Regulation.” (Resolution to establish
MSG on implementation of the Initiative).
g) The multi-stakeholder group has clear Terms of Reference (ToR) and regulations that are in line with EITI requirements
(attached). The MSG ToR and regulations were approved at the fourth meeting of the MSG on 26 December 2012. The
documents cover the necessary elements in terms of establishing a clear mandate for overseeing EITI implementation,
including the role, responsibilities and rights of the MSG and internal governance rules.
i. Based on the information provided, the Secretariat’s assessment is that members of the multi-stakeholder group have the
capacity to carry out their duties. In September 24-28 2012, members of the MSG participated in a four-day training session
that was conducted by the EITI Secretariat in collaboration with the GIZ and World Bank aimed at improving communications
around the EITI in implementing countries. A month later, on October 11, 2012 the Ministry of Energy and Coal Industry
organized an international conference “Ukraine on the way to joining the EITI” that was chaired by the Minister of Energy and
Coal Industry and hosted senior government officials, along with senior representatives of international organisations and
foreign governments (Attachment 13 in the application).
Ukrainian MSG member Olena Pavlenko addressed the stakeholders’ forum at Global Conference in Sydney, highlighting the
progress made to date in implementing the EITI (information available on the EITI website http://eiti.org/news/countryleaders-pledge-eitiThe application also notes that members of the Energy Transparency Association regularly participate in
trainings facilitated by the Eurasia Extractive Industries Knowledge Hub and the Eurasia Regional Transparency Network.
ii. Outreach to civil society is mainly carried out through the Energy Transparency Association. According to the application,
the NGO-members of the Association organised a number of conferences and roundtables, prepared materials and conducted
advocacy activities related to EITI in the period 2009-2012. Dixi group, one of the members, maintains an up to date website
with information about the energy sector and the EITI implementation in Ukraine.
iii. The Secretariat’s assessment is that members of the multi-stakeholder group are liaising with their constituency groups.
With regards to civil society, activities are mainly coordinated by the Energy Transparency Association, created in 2009. The
Association includes more than ten NGOs, including NGOs engaged in research and analysis, and NGOs focusing on extractive
sector issues. The Association has its own governing rules, and receives financial support from donors. Information about EITI
activities is published on the Association’s website. The Association also collaborates with international civil society groups
including PWYP, to which it was affiliated in early 2013, and Revenue Watch Institute.
iv. The ToR and regulations clearly state that the multi-stakeholder group is responsible for approving and revising the
workplan annually (ToR, §2), developing ToR for the Independent Administrator (ToR, §4), appointing the Independent
Administrator (ToR, §4), publishing annual EITI Reports (ToR, §5), and publish annual reports on EITI implementation activities
(Regulation, §6).
v. According to the ToR, the multi-stakeholder group is responsible for the EITI reporting process and the Validation (ToR, §.67).
vi. The MSG regulations include clear procedures for decision making. Decisions are taken by consensus, but the regulations
also stipulate the procedures for voting, if necessary. All documents related to the EITI implementation go through the MSG
for approval. Meetings are considered quorate if at least 12 members take part, with at least four from each constituency. MSG
meetings are convened as necessary, but at least four times as year, with the possibility for extraordinary meetings on
request. Any MSG member can submit proposals to the meeting agenda. Each member serves for a period of 3 years and may
withdraw earlier with a prior notification (1 month). In case of resignations, the outgoing MSG representative is tasked with
appointing his/hers replacement. The regulations include provisions on observers and alternates.
vii. MSG meetings are convened by the Chair of the multi-stakeholder group no later than 5 days prior to the meeting, with
the provision of the relevant documents no later than 3 days prior to the meeting.
viii. The MSG ToR state that ‘[the] MSG shall ensure due publicity of its activity. Information concerning meetings, discussions
and decisions taken shall be published on EITI’s specialized website, sites of the revenant authorities, or in any other
appropriate way’ (ToR, §10). The MSG regulations clearly set out the process for circulating and agreeing meeting minutes.
The International Secretariat has been provided with all the meeting minutes of the MSG (attached to the application).
The Secretariat has conducted further consultations regarding the full, independent, active and effective
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participation of civil society during its visit to Ukraine 23–25 September, including consultations with international
representatives of PWYP. The Secretariat’s assessment is that the requirement is met.
EITI REQUIREMENT 1.4
The multi-stakeholder group is required to maintain a current workplan, fully costed and aligned with the
reporting and Validation deadlines established by the EITI Board.
The workplan must:
a)
set EITI implementation objectives that are linked to the EITI Principles and reflect national priorities for the
extractive industries. Multi-stakeholder groups are encouraged to explore innovative approaches to
extending EITI implementation to increase the comprehensiveness of EITI reporting and public
understanding of revenues and encourage high standards of transparency and accountability in public life,
government operations and in business;
b) reflect the results of consultations with key stakeholders, and be endorsed by the multi-stakeholder group;
c)
include measurable and time bound activities to achieve the agreed objectives. The scope of EITI
implementation should be tailored to contribute to the desired objectives that have been identified during
the consultation process. The workplan must:
i.
assess and outline plans to address any potential capacity constraints in government agencies,
companies and civil society that may be an obstacle to effective EITI implementation;
ii.
address the scope of EITI reporting, including plans for addressing technical aspects of reporting,
such as comprehensiveness and data reliability (Requirements 4 and 5); and
iii.
identify and outline plans to address any potential legal or regulatory obstacles to EITI
implementation, including, if applicable, any plans to incorporate the EITI Requirements within
national legislation or regulation.
d) identify domestic and external sources of funding and technical assistance where appropriate in order to
ensure timely implementation of the agreed workplan;
e)
be made widely available to the public, for example published on the national EITI website and/or other
relevant ministry and agency websites, in print media or in places that are easily accessible to the public;
f)
be reviewed and updated annually. In reviewing the workplan, the multi-stakeholder group should
consider extending the detail and scope of EITI reporting including addressing issues such as revenue
management and expenditure (3.7-3.8), transportation payments (4.1.f), discretionary social expenditures
(4.1.e), ad-hoc subnational transfers (4.2.e), beneficial ownership (3.11) and contracts (3.12). In accordance
with requirement 1.3 (g)(viii), the multi-stakeholder group is required to document its discussion and
decisions; and
g) include a timetable for implementation that is aligned with the reporting and Validation deadlines
established by the EITI Board (see 1.6, below) and that takes into account administrative requirements such
as procurement processes and funding.
a) The MSG has developed an EITI workplan covering 2012-2015 (included in the application). According to the application,
the main objective is to increase transparency in revenues from the oil and gas sector, including transit revenues. It also
includes activities aimed at increasing the comprehensiveness of EITI reporting and public understanding. The workplan does
not include broader objectives reflecting the national priorities for the extractive industries. According to the application, a
working group will be established to consider the expansion of EITI activities to include issues such as expenditures, social
services, transfers to local budgets, beneficial law and contracts. During its visit to Ukraine 23–25 September, the Secretariat
confirmed that the working group has been formed and started exploring these issues.
The workplan is still formally considered a ‘draft’, due to Ministry of Finance disagreement with the section on government
sponsorship. The multi-stakeholder group has agreed and endorsed it but had to send it to the Ministry of Finance for an
approval of the government funding. During its visit to Ukraine 23–25 September, the Secretariat that international donor
funding has been identified and some government funds will be made available.
b) The discussion of the workplan started in the early phases of the EITI implementation and was based on a draft provided by
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the Ukrainian think tank “Dixi Group”. The workplan was endorsed at the last MSG meeting, on 22 April 2013.
c) The workplan includes measurable and time-bound activities. All the requirements related to the workplan appear to be
considered by the working group. The timing of some activities may need to be reviewed to get an optimal result.
i) The workplan includes training and capacity building activities aimed at addressing capacity constraints, including training
on the EITI Standard. A working group on ‘developing skills and expanding the EITI’ is tasked with considering this in more
detail.
ii) According to the application, the scope for the first EITI report will be limited to the oil and gas sector, including transit as
preliminary estimates show that oil and gas extraction and transit constitute the majority of the revenues from the extractive
industries. It is further noted that it is expected that the activity on coal extraction will be included in the scope of the next EITI
reporting period (2015-2017). An obstacle to including the coal industry in the first EITI report is the complexities of the sector
and the fact that it suffers from poor governance and lack of accurate data. CSO representatives within the MSG have been
campaigning for the inclusion of coal industry in the first EITI report, but has expressed understanding of the technical
difficulties of gathering data and the risk that it could potentially slow the EITI reporting. They have, therefore, agreed to it
being included in the subsequent EITI reports. During the Secretariat’s visit to Kiev a background note on the coal sector was
produced. The MSG agreed that work to facilitate inclusion of both the coal and iron ore sectors will start as soon as Ukraine
becomes a Candidature country, with the intention to include both sectors in the second EITI Report prior to Validation. The
application notes that a scoping study will be carried out for the purpose of establishing the revenue streams and reporting
entities in the oil, gas and transit sectors to be included in the first EITI report. There are no clear deadlines with regard to the
scoping study, although the workplan indicates that it will be carried out in 2013. It is costed with a possible funding from the
World Bank MDTF. A working group on EITI reporting will be established.
iii) The group has not yet carried out studies that could determine potential barriers to EITI implementation. Preliminary
analyses of the EITI implementation process indicate no legal barriers. Discussions regarding funding have progressed since
the application was lodged. The government has committed to provide funding, although the amount and timing has yet to
be confirmed. Several options for securing financial support from international donors are being explored, including
providing support to CSO training and capacity building. There were also signals from the company constituency about
willingness to contribute funds if necessary.
Other potential obstacles include limited access to information necessary for the preparation of the EITI reports, slow decision
making procedures within government and lack of public awareness about the EITI. Further studies to assess barriers to
implementation, including legal barriers, are planned to be carried out in July-August 2013. The Workplan item 3a indicates
that the next MSG meeting will form a working group to carry out this work. Their assessment is to be provided to the
Secretariat upon completion, most probably in September.
d) The workplan is fully costed, but funding sources have not yet been confirmed. The government has confirmed that it will
provide financing, although the amount and timing has not yet been confirmed. The World Bank has indicated their support
for EITI implementation, once a candidature status is obtained (letters attached). Subject to further discussions this may
include providing financial support for CSO training and capacity building.
e) The draft workplan is publically available at the official EITI website of the Ukranian Energy Association run by the CSO:
http://ua-energy.org/upload/files/EITI_broshure2013_eng.pdf
f) It is expected that the workplan will be reviewed annually in accordance with the EITI requirements and the ToR of the MSG.
g) The workplan includes the timetable for implementation that is aligned with the 2011 Rules and not the validation and
reporting deadlines of the new EITI Standard.
The Secretariat’s assessment is that the requirement is met, but recommends that the Board reiterates that
compliance requires coverage of all material oil, gas and mining industries unless the MSG can demonstrate that
these are not material.
Annexes
Publically available at: www.eiti.org/ukraine
12
Governance Committee
1 October 2013
Board Paper 25-7-A
TERMS OF REFERENCE OF THE
GOVERNANCE COMMITTEE
For decision
Recommendation:
It is recommended that the Board approves the terms of reference for the Governance Committee. These largely follow the
work practices adopted by the previous Committee.
Board Paper 25-7-A
Governance Committee: Terms of Reference
GOVERNANCE COMMITTEE: TERMS OF
REFERENCE
1
Recommendation
It is recommended that the Board approves the terms of reference for the Governance Committee. These largely follow the
work practices adopted by the previous committee.
2
Background
The Governance Committee’s brief mandate was agreed by the Board in Circular 67 1 March 2010: “On behalf of the EITI
Board, address issues relating to the Governance of the initiative, including voting procedures.” The Committee has been
inclined not to deal with implementation aspects of EITI Rules.
The Committee was initially set up at the Decision-Making Committee at the 1st EITI Board Meeting in New York 7 December
2006. The mandate of this sub-group was to “do further work on voting procedures”. The Committee’s name was changed to
Governance Committee at the 3rd EITI Board Meeting in Oslo, 27 September 2007, and its mandate has widened. The
Governance Committee has among other things developed the EITI Articles of Association during 2008/2009, and overseen
the Governance Review during 2010, issuing recommendations following this review.
3
Responsibilities
On behalf of the EITI Board, and in accordance with the EITI Rules, the Governance Committee shall consider and seek to
develop recommendations relating to the governance of the EITI, including:
o
o
o
o
o
o
o
o
o
4
Voting procedures, for Board decision-making, for Chair election and for constituency elections
Policy issues affecting the EITI Association
Proposed amendments of the Articles of Association
Rules and Procedures on management and operations of the EITI Association
Board member status, vacancies and liability
Governance issues concerning Members meetings
Goverance issues concerning Board Committees
Board meeting governance (procedures, observers).
Deal with cases where a country may change status because it is suspended or delisted, or because it has a
government whose recognition is disputed.
Committee Composition
The committee was established through Board Circular 154 on 9 July. The members are:
Countries
Mr Olivier BOVET
Mr Michel OKOKO
Mr Kåre STORMARK
Companies/ Investors
Mr Alan McLEAN
Ms Carine SMITH IHENACHO
2
Board Paper 25-7-A
Governance Committee: Terms of Reference
Mr Ian WOOD
Civil Society
Ms Natalya YANSEN
Ms Marinke VAN RIET
On 4 September 2013, the Governance Committee agreed to appoint Alan McLean as Chair of the Governance Committee.
The Committee will be supported by the EITI International Secretariat to fulfil its Terms of Reference. The contact points are
Jonas Moberg (jmoberg@eiti.org) and Souad Harvey (sharvey@eiti.org).
3
1 October 2013
Board Paper 25-7-B
DRAFT CODE OF CONDUCT
For decision
Summary
The Secretariat suggests that the Board reviews progress in developing a Code of Conduct for EITI Board Members
and other stakeholders to define what is expected of them in terms of fufilling their EITI-related duties. Subject to
further refinements following consultations with implementing countries, it is expected that the Governance
Committee will make a recommendation to the Board to approve the Code of Conduct via Board circular following
the Abidjan Board meeting
Board Paper 25-7-B
DRAFT Code of Conduct
DRAFT CODE OF CONDUCT
1
Introduction
The EITI Board’s Strategy Working Group has suggested that the EITI Association develops a Code of Conduct for
EITI Board Members and other stakeholders to define what is expected of them in terms of fulfilling their EITIrelated duties. A draft Code of Conduct is attached.
This Code of Conduct is mainly based on the Principles and the Criteria. In addition, it has been drafted within the
framework of the Articles of Association which deal with the way the EITI Association is managed. It would
provide greater detail of what kind of conduct is expected of those involved with the EITI. The draft code draws on
lessons from situations where the absence of a code of conduct has made it difficult to effectively deal with
perceived misconduct by Board Members and stakeholders.
Subject to the Board’s approval, the Code of Conduct would be made available in the EITI Rules, as an annex to the
EITI Articles of Association, as this would reinforce its status.
In developing this proposal, the EITI Secretariat has obtained advice from its legal counsel (this firm’s complete
advice can be obtained from the Secretariat).
2
Background
2.1 The need for an EITI Code of Conduct
In an organisation such as the EITI Association, which is based on fundamental ethical principles, it is important to
establish a common value base that is concrete and guiding on a personal level for those involved with the EITI.
Currently there is limited guidance in the EITI Rules and the Articles of Association.
2.2 Limited coverage by the current EITI Rules and Articles of Association
The expected behaviour of EITI stakeholders is not sufficiently defined in current EITI Rules and policy. The EITI
Rules set out “the requirements for countries implementing the EITI and companies as established by the EITI
Board” (p. 9) but do not contain behavioural rules on a personal level. The Articles of Association are more
instructive but they too are not adequately detailed and are limited to those involved with the permanent
institutions of the EITI Association such as the EITI Members and EITI Board Members.
2.2.1 EITI Principles and Criteria
The EITI Principles call “to increase transparency over payments and revenues in the extractives sector” (p. 10) and
the EITI Criteria set out the “minimum requirements” for implementing the EITI (p. 11).
EITI stakeholders should generally respect the Principles such as:
•
•
•
•
•
•
Proper management of natural resource wealth (Principle 1) for the benefit of a country’s citizens
(Principle 2)
Transparency by governments and companies (Principle 5)
Respect of contracts and laws in the achievement of greater transparency (Principle 6)
Accountability by government to all citizens (Principle 8)
Commitment to encouraging high standards of transparency and accountability in public life,
government operations and in business (Principle 9)
An inclusive approach in seeking solutions (Principle 12)
EITI Policy Note #6 deals with the “Participation of civil society”, setting out guidelines for and limits to behaviour
by civil society representatives and by other EITI stakeholders towards them.
1
Board Paper 25-7-B
2.2.2 EITI Articles of Association
The EITI Articles of Association regulate issues related to the EITI’s objectives, management, permanent bodies of
the EITI Association and the procedures of the EITI Association. On a personal level this means the Members of the
EITI Association, including the Board Members and EITI secretariat staff, are mentioned but there are no specific
requirements as to their behaviour. Wider EITI stakeholders are not mentioned. As for EITI Members and EITI Board
Members, the following requirements related to a stakeholders’ conduct apply:
Article 5.5 describes the cases when “the EITI Board may terminate any Member’s Membership of the EITI
Association”:
i) The Member, or the country or other entity the Member represents, does not comply with these Articles of
Association; or
ii) The Member, or the country or other entity the Member represents, has conducted his/her/its affairs in a way
considered prejudicial or contrary to the EITI Principles. 1
Article 13 requires that the EITI Board “shall act in the best interest of the EITI Association at all times” but this article
applies primarily to the EITI Board as such and not each Board Member. Also, it does not further define what would
be an action against these interests.
Article 15.6 covers conflicts of interest, but it only applies to EITI Board Members:
“A Board Member shall not vote in respect of any matter or arrangement in which he or she is directly interested,
or if there are any other special circumstances which are apt to impair confidence in his or her impartiality. A
Board Member shall declare such interests in writing to the EITI Board as soon as possible after he or she
becomes aware of the same. A Board Member shall not be counted in the quorum present when any resolution is
made about a matter which that Board Member is not entitled to vote upon.”
3
The scope of an EITI Code of Conduct
3.1.1 Definition of the term “code of conduct”
A code of conduct can be defined as “a set of rules outlining the responsibilities of or proper practices for an
individual, party or organisation” (http://en.wikipedia.org/wiki/Code_of_conduct).
A code of conduct generally guides not only the behaviour by individuals but the “decisions, procedures and
systems of an organization” (2007 International Good Practice Guidance, "Defining and Developing an Effective
Code of Conduct for Organizations", International Federation of Accountants).
3.1.2 Scope of an EITI Code of Conduct
The intention is that the code would apply to all those that hold an EITI office, including Members of the EITI
Association, EITI Board Members, staff at the EITI International Secretariat, staff at EITI national secretariats and
members of EITI multi-stakeholder groups (EITI Office Holders). By accepting to become an EITI Office Holder, the
person would commit to abide by the EITI Code of Conduct.
1
Some further, implicit guidance for assessing the behaviour of individual stakeholders could be found in EITI Policy Note #5. While dealing
with “Temporary suspension and delisting of EITI implementing countries”, it could also be indicative to determine whether due to the
actions of an individual “the EITI Principles and Criteria are not in a significant aspect adhered to and honoured …”.
2
Board Paper 25-7-B
3.1.3
Not directly legally binding
It is proposed to annex the Code of Conduct to the Articles of Association. The Code of Conduct will
not be directly legally binding but it will be a norm. This approach, e.g. having a Code of Conduct that
represents a norm or a standard and that will not be legally binding for EITI Office Holders, is in line with
common practice.
4
ANNEX – Draft Code of Conduct
Below is the first draft of an EITI Code of Conduct for consideration by the Governance Committee. The aim has
been to draft clear and concisee articles in order to ease understanding, implementation and compliance, and to
ensure easy management and enforcement. Furthermore, the EITI should avoid making the draft too detailed as
the Code of Conduct will be globally applicable.
EITI Association Code of Conduct (version [x] 2012)
1. Scope:
All EITI Board Members, their alternates, Members of the EITI Association, secretariat staff (national and
international), and members of multi-stakeholder groups (below referred to as “EITI Office Holders”) shall abide by
this Code of Conduct.
2. Personal behaviour, intergrity and values
EITI Office Holders shall observe the highest standards of integrity and ethical conduct and shall act with honesty
and propriety. The personal and professional conduct of EITI Office Holders should, at all times, command respect
and confidence in their status as Office Holders of an association that promotes an international standard for
transparency and accountability and should contribute to the good governance of the EITI.
EITI Office Holders should dedicate themselves to be leading by example and should represent the interests and
mission of the EITI in good faith and with honesty, integrity, due diligence and reasonable competence in a
manner that preserves and enhances public confidence in their integrity and the integrity of the EITI, and ensuring
that his or her association with the EITI remains in good standing at all times.
3. Compliance
EITI Office Holders shall discharge their duties to the EITI in compliance with applicable laws and regulations and
with the EITI Rules, interests and objectives.
4. Respect for others
EITI Office Holders will respect the dignity, EITI-related needs and private lives of others and exercise proper
authority and good judgment in their dealings with colleagues, members of the other EITI bodies, staff members,
the general public and anyone whom they come in contact with during the discharge of their duties to the EITI.
5. Professionalism
EITI Office Holders should perform his or her assigned duties in a professional and timely manner and should use
his or her best efforts to regularly participate in professional development activities.
6. Discrimination
EITI Office Holders shall not engage in or facilitate any discriminatory or harassing behaviour directed toward
anyone whom they come in contact with during the discharge of their duties to the EITI.
7. Confidentiality
3
Board Paper 25-7-B
EITI Office Holders shall not use any information that is provided in his or her role as EITI Office Holder and which
is not already in the public domain in any manner other than in furtherance of his or her duties. EITI Office Holders
continue to be bound by this obligation for two years after termination of their mandate.
8. Expenditure of EITI resources and use of EITI property
EITI Office Holders shall respect the principle of value-for-money and be responsible in the use of funds dedicated
to the EITI. No EITI Office Holder shall misuse EITI property or resources and will at all times keep EITI property
secure and not allow any person not appropriately authorised to have or use such property.
EITI Office Holders shall only bill at actual cost travel, operational or other costs related to the fulfilment of duty as
an EITI Office Holder. EITI Office Holders shall provide goods or services to the EITI as a paid vendor to the EITI only
after full disclosure to, and advance approval by the EITI Board or EITI multistakeholder group.
9. Conflict of interest and abuse of position
EITI Office Holders shall at all times act in the best interest of the EITI and not for personal or third-party gain or
financial enrichment.
EITI Office Holders shall avoid conflicts of interest. For the purposes of this code, a conflict of interest is a situation
or circumstance in which interests of EITI Office Holders influence or may influence the objective and impartial
performance of their official EITI duties. In this regard, private interests include any advantage for themselves, their
families or personal acquaintances.
EITI Office Holders finding themselves in such a situation must recuse themselves and inform the EITI Board or
multi-stakeholder group of such recusal. For EITI Board Members the rules established in Article 5.6 of the EITI
Articles of Association apply.
Specifically, EITI Office Holders shall follow these guidelines:
o
Avoid placing (and avoid the appearance of placing) one's own self-interest or any third-party
interest above that of the EITI; while the receipt of incidental personal or third-party benefit may
necessarily flow from certain EITI-related activities, such benefit must be merely incidental to the
primary benefit to the EITI and its purposes. Any per diems set, paid or obtained should be based on
reasonable actual costs and good international practice.
o
Refrain from overstepping the conferred powers. Office Holders shall not abuse EITI office by
improperly using the EITI Association or the EITI’s staff, services, equipment, resources, or property for
personal or third-party gain or pleasure; EITI Office Holders shall not represent to third parties that
their authority as an EITI Office Holder extends any further than that which it actually extends.
o
Do not engage in any outside business, professional, political or other activities that could, directly or
indirectly, materially adversely affect the EITI.
10. Gifts, trips and entertainment
EITI Office Holders shall not solicit or accept gifts, gratuities, free trips, honoraria, personal property, or any other
item of value from any person or entity that are intended to be, or that can reasonably be perceived to be, a direct
or indirect inducement to provide special treatment to such donor with respect to matters pertaining to the EITI.
Any offering or receiving of gifts, free trips or other compensation over the value of USD 100 directly or indirectly
related to the discharge of EITI responsibilities should be declared to the EITI Board or the respective EITI multistakeholder group (through the international or national secretariats). Any offering or receiving of gifts considered
excessive, should be refused. In case of doubt whether a gift is excessive, the EITI Secretariat or multistakeholder
group should be consulted. Should it be inappropriate to refuse an offering, notably because such refusal could
prove embarrassing to the donor, the gift is to be surrendered to the EITI Secretariat or the multistakeholder
group.
11. Implementation
4
Board Paper 25-7-B
The EITI Board, the respective EITI multi-stakeholder groups, the international or national secretariats are
responsible for making EITI Office Holders familiar with this Code of Conduct and for providing advice and, if
required, training on the interpretation and implementation thereof .
12. Reporting
EITI Office Holders with a concern related to the interpretation, implementation or potential violation of this Code
of Conduct shall bring such issues to the attention to the immediate EITI body. Where matters are brought to the
attention of the EITI Board, the Board will consider the circumstances and consider whether action is necessary in
accordance with the EITI Principles, the EITI Standard and the Articles of Association. Anybody who is
uncomfortable to raise any such concerns with the immediate EITI body, may bring their concerns to the attention
to the EITI Board through its Governance Committee.
***
5
Oslo 1 October 2013
Board Paper 25-8
DRAFT International Secretariat
2014 Workplan
For approval
Summary
The Board is asked to approve this draft workplan. It sets out the Secretariat’s priorities and
includes action points and indications of dedicated staff time.
Board Paper 25-8
Draft International Secretariat 2014 Workplan
Table of contents
1
Summary including priorities for 2014.......................................................................................................................................................... 3
2
Tasks and actions in 2014 .................................................................................................................................................................................4
3
2.1
Support to implementing countries ..................................................................................................................................................... 4
2.2
Outreach and strategic positioning of the EITI ................................................................................................................................... 6
2.3
Support to the EITI Board ......................................................................................................................................................................... 8
Management, funding and monitoring ........................................................................................................................................................ 9
3.1
Management of the International Secretariat .................................................................................................................................... 9
3.2
Funding of the International Secretariat .............................................................................................................................................. 9
3.3
Monitoring and evaluation ...................................................................................................................................................................... 9
Annex A - EITI International Secretariat Organisational Diagram .................................................................................................................11
Annex B - EITI International Secretariat Key Performance Indicators ..........................................................................................................12
Annex C - Summary of actions items ...................................................................................................................................................................16
Annex D - Summary of allocation of staff time ..................................................................................................................................................17
Board Paper 25-8
draft International Secretariat 2014 Workplan
DRAFT INTERNATIONAL SECRETARIAT 2014
WORKPLAN
1
Summary including priorities for 2014
In 2013, the EITI experienced many exciting developments, challenges and opportunities, both from an internal as well as
from an external perspective. The 2013 Standard was successfully adopted at the 6th Global EITI Conference in Sydney; many
countries have started to implement the EITI and many countries have announced their intention to do so.
The EITI has truly become an international standard, while upholding an impressively flexible, light-touch and collaborative
management and support structure. With countries such as Colombia, France, Italy, Myanmar, the UK and the US having
announced their intention to implement the EITI, and countries implementing (Australia) and announcing (Germany) an EITI
pilot, the EITI faces a growing challenge to maintain an efficient, effective and agile international initiative.
The International Secretariat will continue to focus work within two main priority areas:
Priority 1: Implementing the EITI Standard
From transparency to accountability
The EITI Standard entails changes in how countries approach the EITI: implementation covers a larger part of the so-called
extractive industries value chain; EITI reports are required to include more contextual information and there is a stronger
emphasis on defining the goals countries want to achieve through their EITI. To do this, and to understand the technical
requirements of the EITI Standard, implementing countries will need support. The Secretariat will provide this assistance
through in-country training and technical assistance, policy development, piloting innovative elements, sharing examples,
and active and broad coordination with other providers of technical assistance.
With a growing number of implementing countries, and a stronger focus on using the EITI as an instrument to strengthen
accountability and improve management of natural resources, there is also good reason for further widening and deepening
ownership of the EITI. Strengthening in-country ownership is also required to ensure that EITI Reports increasingly become
channels of discussion based on information incorporated in government systems, rather than warehouses of data. To ensure
sustainability, national EITIs will need to reach a critical mass of support and capacity in-country, able to maintain momentum
without depending on external support. This means, for example, strengthening engagement of political leaders, companies
and parliamentarians in countries. It also means strengthening the role of implementing country National Coordinators and
members of the EITI Board to provide leadership and carry the EITI on a national, regional and global level.
Priority 2: Strengthening the EITI as a global standard
Strategic positioning, outreach, network development and interoperability
Recent years has seen growing attention as well as new efforts to improve natural resource governance; itself partly as
consequence of EITI’s successes but also its limitations. To benefit from this growing attention, EITI needs to be visible,
understood, and perceived as meaningful. Furthermore, EITI needs to work closely with other efforts to learn from each other
and ensure complementarity. The growth of the available data from EITI reporting is a case in point. In order to promote
further use of this data, it is required that the data collection and presentation is of high quality, and is interoperable with data
from other sources. In addition, with the promise of more countries committing to implement the EITI Standard, and some
movement within many non-implementing countries towards implementation, an expansion of global awareness through
outreach activities is required.
The next chapter in this workplan sets out the tasks and actions the International Secretariat will perform in 2014. Finally,
chapter 3 explains the management, funding and monitoring of the International Secretariat. This workplan should be
considered in parallel with the EITI budget for 2014, which has been considered by the EITI Board’s Finance Committee.
3
Board Paper 25-8
2
Tasks and actions in 2014
2.1 Support to implementing countries
As of September 2013, 39 countries were implementing the EITI with 23 having achieved Compliant status. 34 countries had
published EITI Reports. Several Candidate countries were preparing to complete Validation. Some Candidate countries were
newer to the process, and others were experiencing political instability. As in previous years, the International Secretariat will
continue to provide guidance throughout the implementation process, including Validation.
2.1.1
Provide direct support to implementing countries
The EITI Standard contains a host of new elements. Countries need detailed guidance and support to integrate these new
elements into their reporting processes. Countries will also need assistance in defining their objectives. This will not be
without challenges. Some of the new elements in the Standard are fairly straightforward; others may be more difficult to
apply in certain countries because they may lack accommodating government structures and processes, or the necessary
legal framework. It will take some time for implementing countries to get accustomed to the requirements under the EITI
Standard, and to adapt their administrative systems and reporting processes accordingly. In addition, it may take a lot of
discussion and negotiations for a diverse group of stakeholders to agree to pursue a joint set of goals.
The International Secretariat will assist countries in this transition process and beyond by drafting guidance notes and model
documents; offering general and specialised training; functioning as a knowledge centre for good practices; conducting
reviews; and assisting countries in elaborating scoping studies and feasibility studies, terms of reference for scoping and
reconciliation. There will be specific attention to assisting countries in elaborating and adapting their workplans and
communication plans to reflect the increasingly important role of these documents in the implementation process. In
addition, with the EITI Standard, the Secretariat will not only oversee validation processes but also will also manage and
finance Validation 1.
Finally, some concepts may need to be further developed and tested to fully understand the implications they may have. To
do this, the Secretariat will engage with interested and involved parties to elaborate pilot exercises on issues such as
oil/commodity/NOC sales 2, beneficial ownership 3, “real-time” reporting, local content, and tax arrangements 4.
ACTION POINTS
•
•
•
•
2.1.2
Refine and develop guidance notes to guide MSGs in implementing the EITI Standard.
Support implementing countries in developing goals and workplans in-line with the EITI Standard, by reviewing
workplans and in-country missions.
Support piloting of innovative elements of EITI reporting, such as reconciliation of oil sales, real-time-reporting, and
beneficial ownership.
Support countries’ efforts to communicate and use EITI data by providing training and reviewing plans and
materials.
Coordinate support by international partners in implementing countries
Technical and financial assistance is available from a large number of partners in the EITI such as the World Bank, civil society
organisations, regional development banks, and multilateral and bilateral donors. The success of the EITI in most countries
relies on the engagement of all of these stakeholders, including companies. The Secretariat seeks to ensure coordination
between implementing countries and these assistance providers to ensure that countries needing technical assistance receive
it in a timely manner and that cooperation programmes are synchronised with and linked to these goals.
1
Note that following the transition arrangements, there will not be any Validations in 2014, and a projected 8
Validations in 2015.
2
EITI Requirement 4.1c
3
4
4
Board Paper 25-8
This is of particular importance with the EITI Standard, which enlarges the scope of reporting coverage, and which provides
many more opportunities for links to national reform efforts and to parallel training and support programmes by international
partners. Also, through a number of international commitments, for example by the G8, bilateral partnerships have been
created which increase the potential for mutual strengthening and enhance the call for further coordination. In addition to
technical assistance, adequate political support and coordination is needed not only to maintain momentum but in particular
in those countries where implementation processes experience difficulties and delays. The Secretariat will increasingly call on
the support of international partners to make use of their networks and their unique access to decision makers to help
overcome these challenges.
ACTION POINTS
•
•
2.1.3
Invite World Bank Task Team Leaders to accompany every in-country visit.
Share mission objectives and reporting with international partners providing support in-country.
Strengthen and increase the involvement of in-country actors
Thus far, the international EITI has benefited from the leadership of a relatively limited number of National Coordinators and
National EITI Champions. However, there is a need for broader and stronger ownership by a larger group of EITI stakeholders,
to ensure continuity and to help carry the EITI forward by providing the necessary critical mass and to shape the future of the
initiative:
•
•
•
•
•
•
National Coordinators and National Champions could play a stronger role on a national, regional and global level. This is
necessary to narrow the gap between a technical process and the objective of stimulating public debate. Required
activities include engaging in peer learning, capacity building including improving communications and outreach efforts;
and through involvement in outreach activities outside their own country.
National secretariats and MSGs are required to communicate with the public about the findings of their EITI, yet capacity
and interest to do so varies.
Ministers and Members of Parliament should increasingly put their political support for the implementation process into
practice, for example by using the EITI process in political debate; by ensuring the integration of EITI reporting in
government systems; by providing financial support; and by helping the MSG in addressing challenges in the
implementation process.
The industry constituencies in many implementing countries do see the additional work involved in EITI reporting, but
find it difficult to recognise the opportunities the EITI offers to address their concerns, and often do not provide active
momentum to the process. The Secretariat has developed an EITI Business Guide that contains advice on how companies
can maximise benefits and efficiency of their in-country EITI engagement.
In many implementing countries, supporting countries and institutions have representative offices that provide financial,
coordinating, analytical and monitoring capacity and support. This is, however, not the case in all implementing
countries.
As EITI reporting improves, civil society and other institutions such as universities, think tanks and media should be
engaged more in analysing, comparing and using data in order to hold leaders to account and to inform the national
debate about the management of natural resources. The EITI Secretariat and global partners can play a role to spur more
such engagement by highlighting findings from countries’ EITI processes in its available channels and by reaching out to
media directly, and indirectly, by making the data from EITI reports available on its global website.
ACTION POINTS
•
•
•
•
•
•
Organise regional meetings once a year with implementing countries presenting and sharing experiences of
challenges and successes.
Support industry EITI engagement by disseminating the EITI Business Guide and other guidance as needed.
Reach out to extractive companies operating in implementing countries to become EITI Supporting Companies.
Provide communications training to secretariats in countries, in particular in countries with new EITI programmes.
Identify countries with similar challenges and organise two or more twinning workshops.
Highlight findings from countries’ EITIs on the international EITI website, through media outreach and other
channels.
Resource requirements
5
Board Paper 25-8
Supporting implementing countries is anticipated to require ≈600% of one policy staff member’s time and 170% of one
administrative staff member’s time.
2.2 Outreach and strategic positioning of the EITI
Throughout the years, the EITI has helped in making proper management of revenues a key concept in discussions on
development and governance. The EITI itself has evolved to become a key player in these discussions, and aims to serve as a
central instrument to improve natural resource management. With the increasing number of actors engaged in this
discussion, and because of the expanding scope of the EITI, there is a growing necessity for positioning the EITI in this
landscape, and in connecting with these other actors. Also, the EITI as a body itself is growing and becoming more diversified,
with already 39 implementing countries and more on their way from every corner of the globe. The continuing active interest
from countries to join the global EITI movement needs to be accommodated, and all EITI stakeholders should be involved in
engaging an even larger, more inclusive, and more diverse group of supporters and implementers.
2.2.1
Outreach
The International Secretariat has an important role in enthusing countries to sign up to the EITI, following the criteria that the
Board has developed for prioritising outreach activities:
•
•
•
•
Risk of the resource curse – potentially high numbers of negatively affected people;
Strategic importance for the EITI, e.g., major emerging economy or particularly significant for the scope of the EITI;
Government commitment to the initiative - likelihood of effective implementation; and
Comparative advantage of the International Secretariat over other partner institutions.
Based on these criteria, the Outreach and Candidature Committee has recommended a number of priority outreach countries:
Australia, Brazil, Chile, Colombia, Egypt, Libya, Mexico, Myanmar, Papua New Guinea, The Philippines, South Africa, South
Sudan, Uganda and United States. Often, a great number of actors are involved in promoting the EITI in these countries and
the International Secretariat may need to provide direct and usually high level advocacy, coordinate the efforts of others and
encourage more peer and regional pressure.
In addition to these outreach priorities, sometimes national and international developments create a sudden and unexpected
interest for implementing the EITI, such as in Tunisia and Myanmar in 2012, or the UK, France and the Seychelles in 2013.
When this happens, the Secretariat will – in coordination with the Outreach and Candidature Committee – include these
countries in its outreach efforts, with an aim to continue and strengthen momentum and to coordinate assistance.
The International Secretariat aims to enlarge the broader EITI family by liaising with supporting countries, foundations and
international development institutions. It will support efforts by others to broaden the support by companies and
institutional investors.
ACTION POINTS
•
Develop and deliver targeted messages to priority outreach countries and other countries.
Outreach is anticipated to require ≈155% of one policy staff member’s time and 40% of one administrative staff member’s
time.
2.2.2
Strategic positioning and strengthening network links
The EITI operates in an environment that increasingly sees the emergence of new actors and complementary initiatives, be
they operating along different parts of the value chain, involving broader transparency efforts, or having alternative
approaches to increasing transparency. Examples are the Open Government Partnership, the Natural Resource Charter or
Australia’s Mining for Development. In addition, the G8, G20, OECD, UN and regional organisations are stepping up their
engagement and elaborate different ways in which to provide practical and political support.
The EITI should enjoy the benefits of this increasing global momentum, but it also needs to ensure that the EITI’s value and
strengths are articulated and understood. There is room for strengthened coordination and cooperation, to maximize the
6
Board Paper 25-8
benefits of this momentum and of the available support, for the benefit of countries facing challenges associated with natural
resource management. This means active outreach to the actors, organisations and initiatives mentioned, and capitalizing on
initiatives such as the bilateral partnerships started under the UK presidency of the G8.
ACTION POINTS
•
•
Engage with OGP, NRC, Mining for Development and other actors to ensure complementarity.
Ensure stronger international support of EITI, by working with amongst others the Australian presidency of G20.
Strategic positioning and strengthening network links is anticipated to require ≈40% of one policy staff member’s time
and 40% of one administrative staff member’s time.
2.2.3
Improving availability, accessibility and use of data from EITI reporting
While the main use and benefits from EITI reporting is within each country, the EITI has in recent years been mandated to
devote more attention to analysis of the EITI Reports themselves, and to develop a central repository of the data from the EITI
reports. The International Secretariat therefore has improved its capacity for analysing these reports as well as established a
database with data from the EITI reporting on its website, available at http://data.eiti.org. With the arrival of more
comprehensive EITI Reports adhering to the 2013 EITI Standard, this database will need considerable revisions in 2014. This
will need to be done in conjunction with the implementation of reporting templates.
The International Secretariat sees it as important also to improve the usage of the EITI data. In order for this to happen, the
data must be made available in an open and machine-readable format, but also to stimulate the “demand-side” by showing
how it can be used. This includes spurring development of tools that allow comparisons, visualisations, often referred to as
“apps”. Such “apps” should present the data in a more comprehensible manner, and allow users to manipulate the data to
make their own findings.
Further, improving the usage of the EITI data requires to partner with organisations that have already gained more experience
with such ‘open data’ such as Revenue Watch Institute, the World Bank Institute, EI Sourcebook, Open Knowledge
Foundation, IATI, Sunlight Foundation, JODI, IMF, and also companies such as developers of online cadastre systems.
ACTION POINTS
•
•
•
Improve data.eiti.org to capture additional information from EITI Reports as required by the 2013 EITI Standard.
Spur development of “apps” that show how EITI data can be used.
Partner with organisations that have more experience with open data.
Strategic positioning and strengthening network links is anticipated to require ≈120% of one policy staff member’s time
and 100% of one administrative staff member’s time.
2.2.4
Raising awareness, communicating with stakeholders and showing the results of the EITI
The International Secretariat will continue and strengthen its efforts to document and present results from EITI in countries.
This will include publishing stories, blog posts and research articles on the EITI website. In 2013 a dedicated section on the EITI
website for presenting impact from the EITI was developed.
The annual EITI flagship publication, previously known as the “progress report” will be launched early 2014 as the "Extractive
Transparency Report 2013". This will build on the previous progress report, yet with a stronger emphasis on the different ways
countries are using the EITI in their country.
As can be seen in its KPIs in Annex B, coverage in the media has continued to grow. The Secretariat’s media outreach includes
actively engaging with targeted media, handling incoming queries from the media, issuing news releases following important
news from the EITI, and contributing articles and op-ed to targeted publications. The EITI maintains a media database with
7
Board Paper 25-8
journalists covering the EITI. They receive regular as well as targeted updates. Already this database includes some national
media outlets, yet this should be further strengthened.
ACTION POINTS
•
•
Publish the "Extractive Transparency Report 2013".
Further strengthen media outreach, including target in-country media contacts.
Raising awareness, communicating with stakeholders and showing the results of the EITI is anticipated to require
≈110% of one policy staff member’s time and 20% of one administrative staff member’s time.
2.3 Support to the EITI Board
The International Secretariat will work with the Chair and the Board to prepare agendas, provide activity reports, oversee
translation of documents and make other practical arrangements for Board meetings. The Secretariat will organise at least
three EITI Board meetings in 2014 and provide the Board with the necessary support and documentation for decisions taken
both in Board meetings and through Board circulars. Considering the composition of the current EITI Board and its
Committees, this support will need to be provided in (three or) four of the working languages of the EITI. The International
Secretariat will assist the supporting country constituencies in particular to strengthen their internal coordination before
board meetings.
The Secretariat works with the Chair and the Board – mostly through its Committees and Working Groups 5 – to develop
policy proposals and recommendations. For 2014, the Secretariat will work with Board Committees on a number of tasks on
their respective agendas:
•
•
•
•
•
Outreach and Candidature Committee: to define priority outreach countries, and to elaborate and refine strategies for
outreach to specific countries.
Implementation Committee: on behalf of the EITI Board, the Implementation Committee oversees progress with
implementation of the EITI Standard, including reviewing Implementation Progress Reports, EITI Reports, and the impact
of the EITI.
Validation Committee: reviews validation reports and applications for extensions the validation deadlines, and reviews
and make recommendations on validation procedures.
Governance Committee: on behalf of the EITI board, address issues relating to the governance of the EITI.
Finance and Audit Committees: the strategic management of the EITI’s financial resources and monitoring the budget,
as well as reviewing the 2013 audit report. In particular, the Finance Committee will consider questions related to
financing validation and managing the carry-over.
ACTION POINTS
•
Organise three EITI Board meetings and provide support to the EITI Board, committees and working groups.
5
The Outreach and Candidature Committee, the Implementation Committee, the Validation Committee, the Governance
Committee, the Implementation Committee, the Rapid Response Committee, the Finance Committee, and the Audit Committee.
More information on the Committees can be found in their ToRs.
8
Board Paper 25-8
Support to the EITI Board is anticipated to require ≈210 % of one policy staff member’s time and 120 % of one
administrative staff member’s time.
3
Management, funding and monitoring
3.1 Management of the International Secretariat
The International Secretariat currently has 18 full time staff (including one staff member on secondment from Statoil, one
Staff member seconded by the Netherlands Ministry of Foreign Affairs and one consultant). Two part-time staff members
provide additional support: one assistant to the Chair (one day per week) and one part time senior advisor (see organisation
chart in Annex A and staff allocation to work areas in Annex D).
The staffing of the EITI International Secretariat was established at a time when there were far fewer implementing countries
and it has grown incrementally. Some countries need more intense support than was originally envisaged and in some cases
this support can be especially time-consuming due to the size and complexity of the country (e.g. Nigeria, DRC and
Indonesia). Furthermore, the Validation process has taken up more staff time than expected and the International Secretariat
undertakes more technical analysis than was originally envisaged. This coupled with the amount of work associated with the
priorities established for 2014 are expected to put the capacity of the International Secretariat under pressure. This will be
addressed in three ways:
•
The Secretariat will need expand its capacity. In 2014, to address data challenges and an increasing number of
implementing countries, the Secretariat plans to continue with recruiting 1-3 senior staff members.
•
The Secretariat will need implement a number of structural changes in how the Secretariat operates. This can mean
providing more practical training in implementing countries through staff exchanges and short embedded missions, or
by closer collaboration with national stakeholders to provide guidance and training.
•
The Secretariat will need do less in some cases. Following the transitional arrangements, no country is scheduled for
Validation in 2014.
3.2 Funding of the International Secretariat
The EITI’s funding strategy 6 recognises that the international management of the EITI enjoys a strong and diverse funding
base that enables it to meet its financial needs. It expects this funding base to continue to support the EITI. The Secretariat
will underline the importance of multi-year funding arrangements in its contacts with current and potential funders.
To execute this 2014 workplan, the Secretariat considers a budget of US$ 4.1m as necessary, as elaborated in the 2014 Budget
Proposal presented to the Board in a separate paper. The proposed 2014 budget is equal to the 2013 budget and though
there will be no EITI Global Conference held in 2013, other costs (implementation, outreach and salaries) are expected to
increase to cope with the support related to the new EITI Standard and associated dissemination activities. This will create an
increased workload and a need for increased staff capacity. With continued efforts by the Secretariat to widen the EITI funding
base, the existing commitments from supporting countries and companies, and a carry over from 2013 to 2014, the
Secretariat expects to have access to sufficient funding. The reserve of US$ 0.5m that can be called upon in extreme
circumstances provides further security.
3.3 Monitoring and evaluation
The EITI will continue to monitor its performance and impact to:
•
6
Benefit from experience.
Discussed at the 21st meeting of the EITI Board in Lusaka, October 2012.
9
Board Paper 25-8
•
Improve delivery, planning and allocating resources.
•
Demonstrate results.
The outcome indicators approved by the Board in 2010 are the key set of performance indicators that the International
Secretariat is committed to monitor. In addition, the Standard will set out clearer outputs of the country process for
monitoring and the Secretariat will explore the option of proposing a review to be conducted of the EITI, similar to the review
by Scanteam in 2010.
Management, funding and monitoring is anticipated to require ≈40% of one policy staff member’s time and 130% of one
administrative
10
EITI Board Paper 25-8
Annex A - EITI International Secretariat Organisational Diagram
11
Annex B - EITI International Secretariat Key Performance Indicators
Note: These indicators were approved by the Board in 2010 (see Board Circular No. 75).
Part I. Outcome Indicators
1)
2)
3)
4)
No. of compliant countries (2)
No. of implementing countries (2)
No. of supporting companies (2)
No. of supporting investors (2)
2007
2008
2009
2010
2011
2012
2013
2013
2014
Actual
Actual
Actual
Actual
Actual
Actual
Target
Actual (1)
Target
N/A
15
37
N/A
N/A
23
37
USD14trm
2
29
41
USD16trm
5
33
52
84
12
35
60
90
16
37
76
90
27
47
75
95
23
39
81
96
30
45
85
96
10
N/A
12
N/A
16
2
17
17
18
27
18
31
18
41
18
39
-40
5,300
9
1031
6,000
14
1231
8,700
12
1532
10,140
25
2200
12,950
17
1740 (8)
15,600
20
2020
16,800
25
27000
22,800
22
1870
30,000
N/A (3)
2700
N/A
N/A
1700
2000
N/A (10)
3100
3000
5700
6700
19(5)
41%
N/A
7
33%
N/A
17
74%
N/A
10
34%
N/A
21
58% (9)
N/A
40
86.4%
N/A
35
97%
N/A
26
87.1%
776
30
97%
800
(before 2010 measured in assets under management)
5)
6)
No. of supporting countries (2)
No. of countries that have submitted final
Validation reports (2)
7) Visits to EITI website (per month)
8) Articles citing EITI in selected media (per year) (3)
9) References of EITI in, tracked by Factiva.com (per
year) (4)
10) Subscribers to EITI’s newsletter (2)
11) Reporting
• No. of EITI reports (fiscal periods)
• % of implementing countries reporting
• Companies participation (7)
(1) Until 15 September 2013.
(2) Cumulative.
(3) Measures articles in Financial Times, The Economist, Le Monde, Le Figaro. Indicator depreciated from 2014 since growth of digital-only articles/blogs is making it difficult to find meaningful figures that can be compared year-over-year.
(4) Include references to “EITI” on English sites and “ITIE” on French sites.
(5) Cumulative 2003-2007.
(6) It is expected that reports become an annual exercise thereafter.
(7) Cumulative number of companies that have participated in EITI Reports published during the year.
(8) The service provided has changed their statistics models. 2011 and 2012 figures are not comparable to previous years.
(9) 31 implementing countries were expected to publish reports. (The calculations exclude Yemen and Madagascar that were suspended; and new candidate countries, Trinidad and Tobago and Guatemala).
(10) Data not available due to change of service provider.
Part II. Agency effectiveness indicators
12
Agency effectiveness
(Resources)
2010
(USD)
%
2011
(USD)
%
2012
(USD)
%
Support to implementing countries
678 383
22
1 106 284
24
1 196 831
29
500 696
15
Outreach activities
201 080
7
283 732
6
363 850
9
195 785
6
Board meetings and Chairman support 776 843
26
617 627
13
582 930
14
273 815
8.5
Rel. Stakeholders (Conference, NCs)
312 367
10
1 037 750
22
326 493
8
1 344 806
42
Rel. Companies and Investors
68 855
2
94 770
2
21 678
1
11 740
.5
Communication
356 903
12
547 964
12
454 976
11
364 262
11
Training
18 319
1
52 841
1
68 824
2
30 614
1
Management and administration
608 153
20
931 253
20
1 060 642
26
520 366
16
*January-June 2013
2013
(USD) *
%
Outputs
2010
2011
2012
2013
7
13
Website & Publications
News items
51
71
45
55
Tweets
72
202
111
540
Blogs
8
19
13
18
3
5
5
6
Regular publications
25
21
23
24
Videos
0
5
0
1 + 14
Progress report
1
2
0
1
Validations reports reviewed
15
10
4
8
Newsletter
8
Secretariat Reviews
Reconciliation reports reviewed
5
8
10
21
27
26
Donors roundtables
1
1
1
1
National coordinators meeting
1
0
1
1
Board meetings
4
4
3
3
People trained
150
180
170
50
Implementing
26
25
28
35
Outreach
7
17
15
15
No of EITI Reports (fiscal periods)
10
21
40
26
No of EITI Reports (disaggregated)
6
9
4
22
Regularity of EITI disclosure
34 %
58 %
51%
Meetings
9
Countries visited
Disclosure of Revenues
7
January- September 2013.
Measurement to be removed in next year’s work plan
8
Fiscal periods
9
Including 25th Board Meeting
8
14
Companies participating in reporting
10
10
N/A
N/A
Cumulative number of companies that have participated in EITI Reports published during the year
N/A
776
15
Annex C - Summary of actions items
16
Annex D - Summary of allocation of staff time
Policy Staff
Administrative
Moberg
Rich
100%
100%
Bartlett
100%
Paris
100%
Bittiger
100%
Biesterbos
Rogan
Kråkenes
Balde
Aamot
Kanyoni
Vacancy*
Vacancy*
Senior Advisers
Reitmaier
Total
(Staff years)
100%
100%
100%
100%
100%
50%
100%
100%
Krogsund
Andreasen
Harvey
Bishop
Spit
Johansen
Kasimova
100%
100%
100%
20%
100%
100%
100%
25%
12.75
6.20
18.95
Workplan Element
Supporting to implementing countries
Outreach and strategic positioning of the EITI
Strategic positioning and strengthening network
links
Improving availability, accessibility and use of data
from EITI reporting
Raising awareness, communicating with
stakeholders and showing the results of the EITI
Support to the EITI Board
Management, funding and monitoring
Total
Administrativ
Policy Staff e
Total
600%
170%
770%
155%
40%
195%
40%
40%
80%
120%
100%
220%
110%
210%
40%
1275%
20%
120%
130%
620%
130%
330%
170%
1895%
17
TITTLE
Board Paper 25-9-A
Financial update January-June 2013
For information
1
Contents
2
Summary .................................................................................................................................................................................... 1
3
Revenue January to June 2013 .............................................................................................................................................. 1
4
Outstanding and foreseen revenue for July – December 2013 ...................................................................................... 3
5
Expenditure January – June 2013 ......................................................................................................................................... 5
6
July – December activities and 2013 outlook..................................................................................................................... 6
6.1
Staff updates .................................................................................................................................................................... 6
Board Paper 25-9-A
Financial update: January-June 2013
EITI ACCOUNTS JANUARY – JUNE 2013
2
Summary
This paper presents the financial status of the Secretariat for the period January-June 2013.
Table 1: Revenue & Expenditure January – June 2013
Revenue and Expenditure January - June (US $) 1
(2013 budget: 4 075 000)
Revenue
Expenditure
Carry over from 2012 (including reserve)
2 152 945
2013 revenue including parallel funding
4 060 304 2013 expenditure
3 227 869
TOTAL
6 213 245
3 227 869
Bank Balance as at 30 June 2013 (excluding reserve)
2 485 380
Reserve
500 000
Bank Balance as at 30 June 2013 (including reserve)
2 985 380
The above table shows that:
1. As at 30 June 2013, the Secretariat had a bank balance of almost US $3m of which US $0.5m was the
reserve.
2. The Secretariat received US $4m in funding in the period January – June 2013. This includes US $0.4m
received in parallel funding (see Table 2 below).
3. Expenditure of US $3.2m was incurred in the period January – June 2013. Even though this amount
represents 79% of the expected expenditure for the whole of 2013, spending patterns appear to be on
track, as explained further below.
Additional financial support to the amount of US $1.76m is currently outstanding and foreseen to be received
during the period July – December 2013. Foreseen expenditure for this period amounts to US $1.67m.
3
Revenue January to June 2013
The table below sets out the revenue of the EITI Secretariat, broken down by constituency, in the period January –
June 2013.
1
Exchange rate 1US$=NOK 5.8 (Source: http://www.xe.com/currencytables)
1
Board Paper 25-9-A
Table 2: Revenue January to June 2013
Revenue Received 1 January - 30 June 2013
Name
Currency
received
Amount NOK Amount US $
Governments, Civil Society & International Dev. Agencies
AusAid 2
€ 779 300,00
5 924 138,60
1 021 403
Natural Resources Canada
CAD$45 000
254 678
43 910
DKK 1 500 000
1 526 150
263 129
DFID (UK)
£200 000
1 790 400
308 690
MFA Finland
€ 500 000
3 718 230
641 074
55 149
9 508
13 268 745
2 287 715
MFA Denmark
KFW Bankengruppe
$10 000
Total revenue from Govt's, CSO and Int. Dev. Agencies
Companies
Oil & Gas
BG International
$60 000
344 414
59 382
BP International Ltd.
$60 000
330 025
56 901
ConocoPhillips
$60 000
342 893
59 119
ENI SPA
$60 000
341 509
58 881
Exxon Mobil Corporation – PTP
$60 000
326 368
56 270
Galp Energia S A
$10 000
54 983
9 480
Hess Corporation
$60 000
332 067
57 253
Kosmos Energy LLC
$10 000
54 021
9 314
Lundin Petroleum
$35 000
194 635
33 558
Mærsk Oil
$60 000
334 202
57 621
Oil Search PNG
$35 000
192 677
33 220
Pacific Stratus
$35 000
198 906
34 294
Petrobras
$60 000
342 953
59 130
Shell International
$60 000
330 770
57 029
TOTAL SA
$60 000
340 838
58 765
Woodside (2012+2013)
$120 000
663 692
114 430
4 724 952
814 647
Total revenue from Oil & Gas
Mineral & Mining
Arcelor Mittal (2012)
$90 000
338 053
58 285
Dundee Precious Metal
$10 000
55 709
9 605
ERAMET
$20 000
110 450
19 043
ICMM
£260 000
2 228 325
384 194
Impala Platinum Ltd.
$10 000
57 004
9 828
Kinross Gold
$50 000
289 775
49 961
Paladin Energy Ltd.
$5 000
29 080
5 014
RWE Aktiengesellschaft
$35 000
194 023
33 452
Tata Steel CI
$4 000
21 509
3 709
3 323 928
573 091
Total revenue from Mineral & Mining
2
The EITI Secretariat received AUS $1m (€779 300) as additional grants for the activities of the Secretariat in 2013. This was in addition to
2013 funding that was paid out in 2012. Originally foreseen to be classified as parallel funding, this grant was later marked as regular
support for the EITI International Management.
2
Board Paper 25-9-A
Institutional Investors
Allianz Global Investors
$2 000
11 653
2 009
Canada Pension Plan
$2 000
11 422
1 969
$500
2 705
466
NAMF Mauritius
$2 000
11 027
1 901
OPSEU Pension Trust
$1 500
8 883
1 532
SNS Reaal NV
$2 000
10 842
1 869
56 532
9 747
8 105 412
1 397 485
21 374 157
3 685 199
2 175 608
375 105
23 549 765
4 060 304
Ethos - Foundation Suisse
Total revenue from Institutional Investors
Total revenue from Companies
Total revenue received
Total parallel funding received
Total revenue including parallel funding
Parallel funding
In addition to the funds received to support the EITI International Management, a number of parties choose to
provide parallel financial support to a host of events and activities. These may be events and activities that are
foreseen in the regular budget of the EITI International Management, but are found to be of great particular
importance to certain supporters, such as the Conference or specific meetings of the EITI Board. These may also be
activities that are not foreseen in the budget, but provide ad-hoc and one-time strategic opportunities to, for
example, leverage partnerships or stimulate innovation.
The table below shows parallel funding received in the period January - June 2013.
Table 3: Parallel funding January – June 2013
Name
Parallel Funding (communication, Conference & Board Meeting) - 2013
NOK
Amount received
DFID (UK) - Open Data Communications Programme
US $
£100 000
875 200
150 897
African Development Bank (2012 Lusaka Board Meeting)
$10 000
54 390
9 378
BHP Billiton (Conference)
$200 000
1 159 400
199 896
Rio Tinto (Conference)
$15 000
86 618
14 934
2 175 608
375 105
Total parallel funding received 2013
4
3
Outstanding and foreseen revenue for July – December 2013
Table 4 shows the list of governments, companies and institutional investors from which revenue for 2013 is still
outstanding adding up to US $1.7m. This is based on on-going or expected funding agreements with supporting
countries and likely contributions from companies. If all expected revenue is received in 2013 then the Secretariat
will be on target to meet the budget figures. Reminders will be sent out in August 2013.
3
Covering the hackathon and #followthedata events in London and Sydney to unlock the power of EITI data
3
Board Paper 25-9-A
Table 4: List of outstanding foreseen funding July – December 2013
Outstanding Funding 2013 (tentative)
Receiving currency
Name
ATP Denmark
US$
$2 000
2 000
€190 000
241 000
Centera Gold Inc.
$10 000
10 000
Chevron
$60 000
60 000
ConoccoPhillips
$60 000
60 000
DONG E P
$10 000
10 000
$2 500
2 500
GDF Suez
$20 000
20 000
Glencore
$60 000
60 000
KOGAS
$10 000
10 000
London Mining PLC
$10 000
10 000
Marathon Oil
$60 000
60 000
$250 000
250 000
NOK 2 500 000
430 000
MFA Italy
€ 50 000
365 000
Noble Energy Inc.
$60 000
60 000
Norsk Hydro
$10 000
10 000
Oki Tedi Mining Ltd.
$10 000
10 000
Repsol
$10 000
10 000
€ 400
500
Talas Copper Gold
$10 000
10 000
Talisman Energy
$60 000
60 000
Timor Gap Gas
$10 000
10 000
BMZ - Germany
F&C Management
MFA - Netherlands
MFA - Norway
Stichting Ned. Inst. Int.
Total US$
1 761 000
4
Board Paper 25-9-A
5
5
Expenditure January – June 2013
The table below sets out the expenditure of the EITI Secretariat in the period January to June 2013. The Secretariat
is pleased to report that the recurrent expenses (salaries, staff costs, and Chair’s support) of the Secretariat have
remained steady and on target in the first half of 2013.
Table 5: Expenditure January-June 2013
Expenditure January-June 2013
Description of
costs
Actual 2012
Jan - Jun 2013
Budget 2013
US$
US$
US$
% of budget
Foreseen 4
Comments
US$
Many activities foreseen in Q3 and Q4 on
disseminating the Standard (see transition
paper)
On track – some outreach activities planned
(see outreach activity paper)
On track, slight overspend foreseen
depending on location and addition of
translations in Spanish. Abidjan is proposed.
Overspend explained (see comments on
AusAid contribution).
Overspend explained (see comments on UK
funded programme)
Implementation
199 607
42 818
250 000
17 %
200 000
Outreach
168 741
78 380
150 000
52 %
70 000
Board Meetings
496 215
227 596
300 000
76 %
75 000
Conference
261 457
1 286 104 5
500 000
257 %
0
Communications
173 152
235 167 6
150 000
157 %
10 000
34 747
10 998
50 000
22 %
10 000
Slight underspend foreseen
168 062
44 938
150 000
30 %
80 000
On track (includes Jurgen and John salaries)
1 779 235
1 039 994
2 100 000
50 %
1 060 006
Other Staff costs
173 435
81 980
125 000
66 %
50 000
On track
Office Expenses
562 031
179 894
300 000
60 %
100 000
On track
4 016 682
3 227 869
4 075 000
79 %
1 655 006
Chairman’s
Support
Project
Consultants
Salary
Recurring costs, on track (includes HR
Manager salary)
Exceptional costs
None foreseen
Total Budgeted
expenses
Slight underspend, when taking conference
and UK funded programme into account 7
The table above shows that as at 30 June, the Secretariat had spent 79% of the annual budget amount with the
highest budget lines related to conference and communications costs. These included special items that were not
expected to be funded through the budget:
•
Much of the Conference costs were originally scheduled to be covered separately, through a parallel AUS
$1 million contribution from the Australian government (AusAid). Ultimately, however, this Australian
contribution was channelled through the regular budget of the EITI International Management, which
meant that the full Conference costs were also moved under this regular budget.
This column only includes recurrent costs such as salaries and other staff costs and the proposed Abidjan Board meeting. The comments
column explains other foreseen activities.
4
This overspend reflects that preference by AusAid to channel their support to the Conference through an unallocated grant to the
Secretariat. They provided AUS $1m (€ 779 300) to the Secretariat budget ensuring sufficient funds for the Conference but that it did not
come, as expected, through parallel funding.
5
6
7
This reflects the £100k grant from DFID to cover the Open Data Programme for hackathon and #followthedata events.
This reflects the added costs for communication and the Conference for which parallel funding was received
Board Paper 25-9-A
•
The Open Data Communications Programme which DFID UK requested to be channelled through the EITI
budget (£100,000).
The table includes a column on foreseen expenditure. Whilst there are many activities planned for the second half
of 2013, especially on missions and training to roll out the new Standard, which are explained in the comments
column, the foreseen column only includes recurrent costs such as salaries and other staff costs and the proposed
Board meeting in Abidjan.
Taking all this into consideration, expenditure for 2013 can be considered to be on track.
The Board meeting costs in Sydney were relatively low as many expenses (travel, accommodation and visa) were
included in Conference costs.
6
July – December activities and 2013 outlook
As mentioned in the report for the first quarter of 2013, June – December will be busy months for implementation
visits in Asia, Africa, Latin America and the Middle East.
The 25th EITI Board meeting is scheduled to be held in October 2013. Abidjan has been suggested.
7
Staff updates
There have been a number of staff changes in the first half of 2013 as below, but these are of negligible budgetary
impact.
1. Chantal Spit, Conference Manager, has accepted the position of Human Resource Manager effective from
1 July 2013.
2. Jürgen Reitmaier, EITI Senior Advisor, has agreed to work up to eight days per month (from the present
four days), including taking on country management for Tanzania and Mozambique and outreach lead on
several countries in the region, plus Germany.
3. Tim Bittiger, Sam Bartlett and Anders Kråkenes will be on paternity leave for either part or all of 2013. No
additional staff will be employed during their absence.
6
Oslo, 27 August 2013
Board Paper 25-9-B
2014 EITI BUDGET PROPOSAL
For decision
Recommendation
The Finance Committee recommends that the Board approves a 2014 Budget of US $4.1m. The
proposed Budget is equal to the 2013 budget and though there will be no EITI Global Conference
held in 2014, other costs (implementation, outreach and salaries) are expected to increase.
Board Paper 25-9-B
2014 EITI Budget Proposal
Table of Contents
1
Background ........................................................................................................................ 2
2
Proposed 2014 Budget ....................................................................................................... 2
Table 1: EITI Budget proposal 2014 in US $ ............................................................................................... 3
Table 2: Revenue Jan 2008 – Jun 2013 in US $ ........................................................................................ 4
1
Background
The Finance Committee has reviewed projections of both revenues and expenditures with the Secretariat
and is confident that they are well-founded. The proposed 2014 Budget is contingent on the Board’s
approval of the 2014 Workplan. The Budget cannot be considered and approved in isolation, as the
activities are set out in the Workplan.
With continued efforts by the Secretariat to widen the EITI funding base, the existing commitments from
supporting countries and companies, and an expected carry-over from 2013 to 2014, the Secretariat
expects to have access to sufficient funding to fully execute the 2014 Workplan.
The reserve of US $0.5m that can be called upon when needed contributes towards financial sustainability.
2
Proposed 2014 Budget
The Secretariat considers a budget of US $4.1m as necessary and adequate to execute its mandate as
defined in the EITI Articles of Association and in the draft 2014 Workplan. This means that the 2014 Budget
will be equal to that of 2013. The Secretariat foresees increased expenditure for salaries, outreach,
implementation, Board meetings and communication. Conference expenditure in 2014 will be lower, but
not equal to zero as some costs for the 2015 Conference may be paid for in 2014. Salaries, the most
significant cost expenditure, are expected to increase by 5 %.
The budget excludes the US $0.5m reserve. With the Secretariat obtaining most revenue in US dollars and
with most costs in NOK, there is always unpredictability due to currency fluctuations.
Underlying this proposed budget are the activities identified in the Workplan.
1. More intense support will need to be provided to the 39 implementing countries and to outreach
efforts. This will create an increased work load and a need for increased staff capacity as set out in the
draft 2014 Workplan. The EITI Standard contains a number of new elements, and countries need
detailed guidance and support to integrate these new elements into their reporting processes.
The International Secretariat will assist countries in this transition process and beyond, by drafting
guidance notes and model documents; offering general and specialised training; functioning as a
knowledge centre for good practices; conducting reviews; and assisting countries in elaborating
scoping studies and feasibility studies, terms of reference for scoping and reconciliation. There will be
specific attention to assisting countries in elaborating and adapting their work plans and
communication plans to reflect the increasingly important role of these documents in the
implementation process. In addition, with the EITI Standard, the Secretariat will manage and finance
Validation processes.
2
Board Paper 25-9-B
2. Governance - The demands on the Secretariat in servicing the Board will continue to grow. With the
election of the new Board in Sydney in May 2013, interpretation at Board and committee meetings will
now include Spanish. Interpretation is costly, which will have an effect on Board meeting expenditure
in 2014.
There are expected to be three Board meetings in 2014 compared to four in 2013. Costs for the two
board meetings held in Sydney in May 2013 were mainly borne by the Conference, but the Secretariat
expects that costs will increase slightly in 2014 due to increased interpretation costs.
3. At its 23rd meeting in Sydney on 22 May 2013, the EITI Board agreed that the EITI International
Management 1should finance and procure EITI Validation, replacing the current arrangement by which
Validation is paid for and procured by implementing countries, often with bilateral donor support. The
Secretariat is in the process of seeking additional funding from the World Bank Multi Donor Trust Fund
(MDTF). No Validations are expected in 2014 so these costs are not expected to have an effect on the
2014 Budget unless the Board, on the basis of developments in an EITI Compliant country, would
decide to require a country to be re-validated in 2014.
4. Staff numbers – and associated expenses – are expected to increase in 2014. With more countries
implementing the EITI Standard, the need for further support will increase and project consultants may
be required in-country.
5. Communication costs are expected to increase in 2014 given the foreseen activities dedicated to
communicating the EITI Standard.
6. While there is no Conference in 2014, some costs related to the Conference e.g. booking costs for the
venue/accommodation, communication costs and flight tickets may be paid for in 2014.
These plans and developments translate to expenses in 2013 as presented in Table 1.
Table 1: EITI Budget proposal 2014 in US $
Description
2008
2009
2010
2011
2012
Expenses
1
2013
2014
2014
2014
Budget
Proposed
Budget
Nominal
change
%
change
Implementation
211899
167449
206902
162377
199 607
250 000
300 000
50 000
+20 %
Outreach
125366
103034
104683
151054
168 741
150 000
200 000
50 000
+33 %
Board meetings
167661
152696
457825
427553
496 215
300 000
400 000
100 000
+33 %
Communications
104339
77375
95254
225746
173 152
150 000
200 000
50 000
+33 %
Chair’s support
300360
147093
153766
85827
34 747
50 000
50 000
0
0%
Project consultants
162391
131697
106845
305015
168 062
150 000
200 000
50 000
+33 %
Salary
1276726
1266475
1403359
1922008
1 779 235
2 100 000
2 200 000
100 000
+5 %
Other staff expenses
249221
49708
92673
71966
173 435
125 000
125 000
0
0%
Office expenses
275391
166576
179275
362632
562 030
300 000
300 000
0
0%
Contingency
2955
TOTAL (excl.
conference)
2876309
2262103
2800582
3714178
3 755 224
3 575 000
3 975 000
400000
+11 %
Conference
35126
401829
219192
958042
261 457
500 000
100 000
-400 000
-80 %
TOTAL (incl.
Conference)
2911435
2663932
3019774
4672220
4016681
4 075 000
4 075 000
0
0%
2800582
EITI International Management refers to the International Secretariat, Board and Conference
3
Board Paper 25-9-B
With its continued efforts to strengthen the EITI funding base, the Secretariat expects to have access to
sufficient funding in 2014 to cover the increased expenses and to properly execute the 2014 Workplan. In
addition, there have been significant carry-overs in the past two years partly due to increased fund-raising
efforts and existing commitment from supporting countries and companies in 2013. 2
The reserve of US $0.5m was set aside to cater to fluctuations in the exchange rate and uncertainties
in some major funding streams. This reserve was agreed by the Board in 2010 3.
Additional considerations supporting these expectations are:
•
A widening funding base. So far in 2013, three new supporting companies have made a
financial contribution to the EITI; and
•
Existing commitments from supporting countries and companies.
These considerations are presented in Table 2.
Table 2: Revenue Jan 2008 – Jun 2013 in US $
2008
2009
2010
2011
2012
Source
Actuals
2013
2013
2014
Jan – Jun
Received
Agreed
Total
Proposed
budget
Core contribution, Government of Norway
Government of Norway
500 000
560 000
602 654
669 442
583 333
0
600 000
500 000
Supporting countries, International Development Agencies (IDAs) and NGOs (approximately 50% of remaining requirement)
Civil society
130 109
0
0
0
0
0
10 000
10 000
Supporting countries & IDAs
939 018
2 034 945
1 328 431
2 317 486
2 436 056
1 266 311
1 727 500
1 777 500
Private sector (approximately 50% of remaining requirement)
Investors
10 942
9 763
4 180
14 355
12 537
9 747
10 000
10 000
Oil and Gas
755 562
882 879
748 615
1 003 330
1 253 764
814 647
1 145 000
1 185 000
Mining and Minerals
274 436
441 440
129 960
816 439
635 104
573 091
582 500
592 500
2 610 067
3 929 027
2 813 840
4 821 052
4 920 795
2 663 796
4 075 000
4 075 000
TOTAL REVENUES
(excluding reserve)
Board members
David Diamond
Olivier Bovet
Ali Idrissa
Natalya Yantsen
2
Before the first Board meeting in 2014, the Finance Committee aims to conduct a review of the financial situation of
the EITI international management, to address questions related to funding, the carry-over, conference expenses, and
financing validation.
3
The annual reserve does not equal exactly US$500,000 because it was established in Norwegian Kroner (NOK2.7m). The reserve
has subsequently appreciated to US $509,434.
4
Board Paper 25-9-B
Committee advisors
Anwar Ravat
Secretariat
Wouter Biesterbos
Leah Krogsund
Jonas Moberg
Eddie Rich
5

Draft Agenda - Extractive Industries Transparency Initiative

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