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EITI reaffirms energy transparency leadership

Published: 
Thursday, March 16, 2017
(in the middle) Fredrik Reinfeldt, Chair EITI Board, (on right) Jonas Moberg, Head EITI Secretariat, (on left) Victor Hart, Chair TTEITI Steering Committee deliberate on issues at the EITI Board Meeting held in Bogota last week.

The Extractive Industries Transparency Initiative (EITI) held its 36th board meeting, with parallel side-meetings, in Bogota, Colombia, 7-9 March 2017, when it reafirmed its leadership on revenue transparency in the world’s extractive sectors. The EITI is in its tenth year of implementation and the Board confirmed the introduction of new initiatives to further advance the core objective of revenue transparency.

In attendance, were board members and national coordinators representing the 51 EITI implementing countries worldwide.

T&T was represented by Victor Hart, board member and chair TTEITI steering committee, and Sherwin Long, head TTEITI secretariat.

The EITI is a coalition of governments, companies, civil society groups, investors and international organisations and its board is chaired by Fredrik Reinfeldt, a former Prime Minister of Sweden (2006-2014). T&T joined the EITI in 2011 and won a seat on the board in 2016 as representative of the implementing countries of EITI Region 6 (Europe: Norway, Albania, UK and Germany; Americas: USA, Peru, Colombia, Guatemala, Honduras, The Dominican Republic and T&T).

 

New initiatives

In its discussions on new initiatives, the board decided how and when project level reporting would be introduced in all implementing countries. EITI chair, Reinfeldt, said: “I am delighted that the Board has set out how EITI countries are to report by project. This is a big step forward in the global effort to ensure contracts are enforced and taxes properly paid and collected in the sector.”

Project level reporting is an additional level of information to the public to illustrate how companies operate in individual extractive projects.

Publishing project-level information can allow citizens to monitor and assess the extent to which the government receives what it ought to from each individual extractive project, by comparing payments made with the fiscal terms set out in the laws or contract terms that govern the project. For host/frontline communities, it will show the contribution made by each project.

The board agreed that each country should develop and apply a definition of the term “project” that is consistent with relevant national laws and systems as well as international norms. Project level reporting will be required for all reports covering fiscal years ending on or after December 31, 2018.

 

Membership performance

The voluntary coalition of groups, with different interests, that form the EITI, creates a platform that makes it possible to take difficult decisions and that was again demonstrated at the board meeting when evaluating members’ performance. That notwithstanding, discussions were difficult in finding consensus on particularly challenging and contentious issues.

The EITI adopted a new standard in February 2016 and currently all countries are being assessed as to whether they have made satisfactory, meaningful, inadequate or no progress against the standard. 

The board assessed Ghana, Mauritania and Sao Tome e Principe to have made meaningful progress and commended them on the impact of their processes. 

The board concluded that the progress in the Kyrgyz Republic, the Solomon Islands and Tajikistan was inadequate and set out corrective actions and timelines for them to make progress towards satisfying the Standard. 

Reinfeldt said: “It is good to see that the EITI’s new way of assessing countries is working. The board was pleased that another three countries had made meaningful progress and committed its continued support to the others in their efforts to meet the standard.”

However, on the negative side, while the board acknowledged that Azerbaijan had taken further steps to meet the EITI Standard, it was assessed not to have fully met the corrective actions set by the board in October 2016 related to civil society’s freedom to participate in the EITI implementation process.

As a consequence, the board suspended Azerbaijan from membership and put it on notice to take certain corrective measures by a set date.

Azerbaijan reacted to the board’s decision by serving notice that it was withdrawing from EITI membership. Immediate reaction to that news came from EITI International Secretariat Head, Jonas Moberg, who said: “It is with regret that we have received the decision from the Government of Azerbaijan announcing they are withdrawing from the EITI.”

In its announcement, Azerbaijan has assured that it “will continue to adhere to the principles of revenue transparency and remains strongly committed to those principles of good governance, transparency and accountability in extractive industries. It will continue to disclose all the information related to revenues received from extractive industries to the full extent.”

That commitment is seen to offer some hope for the future and the EITI chair commented: “We all hope that the government of Azerbaijan will return to the EITI and continue the good work done in achieving transparency.”

 

The future

Even as the board regrets Azerbaijan’s withdrawal from the EITI, at the just concluded meeting, it warmly welcomed Armenia as the newest EITI member to bring future growth and renewal to the EITI movement.

The EITI recognises that a country’s natural resources belong to its citizens and the journey towards protecting the people’s patrimony through greater transparency and accountability is a long one with some bumps along the way. EITI implementation will continue to bring complex challenges that when solved will redound to the benefit of T&T extractive sectors. 

All stakeholders are required to work together to achieve success as the TTEITI Steering Committee pursues the integration of the midstream and downstream energy sectors and the mining sector into the EITI reporting process. Additionally, stakeholders will be called upon to participate in the adoption of strategies to implement beneficial ownership disclosure, contract and licence transparency, transfer pricing monitoring and commodity trading monitoring.

As a result of these initiatives, expect to see more benefits accruing in the areas of increased revenue collection, some avoidance of tax payments and reduced corruption.

Also, there will develop a better-informed citizenry to provide more oversight of the exploiting of their assets in the extractive sectors and to hold government and companies accountable.