US, UK and France Joining Those Subject to New Rules
May 22, 2013, Sydney—The Extractive Industries Transparency Initiative (EITI) has approved a revised standard of performance requiring its 39 implementing countries to release wide-ranging new information about their oil, gas and mining industries.
Rather than merely disclosing revenue data, countries will now need to release information about production volumes, the companies holding licenses, license allocations, state-owned companies, corporate social responsibility payments and transfers from central to local governments to be considered in line with the EITI Standard.
“The EITI has finally recognized that, when it comes to complex industries, merely disclosing payments is not enough,” said Daniel Kaufmann, President of the Revenue Watch Institute. “By including contracts and licenses, beneficial ownership, state-owned companies and production information, the new Standard could make EITI more effective in addressing the vast governance challenges facing resource-rich countries.”
Created in 2003, EITI previously required governments and companies to disclose payments deriving from oil, gas and mining activities. A body that includes government, company and civil society members must oversee the reporting process. To date, 39 governments have volunteered to participate in EITI, and 23 have achieved “EITI compliant” status. The United Kingdom and France announced today their intention to implement EITI, joining the United States, which made a commitment in 2011.
The new EITI Standard announced today results from over a year of negotiations between the governments, companies and non-governmental groups on the initiative’s International Board.
EITI countries will now have to provide detailed information about each oil, gas and mining license. First, they will need to maintain a public register that lists the company name, location and duration of each license, information currently missing in major producers like Kazakhstan and emerging producers like Mozambique. EITI reports will contain an explanation of how licenses were awarded or transferred during the year covered, and details on applicants and criteria used in any license auctions.
EITI now requires reporting of revenue data by each project, bringing EITI in line with this spreading international standard. The U.S. Securities and Exchange Commission requires project-level reporting by all U.S.-listed oil, gas and mining companies, and the European Union has committed to the same. By changing its rules, EITI keeps pace with this important development.
The new Standard asks for considerably more information from state-owned companies, including major industry players in nations like Azerbaijan, Iraq, Nigeria and the Democratic Republic of Congo. When selling the state’s share of production, national oil companies will have to disclose the volumes sold and revenues received—an opaque area in many countries. Reporting on quasi-fiscal expenditures, the sale of state-owned assets and financial transfers with the state is also required.
EITI will now also include production data. EITI Reports will have to disclose total production volumes and the value of production by commodity, including by state and region when relevant, as well as total export volumes and the value of exports by commodity.
Finally, the new Standard encourages countries to act in two additional areas of transparency–the disclosure of contracts and beneficial ownership information. In the coming months, the multi-stakeholder group that oversees EITI country implementation will have to determine whether to include this information in their EITI process. Contracts determine the benefits the public receives for their sub-soil assets, and beneficial ownership disclosure reveals when licenses are allocated to politically connected persons.
“The new Standard has opened the door for EITI to become much more relevant to meaningful policy reforms to improve resource governance,” said Erica Westenberg, EITI Policy Officer at Revenue Watch. “The challenge now is for the 39 countries to implement the Standard in a timely and thorough way.”
Source: Revenue Watch Institute
Revenue Watch promotes the transparent and accountable management of oil, gas and mineral resources for the public good. www.revenuewatch.org | @revenuewatch | www.facebook/revwatch
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