Draft Agenda. Board paper EITI International Secretariat Oslo, 1 October TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013

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1 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 Board paper 25-1 Draft Agenda EITI International Secretariat Oslo, 1 October 2013 Wednesday 16 October (07:30 Committee breakfast meetings) 25 th 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 1

2 12:30 Lunch Board Paper 25-1 Draft Agenda 13:15 Case studies from Azerbaijan, Liberia and Norway (tbc) Q & A 14:45 End 15: Adoption of agenda Board paper 25-1-A Draft agenda 15: Report from the Head of the Secretariat Including follow-up on actions and decisions through circular since the last Board meeting 15: 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: Brief report from the World Bank MDTF 16:40 End (17:00 Committee meetings) Thursday 17 October 07:30 Committee breakfast meetings 25 th EITI Board meeting continued 09: 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: 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 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: 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: Workplan Board paper 25-8 Draft International Secretariat 2014 Workplan 11: 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

3 Board Paper 25-1 Draft Agenda 12: Board Meetings 12: 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 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-December 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 3

4 Summary of actions from previous Board meetings Board Paper 25-1 Draft Agenda 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 Status Actions items from the 24 th Board Meeting, 24 May 2013, Sydney 24-3 The Governance Committee is to address questions on voting procedures, tenure for Ongoing Board members, external communication by Board members, representation of supporting and implementing countries on the Board and the composition of the Board The Secretariat to write a short report from the Conference. Completed 24-5 The Secretariat to update the document on committees for consideration via Board Completed circular Board members to express their interest to join the committees. Completed 24-5 Committees to consider drafting workplans to be presented to the Board. Ongoing 24-6 The Secretariat to update the proposal for transitional arrangements in consultation Completed with National Coordinators, and present a revised proposal to the Validation Committee for consideration The Secretariat to develop guidance on implementation requirements related to In progress state-owned enterprises The Secretariat to propose dates and locations for Board meetings in October 2013, and February and May Ongoing Actions items from the 23 rd Board Meeting, 22 May 2013, Sydney 23-1 EITI Chair to write a letter of support to Jean Claude Katende. Completed 23-3 EITI Chair to write to the government of Zambia recalling the need for strong Completed political support The Secretariat to improve the structure and presentation of future IPR. Ongoing 23-4 The Secretariat to inform the government of Cote d Ivoire of the Board s decision. Completed 23-4 The Secretariat to inform the government of Togo of the Board s decision. Completed 23-4 The Secretariat to inform the government of Indonesia of the Board s decision. Completed 23-5 The Secretariat to inform the government of Honduras of the Board s decision. Completed 23-5 The Secretariat to inform the government of Philippines of the Board s decision. Completed 23-7 The Secretariat to pursue discussions with the WB MDTF and its Management Ongoing Committee regarding funds for validation The Secretariat to draft guidelines for a short review of the selection of the auditor. Ongoing Incomplete action items from previous Board meetings Actions items from the 22 nd Board Meeting, February 2013, Oslo 22-5 Secretariat to launch a public consultation on the Code of Conduct. Ongoing 22-5 Board members and other stakeholders to provide feedback to the Governance Ongoing Committee via the International Secretariat on the draft Code of Conduct by 15 April Governance Committee to finalise guidance for companies considering support to Ongoing MSGs The Secretariat to explore mechanisms for recognising implementation that exceeds the EITI Requirements. Ongoing 4

5 Action items from the 21 st Board Meeting, October 2012, Lusaka 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 19 th Board Meeting, February 2012, Wiston House 19-2 The Secretariat to invite comments on future annual progress reports via Governance Committee and Board circular. Board Paper 25-1 Draft Agenda In progress 1 In progress 2 Pending until next annual progress report 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. Ongoing Decisions taken via Board circulars after the 24 th Board meeting, 24 May 2013, Sydney BC The Secretariat is to proceed with negotiations with the WB/MDTF on funding for Validation based on the request approved by the Board. BC Mauritania s suspension is lifted as of 25 June BC Sydney Board meeting minutes are approved. BC Yemen s suspension is lifted as of 26 of July BC Members to the Board Committees are confirmed. BC th Board meeting is confirmed to take place in Abidjan, Cote d Ivoire. BC Chad s status as an EITI Candidate country is renewed. BC Transitional arrangements to the EITI Standard are agreed. BC Terms of reference for the Validation Committee are approved. BC Trinidad and Tobago is granted a six-month extension to their Validation deadline, i.e. until 28 February BC Terms of reference for the Implementation Committee are approved. 1 The dates and venue for the autumn 2013 meeting is still to be confirmed. 2 A draft guidance note is under consideration by the Governance Committee. 5

6 25 TH EITI BOARD MEETING ABIDJAN OCTOBER 2013 EITI International Secretariat Oslo, 1 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 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.

7 IMPLEMENTATION PROGRESS REPORT AUGUST-SEPTEMBER 2013 Board Paper 25-3-A Implementation Progress Report Table of Contents 1. Summary EITI spotlight Thematic focus: Sub-national EITI reporting and transfers Country by country assessment Table 1: Country assessment of progress EITI reporting Table 2: Overview of EITI reporting September Validation Outreach Update Training and capacity building Secretariat activities Annex A: Briefing note for Board delegation to the Democratic Republic of Congo 30 Annex B: Briefing note for Board delegation to Ghana Annex C: Briefing note for Board delegation to Guniea Annex D: Briefing note for Board delegation to Nigeria 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. 2

8 Board Paper 25-3-A Implementation Progress Report 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. 3

9 Board Paper 25-3-A Implementation Progress Report Having failed to achieve compliance following two Validations, the Board suspended DRC in April 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) (ii) (iii) Assess progress in the implementation of the corrective actions agreed by the Board. Encourage strong political commitment to use the EITI as a platform for wider reforms. 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: Ghana 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 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 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 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, 4

10 Board Paper 25-3-A Implementation Progress Report 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 (15 th /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 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, 5

11 Board Paper 25-3-A Implementation Progress Report 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 6

12 Board Paper 25-3-A Implementation Progress Report 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). 7

13 Board Paper 25-3-A Implementation Progress Report Does the latest EITI Report cover Country company payments to local government? (share of total revenues) Albania Yes (0.14%) Cameroon Yes (0.15%) Ghana Yes (0.05%) Guatemala Yes (2.00%) Madagascar Yes (2.00%) Mongolia Yes (3.10%) Tanzania Yes (0.90%) Togo Yes (0.05%) Zambia Yes (1.20%) Afghanistan Partial (0.03%) DRC Partial (1.00%) Guinea Partial (0.90%) Indonesia Partial (0,02%) Iraq Partial (1.23%) Kyrgyz Republic Partial (4.30%) Mali Partial (1.25%) Nigeria Partial (2.26%) Sierra Leone Partial (8.70%) Central African Republic Unknown Chad Unknown Mauritania Unknown Niger Unknown Yemen Unknown Azerbaijan Immaterial Burkina Faso Immaterial Côte d'ivoire Immaterial Kazakhstan Immaterial Liberia Immaterial Mozambique Immaterial Norway Immaterial Peru Immaterial Rep of Congo Immaterial Timor Leste Immaterial Trinidad & Tobago 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

14 Board Paper 25-3-A Implementation Progress Report 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: and 9

15 Board Paper 25-3-A Implementation Progress Report 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 10

16 Board Paper 25-3-A Implementation Progress Report 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 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. Previous assessment: Red 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

17 Board Paper 25-3-A Implementation Progress Report Indonesia Candidate Country manager: Sam Bartlett Peru Compliant Country manager: Francisco Paris Previous assessment: Red 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 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

18 Board Paper 25-3-A Implementation Progress Report Previous assessment: Amber 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 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 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. Previous assessment: Red 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

19 Board Paper 25-3-A Implementation Progress Report Solomon Islands Candidate Country manager: Sam Bartlett Yemen Compliant Country manager: Eddie Rich Previous assessment: Amber 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. Previous assessment: Red Yemen is ranked red because there have been delays in preparing the 2011 report. Yemen s 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

20 Board Paper 25-3-A Implementation Progress Report Afghanistan Candidate Country manager: Dyveke Rogan Chad Candidate Country manager: Bady Baldé Guatemala Candidate Country manager: Francisco Paris Previous assessment: Amber 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. Previous assessment: Red 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 workplan in line with the EITI Standard. Previous assessment: Amber Guatemala had a Validation deadline of 28 August 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 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

21 Board Paper 25-3-A Implementation Progress Report Guinea Candidate Country manager: John Kanyoni Iraq Compliant Country manager: Eddie Rich Kyrgyzstan Compliant Previous assessment: Amber Guinea is currently addressing the remedial actions requested by the Board following its Validation in 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 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 EITI Report. Previous assessment: Amber 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 The MSG has signed the reconciliation contract with Ernst and Young for both reports. Previous assessment: Green The immediate priority in Kyrgyzstan is to increase political sponsorship for 16

22 Board Paper 25-3-A Implementation Progress Report 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 Previous assessment: Amber 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

23 Board Paper 25-3-A Implementation Progress Report Mali Compliant Country manager: Wouter Biesterbos Mozambique Compliant Country manager: Jurgen Reitmaier Timor Leste Compliant Country manager: Sam Bartlett Previous assessment: Amber 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 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. Previous assessment: Green 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. Previous assessment: Amber 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. 18

24 Board Paper 25-3-A Implementation Progress Report Trinidad and Tobago Candidate Country manager: Francisco Paris Zambia Compliant Country manager: Eddie Rich Previous assessment: Red The FY 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 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. Previous assessment: Green 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 Albania Compliant Country manager: Siri Farstad Assessment Previous assessment: Green Albania achieved EITI compliance in May 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 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. 19

25 Board Paper 25-3-A Implementation Progress Report Azerbaijan Compliant Country manager: Siri Farstad Previous assessment: Green 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 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 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. Previous assessment: Red 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 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. Previous assessment: Green EITI implementation is on track, with the 2011 EITI Report published in April 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

26 Board Paper 25-3-A Implementation Progress Report Ghana Compliant Country manager: Eddie Rich Honduras Candidate Country manager: Francisco Paris Kazakhstan Candidate Country manager: Dyveke Rogan Previous assessment: Green The EITI Reports were published in February 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 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 Previous assessment: Red 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

27 Board Paper 25-3-A Implementation Progress Report Liberia Compliant Country manager: Siri Farstad Previous assessment: Green 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 Compliant Country manager: Wouter Biesterbos Mongolia Compliant Country manager: Wouter Biesterbos Previous assessment: Red 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 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 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. Previous assessment: Green 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 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

28 Board Paper 25-3-A Implementation Progress Report Niger Compliant Country manager: Wouter Biesterbos Nigeria Compliant Country manager: Eddie Rich Previous assessment: Green 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. Previous assessment: Green 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 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

29 Board Paper 25-3-A Implementation Progress Report Norway Compliant Country manager: Anders Kråkenes Philippines Candidate Country manager: Wouter Biesterbos Republic of the Congo Compliant Country manager: Bady Baldé Previous assessment: Green 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. Previous assessment: Green The Philippines was admitted as an EITI Candidate on 22 May 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 Previous assessment: Green 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 On 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 workplan in line with the new Standard, and in building and maintaining a public register of licenses. 24

30 Board Paper 25-3-A Implementation Progress Report Tajikistan Candidate Country manager: Dyveke Rogan Tanzania Compliant Country manager: Jurgen Reitmaier Togo Candidate Country manager: John Kanyoni Previous assessment: Green Tajikistan was admitted as an EITI Candidate on 26 February 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. Previous assessment: Green 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. Previous assessment: Green The EITI process in Togo is advancing slowly. Togo became a Compliant country on 22 May 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 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

31 Board Paper 25-3-A Implementation Progress Report 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 Nigeria has published the 2011 oil and gas audit. The 2011 solid minerals is outstanding. 26

32 Board Paper 25-3-A Implementation Progress Report 27

33 Board Paper 25-3-A Implementation Progress Report 6. Validation Twelve countries have Validation deadlines in 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 Deadline Status Afghanistan Complete DRC Complete Indonesia Complete Togo Complete Albania Complete Burkina Faso Complete Côte d Ivoire Complete Chad Complete Cameroon Complete Kazakhstan Complete Guatemala TBC Trinidad & Tobago 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 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

34 Board Paper 25-3-A Implementation Progress Report 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 visits or 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 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

35 Board Paper 25-3-A Implementation Progress Report 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

36 Briefing for Board visit to DRC 14 October 2013 EITI International Secretariat Oslo, 1 October 2013 Important contact information: Bady Baldé Professor Mack Dumba Fleuve Congo Hôtel EITI International Secretariat National Coordinator, EITI DRC 119 Boulevard Tshatshi Tel: Tel: Kinshasa DRC BBalde@eiti.org mack.dumba@itierdc.org Tel: Executive Summary Draft programme for the visit Members of the delegation Key objectives and suggested messages Implementation progress Overview of EITI Reports World Bank Indicators Revenue Watch Institute Indicators Key Challenges EITI in the context of wider reforms Logistics and practical information Biographies Relevant articles and publications Annex A: The Board decision agreed on 17 April 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

37 Briefing for Board visit to DRC 2 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 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) 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, 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 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

38 Briefing for Board visit to DRC 3 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.

39 Briefing for Board visit to DRC 4 1 Draft programme for the visit TIME ACTIVITIES VENUE PARTICIPANTS/NOTES Monday 7 October :45 Tuesday 8 October :35 Arrival of Civil Society Participants Arrival of Civil Society Participants Wednesday 9 October 2013 Kinshasa Airport 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. Ms Marinke van Riet and Mr Carlo Merla arrive via Air France. Participants will be met by staff from the national secretariat. If your arrival time changes, please let Bady Baldé know. 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 Civil Society Participants Kinshasa Airport Ms Radhika Sarin arrives via Brussels Airlines at 20:25. Saturday 12 October :20 Sunday 13 October 2013 Arrival of International Secretariat staff Kinshasa Airport Participants will be met by staff from the national secretariat. If your arrival time changes, please let Bady Baldé know. Mr Bady Baldé arrives via Asky KP40. Participant will be met by staff from the national secretariat. 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. Participants will be met by staff from the national secretariat.

40 Briefing for Board visit to DRC 5 TIME ACTIVITIES VENUE PARTICIPANTS/NOTES Sunday 13 October :30 Meeting with the Minister of Environment, Conservation, and Tourism, N'sa Mputu Elima Bavon Fleuve Congo Hotel International Secretariat staff (preparation of MSG meeting) Welcome dinner and 20:00 debrief Monday 14 October :30-8:30 Breakfast 9:00 12:30 MSG meeting 12:30 13:30 Working lunch with private sector representatives Fleuve Congo Hôtel Fleuve Congo Hôtel Fleuve Congo Hôtel Fleuve Congo Hôtel Members of delegation only EITI delegation, MSG members, and observers. 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

41 Briefing for Board visit to DRC 6 TIME ACTIVITIES VENUE PARTICIPANTS/NOTES Monday 14 October :00 14:30 14:30 16:00 14:30-16:00 16:00-17:00 17:00-18:00 Meeting with Parliamentarians Parallel field visit to the Inspector General s Office Parallel field visit to the EITI technical secretariat Visit to HE Joseph Kabila s Office Visit to HE Augustin Matata Ponyo s Office Fleuve Congo Hôtel IGF EITI technical secretariat Office of the President Office of the Prime Minister 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. 18:30 Reception/working dinner Fleuve Congo Hôtel (tbc) Partners invited include AfDB, EU, GTZ, WB, and embassies from supporting countries. Tuesday 15 October :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.

42 Briefing for Board visit to DRC 7 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 Vice President, Environmental Affairs, Freeport-McMoRan, Copper&Gold Inc. Mr TOLLAN Harald 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. Assess progress in the implementation of the corrective actions agreed by the Board. 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.

43 Briefing for Board visit to DRC 8 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.

44 Briefing for Board visit to DRC 9 4 Implementation progress The government committed to implementing the EITI in The DRC has published three EITI Reports since it was admitted as a Candidate country in September 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 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 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 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.

45 Briefing for Board visit to DRC Overview of EITI Reports Period covered Publication date Sectors covered Government revenues (US$ millions) Company payments (US$ millions) Number of companies reporting 2007 November 2009 Oil, Gas, Mining January 2012 Oil, Gas, Mining January 2012 Oil, Gas, Mining January 2013 Mining, Oil, Gas World Bank Indicators 1 Indicator Population GDP; GNI per capita Poverty headcount ratio at national poverty line (% of population) 2012 or latest available data million $17.87 billion; $220, (low income country) 71.3% Life expectancy at birth, total (years) 49 1 Source: World Bank website:

46 Briefing for Board visit to DRC Revenue Watch Institute Indicators 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

47 Briefing for Board visit to DRC 12 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 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 December 2013 Ministry of Mining Mining Cadaster (CAMI) Ministry of Portfolio Prime Minister s Office 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 information related to (i) assets sales in State s portfolio, (ii) joint ventures established and (iii) investments projects Continuous 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 3 Source: World Bank May 2013

48 Briefing for Board visit to DRC 13 N Actions Deadline Responsible Agency Observation already initiated by mining SOEs; and Requirement 3.6 publication of procedures used to the sale each asset. 3 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. Twice a year and annually (July; January) Ministry of Mining This is relevant to the implementation of the new EITI Standard as per Requirements Preparation by government and submission to Parliament of the annual report on the sale of assets and joint ventures carried out by mining SOEs. Annually (March) Prime Minister s Office Ministry of Mining Strengthen the Legal and regulatory framework in the petroleum sector 6 Publication of the legal and regulatory framework as well as oil agreements and mapping of the blocks: 7 a) Publication and dissemination of the new hydrocarbon law on the Ministry of Hydrocarbon website 8 b) Publication within 60 days following agreement, of all oil agreements as well as exploration and development permits; and publication of existing oil agreements 9 c) Publication on the Ministry of 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. December 2013 Continuous December 2013 Ministry of Hydrocarbon Ministry of Hydrocarbon Ministry of Hydrocarbon and 3.5 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 Requirement 3.12 This is relevant to the implementation of the new EITI Standard as per Requirements 3.9 and 3.12 This is relevant to the implementation of the new EITI Standard as per Requirements 3.10 and 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.

49 Briefing for Board visit to DRC 14 Hotel: The government recommends the Fleuve Congo Hôtel. Reservations can be made online at or by or phone: 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 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 HE Matata Ponyo Prime Minister Augustin Matata Ponyo Mapon (born 5 June 1964) was appointed Prime Minister in April 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 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:

50 Briefing for Board visit to DRC 15 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 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 The report published on 1 January 2010; covering oil and mining revenues for 2007 is available at Publication of revenue (mining, oil, forests) - 2nd Quarter 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 The 2013 Africa Progress Panel s report includes a case study on DRC and is available at The contracts in the oil, gas and mining sectors are accessible on the Ministry of Mine website at A Bloomberg article published in December 2012 provides a case in point of the risk of corruption

51 Briefing for Board visit to DRC 16 Global Witness analysis of the Congo-China partnership: Launch of the 3T and gold certification scheme for DRC conflict-free minerals A comprehensive list of the DRC s Ministers can be found at A list of the MSG members in the DRC can be found at Cadre%20l%C3%A9gal

52 Briefing for Board visit to DRC 17 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.

53 Briefing for Board visit to Ghana October 2013 EITI International Secretariat Oslo, 1 October 2013 Important contact information : Eddie Rich Franklin Ashiadey EITI International Secretariat Ghana Ministry of Finance and Economic Planning Tel: EITI National Coordinator erich@eiti.org fmashiadey@gmail.com Francisco Paris Sheila Naah EITI International Secretariat Ministry of Finance and Economic Planning Tel: Tel: fparis@eiti.org sheilanaah@hotmail.com Summary Draft programme for the visit Key objectives of visit and suggested speaking points Background Logistics and practical information Relevant articles/references GHEITI National Steering Committee 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 But this looks set to be offset by falling commodity prices, especially gold, as the government s deficit continues to widen.

54 Briefing for Board visit to Ghana 2 Oil production began in 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 (15 th /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 Draft programme for the visit TIME ACTIVITIES VENUE PARTICIPANTS/NOTES Monday 14 October : 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 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 1 Revenue Watch Index 2012,

55 Briefing for Board visit to Ghana 3 Snack/lunch break Role of Companies within the new EITI Standard Chair Mr Koney /Rep of E&P Forum Reporting issues: SAP reporting - Sustainability - Funding Mining/oil/gas companies GHEITI Secretariat Ministry of Finance (Conference Room opposite Main MoF Building) WB Press: GTV,TV3, Metro TV, TV Africa, Joy FM, Radio Ghana, GNA, Citi FM 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 Tuesday 15 October Snack/lunch break Roundtable with civil society organisations Chair Dr Steve Manteaw RWI-Africa Coordinator Emmanuel Kuyole Wrap-up Concluding statements Rep EITI Board Member Chair GHEITI Ministry of Finance (Conference Room opposite Main MoF Building) Ministry of Finance (Conference Room opposite Main MoF Building) CSOs Members GHEITI NSC GHEITI Secretariat Members GHEITI NSC GHEITI Secretariat 2 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 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:

56 Briefing for Board visit to Ghana 4 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.

57 Briefing for Board visit to Ghana 5 3 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 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 2 Total lifting for these three companies in 2011 were 95% of the total with the Ghana National Petroleum company sharing 16% of total listings.

58 Briefing for Board visit to Ghana 6 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. 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. 4 Logistics and practical information 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: 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: See US State Department travel advice (Security) 3 For more travel information see:

59 Briefing for Board visit to Ghana 7 5 Relevant articles/references EITI Board transition arrangement (Ghana): EITI Ghana Validation report, annual report and GHEITI Workplan: See GHEITI website: GHEITI 2012 Annual Report: Itemid=54 GHEITI last report: GHEITI newsletter (May 2013): Public interest and accountability committee report 2012: Annual%20Report% pdf RWI Governance Index : Various articles: PWYP Map on Contracts : GHEITI National Steering Committee (as listed in GHEITI website on 27 September ) 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

60 Briefing for Board visit to Ghana 8 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

61 Briefing for Board visit to Ghana 9 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 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.

62 Briefing for Board visit to Guinea, 18 October 2013 EITI International Secretariat Oslo, 1 October 2013 Important contact information : John Kanyoni Mamadou Diaby Hotel Palm Camayenne EITI International Secretariat National Coordinator, EITI Guinea Commune de Dixinn Tel: Sise Quartier Camayenne Corniche Tel: Abdoulaye Soumah Conakry JKanyoni@eiti.org Tel: Tel: diabyitie@yahoo.fr Executive Summary Draft programme for the visit Members of the delegation Key objectives of the mission and suggested messages Implementation progress Summary Remedial actions Situation analysis EITI Guinea s impact Challenges ahead EITI Guinea background and facts Key EITI facts a reminder, as of 26 September Logistics and practical information Biography 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

63 Briefing for Board visit to Guinea, 18 October 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 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 EITI Report. 1 Draft programme for the visit TIME ACTIVITIES VENUE PARTICIPANTS/NOTES Thursday 17 October :20 Arrival of some representatives of the EITI delegation with the Asky Flight KP0016 Airport A representative from EITI Guinea will meet you upon arrival. If your arrival time changes, please let John Kanyoni know. Friday 18 October :00-8:00 Breakfast Hotel Palm Camayenne Meeting with National Coordinator Mr Mamadou Diaby Meeting with Mining Minister, Mr Lamine Fofana Meeting with Prime Minister, Mr Mohamed Said Fofana Meeting with President Alpha Condé Hotel Palm Camayenne Ministry of Mines and Geology Prime Minister s office Presidential Palace 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. - 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.

64 Briefing for Board visit to Guinea, 18 October Lunch with the Chamber of Mines and other representatives of private sector Meeting with the EITI Guinea steering committee Working meeting with multiand bilateral partners Departure for airport Flight Air France AF751 departure at 21:30 Hotel Palm Camayenne Conference room of ministry of mines and geology US Embassy in Conakry Hotel Palm Camayenne - 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. 2 Members of the delegation 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

65 Briefing for Board visit to Guinea, 18 October 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.

66 Briefing for Board visit to Guinea, 18 October Build capacities of CSO in Guinea. 4 Implementation progress 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 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 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 : 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.

67 Briefing for Board visit to Guinea, 18 October 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 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.

68 Briefing for Board visit to Guinea, 18 October 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 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 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 The last report was published in August 2012 and covers fiscal years, 2007, 2008, 2009 and 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 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

69 Briefing for Board visit to Guinea, 18 October 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 ( ). 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 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. 5 Logistics and practical information Travel advice to Conakry Travellers to Guinea are advised to consult the UK Foreign Advice pages for Guinea at 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 or by (reservations@palmcamayenne.com), or by phone: Contact in Conakry National Coordinator Mamadou Diaby (tel: ) and Mr abdoulaye Soumah (tel: ) 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 ( ) and jkanyoni@eiti.org Local information According to the weather forecast, you can expect some 27 C during the day with rain.

70 Briefing for Board visit to Guinea, 18 October 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 Previously, he was advisor to the Prime Minister of Guinea in charge of the mining sector from 2004 to Prior to that, Fofana worked in various USAID funded projects in Guinea. 7 Relevant articles/references EITI Guinea publications Guinea s 2010 EITI Report Board Paper on Guinea s Validation Guinea s Scoping Study for the 2011 Report Other articles and publications FT (15 March 2013). Guinea: resource nationalism, or just getting things straight? Aminata.com (11 April 2013). Guinea : CSOs in conclave on the EITI reports GulfNews (13 June 2013). Guinea s current agenda mirrors that of the G8 by President Alpha Condé Visionguinee.info (18 June 2013 in French). Lancaster House London. Discours d Alpha Condé au G8 Chatham House (June 2013). Guinea in Transition : Reform, Resources and Regional Relations. President s Condé Speech and Q and A. é.pdf éqa.pdf

71 Briefing for Board visit to Guinea, 18 October Transformation Index BTI Africa Economic Outlook Guinea (2012) LesAfriques.com (August 2013 in French). Guinée début du dégel du mega projet de Simandou The Independent (17 June 2013). The corruption deal of the century: how Guinea lost billins of pounds in Simandou mining licensing The New Yorker (8 July 2013). Buried secrets The Guardian (30 July 2013). The tycoon, the dictator s wife and the $2.5bn Guinea mining deal The Guardian (8 August 2013). Guinea permits at risk if mining firm BSGR is found guilty of corruption Business Spectator (9 August 2013). Rio Tinto eyes Simandou blocks LesAfriques.com (August 2013 in French). Georges Soros, l éclaireur du president Alpha Condé 3.html?Itemid=308 All Africa.com (19 September 2013). Guineans finally go to the polls to end the political impasse

72 Briefing for Board visit to Nigeria 14 October 2013 EITI International Secretariat Oslo, 1 October 2013 Important contact information : Dyveke Rogan Zainab Ahmed Transcorp Hilton hotel EITI International Secretariat Executive Secretary, NEITI 1 Aguiyi Ironsi Street, Maitama, Tel: Tel: Abuja, Drogan@eiti.org ahmedzainab16@hotmail.com Tel: Executive Summary Draft programme for the visit Members of the delegation Key objectives and suggested messages Implementation progress Summary Situation analysis NEITI s impact Challenges ahead NEITI background and facts Key EITI facts a reminder, as of September Logistics and practical information Relevant articles and publications 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$

73 Briefing for Board visit to Nigeria 2 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 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 Draft programme for the visit TIME ACTIVITIES VENUE PARTICIPANTS/NOTES Sunday 13 October 2013 pm Arrival of EITI delegation Airport A representative from NEITI will meet you upon arrival. If your arrival time changes, please let Dyveke know. 20:00 Welcome drink Transcorp Hilton Hotel Piano Lounge. Informal get-together. Monday 14 October :00-09:00 Breakfast Transcorp Hilton Hotel 09:00 10:00 Meeting with Nigeria Stakeholders Working Group (NSWG) and NEITI Management 10:30 13:00 Inauguration of Inter- Ministerial Task Team Transcorp Hilton Hotel Transcorp Hilton Hotel 13:00 14:00 Lunch Transcorp Hilton Hotel 14:00 15:00 Meeting with Civil Society Transcorp Hilton Hotel An EITI table has been reserved in the breakfast hall. EITI delegation, NSWG Members, ES, Senior NEITI Management. EITI delegation, NSWG, Minister of Mines and Steel Development, IMTT Members Senior Management and Communications Team. EITI delegation, NSWG, IMTT Members, NEITI Management. EITI delegation, NSWG, Select Media, Select Civil Society Organisations, Select

74 Briefing for Board visit to Nigeria 3 Press conference 15:30 17:00 Meeting with Ngozi Okonjo- Iweala, Minister of Finance and Coordinating Minister of the Economy Ministry of Finance 19:00-21:00 Cocktail/Dinner Transcorp Hilton Hotel Professional Associations, NEITI Management. 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, Inter- Governmental 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 Monday 14 October :00 Breakfast Transcorp Hilton Hotel 08:00 Departure for airport Transportation is arranged by NEITI. Please meet in the lobby. 10:30 Departure flight ASKY KP33 2 Members of the delegation 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

75 Briefing for Board visit to Nigeria 4 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 Implementation progress 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 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.

76 Briefing for Board visit to Nigeria 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 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 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 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 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 40 th /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

77 Briefing for Board visit to Nigeria 6 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 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 On 1 March 2011 the EITI Board designated Nigeria as Compliant. Nigeria s next Validation deadline is 1 January EITI reporting: NEITI has published oil and gas audits covering financial years , and solid mineral audits covering 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 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

78 Briefing for Board visit to Nigeria 7 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 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. 5 Logistics and practical information 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 am. 6 Relevant articles and publications NEITI publications NEITI oil and gas financial audit NEITI oil and gas physical and process audit NEITI solid minerals financial audit Flows pdf NEITI solid minerals physical and process audit Process pdf

79 Briefing for Board visit to Nigeria 8 NEITI 2012 annual activity report NEITI 2013 workplan NEITI Ten years of NEITI Reports What we have learnt? Other articles and publications Chatham House (September 2013). Nigeria's Criminal Crude: International Options to Combat the Export of Stolen Oil, FT (19 September 2013). Criminal networks blamed for Nigeria oil theft, feab7de.html?siteedition=intl#axzz2fuuemv5F NEITI (5 September 2013) NEITI calls for transparency in the acquisition and awards of oil prospecting licences and mining leases, and-awards-oil-prospecting-licences-and-mining- FT (27 August 2013). Theft and disruptions knock Nigeria oil output to four-year low, NEITI (16 July 2013). NEITI seeks support of the national assembly on contract transparency in the petroleum industry bill, Economist (15 July 2013). Safe sex in Nigeria, allafrica.com (1 July 2013). Nigeria: N13.3 Billion Unpaid Tax - NEITI Lauds Tribunal's Ruling On Mobil, NEITI (30 May 2013). Nigeria wins best EITI implementing country award, NEITI (23 April 2013). NEITI position on the petroleum industry bill, This Day Live (21 March 2013). NEITI to Tackle Oil Theft, Pipeline Vandalism, National Mirror (28 February 2013). NEITI to audit utilisation of 13% derivation funds,

80 Briefing for Board visit to Nigeria 9 BusinessDay (28 February 2013). N8trn lost to illicit gold mining, FG bemoans, One.org (4 January 2013). Making transparency work for development in Nigeria, Revenue Watch Institute (2013) Resource Governance Index Nigeria, This Day Live (25 October 2013). Ribadu Report Uncovers Sleaze in Oil and Gas Sector, 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. Ngozi Okonjo-Iweala, Minister of Finance Ngozi Okonjo-Iweala was appointed Minister of Finance for the Federal Republic of Nigeria in July Prior to this appointment, she was the Managing Director of World Bank (October July 2011) and has also held the position of a Finance Minister and Foreign Minister of Nigeria, between 2003 and 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 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. 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. Ledum Mitee, NSWG Chairman

81 Briefing for Board visit to Nigeria 10 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 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:

82 Briefing for Board visit to Nigeria 11

83 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 EITI International Secretariat 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.

84 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 2 Template Terms of Reference for Independent Administrators Contents 1 Summary Background Consultations... 4 Annex A Template terms of reference 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

85 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 3 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, in the EITI Rules / Requirements 4 and 5 in the EITI Standard).

86 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 4 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.

87 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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. Comment [EITI1]: Not yet available. To be reviewed by the Implementation Committee 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).

88 Terms of Reference Board Paper 25-3-B Template Terms of Reference for Independent Administrators 6 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. Comment [EITI2]: It is recommended that the first section provides a general introduction to the EITI. A suggestion is included below. 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 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

89 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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 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 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 Comment [EITI5]: Indicate the basis for the scope proposed below. In Annex 2, provide links to the documentation, or attach to the ToR. Comment [EITI6]: The MSG may wish to elaborate on this point, e.g., if special attention in needed 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:

90 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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. 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. 1.3 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.] Comment [EITI8]: The MSG may wish to list additional benefit streams not required by the EITI Standard. 1.4 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

91 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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.] Comment [EITI9]: The MSG may wish to list additional aspects not required by the EITI Standard. 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 ( 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

92 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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 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 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]. 2.2 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.

93 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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. 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 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

94 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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). Comment [EITI14]: Where the MSG agrees to include this, additional information should be provided. 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 Inception period Inception report Data collection & initial reconciliation Initial reconciliation report Draft report Final report [date] [date] - [date] [date] [date] - [date] [date] [date] [date] [Add any additional information regarding other deliverables requested by the MSG] Requirements for Independent Administrators

95 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 13 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]

96 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 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. 1. Contextual Information The Independent Administrator is tasked with collating the following contextual information in accordance EITI Requirement 3. Comment [EITI15]: Indicate the basis for the scope proposed below. Provide links to the documentation, or attach to the ToR. Comment [EITI16]: This section may be removed where the Independent Administrator has no role in collating contextual information. Contextual information to be provide in the EITI Report 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 Commentary on work to be undertaken by the Independent Administrator 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. 2 Add reference to Guidance Note 3 Add reference to Guidance Note 4 Add reference to Guidance Note

97 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 15 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 Comment [EITI18]: Alternatively, the MSG may wish to attach the scoping study where available. Benefit stream Commentary on work to be undertaken by the Independent Administrator 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) Comment [EITI21]: Alternatively, the MSG may wish to attach the scoping study where available. 4. Additional commentary on scope The materiality and inclusion of subnational payments (Requirement 4.2(d)) 8 5 Add reference to Guidance Note 6 Add reference to Guidance Note 7 Add reference to Guidance Note 8 Add reference to Guidance Note

98 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 16 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 Add reference to Guidance Note 10 Add reference to Guidance Note

99 Board Paper 25-3-B Template Terms of Reference for Independent Administrators 17 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) [ ] [ ]

100 25 TH EITI BOARD MEETING ABIDJAN OCTOBER 2013 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.

101 Board paper 25-5-A Validation: Cameroon VALIDATION: CAMEROON Table of Contents 1 Recommendation Background Assessing Compliance Procedures for achieving Compliance Assessment of the final Validation report... 6 Annex A Coverage EITI Reports Recommendation The Validation Committee makes the following recommendation to the EITI Board: The EITI Board designates Cameroon as EITI Compliant as of 17 October 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

102 Board paper 25-5-A Validation: Cameroon 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 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 A Prime Ministerial decree of June 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 data in November A second report covering 2005 data was published in March 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 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 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 (see Annex A below). Cameroon has completed the Validation process in accordance with the EITI Rules. The EITI 1 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 19 th 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. 3

103 Board paper 25-5-A Validation: Cameroon International Secretariat received Cameroon s draft Validation report on 27 July On behalf of the EITI Board, the Validation Committee agreed comments 3 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 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. Requirement Validator's assessment Secretariat's assessment 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 Status EITI Reporting Deadlines (Deadlines to avoid suspension) 2011 Report (EITI Rules) by 15 August Report (EITI Standard) by 31 Dec 2014 New Validation Deadline (Validation to commence) Cameroon Candidate 15 August 2013 (EITI Rules) The approach addresses three scenarios: 3 The draft validation report for Cameroon was distributed to members of the EITI Validation Committee on 29 July The Committee met on 2 August 2013 to discuss the report. 4

104 Board paper 25-5-A Validation: Cameroon 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

105 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 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 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 The government is required to issue an unequivocal 1 public statement of its intention to implement the EITI. The government is required to commit to work with civil 2 society and companies on implementation of the EITI. The government is required to appoint a senior individual 3 to lead on the implementation of the EITI. 4 The government is required to establish a Multi- Stakeholder group to oversee the implementation of EITI Comments by the Validation Committee on the draft Validation report, issued on 02 August No comments 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 International Secretariat s assessment of the final Validation report The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. The Minister of Finance, Mr Alaminie Ousman Mey, chairs the MSG, which meets regularly. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 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

106 Board paper 25-5-A Validation: Cameroon 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. Comments by the Validation Committee on the draft Validation report, issued on 02 August 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)). In accordance with Requirement 4(f), the Validator should assess whether members of the MSG have the capacity to carry out their duties. 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. International Secretariat s assessment of the final Validation report 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. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 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: 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 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. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 7

107 Board paper 25-5-A Validation: Cameroon Requirement 6 7 The government is required to ensure that civil society is fully, independently, actively and effectively engaged in the process. The government is required to engage companies in the implementation of the EITI. Comments by the Validation Committee on the draft Validation report, issued on 02 August No Comments No comments. International Secretariat s assessment of the final Validation report The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 8 The government is required to remove obstacles to the implementation of the EITI. No comments. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 9 The multi-stakeholder group is required to agree a definition of materiality and the reporting templates. 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 Report. 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 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

108 Board paper 25-5-A Validation: Cameroon Requirement Comments by the Validation Committee on the draft Validation report, issued on 02 August 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. International Secretariat s assessment of the final Validation report 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: 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). 10 The multi-stakeholder group must perceive the organisation appointed to produce the EITI reconciliation report as credible, trustworthy and technically competent. No comments The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 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 Stakeholders confirm that the reconciler is perceived as credible, independent, trustworthy and technically competent (p. 62). The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 9

109 Board paper 25-5-A Validation: Cameroon Requirement Comments by the Validation Committee on the draft Validation report, issued on 02 August International Secretariat s assessment of the final Validation report 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 The government is required 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 The government is required 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 concludes that the requirement is met. The International Secretariat concurs with this assessment. 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

110 Board paper 25-5-A Validation: Cameroon Requirement Comments by the Validation Committee on the draft Validation report, issued on 02 August International Secretariat s assessment of the final Validation report 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 The government is required to ensure that government reports are based on audited accounts to international standards. No Comments The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 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 certified 4 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) 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 concludes that the requirement is met. The International Secretariat concurs with this assessment. 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. The Validator concludes that the requirement is met. The 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

111 Board paper 25-5-A Validation: Cameroon Requirement accordance with the agreed reporting templates. Comments by the Validation Committee on the draft Validation report, issued on 02 August ). 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. International Secretariat s assessment of the final Validation report 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 ], 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 The multi-stakeholder group 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 Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. The EITI Follow-up Committee approved the 2009 and 2010 Report on 21 February The Validator concludes that the requirement is met. The 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 EITI Report. The Validator concludes that the requirement is met. The 12

112 Board paper 25-5-A Validation: Cameroon Requirement 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. Comments by the Validation Committee on the draft Validation report, issued on 02 August No Comments. No comments. No Comments. International Secretariat s assessment of the final Validation report International Secretariat concurs with this assessment. 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). The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. The Validator concludes that the requirement is met. The International Secretariat concurs with this assessment. 13

113 Annex A Coverage EITI Reports Total Revenues received by the Government from the extractive sector, after adjustments, (see page 8 and 9 in the respective Reports) Unilaterally disclosed revenues and payments Percentage of unilaterally disclosed revenues 1,728 % 2,0123 % 0,1028 % Percentage of revenues reconciled 98,272 % 97,99 % 99,90 %

114 25 TH EITI BOARD MEETING ABIDJAN OCTOBER 2013 Validation Committee 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.

115 Board paper 25-5-B Validation: Indonesia 2 VALIDATION: INDONESIA Table of Contents 1 Recommendation Background Assessing Meaningful Progress Procedures for achieving Compliance Assessment of the final Validation report Recommendation The Validation Committee makes the following recommendation to the EITI Board: 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.

116 Board paper 25-5-B Validation: Indonesia 3 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 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 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

117 Board paper 25-5-B Validation: Indonesia 4 Standard. In accordance with the transitional procedures for the EITI Standard, Indonesia is required to publish a 2013 annual activity report by 1 July Background Indonesia was admitted as an EITI candidate on 19 October 2010 and it published its first EITI report in May 2013, covering Indonesia s original validation deadline was 18 April Following an application from the MSG the Board agreed to extend the deadline to 18 July 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 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 Validator's Assessment Secretariat's Assessment 1

118 Board paper 25-5-B Validation: Indonesia 5 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 months, i.e., October 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 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 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.

119 Board paper 25-5-B Validation: Indonesia 6 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 Policy Note 3 in the EITI Rules including the Validation Guide (February 2011) states that: 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. 4 Procedures for achieving Compliance The Board recently agreed the transitional procedures for the EITI Standard. Indonesia s deadlines are as follows: Country Status EITI Reporting Deadlines (Deadlines to avoid suspension) 2010 & 2011 Report (EITI Rules) by 31 Dec Report (EITI Standard) by 31 Dec 2014 New Validation Deadline (Validation to commence) 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. Indonesia Candidate

120 Board paper 25-5-B Validation: Indonesia 7 Country Status EITI Reporting Deadlines (Deadlines to avoid suspension) New Validation Deadline (Validation to commence) The approach addresses three scenarios: 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.

121 EITI Board Paper 25-5-B Validation: Indonesia 8 5 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 The Validation Committee agreed comments on the draft (see below), which were sent to the national coordinator and the Validator on 21 May The Validation report was subsequently revised, approved by the Indonesian Steering Committee on 16 July 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. 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 turn, below: Table 2 International Secretariat s Assessment of the final Validation report from Indonesia Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final Validation report 1 The government is required to issue an unequivocal public statement of its intention to implement the EITI. No comments The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requireme 2 The government is required to commit to work with civil society and companies on implementation of the EITI. 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. 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 2

122 EITI Board Paper 25-5-B Validation: Indonesia 9 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final Validation report on the MSG. The Validator concludes that the requirement is met. The 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 The government is required to 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. The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requirement is met and supports the recommendations by the Validator. The Validator has addressed the Committee s comments. 4 The government is required to 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.

123 EITI Board Paper 25-5-B Validation: Indonesia 10 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final Validation report 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 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. 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. 6 The government is required to ensure that civil society is fully, independently, actively and effectively engaged in the process. See comments under Requirement 2, above. See comments under Requirement 2, above. The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requirement is met, but supports the recommendation by the Validator that broader Civil Society engagement is needed. 7 The government is required to engage companies in the implementation of the EITI. No comments. The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the requirement is met.

124 EITI Board Paper 25-5-B Validation: Indonesia 11 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final 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 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. 8 The government is required to remove obstacles to the implementation of the EITI. These figures should be updated in accordance with the final 2009 report, and the implications of any no participation assessed. 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 concludes that the arguments put forward by non-reporting companies are inconsistent with the commitment made by their representative bodies on the MSG The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the 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.

125 EITI Board Paper 25-5-B Validation: Indonesia 12 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 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. 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); International Secretariat s assessment of the final 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. 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. The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the requirement is met.

126 EITI Board Paper 25-5-B Validation: Indonesia 13 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final Validation report 11 The government is required to ensure that all companies and government entities 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. 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 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 government entities report. 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) 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 concludes that the requirement is met. The International Secretariat considers that there is insufficient evidence to demonstrate that this requirement is met. 12 The government is required to ensure that company reports are based on audited accounts to international standards. 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: 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?); 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 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 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

127 EITI Board Paper 25-5-B Validation: Indonesia 14 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 future. The Validator highlights the applicable accounting standards. He should also comment on whether these are generally complied with. International Secretariat s assessment of the final 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 The government is required to ensure that government reports are based on audited accounts to international standards. 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 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 3 To note: the reporting templates were approved by the MSG during its meeting on 24 August 2011.

128 EITI Board Paper 25-5-B Validation: Indonesia 15 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 to which does not confirm whether or not Indonesia implemented these ISSAIS even in There is therefore no indication as to whether or not the government s accounts were audited to international standards. International Secretariat s assessment of the final Validation report 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 Companies comprehensively disclose all material payments in accordance with the agreed reporting templates. 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. The Validator concludes that the requirement is met. The 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

129 EITI Board Paper 25-5-B Validation: Indonesia 16 Requirement Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final 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. 15 Government agencies comprehensively disclose all material revenues in accordance with the agreed reporting templates. 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. 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. 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. The Validator concludes that the requirement is met. The 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. 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. 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 The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the requirement is met. 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. The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the 4 The correct link to the document:

130 EITI Board Paper 25-5-B Validation: Indonesia 17 Requirement possible explains those discrepancies, and where necessary make recommendations for remedial actions to be taken. Comments by the Validation Committee on the draft Validation report, issued on 14 May 2013 International Secretariat s assessment of the final Validation report requirement is met. 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. The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the requirement is met. 19 Oil, gas and mining companies must support EITI implementation. No comments. The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the 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. The Validator concludes that this requirement is met. The International Secretariat is also satisfied that the requirement is met.

131 EITI Board Paper 25-5-B Validation: Indonesia 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.

132 25 TH EITI BOARD MEETING ABIDJAN OCTOBER 2013 Validation Committee 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.

133 Board paper 25-5-C Validation: Kazakhstan 2 VALIDATION: KAZAKHSTAN Table of Contents 1 Recommendation Background Assessing compliance Procedures for achieving Compliance Assessment of the final Validation report Recommendation The Validation Committee makes the following recommendation to the EITI Board: The EITI Board designates Kazakhstan as EITI Compliant as of 17 October 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 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

134 took note of the Validator s assessment but considered that there was sufficient evidence to demonstrate that these requirements were met. Board paper 25-5-C Validation: Kazakhstan 3 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 Kazakhstan has produced a total of seven EITI reports covering financial years , including an addendum the 2011 EITI Report 1. Preparations for the 2012 EITI Report are underway. Kazakhstan completed its first Validation in August 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 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 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

135 Board paper 25-5-C Validation: Kazakhstan 4 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 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 o o The 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. 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. The 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 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 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. 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 5 Available from

136 Board paper 25-5-C Validation: Kazakhstan 5 NSC, the International Secretariat notes that not all companies were included in the initial 2011 EITI Report. Specifically: o o o 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 Seven mining companies that made material payments in 2011 were not included in the report. Revenues from these companies represented % of total revenues from the mining sector in 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. 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

137 Board paper 25-5-C Validation: Kazakhstan 6 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 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, Kazakhstan 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. Kazakhstan s deadlines are as follows: Country Status EITI Reporting Deadlines (Deadlines to avoid suspension) New Validation Deadline (Validation to commence) Kazakhstan Candidate 2012 Report (EITI Rules) by 31 Dec Report (EITI Standard) by 31 Dec August 2013 (EITI Rules) The approach addresses three scenarios: 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.

138 Board paper 25-5-C Validation: Kazakhstan 7 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.

139 Board Paper 25-5-C Validation: Kazakhstan 8 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 The Validation Committee agreed comments on the draft (see below), which were sent to the national coordinator and the Validator on 19 July The Validation report was subsequently revised, approved by the Kazakhstan National Stakeholder Council on 14 August 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 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 turn, below: Table 2 International Secretariat s Assessment of the final Validation report from Kazakhstan Requirement Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 International Secretariat s assessment of the final Validation report 11 The government is required to ensure that all companies and government entities 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 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$ 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.

140 Requirement Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 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. Board Paper 25-5-C Validation: Kazakhstan International Secretariat s assessment of the final 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 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 ). 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

141 Requirement Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 Board Paper 25-5-C Validation: Kazakhstan International Secretariat s assessment of the final 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 ( ) 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 ( 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 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 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

142 Requirement 12 The government is required to ensure that company reports are based on audited accounts to international standards. Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 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 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. Board Paper 25-5-C Validation: Kazakhstan International Secretariat s assessment of the final Validation report The Validator concludes that the requirement is met. The 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. The Validator has addressed the Committee s comments, explaining that: 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 11

143 Requirement Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 Board Paper 25-5-C Validation: Kazakhstan International Secretariat s assessment of the final 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. The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requirement is met. 12 The Validator notes that the work performed by the Accounts Committee was a financial audit. 13 The government is required to ensure that government reports are based on audited accounts to international standards. 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. The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requirement is met. 14 Companies comprehensively 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

144 Requirement accordance with the agreed reporting templates. Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 affected the EITI report. Board Paper 25-5-C Validation: Kazakhstan International Secretariat s assessment of the final Validation 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. The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requirement is met Government agencies comprehensively disclose all 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).

145 Requirement Comments by the Validation Committee on the draft Validation report, issued on 19 July 2013 Board Paper 25-5-C Validation: Kazakhstan International Secretariat s assessment of the final Validation report The Validator concludes that the requirement is met. The International Secretariat is also satisfied that this requirement is met. 14

146 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 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.

147 Board Paper 25-6-AOutreach and Candidature Committee: Terms of Reference TERMS OF REFERENCE OF THE OUTREACH AND CANDIDATURE COMMITTEE 1 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.

148 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 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).

149 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 Outreach & Candidature Committee 1 October 2013 Board Paper 25-6-B EITI Outreach Strategy For discussion Summary The Outreach and Candidature Committee recommends that the Board agrees the EITI Outreach Strategy 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 The strategy draws extensively on previous outreach strategies.

150 EITI OUTREACH STRATEGY Board Paper 25-6-B EITI Outreach Strategy Contents 1 Introduction Background and EITI outreach so far Strategic objectives Criteria Strategic approaches Priority countries Resource implications Monitoring and evaluation 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 ders_communique.pdf 2

151 Board Paper 25-6-B EITI Outreach Strategy 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 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 A Board committee devoted to the topic was established in 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

152 Board Paper 25-6-B EITI Outreach Strategy 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: 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. 4 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

153 Board Paper 25-6-B EITI Outreach Strategy 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

154 Board Paper 25-6-B EITI Outreach Strategy 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 e- mail), 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 , the EITI will prioritise the following countries: 6

155 Board Paper 25-6-B EITI Outreach Strategy 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 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

156 Board Paper 25-6-B EITI Outreach Strategy estimated at USD 180,000, which is the same as it was in 2012 and Should there be a demand for additional expenditure, it would be possible to draw on contingencies during 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 $5,000 Grand total $180,000 8 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

157 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 EITI International Secretariat 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.

158 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 DRAFT OUTREACH PROGRESS REPORT: JULY- SEPTEMBER 2013 Table of Contents 1 Summary Background Update on Outreach Strategy Developments in priority outreach countries... 5 Australia... 5 Brazil... 6 Chile... 7 Colombia... 8 Egypt Libya Mexico Myanmar (Burma) Papua New Guinea South Africa South Sudan Tunisia Uganda United States Developments in other countries Candidate application pending / expected Committed to implement, but timeline unclear Uncommitted/limited progress

159 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 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 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 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 September to discuss these issues with stakeholders]. A joint statement 1 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 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

160 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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 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 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 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: 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. 3 Update on Outreach Strategy 2013 The EITI International Secretariat workplan for 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

161 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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 International Secretariat contact: Contact name: Sam Bartlett and or telephone number: sbartlett@eiti.org BACKGROUND Partners with particular interest (lead coordinating partner underlined): Not applicable. 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. Australia s EITI Pilot (announcement) is underway. The MSG has been formed and has met regularly. The next meeting is scheduled for Friday 27 September- There 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 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

162 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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, November 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) Other contacts in the Ministry include: Partners with particular interest (lead coordinating partner underlined): World Bank Daniele La Porta Revenue Watch Institute - Anthony Richter ARichter@sorosny.org European Commission British Embassy ExxonMobil International Secretariat contact: Contact name: Francisco Paris and or telephone number: fparis@eiti.org, 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) 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

163 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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 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. OUTREACH STRATEGY/NEXT STEPS 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 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 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 International Secretariat contact: Contact name: Francisco Paris and or telephone number: fparis@eiti.org; Partners with particular interest (lead coordinating partner underlined): British Embassy Karl Zammit-Maempel karl.zammit-maempel@fco.gov.uk Chile Transparente Jaime Bazan Ried (jbazan@chiletransparente.cl) European Commission 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 director- Legal affairs) mario.vila@sii.cl Industry: Codelco: Juan Pablo Schaeffer juan.schaeffer@codelco.cl Anglo-American: Miguel Angel Duranmaduran@consejominero.cl and Felipe Purcell- Felipe.purcell@anglochile.cl- 7

164 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 BACKGROUND Consejo Minero: Miguel Angel Duran Xtrata: Nicolás Fuster Antofagasta: Helen Karikari Alejandra Tironi (Chile) Consejo Minero- Joaquin Villarino Civil Society: Chile Transparente (TI Chapter) Juan Carlos Decano (President) Drina Rendic (Treasurer)- 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. OUTREACH STRATEGY/NEXT STEPS 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. The International Secretariat will: 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 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

165 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 Talisman. World Bank/MDTF, IADB and RWI. International Secretariat contact: Contact name: Francisco Paris and or telephone number: BACKGROUND Local stakeholders: Government: Secretary General, Office of the President, Maria Lorena Gutierrez Industry Oil Sector Alejandro Martinez, Asociacion Colombiana de Petroleo Camilo Duran, President ExxonMobil Colombia Eduardo Rodriguez, President Shell Colombia Patricia Serrano, Corporate and Governmental affairs, Chevron 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 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 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 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

166 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 OUTREACH STRATEGY/NEXT STEPS The International Secretariat will: 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 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 and or telephone number: tbc Additional info: Following the recent elections, government counterparts have yet to be identified International Secretariat contact: Contact name: Bady Mamadou Balde and or telephone number: bbalde@eiti.org Partners with particular interest (lead coordinating partner underlined): Partners: British FCO and DFID, World Bank, BG, Total, RWI, OSI (No specific lead) Contact name: and or telephone number: Local stakeholders: Stakeholder: tbc Contact name: tbc 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 STRATEGY/NEXT STEPS 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 and or telephone number: Laury Haytayan lhaytayan@revenuewatch.org Patricia Karam pkaram@revenuewatch.org Partners with particular interest (lead coordinating partner underlined): Partner: EITI Secretariat, Global Witness, RWI, PWYP, Total, ENI, US, Contact name: Francesca Ciardiello, ENI and or telephone number: Francesca.ciardiello@eni.com Additional info: The International Secretariat is exploring the 10

167 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 possibility of hosting a high level delegation from Libya to further explore the possibility of government commitment to implement EITI. International Secretariat contact: Contact name: Bady Mamadou Balde and or telephone number: bbalde@eiti.org Local stakeholders: Government: February 17 Coalition, the Libya Finance Group and Transparency Libya Contact name: 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 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 in 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 June 2013, in Tripoli. The workshop was well attended and participants expressed interest for learning more about the EITI process. OUTREACH STRATEGY/NEXT STEPS 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 Partners with particular interest (lead coordinating partner underlined): RWI European Commission British Embassy Emb. of Norway ExxonMobil International Secretariat contact: Contact name: Francisco Paris and or telephone number: fparis@eiti.org: Local stakeholders: Pemex Antonio Dominguez (Comptroller General) Froylan Gracia and Vanessa Zarate Rogelio Gasca Neri Pemex Board member Rogelio.gasca@pemex.com Fundar 11

168 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 Miguel Pulido Aroa de la Fuente Mexicana (TI Chapter) Eduardo Bohorquez BACKGROUND Mexico s oil sector is important to the economy. Oil output is at 2.9 million barrels/day in Pemex, the state owned monopoly, is the largest source of government revenue. Mining is also significant. Mexico has the 4 th and 6 th 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 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 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. OUTREACH STRATEGY/NEXT STEPS 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 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) 12

169 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 International Secretariat contact: Contact name: Dyveke Rogan and or telephone number: BACKGROUND Silvia Facchinello NORAD/Oil for Development: Solveig Andresen Open Society Foundations: Maureen Aung-Thwin Revenue Watch Institute (RWI): Anthony Richter Erica Westenberg Matthieu Salomon Switzerland: Corinne Henchoz Pignani UNDP: Elinor Bajraktari Razi Latif Paul Steele US: Victoria Ayer Marti Flacks Brian Stout Local stakeholders: Spectrum: David and Maw Htun Aung Paung Ku: Kyaw Thu Aung: Pyoe Pin: Gerry Fox Chevron Total: Namita Shah Woodside 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

170 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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. OUTREACH STRATEGY/NEXT STEPS 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 and or telephone number: donald_hehona@treasury.gov.pg International Secretariat contact: Contact name: Sam Bartlett and or telephone number: sbartlett@eiti.org BACKGROUND Partners with particular interest (lead coordinating partner underlined): 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. 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 RECENT DEVELOPMENTS The Secretariat has provided comments on a draft workplan and ToR for the MSG. A launch event and signing of a 14

171 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 MoU has been delayed to allow CSO to conduct further consultations and to select their MSG representatives. OUTREACH STRATEGY/NEXT STEPS 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 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 contact: Contact name: Eddie Rich and or telephone number: erich@eiti.org BACKGROUND Partners with particular interest (lead coordinating partner underlined): International Secretariat, World Bank/MDTF, US Govt, Swiss Govt and RWI. Companies generally supportive including Chamber of Mines. 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 and or telephone number: claudek@sarwatch.org Main: +27 (0) 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 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 15

172 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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. OUTREACH STRATEGY/NEXT STEPS 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. The International Secretariat will: 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 International Secretariat contact: Contact name: Eddie Rich (erich@eiti.org ); Jurgen Reitmaier (jreitmaier@eiti.org; ) BACKGROUND Partners with particular interest (lead coordinating partner underlined): Partner: Norwegian Embassy, UN Special Representative Hilde Johnsen, Global Witness, UN Anti-Corruption Adviser to President Kiir John Githongo Contact name: Ole Kirkvaag and or telephone number: ole.kirkvaag@adeb.no Phone: Local stakeholders: Stakeholder: GADET-Pentagon Contact name: Taban A Christopher and or telephone number: tabachris@yahoo.com 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 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

173 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 demonstrates strong commitment: The Petroleum Act was signed into law in July 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. OUTREACH STRATEGY/NEXT STEPS 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 and or telephone number: The Chief of Staff Hichem Hammi chem.elhammi@pm.gov.tn International Secretariat contact: Contact name: Bady Mamadou Balde and or telephone number: bbalde@eiti.org BACKGROUND Partners with particular interest (lead coordinating partner underlined): Partners: RWI Contact name: Patricia Jean Karam MENA Regional Director, RWI (US) (Lebanon) and or telephone number: pkaram@revenuewatch.org Local stakeholders: Stakeholder: ATTEM (Association Tunisienne pour Transparence dans le secteur de l énergie et des Mines) Contact name: Sofiane Reguigui and or telephone number: sofianereg@yahoo.fr 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 bpd and important gas reserves). A strong civil society group continues its campaign effort to implement EITI. The Government made commitment 17

174 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 to implement the EITI in June 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. OUTREACH STRATEGY/NEXT STEPS 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 and or telephone number: charles.byaruhanga@finance.go.ug Mobile: Additional info: The Ministry of Finance now leads on the EITI. International Secretariat contact: Contact name: Eddie Rich and or telephone number: erich@eiti.org BACKGROUND Partners with particular interest (lead coordinating partner underlined): 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 and or telephone number: dsantley@worldbank.org Steven SMOLDERS steven.smolders@eeas.europa.eu Main: Elin Graae Jensen elin.graae.jensen@mfa.no +256 (0) cm3@dgf.ug (Democratic Governance Facility) Local stakeholders: Stakeholder: PWYP-Uganda Contact name: Winnie Ngabiirwe and or telephone number: winnie.ngabiirwe@gmail.com Office: Dickens Kamugisha Africa Institute for Energy Governance (AFIEGO) afiego_ug@yahoo.com 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

175 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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. OUTREACH STRATEGY/NEXT STEPS 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. International Secretariat contact: Contact name: Sam Bartlett and or telephone number: sbartlett@eiti.org BACKGROUND Partners with particular interest (lead coordinating partner underlined): 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: number: 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: Meetings 19

176 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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. OUTREACH STRATEGY/NEXT STEPS 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 Partners with particular interest (lead coordinating partner underlined) & local stakeholders The Government of Ethiopia, the World Bank/MDTF. Ethiopia Provided an application with outline of Requirements 1-5. Board questioned ability to engage civil society effectively. A delegation visited Addis Ababa on 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. Senegal Candidature application received 23 July. The government of Senegal declared its intention to implement the EITI on 20 February Stakeholders have nominated their MSG representatives. The first MSG meeting took place on 31 January 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. Regional Director contact Eddie Rich USAID, World Bank/MDTF, ADB, CIDA. Osiwa and Oxfam America, La Lumière, Le Forum Civil. Regional Director contact Wouter Biesterbos 20

177 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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 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. Regional Director contact Siri Farstad 5.2 Committed to implement, but timeline unclear Country Progress against the 5 sign-up Requirements Current status and next steps Partners with particular interest (lead coordinating partner underlined) & local stakeholders Guyana Kuwait 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 We understand that the Government is asking the Inter- American 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. Norway, World Bank, Inter- American Development Bank and EU Delegation Regional Director contact Francisco Paris US and Transparency Kuwait. Regional Director contact Eddie Rich 5.3 Uncommitted/limited progress Country Progress against the 5 sign-up Requirements Current status and next steps Partners with particular interest (lead coordinating partner underlined) & local stakeholders 21

178 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 Angola Progress unlikely No recent discussion. 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 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 The World Bank (MDTF) visited the country in March 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 and Norway. Regional Director contact Eddie Rich World Bank/MDTF Regional Director contact Siri Farstad International Secretariat, World Bank/MDTF, RWI, OSI, Centre for the Study of Democracy. Regional Director contact Siri Farstad GIZ, International Secretariat, World Bank, Transparency International. Regional Director contact Tim Bittiger EU Delegation and the World Bank/MDTF. Barrick Regional Director contact Francisco Paris International Secretariat, Open Society Georgia Foundation, RWI Regional Director contact Siri Farstad 22

179 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 Kenya Kosovo Uncommitted/ limited progress No 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. No development partner (yet) in forefront; Turkana Basin Institute (Richard Leakey), Northern Aid (Jarso Mokku), Cedmac (Abubakar Said). Regional Director contact Jurgen Reitmaier International Secretariat, GIZ, World Bank/MDTF Kosovo Foundation for Open Society EITI in Albania Regional Director contact Siri Farstad Lao PDR Malawi No progress towards sign-up Some progress towards sign-up 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: AIDB and the International Secretariat. ICMM/MMR (Minmetals Resources Limited). Regional Director contact Sam Bartlett Germany (GIZ) and World Bank. Citizens for Justice. Regional Director contact Jurgen Reitmaier 23

180 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 Poland Romania Rwanda Surinam Turkey Some progress towards sign-up No progress to sign-up 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. Regional Director contact Siri Farstad Regional Director contact Siri Farstad World Bank/MDTF, Germany (BMZ), and Belgium. Transparency Rwanda. Regional Director contact Tim Bittiger World Bank and Inter- American Development Bank. EU Delegation US Embassy. Regional Director contact Francisco Paris Regional Director contact Siri Farstad 24

181 Board Paper 25-6-C Draft EITI Outreach Progress Report: July-Sept 2013 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 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 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. Regional Director contact Sam Bartlett RWI and Norway. Regional Director contact Sam Bartlett World Bank/MDTF, PWYP, SARW. Regional Director contact Eddie Rich 25

182 25 TH EITI BOARD MEETING ABIDJAN, 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 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).

183 Board Paper 25-6-D Candidature Assessment Senegal CANDIDATURE ASSESSMENT SENEGAL Table of Contents 1. Recommendation Summary Background Candidature Assessment... 7 EITI Requirement EITI Requirement EITI Requirement EITI Requirement Annex A Senegal Candidature Application 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 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 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 2

184 Board Paper 25-6-D Candidature Assessment Senegal 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 Should Senegal be admitted as a Candidate on 17 October 2013, this implies publication of the first EITI Report by 17 October Validation will commence no later than 17 October 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 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

185 Board Paper 25-6-D Candidature Assessment Senegal 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 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 , 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 reform programme: (EN) Or (FR) 10 idem

186 Board Paper 25-6-D Candidature Assessment Senegal 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: 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 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 Debriefing of a WB mission to Senegal in June

187 Board Paper 25-6-D Candidature Assessment Senegal 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 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 development 25 (a EUR185 million investment to enable the construction of a toll 19 H.E. President Macky Sall on national television in the margins of the G8 conference in London: (min. 3.30) idem

188 Board Paper 25-6-D Candidature Assessment Senegal 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 ) 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 ) 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 (min. 3.30) 7

189 Board Paper 25-6-D Candidature Assessment Senegal process, and is formally enshrined in Presidential Decree 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. EITI Requirement 1.2 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. Secretariat s Assessment On 20 June 2013, through Decree , 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 Secretariat s assessment is that the requirement is met. 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. 8

190 Board Paper 25-6-D Candidature Assessment Senegal e) 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. f) 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 multi-stakeholder group must be operationally, and in policy terms, independent of government and/or companies; 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. 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

191 Board Paper 25-6-D Candidature Assessment Senegal 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 Secretariat s Assessment 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 decree 29 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:

192 Board Paper 25-6-D Candidature Assessment Senegal 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 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 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 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

193 Board Paper 25-6-D Candidature Assessment Senegal 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 ( ), 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. Secretariat s Assessment The MSG endorsed the workplan for on 10 July 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 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 See The EITI Standard for specifications of these issues: See The EITI Standard, paragraph 1.6 a) EITI reporting deadlines, p

194 Board Paper 25-6-D Candidature Assessment Senegal 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 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. The Secretariat s assessment is that the requirement is met

195 Board Paper 25-6-D Candidature Assessment Senegal Annex A Senegal Candidature Application Publicly available at: Application: with an English translation available through Annexes: 14

196 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 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 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.

197 Board Paper 25-6-E Candidature Assessment - Ukraine 2 CANDIDATURE ASSESSMENT UKRAINE Contents 1 Recommendation Summary Background Candidature assessment... 6 EITI REQUIREMENT EITI REQUIREMENT EITI REQUIREMENT EITI REQUIREMENT Annexes 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 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 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

198 Board Paper 25-6-E Candidature Assessment - Ukraine 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 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 Should Ukraine be admitted as a Candidate, this implies publication of the first EITI Report by 17 October Validation will commence no later than 17 October 2016.

199 Board Paper 25-6-E Candidature Assessment - Ukraine 4 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 Foundations 6 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 loan 7 to the government of Ukraine and provided them with an additional US $15.2 billion in Financial support was aimed at rebuilding Ukrainian economy after the 2008 financial crisis. 9 The government of Ukraine requested an additional US $15 billion in April 2013 from the IMF. Discussions around this are still ongoing. The World Bank has also provided significant financial support. 10 Political situation and civil society liberties Reports from a number of international organisations suggest that civil society has limited freedom to operate in Ukraine. 11 The US Department of State writes in its 2011 Ukraine country report 12 : 2 See Country Overview: Ukraine (2013) by Economic and Political Intelligence Centre: Info/Documents/ukraine.pdf 3 See the Executive Summary on key recommendations to Ukraine (2012) from the International Energy Agency: 4 See Ukraine Overview: IMF ( ) IMF approves US$ 16.4 billion stand-by arrangement for Ukraine. 8 Bloomberg ( ) Ukraine secures new US$ 15.2 billion IMF bailout loan to cover budget deficit. 9 BBC News ( ) Ukraine s economy to shrink 15% 10 The World Bank ( ) The World Bank in Ukraine: 20 years of partnership. 11 See Human Rights Watch World Report (2013) Ukraine

200 Board Paper 25-6-E Candidature Assessment - Ukraine 5 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 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) and Sounding the Alarm Round 2: Protecting Democracy in Ukraine (Freedom House, July 2012): and Amnesty International Annual Report 2013: Ukraine

201 Board Paper 25-6-E Candidature Assessment - Ukraine 6 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 assessment The government of Ukraine has made several unequivocal statements of the government s intention to implement the EITI, including Resolution No on EITI implementation (attached to the application). The resolution was issued by the Cabinet of Ministers on 30 September 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 , and in the Uriadovy Courier on 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 September The Secretariat s assessment is that the requirement is met. EITI Requirement 1.2 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. Secretariat assessment 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 Boiko 14. 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 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 13 By former Minister of Fuel and Energy and current Vice Prime Minister of Ukraine Yuriy Boyko ( ), Prime Minister of Ukraine, Mykola Azarov ( ), 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.

202 Board Paper 25-6-E Candidature Assessment - Ukraine 7 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. The Secretariat s assessment is that the requirement is met. 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) 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. f) 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; 15 Interviews were held with CSO members of the MSG, as well as the EITI representative in the Ministry of Energy and Coal Industry.

203 Board Paper 25-6-E Candidature Assessment - Ukraine 8 iii. iv. 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. Members of the multi-stakeholder group should have the capacity to carry out their duties. ii. iii. 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. viii. 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. The multi-stakeholder group must keep written records of its discussions and decisions. Secretariat assessment 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

204 Board Paper 25-6-E Candidature Assessment - Ukraine 9 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 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 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 Attached.

205 iii. Senior government officials are represented in the MSG, mainly at Head of Department level. Board Paper 25-6-E Candidature Assessment - Ukraine 10 iv. The EITI multi-stakeholder group is established through the Order of the Deputy Minister of Fuel and Energy on 10 October 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 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 , 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 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 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 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,.6-7). 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

206 Board Paper 25-6-E Candidature Assessment - Ukraine 11 participation of civil society during its visit to Ukraine 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 ( ), 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. Secretariat assessment a) The MSG has developed an EITI workplan covering (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 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 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

207 the Ukrainian think tank Dixi Group. The workplan was endorsed at the last MSG meeting, on 22 April Board Paper 25-6-E Candidature Assessment - Ukraine 12 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 ( ). 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 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 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: 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:

208 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 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.

209 GOVERNANCE COMMITTEE: TERMS OF REFERENCE Board Paper 25-7-A Governance Committee: Terms of Reference 2 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 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 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. 4 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

210 Board Paper 25-7-A Governance Committee: Terms of Reference 3 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).

211 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 EITI International Secretariat 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

212 DRAFT CODE OF CONDUCT Board Paper 25-7-B DRAFT Code of Conduct 1 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 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.

213 Board Paper 25-7-B DRAFT Code of Conduct 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 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 ( 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) 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.

214 Board Paper 25-7-B DRAFT Code of Conduct 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

215 Board Paper 25-7-B DRAFT Code of Conduct 4 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 o 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. 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. 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

216 Board Paper 25-7-B DRAFT Code of Conduct 5 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. ***

217 25 TH EITI BOARD MEETING ABIDJAN, OCTOBER 2013 EITI International Secretariat 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.

218 Board Paper 25-8 Draft International Secretariat 2014 Workplan Table of contents 1 Summary including priorities for Tasks and actions in Support to implementing countries Outreach and strategic positioning of the EITI Support to the EITI Board Management, funding and monitoring Management of the International Secretariat Funding of the International Secretariat 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

219 Board Paper 25-8 draft International Secretariat 2014 Workplan 3 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 6 th 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 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.

220 Board Paper 25-8 draft International Secretariat 2014 Workplan 4 2 Tasks and actions in 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 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 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 EITI Requirement 4.1c 3 EITI Requirement EITI Requirement 3.2

221 Board Paper 25-8 draft International Secretariat 2014 Workplan 5 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 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

222 Board Paper 25-8 draft International Secretariat 2014 Workplan 6 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 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 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. Resource requirements Outreach is anticipated to require 155% of one policy staff member s time and 40% of one administrative staff member s time 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

223 Board Paper 25-8 draft International Secretariat 2014 Workplan 7 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. Resource requirements 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 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 With the arrival of more comprehensive EITI Reports adhering to the 2013 EITI Standard, this database will need considerable revisions in 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. Resource requirements 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 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

224 Board Paper 25-8 draft International Secretariat 2014 Workplan 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. Resource requirements 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. Resource requirements 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.

225 Board Paper 25-8 draft International Secretariat 2014 Workplan 9 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 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: Benefit from experience. 6 Discussed at the 21st meeting of the EITI Board in Lusaka, October 2012.

226 Board Paper 25-8 draft International Secretariat 2014 Workplan 10 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 Resource requirements Management, funding and monitoring is anticipated to require 40% of one policy staff member s time and 130% of one administrative

227 Annex A - EITI International Secretariat Organisational Diagram EITI Board Paper 25-8 draft International Secretariat 2014 Workplan 11

228 EITI Board Paper 25-8 draft International Secretariat 2014 Workplan 12 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 2007 Actual 2008 Actual 2009 Actual 1) No. of compliant countries (2) N/A N/A ) No. of implementing countries (2) ) No. of supporting companies (2) ) No. of supporting investors (2) N/A USD14trm USD16trm (before 2010 measured in assets under management) 5) No. of supporting countries (2) ) No. of countries that have submitted final N/A N/A Validation reports (2) 7) Visits to EITI website (per month) 5,300 6,000 8,700 10,140 12,950 15,600 16,800 22,800 30,000 8) Articles citing EITI in selected media (per year) (3) N/A (3) 9) References of EITI in, tracked by Factiva.com (per year) (4) (8) ) Subscribers to EITI s newsletter (2) N/A N/A N/A (10) ) Reporting No. of EITI reports (fiscal periods) % of implementing countries reporting Companies participation (7) 19(5) 41% N/A 7 33% N/A 17 74% N/A (1) Until 15 September (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 (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 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 Actual 10 34% N/A 2011 Actual 21 58% (9) N/A 2012 Actual % N/A 2013 Target 35 97% N/A 2013 Actual (1) % Target 30 97% 800 Part II. Agency effectiveness indicators

229 EITI Board Paper 25-8 draft International Secretariat 2014 Workplan 13 Agency effectiveness (Resources) 2010 (USD) % 2011 (USD) % 2012 (USD) % 2013 (USD) * % Support to implementing countries Outreach activities Board meetings and Chairman support Rel. Stakeholders (Conference, NCs) Rel. Companies and Investors Communication Training Management and administration *January-June 2013 Outputs

230 EITI Board Paper 25-8 draft International Secretariat 2014 Workplan 14 Website & Publications News items Tweets Blogs Newsletter Regular publications Videos Progress report Validations reports reviewed Secretariat Reviews 5 Reconciliation reports reviewed Meetings Donors roundtables National coordinators meeting Board meetings People trained Countries visited Implementing Outreach Disclosure of Revenues No of EITI Reports (fiscal periods) No of EITI Reports (disaggregated) Regularity of EITI disclosure 34 % 58 % 51% 7 January- September Measurement to be removed in next year s work plan 8 Fiscal periods 9 Including 25th Board Meeting

231 EITI Board Paper 25-8 draft International Secretariat 2014 Workplan 15 Companies participating in reporting 10 N/A N/A N/A Cumulative number of companies that have participated in EITI Reports published during the year

232 Annex C - Summary of actions items EITI Board Paper 25-8 draft International Secretariat 2014 Workplan 16