STRENGHTENING GOVERNANCE IN TRINIDAD AND TOBAGO S EXTRACTIVE SECTORS The role of the EITI. TTEITI Secretariat April 2013

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1 STRENGHTENING GOVERNANCE IN TRINIDAD AND TOBAGO S EXTRACTIVE SECTORS The role of the EITI TTEITI Secretariat April 2013

2 ORIGINS OF THE EITI Extractive Industries publish payments to governments Promote improved governance through greater transparency and accountability to citizens To satisfy Civil Society s right to know

3 RESOURCE RICH COUNTRIES Energy as a % of GDP (constant prices) Energy revenue as a % of total revenue Energy exports as a % of total exports TTEITI Mini Scoping Study on the Extractive Sector January 2013 Volatile and nonrenewable revenue streams Careful revenue management necessary to avoid socio-economic and governmental distortions

4 WHAT IS THE EITI? A global standard for extractive industries companies (i.e. oil, gas and mining) to publish what they pay and for governments to disclose what they receive from the extractive sector An objective to make natural resources benefit all A coalition of governments, companies and civil society

5 37 Implementing countries EITI IMPLEMENTING COUNTRIES

6 WHO SUPPORTS THE EITI? 62 leading oil & gas companies 7 operating in Trinidad & Tobago 80 institutional investors 100s of civil society groups & networks Publish What You Pay Revenue Watch Institute Transparency International

7 GENESIS OF THE TTEITI Peoples Partnership Manifesto 2010 TTEITI is the result of Civil Society Advocacy

8 THE TTEITI STEERING COMMITTEE National Multi-stakeholder Group (MSG) Cabinet-appointed Committee created - December 2010 Steering Committee Composition - Government (6) - Industry (4) - Civil Society (8) Chair Victor Hart Candidate country status achieved - March 2011 Each group has a place, each group has a say

9 CIVIL SOCIETY TTEITI SC REPRESENTATIVES 1. Trinidad and Tobago Chamber of Industry and Commerce 2. The Energy Chamber of T&T 3. T&T Transparency Institute 4. Oilfields Workers Trade Union 5. The National Youth Council of T&T 6. The Cropper Foundation 7. Fishermen and Friends of the Sea 8. The Network of NGOs of T&T for the Advancement of Women

10 TTEITI SC REPRESENTATIVES GOVERNMENT 1. Ministry of Energy and Energy Affairs 2. Ministry of Finance 3. Board of Inland Revenue 4. Petroleum Company of Trinidad and Tobago Limited 5. The National Gas Company of Trinidad and Tobago Limited 6. National Quarries Company Limited COMPANIES 1. bptt LLC 2. BG Trinidad and Tobago Limited 3. BHP Billiton Trinidad and Tobago Limited 4. EOG Resources Trinidad Limited

11 EITI MAIN DELIVERABLES TWO MAIN DELIVERABLES: 1) Complete first EITI Report by June 2013: Completion of a Revenue Reconciliation Report 2) Attain Compliant Country Status by August 28, 2013: External validators review systems to ensure revenue transparency Validators gauge the views of a cross section of stakeholders on EITI implementation EITI International Board awards compliant status on the basis of validators report

12 CHANGING GOVERNANCE PARADIGM Holding Government to account, a new practice in Trinidad and Tobago Sunlight is the best disinfectant U.S. Supreme Court Justice Louis Brandeis Even when we trust, we should verify that our interests are being served as they should at all times Richard Joseph, Former Chair, TTTI

13 GOVERNANCE IN RESOURCE RICH COUNTRIES Karl, L. T State not dependent on taxation of its citizens Disconnect between citizens and state on accountability on allocation of resources Devarjan et al 2010 Critical to improve the efficiency of the taxation system in oil rich economies

14 THE EITI PROCESS Companies Disclose Payments Government Discloses Receipts Government Spending Award of licenses & contracts Regulation & monitoring of operations Independent Verification of Tax & Royalty Payments Revenue Distribution & Management Implementa tion of Sustainable Developme nt Policies Oversight by a Multi-Stakeholder Group Links to other Public Financial Management Reforms & Accountability Mechanisms The EITI provides a Forum for dialogue and a Platform for broader reforms

15 EITI & GOVERNANCE INDICATORS Source : World Bank Governance Indicators 2011 Good governance = access to international financing

16 THE EITI = STANDARDIZATION Central Bank - 11 components Ministry of Finance - 10 components Heritage & Stabilization Fund Act - even less components Surplus Deficit FISCAL BALANCE $ million MOF CB DIFF 2007 $2,200 $268 $1, $12,100 $2,900 $9, $6,600 $6,600 $ $308 $2,800 $2,492 THREE DIFFERENT WAYS OF CALCULATING EXCESS ENERGY REVENUE

17 SUMMARY An excellent platform for uniting stakeholders and giving Civil Society a seat around the table An effective natural resource management system for finite non-renewable sources of revenue Comprehensive disclosure of all material payments and standardized accounting system over time Improved international ratings RWI, GCI, CPI Strengthen regulations and reduce leakage A framework for broader governance reform

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