The Moves to Greater Transparency

The EITI, Extractive Industries Transparency Initiative, the global standard for transparency of revenues from natural resources, is holding its 2013 Global Conference in Sydney, Australia.  Launched in 2003, the EITI promotes and supports improved governance and transparency in resource-rich countries by ensuring companies publish what they pay and governments publish what they receive in an EITI report.

Nigeria’s Minister of Mines and Steel Development, Musa Sada, was quick to demonstrate the value of signing onto the Extractive Industries Transparency Initiative.

Speaking at the opening session of the 6th global EITI conference in in Sydney, Australia, Musa Sada said EITI audits had revealed $2 billion in underpayments to Nigeria. It was money he said that had been recovered and channeled into the country’s infrastructure.

There are now 39 countries around the globe which have joined EITI – the Extractive Industries Transparency Initiative – which requires full disclosure of taxes, royalties and other fees from a country’s oil, gas and mining sectors. About half of the countries are in Africa.

Transparency Top Priority

In opening the 6th EITI conference, which has attracted delegates from about 100 countries around the globe, EITI chair Clare Short, announced that the United Kingdom and France would join other countries in committing to implement the EITI.

In a video address played to the conference, the British Prime Minister David Cameron said transparency was a top priority for Britian in its presidency of the G8 and “nowhere is transparency more important than in extractive industries.”

And just prior to the start of the conference, it was also announced that Honduras and the Philippines would now implement the EITI standard, a move which requires both countries to publish their first EITI report within a year and a half. 

“By signing onto EITI, countries are sending a clear message that they want to increase transparency and accountability when it comes to their natural resources,” said Paulo de Sa, manager of the World Bank’s Oil, Gas and Mining Unit.  “This transparency is fundamental to helping ensure that the benefits of a country’s natural resources can help developing nations in their quest to reduce poverty and boost shared prosperity.”

An Added Benefit

In his opening address to the conference, the Prime Minister of Solomon Islands, the Hon. Gordon Darcy Lilo also highlighted another advantage he saw to joining the EITI – helping reduce the risk of conflict.

The Prime Minister told the conference the consultations and transparency that comes with EITI would help his country avoid the problems that occurred during the tensions in years past.

He said it was “crucial for the benefits from extractives to be managed in the best possible way” and to let “revenues be a positive force for the people.”

“The road ahead is challenging, but not impossible,” he told the conference delegates. The Prime Minister also noted the support of the World Bank. Signing onto the EITI runs parallel to initiatives taken to modernize the mining sector, in collaboration with the Bank. The government is currently in talks with the Bank to provide ongoing support to update its mining law and regulatory framework to promote the development of an industry that is environmentally and socially responsible.

The World Bank’s oil, gas, and mining unit provides countries with technical assistance and grants to implement the EITI principles of revenue transparency and accountability, as well as support for civil society. Funding comes from a multi-donor trust fund (MDTF) managed by the Bank and supported by 15 donor countries including Australia, Belgium, Canada, Denmark, the European Commission, Finland, France, Germany, Japan, the Netherlands, Norway, Spain, Switzerland, the UK and the US.

Changing Standards

As a voluntary association of stakeholders with common goals, the EITI includes resource rich developing countries, donors, international and national resource companies and civil society. The initiative aims to improve transparency by the publication and verification of company payments and government revenues from oil, gas and mining activities. A body that includes government, company and civil society members oversees the reporting process.

And with this year marking ten years since EITI’s inception, the conference is also set to endorse changes to the EITI standards, which will include new reporting requirements so EITI reports disclose the payments broken down by each company and by revenue stream, rather than aggregate figures. The changes are aimed at improving implementation and reporting processes as well as greater transparency.

“Thanks to EITI, citizens can follow the money trail from the resources under the ground right through to government budgets, delivering greater transparency in the management of a country’s natural resources,” said S. Vijay Iyer, the Director of the World Bank’s Sustainable Energy and Mining Department.  “The World Bank Group will continue to support countries to get better deals, which are better managed, and which deliver transformative development impact for more citizens.”

One new tool unveiled for the EITI conference is a new database of publicly available oil, gas and mining agreements developed by the World Bank Institute, Revenue Watch Institute and the Vale Columbia Center on Sustainable International Investment.  The database is designed to help fill the gaps in knowledge and access and is designed for easy use, even in countries with slower internet connections.

“All these tools and measures, though not panaceas, will help inform better mining deals in the future for more development impact for people in the resource rich countries,” he said.