Image by Pixabay
 

EITI Board members met for #EITIVirtual2020 last week, where they discussed the outlook and opportunities for EITI implementation through and beyond the COVID-19 pandemic.
 
Rethinking Validation: The Board agreed to introduce a new way of assessing how countries progress towards implementing the EITI Standard. The proposed approach will place emphasis on the role of multi-stakeholder groups, routine disclosure and impactful EITI implementation.

Flexible reporting: Ten EITI implementing countries will take up flexible EITI reporting in 2020. The Board has extended these measures into 2021, as countries continue to grapple with the prolonged impact of the pandemic.

As countries strive to meet the Paris agreement, EITI Board Chair Helen Clark outlines why and how EITI reporting is needed to inform policy and debate in the transition to a low-carbon economy.

Quoted: “This transition has profound implications for extractive sectors and it will not be easy. The EITI can be supportive of the transition, as the robust data gathered to meet its requirements, when published and used responsibly, can advance understanding of transition pathways.”

Refresher: A paper by Chatham House explores the implications of the transition to a sustainable, low-carbon economy in EITI implementing countries. The EITI is exploring what these recommendations might look like in practice. Watch this space.

Photo by Pixabay
 

Ecuador was admitted as an EITI implementing country this week, making it the 55^th country implementing the EITI Standard.
 
Raising the bar: Ecuador is one of Latin America’s most important oil exporters, with a daily output of half a million barrels. The sector can provide important revenues for the country’s infrastructure and development. Implementing the EITI Standard will help ensure the country’s resources are managed responsibly.
 
A welcome sight: Civil society organisations have campaigned for Ecuador to join the EITI since 2012. Their continuous engagement, as well as commitment from some of the country’s largest extractive companies, have been instrumental in the process of becoming a member. Ecuador will begin its EITI reporting in early 2022.

Photo by Pixabay
 

The Kyrgyz Republic made meaningful progress towards the EITI Standard, having fully addressed more than half of the corrective actions identified in its first Validation.
 
Making strides: Kyrgyzstan’s extractive sector contributes over 40% of total exports. Since 2018, Kyrgyz companies have included payment data in their reporting to the government, including information required by the EITI. If supported with more sustainable funding, these developments can provide a strong platform to routinely disclose extractives revenue data, as well as public and private-sector audit practices.
 
On the radar: There are opportunities for the government to improve disclosures of state-owned companies, in particular on financial reporting and transactions with their related parties. License and production data should also be made more accessible. More transparency on how revenues flow to subnational levels can shed light on how the sector contributes to national and local development.
 

A freight train transports iron ore train to Zouerat, Mauritania. Photo by jbdodane
 

Mauritania made meaningful progress in implementing the EITI Standard, and addressed all corrective actions since its second Validation last year.
 
Covering ground: While Mauritania is developing its oil and gas sector, the majority of the country’s extractive revenue is currently derived from mining, which contributed over USD 360 million to the state in 2018. Mauritania’s state-owned mining company, SNIM, plays an important role in the country’s social expenditures. In 2019, disclosures by SNIM showed that it financed various public infrastructure projects, including a new airport.
 
At the source: Mauritania is making headway in making data publicly accessible online. Financial information is published via Mauritania EITI’s Data Warehouse – a platform which discloses payments and revenues sourced directly from government and company systems. In June, the government issued a decree on the open and systematic publication of extractive sector data, moving the focus from data collection to analysis.
 
Mind the gap: There is scope to further strengthen the EITI’s impact, for instance in using data to shape planned mining reforms and in publishing the legal and beneficial owners of extractive companies through a public registry.

Uganda’s Finance Minister Hon. Matia Kasaija, addressing members of Uganda’s Multi-Stakeholder Group. Source: Ministry of Finance, Planning and Economic Development, Press Unit.
 

Following Uganda’s recent accession to the EITI, the Head of Uganda’s EITI’s national secretariat, Gloria Mugambe, reflects on the role of transparency in Uganda’s burgeoning extractive sector.
 
The bottom line: Since the discovery of oil in 2006, the Ugandan government and oil companies have had to engage in difficult and protracted negotiations, particularly on taxes. The EITI can help bring stakeholders together to spur dialogue and build trust. It will also strengthen revenue management and accountability, which will be key as the country starts to produce oil next year.
 
Quoted: "Ugandans wish to understand when oil will be sold to international markets, what revenues will accrue to government, what terms have been agreed between government and international oil companies, and how revenues will be accounted for and used,” says Mugambe.

Image by EITI International Secretariat
 

The EITI recently launched new guidelines for companies buying oil, gas and minerals from governments.
 
A good deal: The transactions that arise from commodity trading are substantial. In-kind payments alone make up almost half of total government revenues declared through the EITI – approximately USD 1.2 trillion to date. Data from trading companies shows that payments for purchases made from governments far exceed tax payments.
 
In the open: By shedding light on the terms and transactions of commodity trades, the new guidelines can help mitigate risks such as revenue leakages, misallocation or diversion of revenues, inconsistent terms of trade, conflicts of interest, bribery, corruption and state capture.
 
Analysis: A blog by the Natural Resource Governance Institute makes the case for legislating the guidelines in countries where trading companies are based.