Results Mixed as EITI International Board Discusses Future

Issue: EITI
Country: International
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The International Board of the Extractive Industries Transparency Initiative (EITI) made uneven progress in its discussions on how to strengthen the EITI, while meeting in Lusaka, Zambia, on 25-26 October.

The Board, which includes company, government and civil society representatives, aimed to make decisions on specific proposals for improving the EITI reporting standard that applies to its 37 participant countries. A 2011 evaluation found that EITI’s impact on natural resource governance is limited in part by its narrow reporting requirements, and transparency practices have evolved considerably since the EITI came into being.

The board endorsed several reporting requirements that will generate information vital for promoting the transparent and accountable management of natural resources. They include the required disclosure of:

  • Revenue data, reported by company and revenue stream
  • The transfer of oil, gas and mining revenues from central to regional or local governments
  • Transactions between state-owned companies and governments
  • The register of active licenses and license holders
  • Social payments, such as corporate social responsibility obligations, that are required by contract

“These changes address some of the gaps in current EITI reports,” said EITI International Board Member Anthony Richter. “It will be crucial that the new rules capture these high level decisions in a robust way.”

Two other areas provoked heated disagreement and were not resolved.

The mining and petroleum company representatives fought strongly against the disclosure of contracts, some rejecting even the proposal that the EITI rules encourage (rather than require) their disclosure. On the other hand, there was support among government and civil society representatives for either the encouragement or requirement of contract disclosure, with reference being made to the rapid growth of countries, companies and international organizations that endorse or undertake this practice. Lacking consensus, the board will reconsider the issue at its next meeting, following consultation with EITI’s participating countries.

Companies also opposed the proposal that the revenue data in EITI reports should be broken down by project, citing in particular the challenges of defining a project. Again, this contradicted views expressed by government and civil society. Beginning in 2014, all U.S.-listed extractive companies will be required to report on this basis, and the U.S. Securities and Exchange Commission (SEC) has provided guidance on how to define project. The European Union is actively developing similar regulation. The board agreed to make a decision on this issue at its next meeting, regardless of any pending decisions on U.S. or EU regulations, on the understanding that EITI needs to set its own objectives.

“Now that the SEC has issued its regulations, EITI risks falling behind and should also require project level reporting,” Richter said, “Opponents of transparency cannot be allowed to use a weak EITI to avoid regulatory scrutiny in their home markets. The sooner EITI finalizes its requirements and marks the new generation of transparency standards, the better.”

After further consultation, the board will meet in February 2013 to discuss specific language for implementing its decisions. The new rules will be launched in May 2013 and take effect following a transition period. Currently 37 countries participate in the EITI and have together released 100 reports that disclose oil, gas and mining revenues that total over $700 billion.

Erica Westenberg is EITI Policy Officer

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