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Transparency in Extractive Industries: EITI and Beyond

Transparency in Extractive Industries: EITI and Beyond Gary McMahon, Senior Mining Specialist, World Bank Presentation for VII KazEnergy Eurasian Forum, Astana, Kazakhstan October 2-3, 2012. Sign of the Times. Future agenda of EITI.

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Transparency in Extractive Industries: EITI and Beyond

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  1. Transparency in Extractive Industries: EITI and Beyond • Gary McMahon, Senior Mining Specialist, World Bank • Presentation for VII KazEnergy Eurasian Forum, Astana, Kazakhstan • October 2-3, 2012

  2. Sign of the Times

  3. Future agenda of EITI • the need for all EITI stakeholders –governments, private sector, civil society and international organizations- to protect the gains of the EITI process to date; • to further empower civil society so it becomes a demand-agent for accountability; • to take bolder steps in implementing other reforms that will strengthen broader public financial management along the whole extractive industries value chain. • opening remarks of the World Bank’s Managing Director Sri Mulyani Indrawati on EITI Global Conference in Paris

  4. EITI in 2012 • EITI reports currently tell us: • How much money is received by a government from its oil, gas and mining • The difference between what the government says it received and what the companies says it paid

  5. The six outcomes of EITI reporting • A functioning MSG, including active, independent civil society; • Timely data; • Comprehensive data; • Reliable data; • Investigated discrepancies; • Public debate.

  6. Reconciliation of Audited Payments / Receipts (EITI Report) Award of licenses & contracts Revenue Distribution & Management Expenditure Management: Pursuit of Sustainable Development Policies Regulation & monitoring of operations Oversight by a Multi-stakeholder group Clarification of EITI requirements 1. Making sure that the MSG works

  7. Reconciliation of audited payments/ receipts (EITI Report) Award of licenses & contracts Regulation & monitoring of operations Revenue Distribution & Management Expenditure management: pursuit of sustainable development policies Oversight by a Multi-Stakeholder Group Clarification of EITI requirements 2. Regular and timely reporting – relevant data?

  8. Reconciliation of audited payments/ receipts (EITI Report) Award of licenses & contracts Regulation & monitoring of operations Revenue Distribution & Management Expenditure management: pursuit of sustainable development policies Oversight by a Multi-Stakeholder Group Clarification of EITI requirements 3. Comprehensive data ?

  9. Companies Disclose Payments to Government Government Discloses Receipts from Companies Reconciliation of Audited Payments / Receipts (EITI Report) Clarification of EITI requirements 4. Reliable data? (#12) 4. Reliable data? (#13) Oversight by a Multi-Stakeholder Group

  10. Reconciliation of Audited Payments / Receipts (EITI Report) Award of licenses & contracts Regulation & monitoring of operations Revenue Distribution & Management Expenditure Management: Pursuit of Sustainable Development Policies Oversight by a Multi-Stakeholder Group Clarification of EITI requirements 5. Discrepancies – investigation, remedial actions and improvements?

  11. Reconciliation of Audited Payments / Receipts (EITI Report) Award of licenses & contracts Regulation & monitoring of operations Revenue Distribution & Management Expenditure Management: Pursuit of Sustainable Development Policies Oversight by a Multi-Stakeholder Group Clarification of EITI requirements 6. Public debate – using the data

  12. Some of the questions asked about the sector which are beyond the present core EITI • How much money should have been paid (contracts)? • How much was produced (physical audits)? • Was it a good deal (international comparisons)? • What is the tax regime, exemptions etc? • What was illegitimately paid? • What was the money spent on (PFM)? • What were the regional revenue breakdowns? • Is the sector well managed ? • What impact did it have?

  13. International linkages Global standards and initiatives

  14. AA1000SES – AccountAbility Stakeholders Relations Standard, the first international standard on stakeholder engagement: guidance on how design and implement stakeholder engagement to achieve an accountable and strategic response to sustainability (www.accountability.org) International Petroleum Industry Environmental Conservation Association (IPIECA): Oil and Gas Industry Guidance on Voluntary Sustainability Reporting includes Social Responsibility Performance Indicators (www.ipieca.org) Global Reporting Initiative (GRI) will present its Oil and Gas Sector Supplement in 2011 with reporting indicators, including Social Protocol (www.globalreporting.org) International Association for Public Participation (IAP2): http://www.iap2.org/- established in 1990 to share best practices on public participation in decision making process; more then 1050 members in 26 countries Focus is broadened to encompass other sustainable development issues such as environment protection

  15. Future Directions of EITI • Create a system that provides incentives to implementing countries to go beyond ‘minimum standard’; • Encourage linkages with other governance reform processes; • Maintain a minimum, albeit more nuanced, EITI standard; • Address weaknesses of the current validation system; • Strengthen the emphasis on country ownership.

  16. Next steps

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