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Republic of Congo— Oil Revenue Certification— Process and Summary Results (2003 to Sept. 2004)

Republic of Congo— Oil Revenue Certification— Process and Summary Results (2003 to Sept. 2004). Anton Op de Beke International Monetary Fund/PDR February 3, 2005. The Oil Revenu Certification Process. How it works: Contracted and financed by government

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Republic of Congo— Oil Revenue Certification— Process and Summary Results (2003 to Sept. 2004)

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  1. Republic of Congo—Oil Revenue Certification—Process and Summary Results (2003 to Sept. 2004) Anton Op de Beke International Monetary Fund/PDR February 3, 2005

  2. The Oil Revenu Certification Process How it works: • Contracted and financed by government • Carried out by international accounting firm • Not an audit but review process; “agreed upon procedures” • Published on Ministry of Finance website (www.mefb-cg.org) • Done quarterly; completed by end of following quarter; accruals • Tracks income from each permit/field separately • Tracks payments in oil under production sharing contract • Monitors SNPC compliance with reporting requirements • Covers only recurrent revenue (royalty, profit oil, excess oil)

  3. Certification--Step Towards EITI In common with EITI: • Publication of oil revenue information More than EITI: • Quarterly reports • Assesses collection process (from payments to receipts) Less than EITI: • Omits important benefit streams * national oil company (SNPC) equity oil (15% shares) * bonuses, income from legal actions or privatizations * contractual payments (training, verification) • No civil society participation • Receipts not compared with company payments

  4. Exercise in Reconciliation and Verification Reconciled or verified - Production (companies, terminals, Veritas) • Fiscal parameters of oil contracts (against contracts; sampled) • Fiscal oil payments (companies, terminals) • Government shipments and stocks (terminals, SNPC) • Reference prices (companies, price setting meeting) • Payments (SNPC, companies, bank accounts, projects) • Based on company declarations of production and sharing • Based on SNPC info for sales results Not reconciled or verified - Complete contracts (only on sample basis) - Treasury bank accounts - SNPC information on prices, borrowing, and fees and commissions

  5. Basic Reconciliation Table

  6. Marketing of Fiscal Oil

  7. Marketing Fiscal Oil by SNPC

  8. Marketing Fiscal Oil by Private Operators

  9. Certification Summary (1)

  10. Certification Summary (2)

  11. Ways to Follow up Certification Extend certification process: • Verify SNPC information • Achieve EITI coverage (include non-recurrent revenue, equity oil) • Compare government and company statements Improve revenue tax administration: - Reconcile certification results with fiscal data (TOFE) • Clarify and/or correct past discrepancies, and prevent future discrepancies • Make certifications redundant with government audits Exercise control over marketing process: • Obtain better prices and reduce marketing costs • Reduce cost of financing

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