Extractive Industries Transparency Initiative

Extractive Industries Transparency Initiative

Logo of EITI
Abbreviation	EITI
Motto	Seeing results from natural resources
Formation	17 June 2003 (2003-06-17)
Purpose	Financial transparency and improved governance in the extractive industry
Products	EITI Standard
Membership	48 countries
Official language	English, French, Russian
Chair of the Board	Fredrik Reinfeldt
Head of the International Secretariat	Jonas Moberg
Website	eiti.org

The Extractive Industries Transparency Initiative (EITI) is a global standard to promote the open and accountable management of extractive resources. It seeks to address the key governance issues in the oil, gas and mining sectors.

The EITI Standard requires information along the extractive industry value chain from the point of extraction, to how the revenue makes its way through the government, to how it benefits the public. This includes how licenses and contracts are allocated and registered, who are the beneficial owners of those operations, what are the fiscal and legal arrangements, how much is produced, how much is paid, where are those revenues allocated, and what is the contribution to the economy, including employment.

EITI Standard is implemented in 51 countries around the world. Each of these countries is required publish an annual EITI Report to disclose information on: contracts and licenses, production, revenue collection, revenue allocation, and social and economic spending and goes through an EITI Validation process at least every three years. Validation serves to assess performance and promote dialogue and learning at the country level. It also safeguards the integrity of the EITI by holding all EITI implementing countries to the same global standard.

Each implementing country has its own national secretariat and multi-stakeholder group, made up of representatives from the country’s government, extractive companies and civil society. The multi-stakeholder group takes decisions on how the EITI process is carried out in the country.

The EITI Standard is developed and overseen by a multi-stakeholder Board, consisting of representatives from governments, extractives companies, civil society organisations, financial institutions and international organisations.

The Chair of the EITI is Fredrik Reinfeldt, former Prime Minister of Sweden. The previous chairs have been the Rt Hon Clare Short (2011-2016), former UK Secretary of State for International Development and Dr Peter Eigen (2009-2011). The EITI International Secretariat is located in Oslo, Norway and is headed by former Swedish diplomat Jonas Moberg.

History

The “Extractive Industries Transparency Initiative” (EITI) was first launched in September 2002 by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg,^[1] following years of academic debate, as well as lobbying from civil society and companies, on the management of government revenues from the extractive industries. In particular, the EITI is an answer to public discussions on the “Resource Curse” or the “Paradox of Plenty”. NGOs such as by Global Witness and “Publish What You Pay”, as well as companies such as BP pushed the UK government to working towards an international transparency norm.^[2]

The organisation was founded at a conference in London in 2003. The 140 delegates^[3] from government, companies and civil society agreed on twelve principles^[4] to increase transparency over payments and revenues in the extractive sector. A pilot phase of the EITI was launched in Nigeria, Azerbaijan, Ghana and the Kyrgyz Republic. The management of the Initiative continued to lay with the UK Department for International Development.

The second EITI Conference on 17 March 2005 in London established six criteria based on the principles. These set out the minimum requirements for transparency in the management of resources in the oil, gas and mining sectors, laying the foundation for a rule-based organisation. This conference also established an international advisory group (IAG) under the Chairmanship of Peter Eigen to further guide the work of how the EITI is to be set up and function.^[5] More countries, companies and civil-society organisations joined the initiative. The International Monetary Fund and the World Bank endorsed the EITI.

The report issued in June 2006 by the international advisory group recommended the establishment of a multi-stakeholder board and an independent secretariat, and these were set in place at the third EITI conference held in Oslo, Norway on 11 October 2006.^[6] Oslo was chosen as the new location for the secretariat.^[7]

In the following years the body further fleshed out the criteria, turning them into a set of 23 requirements, known as the EITI Rules in 2011.

The EITI Standard replaced the EITI Rules^[8] on 24 May 2013. The Standard was revised in February 2016.

Structure and Funding

The EITI is organised as a non-profit association under Norwegian law.^[9] It has three institutional bodies: The Members’ Meeting, the EITI Board, and the International Secretariat. The Members’ Meeting governs the EITI and convenes alongside the EITI conferences, which are held every two to three years. The board is the executive body and is supported by the secretariat.

EITI Global Conference, February 2016

The EITI Board meets between two and four times a year and is composed of three groups: countries, companies and civil society. The membership of the Board reflects the multi-stakeholder nature of the EITI. The EITI Board has seven committees (audit, finance, governance and oversight, implementation, outreach and candidature, rapid response and Validation) to assist on selected issues on a more regular basis.

The funding of the EITI is two-fold. At the country level, implementation is funded by the governments. At the international level, the EITI is funded by supporting governments and companies.^[10]

Member countries

Any country with extractive industry sectors can adhere to the EITI Standard. Countries implementing the transparency standard include OECD states such as Norway, the United Kingdom and the United States as well as countries in Africa, Central and East Asia, Europe, and Latin America and the Caribbean.^[11]

When a country intends to join the EITI Standard, is required to undertake four sign-up steps before applying.^[12] These include a clear statement of the government’s commitment, developing a work plan that sets objectives for what the country wants to achieve with the EITI, and establishing a multi-stakeholder group together with companies and civil society.

Once the application of the country has been accepted by the Board, the country is called an “EITI candidate”. The candidate country then undergoes “Validation”. When a candidate country passes EITI Validation, it is declared “EITI compliant” by the Board.^[13]

As of February 2016, 51 countries are implementing the EITI:

Other countries, such as Germany, France and Australia have shown interest in implementing the EITI.^[14]

Impact of the EITI

The EITI has made significant contributions to improved governance of the extractive sector in several countries around the world. In countries like the Democratic Republic of the Congo, the EITI has been central to many reforms of the sector. At the international level, debates on transparency in the sector are unrecognisable from ten years ago, and the EITI is seen as being at the forefront of many frontier debates including beneficial ownership, commodity trading, and artisanal and small-scale mining.

It is also clear that the EITI process is one of the only functioning global mechanisms to inform and channel debate in resource-rich countries in a way that includes all stakeholders. In Peru, EITI Reports have highlighted that, only about 15% of revenues from the mining and hydrocarbon sector has been used for developmental spending, such as infrastructure or economic diversification. The rest has been spent on current expenditures such as salaries and servicing debts. Local citizens are using this information to engage with their regional authorities on alternative ways to spend these resources.

EITI Reports make recommendations aimed at addressing weaknesses in government systems and improving extractive sector management. In Nigeria, President Buhari has initiated major reforms in the oil sector, starting with restructuring the national oil company, a review of oil contracts, an end of the notorious oil swap deals, and a review of subsidy arrangements. These were all recommendations from Nigeria EITI Reports.

Supporting Companies

Around 80 companies involved in oil, gas, and mining support the EITI.^[15] Supporting companies publicly endorse the EITI and can contribute to covering the cost of the international secretariat of the EITI.

The EITI is furthermore endorsed by 95 financial institutions with total assets under management of more than US $19 trillion.^[16]

Extractive companies are involved on the national level in countries implementing the transparency standard. They are part of the stakeholders and are required to hand over numbers on payments as part of the reporting process under the EITI standard. Company advocacy has resulted in several countries beginning EITI implementation.

Criticism

Campaigning organisations have criticised the organisation for the lack of sanction possibilities.^[17] Business representatives have commented that the EITI board is captured by civil society organisations.^[18] The EITI has been seen as insufficient to bring full transparency to payments in the extractive industries, since it does not cover countries active in commodity trading.^[19] The body's credibility was questioned after it permitted an Ethiopian application for membership in 2014.^[20] EITI has also been criticised for ignoring the violations of human rights^[21] in Azerbaijan, and for not reacting sufficiently strongly to the harassment of Azerbaijani civil society groups that are part of EITI's multi-stakeholder approach.^[22]

References

1. ↑ "Statement of Principles and Agreed Actions, EITI" (PDF). UK Web Archive. UK Government. Retrieved 1 September 2014. 
2. ↑ "History of EITI". Retrieved 1 September 2014. 
3. ↑ "Final attendee list, Extractive Industries Transparency Initiative (EITI) London Conference 17 June 2003" (PDF). http://collections.europarchive.org. DFID, UK. Retrieved 1 September 2014.  External link in |website= (help)
4. ↑ "Statement of Principles and Agreed Actions, EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) London Conference, 17 June 2003" (PDF). http://collections.europarchive.org. DFID, UK. Retrieved 1 September 2014.  External link in |website= (help)
5. ↑ "History of the EITI". www.eiti.org. EITI. Retrieved 1 September 2014. 
6. ↑ "The EITI Oslo Conference: Making transparency a global norm". Retrieved 1 September 2014. 
7. ↑ "Norway to host EITI international secretariat". http://www.regjeringen.no/en/archive.html?id=115322. Ministry of Foreign Affairs.  External link in |website= (help)
8. ↑ Dawson, Stella (March 1, 2013). "EITI board raises bar on global standards to report natural resource revenues". Thompson Reuters Foundation. Retrieved 1 September 2014. 
9. ↑ "EITI Articles of Association". 
10. ↑ "EITI - How we are funded". 
11. ↑ "EITI Countries". 
12. ↑ "FAQs for governments considering EITI implementation". eiti.org. 
13. ↑ "EITI Validation". eiti.org. 
14. ↑ http://eiti.org/countries/other
15. ↑ "Stakeholders". eiti.org. Retrieved 3 September 2014. 
16. ↑ "Investors' Statement on Transparency in the Extractives Sector". eiti.org. Retrieved 3 September 2014. 
17. ↑ "Extracting oil, burying data" (Feb 25th, 2012). The Economist. Retrieved 3 September 2014. 
18. ↑ "Comment - Beyond transparency: EITI stretches 'civil society' role". Oil & Gas Journal. Retrieved 4 September 2014. 
19. ↑ "Rohstoffhandel blüht gleiches Schicksal wie den Banken". Tagesanzeiger online. 2014-08-25. Retrieved 3 September 2014. 
20. ↑ Biron, Carey L. (21 March 2014). "In Accepting Ethiopia, Transparency Group 'Sacrifices Credibility'". Inter Press Service. Retrieved 21 March 2014. 
21. ↑ "Extractive Industries: A New Accountability Agenda". Human Rights Watch. Retrieved 2014-08-25. 
22. ↑ "Azerbaijan: Transparency Group Should Suspend Membership". Human Rights Watch. 14 August 2014. Retrieved 25 August 2014. 

External links

•Extractive Industries Transparency Initiative website

•EITI and Sustainable Development, IIED

• Photostream at Flickr, most licensed for free use