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
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 Banks Managing Director Sri Mulyani Indrawati on
EITI Global Conference in Paris
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
The six outcomes of EITI
reporting

A functioning MSG, including active, independent

civil society;
Timely data;
Comprehensive data;
Reliable data;
Investigated discrepancies;
Public debate.
Clarification of EITI requirements

1. Making sure that the MSG works

Reconciliation Expenditure
Award of Regulation Revenue Management:
licenses &
of Audited Distribution Pursuit of
& monitoring of Payments / & Sustainable
contracts operations Management Development
Receipts Policies
(EITI Report)

Oversight by a Multi-
stakeholder group
Clarification of EITI requirements

2. Regular and timely reporting relevant data?

Reconciliation Expenditure
Award of Regulation of audited Revenue management:
licenses & Distribution pursuit of
& monitoring of payments/ & sustainable
contracts operations receipts Management development
policies
(EITI Report)

Oversight by a Multi-
Stakeholder Group
Clarification of EITI requirements

3. Comprehensive data ?

Reconciliation Expenditure
Award of Regulation of audited Revenue management:
licenses & Distribution pursuit of
& monitoring of payments/ & sustainable
contracts operations receipts Management development
policies
(EITI Report)

Oversight by a Multi-
Stakeholder Group
Clarification of EITI requirements

Companies Government
Disclose Payments Discloses Receipts
to Government from Companies

Reconciliation
4. Reliable data? of Audited 4. Reliable data?
(#12) Payments / (#13)
Receipts
(EITI Report)

Oversight by a Multi-
Stakeholder Group
Clarification of EITI requirements

5. Discrepancies investigation, remedial actions and improvements?

Reconciliation Expenditure
Award of Regulation of Audited Revenue Management:
licenses & Distribution Pursuit of
& monitoring of Payments / & Sustainable
contracts operations Receipts Management Development
Policies
(EITI Report)

Oversight by a Multi-
Stakeholder Group
Clarification of EITI requirements

6. Public debate using the data

Reconciliation Expenditure
Award of Regulation of Audited Revenue Management:
licenses & Distribution Pursuit of
& monitoring of Payments / & Sustainable
contracts operations Receipts Management Development
Policies
(EITI Report)

Oversight by a Multi-
Stakeholder Group
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?
International linkages
Global standards and initiatives
 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
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.
Next steps