Transcript Where We Are in the Extractive Industries Vaue Chain”

Mining Laws and Transparency in Extractive Industries:
International Experience and Vietnam’s Perspectives
Agenda
8:30-9:00: The Value Chain
9:30-10:30: Issues and International Best Practice in
Formulating the Mining Laws
10:30-11:00: Questions and Discussion
11:00-11:15: Coffee Break
11:15-11:45: EITI and the Natural Resource Charter
11:45-12:30: Questions and Discussion
Introduction to the
Extractive Industries
Transparency Initiative (EITI)
Hanoi, Vietnam 12 October 2009
What does EITI stand for?
EITI in the ‘Value-Chain’
EITI
Deciding Selecting Negotiating Collecting
To Extract Companies A Contract Revenues
Long-term Creating Spending Monitoring
Planning A budget the moneyService deliver
• The basic EITI focuses only on one aspect of
extractive industries governance: revenue
transparency
EITI involves multiple stakeholders
National Multi-stakeholder Group (MSG)
Government
MSG
Civil Society
Companies
EITI Minimum Standards:
Each country creates its own EITI
Source: EITI
factsheet
•
•
EITI involves the reconciliation of company payments with government receipts
by an independent administrator and disclosure of that information to the
public.
The objective of the EITI is to identify potential discrepancies between payments
and receipts and investigate and address the underlying causes.
The EITI Criteria In Theory
• The EITI criteria
set the minimum
standards of EITI
implementation
Benefits of the EITI for the Government
• Demonstrate a commitment to transparency and fight against corruption
• Improve revenue collection and management processes:
– increased transparency and scrutiny over payments will make it easier
to detect corruption + recommendations of the Administrator will
help identify management systems’ weaknesses and initiate reforms.
• Improve sovereign ratings:
– a country’s ability to raise funds on the international markets (e.g.
through loans) is based on ratings provided by international
companies – these ratings depend also on the quality of national
governance
• Improve a government’s national or international reputation with its
citizens and the international community
Benefits of the EITI for Civil Society
• Open a space for dialogue by engaging multiple stakeholders
• Increase government accountability by increasing the
amount of information in the public domain about those
revenues that governments manage on behalf of citizens
• Give a voice to civil society in a permanent consultation and
participation framework that allows an ongoing discussion
with government and companies under internationally
agreed rules and monitoring
Growth of EITI

Source: EITI website (June 2009)
30 EITI implementing countries (29
candidate and 1 compliant) and several
others such as Afghanistan, Indonesia, Iraq
and Ukraine have expressed their intention
to sign-up.
The EITI International Governance
• The EITI International
Board consists of
representatives from
EITI implementing
country governments,
extractive companies,
civil society groups,
investors, and
supporting country
governments.
• There is a small Secretariat in Oslo
• The highest governing body is the Members Meting at the EITI
International Conference. The last EITI Conference took place in
Doha in February 2009.
The EITI International Secretariat
• Responsible for turning policy decisions of the EITI Board into
action and coordinating worldwide efforts in implementing the
EITI.
• Support to implementation including coordination between
supporting countries and assistance providers
• Specific roles include:
– Outreach & advocacy
– Communicating & sharing lessons learned with stakeholders
– Managing a resource center on revenue management &
transparency
– Oversight of the validation process
Useful Sources of Information
• The EITI website has general information and access to many
useful publications www.eitransparency.org
• The RWI website has lots of information on the EITI and other
extractive industry transparency topics
www.revenuewatch.org
• The PWYP network website has useful information targeted
specifically for civil society organizations and particularly
coalitions working on EITI and related initiatives and
campaigns www.publishwhatyoupay.org
Key Publications
• EITI Rules including the Validation Guide – Brings together
the EITI’s requirements for implementing the EITI (EITI
Secretariat, 2009)
• Implementing the EITI – Builds on lessons learned by the
countries who led the way on EITI implementation (World
Bank & EITI, 2008)
• Drilling Down: The Civil Society Guide to Extractive Industry
Revenues and the EITI – Comprehensive guide to EITI issues
and the challenges of extractive industry accounting for civil
society audience (RWI, 2008)
• EITI Beyond the Basics – Examines some of the best
innovative implementation examples from EITI countries
going beyond basic EITI (RWI, 2009)
Introduction to the
Natural Resource Charter
Hanoi, Vietnam 12 October 2009
From Oil, Minerals, and Gas to
Better Development
Current transparency efforts
in the ‘Value-Chain’
Freedom to Information Act
Contract
Transparency
Discovery and
Decision
To Extract
Prior and informed
Consent
Awards and
Negotiation
of Contracts
EITI
Revenue
Collection
Accounting
Standards
PWYP
Revenue
Actual
Distribution
Expenditures and
And Management Development
Budget
Monitoring
Why a Resource Charter?
• Need to:
– Go beyond transparency to other management
policies
– Link and addresses the economic decisions
necessary in different areas of the value chain
– Tie academic research with practical experiences
– Capture best practice and our evolving knowledge
Natural Resource Charter
Creating a guide for citizens and
governments of resource rich countries
to use the opportunities created by
natural resource effectively.
www.naturalresourcecharter.org
What’s in the Natural Resource
Charter?
• Preamble
• 12 Precepts
• Detailed descriptions of each
precept
• Technical recommendations on
achieving these objectives
To be updated
and reviewed
annually
The Precepts
1.
2.
3.
4.
5.
6.
The development of natural resources should be
designed to secure the maximum benefit for the
citizens of the host country.
Extractive resources are public assets and
decisions around their exploitation should be
transparent and subject to informed public
oversight.
Competition is a critical mechanism to secure
value and integrity.
Fiscal terms must be robust to changing
circumstances and ensure the country gets the
full value from its resources.
National resource companies should be
competitive and commercial operations. They
should avoid conducting regulatory functions or
other activities.
Resource projects may have serious
environmental and social effects which must be
accounted for and mitigated at all stages of the
project cycle.
7.
8.
9.
10.
11.
12.
Resource revenues should be used primarily to
promote sustained inclusive growth through
enabling and maintaining high levels of domestic
investment.
Effective utilization of resource revenues requires
that domestic expenditure be built up gradually
and be smoothed to take account of revenue
volatility.
Government should use resource wealth as an
opportunity to secure effective public
expenditure and to increase the efficiency of
public spending.
Governments should invest in a manner that
enables the private sector to respond to
structural changes in the economy.
The home governments of extractive companies
and international capital centers should require
and enforce best practice.
All extraction companies should follow best
practice in contracting, operations and payments.
Next Steps
• Consultation phase – comments and
suggestions welcome (particularly precepts #2
and #12)
• Suggest additions to oversight board
• Identify target countries for initial
implementation
• Brainstorm means to use this as a
monitoring/advocacy tool