EITI - Extractive Industries Transparency Initiative

Extractive Industries Transparency Initiative (link is external) (EITI) is first and foremost a process to hold authorities responsible in a country, and to ensure that they assume an effective role along with companies and civil society for greater transparency in the oil- and mining industry.  EITI`s objective is to show that tax payments that companies believe have been paid are actually received by authorities.  In Norway this has been enshrined in the petroleum law §10-18 in an amendment that requires disclosure of reported payments of defined cash flows such as petroleum taxes, CO2 fees, area fees and NOx fees.  It means that EITI is not voluntary but obligatory.  The initiative is considered completed, and it works.  The original main objective with EITI in Norway is thus satisfied.

PWYP Norway, through their work in the stakeholder group for Extractive Industries Transparency Initiative (EITI), has contributed to get seven compilation reports without deviation.  PWYP Norway, as the first PWYP coalition in the world in a rich OECD country, demanded that Norway should adopt EITI.  It has been of crucial importance for the introduction of EITI in various countries the world over that central production countries in OECD, such as Norway, have also introduced EITI.  It contributed to countries such as the UK, USA, and Canada joining.  PWYP Norway has created a debate about the future of EITI in Norway. 

Demands for company registers have come as a call for EITI`s 52 member countries and is currently also a priority that is discussed internationally.

What is EITI?

An EITI process is a national process for transparency on cash flows from natural resources.  EITI is a transparency standard that requires that companies publish how much they pay to authorities, and that authorities declare how much they receive.  This information should be compiled in an EITI report.  Norway is today considered compliant with this transparency standard, which is based on a tripartite cooperation between state, company, and civil society. 

The objective of EITI is that natural resources in a country should benefit the whole population and contribute to growth and wealth development.  The tool is among other greater transparency surrounding cash flows from the extraction of natural resources.  By allowing the country`s population insight in the payments, authorities can to a greater extent be held accountable for the use of revenue. Read more about EITI at eiti.org(link is external).

Why is it important?​

The level of ambition for EITI here in Norway has been realistic.  There are already good systems in place in Norway.  Much information, among other how much is paid in petroleum taxes, is already publicly available from the Norwegian Tax Administration and in documents from the government (budget documents etc.).  In this connection it might be necessary to implement certain issues in EITI in Norway for international purposes, that are unimportant in a Norwegian context.  Other issues can be both essential and necessary also in a Norwegian context as viewed from a civil society perspective.

The Ministry of Petroleum and Energy considers that they do not experience any inquiries for the information that EITI produces.  PWYP Norway also does not experience getting inquiries from the civil society for the information that EITI produces here in Norway.  However, from international societies, and also authorities, we experience a demand.

How do we experience international demand in relation to EITI`s importance in civil society currently?

EITI is a forum where transparency can be discussed:   In many countries in the South EITI is an important forum where civil society can discuss payments to authorities and follow up EITI requirements.

Economic incentives to choose EITI as a transparency mechanism: Organizations in the Global South get financial aid to work with EITI.  This contributes to focus on EITI as a transparency mechanism.

Implementation from above:  That some countries have established economic aid for those who wish to “work with EITI” appears to have caused some civil society organizations, that would otherwise not have any agenda under EITI, to desire to start working with EITI.

In organizations in the Global South there are divided opinions on whether authorities should adopt EITI or not.  Some organizations experience that authorities adopt EITI and write that the organizations have joined the process even while they have not.  (Example:  Guatemala).  At the same time, EITI is a process that many have reservations about.  (for example EITI is viewed as “imperialistic” in Bolivia).

Civil society must «prove» the advantage of EITI:   The general space for civil society and freedom of expression is under pressure in many countries.  Can EITI ease this pressure?  The EITI cooperation is primarily between authorities and the private sector, and not with civil society.  Civil society requires that they be the guarantor for whether the transparency demanded in EITI is of importance.

The finances tied up towards a transparency initiative:  We have seen examples that donor institutions have asked civil society to respond to “why they don`t work more with EITI”.  And been informed of a desire to tie finance institutions to one transparency initiative above others.

There has been significant demand for PWYP Norway`s experiences, knowledge and assessments in relation to EITI.  PWYP Norway has shared this with many parties and displayed the various possibilities a civil society in any given country has.  PWYP Norway is cautious about opining what any given country should choose.  Norway is different from other countries.  It is important that civil societies in other countries make their own analyses based on compiling information and experiences that PWYP Norway can share.  Political, technical, and competency challenges are lined up, and PWYP Norway has shared knowledge in both the TRACE program and in presentations.  As a civil society in the Global North that has used the EITI process for several years without deviation, Norway is considered by many as “best practice”, even while we ourselves see challenges in our own implementation.

There exists a demand for EITI that PWYP Norway cannot accommodate because we lack financing.  PWYP Norway does not have the financing to directly follow up this type of demand.  For example, through participation at the EITI conference where the objective is to exchange experiences with other resource-rich countries and inspire a debate concerning new transparency requirements and EITI`s future.  Currently the oil industry and OECD have greater access to resources to cover such travels and can use the occasion as a positive exposure opportunity for authorities and companies.  Even though the initiative is a tripartite cooperation, practically it is only the oil industry and authorities that have the financing to participate.  Even though the initiative promotes civil society as a participant with a voice at the table, civil societies in the Global North get practically locked out from participation.  Even though we in the Global North have been promoters of greater requirements, the financial support only goes to the civil society in the Global South that work with implementing entirely basic transparency requirements, that have already been covered in the Global North.

EITI AND CIVIL SOCIETY

https://www.youtube.com/watch?v=EMdjEwnLV-U&feature=youtu.be
Alexandra Gillies, Director of Governance Programs at NRGI shares her thoughts on the challenges for EITI in the future.
https://youtu.be/LMEa97YISAM
Miguel Zamora from Plataforma Internacional contra la Impunidad shares his thougths on the EITI process in Guatemala.

https://www.youtube.com/watch?v=J7naBMyRscw&feature=youtu.be
Global EITI Conference 2016 Director of Global Witness explains why civil organizations protest.
https://www.youtube.com/watch?v=70bgcVDHNZA&feature=youtu.be
Olena Pavlenko, president of DiXi group Ukraine shares her thoughts on challenges EITI is facing in her country.

What has happened in Norway?

Norway has actively supported EITI politically and financially since the initiative was announced in 2003. In 2007, Norway was approved as a full member of EITI and has committed to adhere to the international transparency standard.

As the first PWYP coalition in the world in a rich OECD country, PWYP Norway demanded that Norway should introduce EITI. It has been of great importance for the introduction of EITI in various countries around the world that mayor production countries in the OECD, such as Norway, have also introduced EITI. This contributed to countries like the UK, the US and Canada also joining.

EITI is primarily a process to make the authorities of a country accountable and to ensure that they take a driving role along with the companies and civil society for greater transparency in the oil and mining sector. The purpose of EITI is to show that the tax payments that the companies claim to have paid are actually received by the authorities.

  • MARCH

    On March 15th PWYP Norway delivered their consultative input with remarks on Norwegian "mainstreaming" of EITI and new EITI stipulation in the petroleum regulations §50b (link is external).

    FEBRUARY

    OED starts the implementation and wants to change the EITI amendment in line with the proposal they promoted.  The EITI amendment was sent out for hearing in the usual way on February 6, 2018.

    Since we cannot progress with EITI, we have jointly decided that EITI should be “mainstreamed.”  This means that we exclude EITI as an intermediary and use existing Norwegian systems of control.  The issue is that OED has sent out for hearing a proposal that will weaken transparency in EITI.  This will have large consequences for Norway and other countries that want to mainstream when the list lies so low.

    On February 19th the organizations met to discuss OED`s draft consultation input on the new stipulation in the petroleum regulations § 50b:   Høring - ny bestemmelse i petroleumsforskriften om rapportering av mottatte betalinger. Opphevelse av forskrift om rapportering og avstemming av pengestrømmer fra petroleumsvirksomheten (EITI-forskriften) (link is external)

    The hearing was sent out to 53 companies and 4 organizations.

  • DECEMBER

    On December 13th PWYP Norway arranged an internal organizational meeting where discussions proceeded on the work with EITI in Norway after the EITI board chose to support the application promoted by OED on “mainstreaming and adapted implementation.”  The application was in part written and supported by the EITI Secretariat.  The EITI board thus chose to ignore that the Norwegian civil society organizations could not support the application.

    The Implementation Committee also put forth a “list of options” for the EITI board which did not include the Norwegian civil society`s position in their “list of options.”  The minimum requirement of the most basic principles for transparency in Norwegian civil society organizations, was not welcome.

    The civil society organizations discussed whether the EITI secretariat has contributed with desired confusion in the process.  The civil society organizations have in repeated letters and emails, asked OED and the EITI secretariat to not contribute by creating confusion on our demanding extended country-by-country reporting relative to EITI, and have explained the difference as many times.

    The EITI board have repeatedly chosen to ignore this and have instead emphasized repeating the misunderstanding – in two blog posts, and with links to ECBCR:

    Mainstreaming EITI in Norway: "stalling or advancing transparency(link is external)”?

    “EITI-board ushers in new era of systematic disclosure(link is external)

    OCTOBER

    On October 25th the EITI board (link is external) approved the Norwegian application on ”mainstreaming and adapted implementation” by EITI in Norway promoted by the Ministry of Petroleum and Energy and supported by the trade and industry representatives in MSG.  This application has not received support from the Norwegian civil society organizations.

    On October 20. the former civil society group in the Norwegian MSG sent a letter to OED, the EITI board, EITI secretariat, and EITI – Implementation Committee.  In the letter the civil society comments on the points of concern presented in the OED note.

    On October 19th PWYP Norway arranges an internal organizational meeting – “Mainstreaming of EITI in Norway.”  At the meeting “list of options” were discussed such as it was presented by the EITI Implementation Committee.

    On October 3th the Implementation Committee (IC), which consists of participants from NRGI, decided that they did not make any decisions in their meeting of October 3rd.  The decision on whether the EITI board would approve the Norwegian application is postponed.  The Implementation Committee (IC) has decided that they wish to give the EITI board “a list of options”.  It is NRGI that has defined the “list of options.”

    The OED and EITI secretariat send the note to the national MSG and the Ministry of Finance where they comment on the civil society letter dated September 28th  OED writes that the description in the letter was not given in compliance with the Ministry of Petroleum and Energy`s perception in several areas.

    The EITI- board meeting is in Manila the 23rd and 24th of October.  IC wants a response to their list of options before the board meeting in Manila, so that IC can process the case before it is sent to the EITI board.

    SEPTEMBER

    On September 29th civil society organizations in the UK object to the process (link is external).

    A letter from civil society, signed by 20 Norwegian civil society organizations is sent to the EITI board, EITI secretariat, and EITI Implementation Committee.  In the letter the civil society organizations ask the EITI board to not ignore the civil society position on the mainstreaming of EITI in Norway, and to not approve the application dated September 28th.

    The background for the letter is that OED has sent two letters to the EITI board where they ask the EITI board to ignore the Norwegian civil society.  In short, the letters from OED to the EITI board concern two issues:

    - OED and the oil industry put forth a proposal that will weaken transparency in EITI.  This will have big consequences for Norway and other countries that will be mainstreamed when the list is laid that low.  We will explain why.

    - OED asks the EITI board to ignore the civil society`s input.  We are asking that the EITI board not ignore it.

    On September 14th PWYP Norway extends an invitation to an organization meeting: “Transparency in reverse?  Norwegian authorities and businesses want to weaken transparency on tax payments.  What do we do now?”  The background for the meeting is that the Civil society side of the EITI collaboration experiences that the work for transparency has gone into reverse.  EITI is a tripartite cooperation that works for transparency in tax payments.  However, neither the Ministry of Petroleum and Energy (OED) nor the oil industry have a wish that paid taxes should be declared.

    The civil society organizations discussed the disagreement that occurs in that OED/the oil industry wish to declare “accruel” payments.  “Accruel» is not what is supposed to be declared, but rather “paid” opines the civil society organizations.  This is where we do not share the same viewpoint.  How the companies interpret «accruel» (or what the audit-technical definition of accruel is) is what is “deposited”.  It is not necessarily the same as what is “paid” (what has really gone out of account to the State).  We are not asking for additional auditing.  The civil society organizations do not have an auditing requirement.  The civil society organizations only have an information requirement on taxes paid.

    In Norway in guides to reporting forms (for use by reporting companies) it is clearly stated that it is the actual paid taxes that should be reported:

    «General comment to the reporting:

    The reporting concerns what has really been paid to the State in 2015, that is the factual cash flows (the cash basis) and not what licensee is levied by taxes and fees etc.  Further, it is net payments that should be reported, that is any refunds from government agencies will be deducted (if any, paid out).  Interest paid/repaid for such items is also included…”

    On September 5th the Ministry of Petroleum and Energy and the EITI secretariat sent the Norwegian application on the mainstreaming of EITI in Norway to the EITI board.  The application did not have the support of the civil society organizations.

    The issue now is that neither OED nor the oil industry wishes transparency on paid taxes when the process is mainstreamed and regular Norwegian systems for control will be utilized.

    APRIL

    On April 26th the Ministry of Petroleum and Energy send the final application on mainstreaming and adjusted implementation of EITI in Norway to the EITI secretariat on behalf of the national multi-stakeholder group (MSG).  The application solely had the support of OED and the oil industry.  The application was not supported by the Norwegian civil society organizations.

    On April 21st the civil society organizations sent a letter to the Ministry of Petroleum and Energy and expressed concerns that the mainstreaming of EITI in Norway is impaired by the proposal put forth by the Ministry of Petroleum and Energy.  The civil society announces that the application cannot be supported without a minimum requirement for transparency.

  • JUNE

    PWYP Norway invites to an open meeting on EITI in Norway on June 2., in connection with EITI having a Board Meeting in Oslo.  A key issue for PWYP Norway is: What lies ahead for EITI here in Norway? : Hva skal være veien videre for EITI her i Norge?

    FEBRUARY

    On February 24. and 25. PWYP Norway participate in the EITI Global Conference 2016 in Lima.  PWYP Norway has the main responsibility for Norway`s national stand at the EITI conference.  PWYP Norway has created 9 VLOG videos that present analyses and summaries of what happened and was discussed during these days.

  • NOVEMBER

    PWYP Norway composes an in-depth piece; «Should we “close down” EITI in Norway?”: "Skal vi "legge ned" EITI i Norge?" about the ongoing process with EITI in Norway and presents “mainstreaming”.

    MAY

    PWYP Norway sends in a position paper to EITI and the Ministry of Petroleum and Energy with a priority list for EITI.

    MARCH

    Two of PWYP Norway`s TRACE-participants gathered representatives from more than 20 civil society organizations in Guatemala to disuss the EITI situation in the country.  PWYP Norway was invited to share Norway`s experiences with the transparency standard.

    On March 19th Mona Thowsen, General Secretary of PWYP Norway, held a presentation for 25 organizations from the civil society in Guatemala through the Cordaid network.  The organizations wished to discuss EITI in Guatemala since this took place a short time after Guatemala was suspended from EITI.

  • In 2014 PWYP Norway conducted a series of meetings to discuss EITI.  We conducted a process in order to map everything the affiliated organizations want to prioritize under EITI in Norway.  It became a long list, and PWYP Norway organized all the input into categories.

    JUNE

    On June 20th the members of the new EITI stakeholder group were appointed in the Council of Ministers.     Among the members is the General Secretary of Publish What You Pay Norway, Mona Thowsen.  The new group will sit for two years.

    MARCH

    PWYP Norway sends in a position paper to EITI and the Ministry of Petroleum and Energy with a priority list for EITI.

  • A paragraph of text that could be contained in an expand/collapse (accordion) style list.EITI hosts a global conference and agrees to recommend that companies inform who the beneficial owners are.  This is a requirement that PWYP Norway has worked long to put through. A paragraph of text that could be contained in an expand/collapse (accordion) style list.

  • In 2012 PWYP Norway continues to follow up their position as a civil society representative in the Norwegian EITI stakeholder group.  The EITI report for 2010 was delivered in March 2012 and the report for 2011 was delivered in December 2012.  PWYP Norway pointed out that large extracting industries embrace EITI and referred to them supporting the initiative when challenged on transparency.  At the same time, the same companies bring litigation against the USA to avoid that reporting requirements from EITI are made obligatory through legislation.

  • MARCH

    In March 2011 the EITI board approved Norway as “EITI compliant”.  Norway was the 25. country in the series and the first OECD country that achieved this status, after being officially an EITI candidate since 2009.  A change had been made in the Norwegian Petroleum Act §10-18 in the amendment on disclosure obligation to report payments of the defined cash flows such as petroleum tax, CO2 fee, area fees, and NOx fee.

    On 2nd and 3rd of March PWYP Norway participates in the EITI Global Conference in Paris as a representative for the civil society in the Norwegian stakeholder group.

  • In 2007 Norway has been approved as a full member of EITI and has committed to uphold the international transparency standard.  In Norway this has been enshrined in the Petroleum Act §10-18 in regulations on disclosure requirements to report payments of defined cash flows such as the petroleum tax, CO2 fee, area fees, and NOx fee.  This means that EITI is not “voluntary”, but “mandatory.”  The initiative is considered completed, and it functions.  The original main purpose with EITI in Norway is thus satisfied.  One result is that the cash flows that need illuminating are now embedded in the Petroleum Act and EITI is about to become mainstreamed in Norway in that EITI data is synchronized daily against the Petroleum Directorate`s facts databases so that instead of reports, there is open access to public systems, which is both easier and more efficient.

    A demand for a company register has now been registered as an appeal in EITI`s 52 member countries and is now also a priority discussed internationally and data sharing between institutions of authority and companies is attained by building on existing systems.