The Role of CSOs in NEITI to Actualize New Standards in EITI Framework

-By Peter Egbule

An explanation of the Civil Society Organizations (CSOs) and the Nigeria Extractive Industries Transparency Initiative (NEITI) with National Stakeholders Working Group (NSWG) including Multi Stakeholders Group (MSG) on the extractive industries across the globe.

The Extractive Industries Transparency Initiative (EITI) Standards

A set of operating values, templates, commitments and implementation guidelines (Reviewed in 2019) that shapes the implementation of EITI process. It is divided into two: Principles and requirements

The Principles

These are general aims and commitments by all stakeholders to increase transparency over payments and revenues in the extractive sector. It could also be seen as the values. It is the cornerstone of EITI.

All stakeholders agreed in 2003 (at the Lancaster House Conference in London – hosted by the Government of the United Kingdom).

Principle 1

EITI shares a belief that the prudent use of natural resource wealth should be an important engine for sustainable economic growth that contributes to sustainable development and poverty reduction, but if not managed properly, can create negative economic and social impacts.

Principle 2

EITI affirms that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national developments.                                                                                         

Principle 3

It recognises that the benefits of resource extraction occurs as revenue streams over many years and can be highly price dependent.

Principle 4

It recognises that a public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable developments

Principle 5

EITI underlines the importance of transparency by governments and companies in the extractive industries and the need to enhance public financial management and accountability.

Principle 6

As part of its principles EITI recognises that achievement of greater transparency must be set in the context of respect for contracts and laws.

Principle 7

It recognises the enhanced environment for domestic and foreign direct investment that financial transparency may bring.

Principle 8

It believes in the principle and practice of accountability by government to all citizens for the stewardship of revenue streams and public expenditures.

Principle 9

EITI is committed to encouraging high standards of transparency and accountability in public life, government operations and in business.

Principle 10

It also believes that a broadly consistent and workable approach to the disclosure of payments and revenues is required, which is simple to undertake and to use.

Principle 11

It believes that payments’ disclosure in a given country should involve all extractive industry companies operating in that country.

Principle 12

In seeking solutions, EITI is of the view that all stakeholders have important and relevant contributions to make ‑ including governments and their agencies, extractive industry companies, service companies, multilateral organisations, financial organisations, investors and non-governmental organisations.

The EITI Requirements

These are practices that must be taken by implementing countries.

Requirement 1

Oversight by the MultiStakeholder Group

The EITI requires effective multi‑stakeholder oversight, including a functioning multi‑stakeholder group that involves the government, companies, and the full, independent, active and effective participation of civil society. The key requirements related to multi‑stakeholder oversight include: (1.1) government commitment; (1.2) company engagement; (1.3) civil society engagement; (1.4) the establishment and functioning of a multi‑stakeholder group; and (1.5) an agreed work plan with clear objectives for EITI implementation and a timetable that is aligned with the deadlines established by EITI Board

Requirement 2

Legal and Institutional Framework, Including Allocation of Contracts and Licenses

The EITI requires disclosures on how the extractive sector is managed, enabling stakeholders to understand the laws and procedures for the award of exploration and production rights, the legal, regulatory and contractual frameworks that apply to the extractive sector, and the institutional responsibilities of the State in managing the sector. The EITI Requirements related to a transparent legal framework and awarding of extractive industry rights include: (2.1) legal framework and fiscal regime; (2.2) contract and license allocations; (2.3) register of licenses; (2.4) contracts; (2.5) beneficial ownership; and (2.6) state participation in the extractive sector.

Requirement 3

Exploration and Production

The EITI requires disclosures of information related to exploration and production, enabling stakeholders to understand the potential of the sector. The EITI Requirements related to a transparency in exploration and production activities include: (3.1) information about exploration activities; (3.2) production data; and (3.3) export data.

Requirement 4

Revenue Collection

An understanding of company payments and government revenues can inform public debate about the governance of the extractive industries. The EITI requires comprehensive disclosure of company payments and government revenues from the extractive industries.

The EITI Requirements related to revenue collection include: (4.1) comprehensive disclosure of taxes and revenues; (4.2) sale of the state’s share of production or other revenues collected in kind; (4.3) infrastructure provisions and barter arrangements; (4.4) transportation revenues; (4.5) SOE transactions; (4.6) subnational payments; (4.7) level of disaggregation; (4.8) data timeliness; and (4.9) data qualities of the disclosures.

Requirement 5

Revenue Allocations

The EITI requires disclosures of information related to revenue allocations, enabling stakeholders to understand how revenues are recorded in the national and, where applicable, subnational budgets, as well as track social expenditures by companies. The EITI

Requirements related to revenue allocations include: (5.1) distribution of revenues; (5.2) subnational transfers; and (5.3) revenue management and expenditures.

Requirement 6

Social and Economic Spending

The EITI encourages disclosures of information related to revenue management and expenditures, helping stakeholders to assess whether the extractive sector is leading to the desirable social and economic and environmental impacts and outcomes. The EITI Requirements related to revenue allocations include: (6.1) social and environmental expenditures by companies; (6.2) SOE quasi‑fiscal expenditures; (6.3) an overview of the contribution of the extractive sector to the economy; and (6.4) the environment impact of extractive activities.

Requirement 7

Outcomes and Impact Regular disclosure of extractive industry data is of little practical use without public awareness, understanding of what the figures mean, and public debate about how resource revenues can be used effectively. The EITI Requirements related to outcomes and impact seek to ensure that stakeholders are engaged in dialogue about natural resource revenue management. EITI disclosures lead to the fulfilment of the EITI Principles by contributing to wider public debate. It is also vital that lessons learnt during implementation are acted upon, that recommendations from EITI implementations are considered and acted on where appropriate and that EITI implication is on a stable, sustainable footing.

 What CSOs are expected to do includes the following:

They are to engage in public education and enlightenment, process and data interrogation, social mobilization, observation and feedback.

 The CSOs are also to monitor, involve in oversight, whistleblowing and play advisory roles.

Painstakingly done, these will ensure transparency in the extractive industries

Mr. Peter Egbule is a CSO Representative

Comment here