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Understand the transparency initiative on oil

By Deus Mukalazi

Supporting the EITI is a good thing; understanding how it works is even better

One of the resolutions passed by the 9th Parliament on Oct.11 was a demand for the government to join the Extractive Industries Transparency Initiative (EITI). Seeing and hearing the members of Parliament chorus “Aye,” one could not easily tell majority of  them were responding to something they did not clearly understand but were convinced is a good idea since the petitioners had done a good job to convince the House to pass the resolutions.

So what’s this EITI monster that the Government is so scared of implementing even when it’s a policy commitment under Objective VI of the national Oil and Gas Policy?

EITI is an independent, internationally agreed upon, voluntary standard for creating transparency in the extractive industry. It’s an international movement whose main aim is to promote transparency and accountability in the management of revenues generated from the exploitation of extractive resources particularly through information disclosure to the public. It’s a standard for companies to publish what they pay and for governments to disclose what they receive.

The establishment of the EITI was announced in September 2002 by the then-British Prime Minister, Tony Blair at the World Summit for Sustainable Development in
Johannesburg. This was due to efforts by a coalition of civil society organisations to encourage disclosure of payments made by international oil companies to host governments. The initiative was initially supported by the British government, which convened a working group composed of resource-rich countries, companies and civil society organisations to develop a methodology.

The EITI has been built over an extended period of consultations and advocacy with stakeholders.

The consensual view has been captured in a series of shared principles and criteria.  In summary, EITI contends that natural resources wealth should lead to growth and poverty reduction, transparency is essential in order to achieve this, all parties must be involved in the process of creating transparency and the process to create transparency should always respect the sovereignty of countries and existing contracts and laws.

The EITI process is governed by the international secretariat in Oslo, Norway with guidance of the EITI board. Claire Short, former British Secretary of State for International Development , is the current chair of the EITI board. Implementation takes place at the country level, in a process that emphasizes multi-stakeholder participation. Countries implementing EITI make annual reports to the EITI Board.

To become an EITI Candidate, an implementing country must sign first by meeting the four Sign Up indicators. The government must issue an unequivocal public statement of its intention to implement EITI, government must commit to work with civil society and companies, the governrnent has to appoint a senior individual to lead the EITI implementation process and publish a fully-costed work plan. After meeting the initial sign up phase a country then moves on the Preparation Phase, The disclosure phase and the validation phase to achieve compliant status.

There are 35 implementing countries in the whole world; 20 of them in Africa. The latest country to join ETI is the US. President Barrack Obama announced this during the launch of the Open Government Partnership (OGP) in New York on Sept.20.

Other governments including Australia, Belgium, Canada, France, Germany, Italy, the Netherlands, Norway and the United Kingdom support EITI. They provide political leadership in promoting the Initiative. Many also contribute financially to the international management of the EITI, and support implementation through direct bilateral support to EITI implementing countries or through a multi donor trust fund managed by the World Bank.

International Organisations supporting the EITI include the World Bank, International Monetary Fund, African Development Bank and the European Bank for Reconstruction and Development, which also provide technical and financial support to implementing countries. The EITI has also repeatedly been endorsed by the G8, G20, AU and EU.

46 of the world’s largest oil, gas and mining companies support and actively participate in the EITI process – through their country operations in implementing countries, international level commitments, and industry associations. Also, the EITI has won the support of over 80 global investment institutions that collectively manage over US $16 trillion.

Deus Mukalazi is the Coordinator, Publish What You Pay Uganda

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