Why Philippines is pursuing EITI compliance in mining

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With the issuance of EO 79, the Philippines aims to become compliant with the Extractive Industries Transparency Initiative

MANILA, Philippines – In the hopes of promoting transparency in the controversial mining sector, the Philippines is working on being included in the list of countries that comply to the Extractive Industries Transparency Initiative (EITI), a seal of global approval that payments and receipts are properly disclosed.

If the Philippines becomes EITI compliant, it will be the 2nd ASEAN country to ensure an effective process for annual disclosure and reconciliation of all revenues from its extractive sector, allowing citizens to see how much their country receives from oil, gas and mining companies.

Under President Aquino, the first step in the EITI process has been achieved when Executive Order No. 79, which defines the mining policy of the Aquino government, was issued in July, mandating various mining stakeholders to pursue EITI accreditation.

UNDP/DILG Consultant Atty. Donna Casgonia said at the September 19 Mining Conference in Pasay City that becoming EITI compliant has also been included in the 2010 to 2016 Philippine Development Plan (PDP). 

“Signing on to the EITI was stated in the Philippine Development Plan. It is a global standard on disclosing mining tax payments. The EITI will benefit government, civil society organizations, industry, and investors,” Casgonia said during the forum.

Indonesia has already started the process of being EITI compliant, a process that could be completed by April 2013.

Currently, there are 11 EITI compliant countries including Norway, Mongolia, Niger, Azerbaijan, Yemen, and Timor Leste. Apart from Indonesia, there are 22 other EITI candidate countries such as Afghanistan, Cameroon, Ivory Coast, Peru, Sierra Leone, Kazakhstan, Guinea, among others.

The Philippines’ road to EITI

Casgonia said complying to the EITI has been on the drawing board since 2005. However, it is only now that the government releasd EO No. 79 can the country begin the compliance process.

She said having a mining policy that mandates proper disclosure of mining revenues is the first step to becoming EITI compliant. This helps in the creation of a multi-sectoral group, the center of EITI processes, before the country vies for EITI compliance.

The issuance of a mining policy also helps capacitate agencies, particularly the Mines and Geosciences Bureau (MGB), in its efforts to conduct multisectoral studies and roundtable discussions.

These studies and discussions as well as workshops on mining tax payments, among others, are included in the EITI 2012 national roadmap that the government is creating.

“As far as UNDP is concerned, we are hoping that by 2013 MGB will already be capacitated enough to organize the activities relating to EITI,” Casgonia said.

What is EITI?

In the September 17 Philippine Transparency Forum, Ananda Idris of the Transparency Team EITI Indonesia under the Indonesian Coordinating Ministry for Economic Affairs explained EITI as a globally developed standard that focuses on transparency in the extractive industries or non renewable energy resources at a local level.

Idris said the EITI was launched by UK Prime Minister Tony Blair during the First International Sustainable Development Conference in Johannesburg in 2002 to help build trust in the oil, gas and mining industries.

Under EITI, Idris said good governance, transparency, sustainable development practices, and the improvement of the country’s investment climate should be the key priciples behind a country’s management and use of natural resources.

Based on Idris’ presentation, the EITI covers all oil, gas and mining firms, including state-owned firms. They are required to submit to the government a report on the amount of all revenues while government agencies are required to make public revenues it collected from these firms.

A multisectoral group created prior to a country’s EITI compliance is required to hire an independent and internationally accepted reconciler to crosscheck the figures. The result of this crosschecking process will be opened and communicated to the public.

The following are needed by countries to comply to the EITI:

  • send an official request to the EITI secretariate;
  • submit a workplan to be compliant;
  • create a multi stakeholder steering group;
  • capacity building for government and civil society;
  • agree and implement the reporting and reconciliation process; and
  • communicate results to the public supported by a communication plan.

Indonesia’s efforts toward EITI compliance

Idris said Indonesia signed on to the EITI because of its desire to be corruption-free. He said prior to beginning the road to EITI compliance, the public clamored for increased transparency in the extractive industries through rallies across Indonesia.

He said oil and gas volumes, surrendered by producers to the state, are monetized. “This represents between 15% to 25% of all state revenue, and tens of billions of dollars,” Idris said.

Idris said the journey of Indonesia toward EITI compliance began in November 2007 when a coalition of 39 Indonesian NGO’s from 8 resource rich provinces called on the Indonesian government to implement EITI. The coalition was then called the Publish What You Pay Coalition Indonesia.

By December of 2007 until May 2010, Indonesia worked on submitting its intent to file for EITI compliance as well as drafting and finalizing its EITI frameworks and templates for reporting. By October 2010, Indonesia was accepted to become an EITI candidate country.

In November 2011, the country received a $1 million grant from the World Bank to support EITI in Indonesia and provide advice and training to stakeholders in the country.

Idris said the country intends to make public the first EITI Indonesia Report for 2009 by December this year. This will be a necessary step toward becoming fully EITI compliant by July 2013. – Rappler.com

Read the Blog on the 2012 Mining Conference for a blow-by-blow account of issues being discussed.

For the existing mining contracts in the Philippines, view this #WhyMining map.

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