Reporting Practices

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The actual disclosure of information by government agencies. Because disclosure is the best indicator of transparency, this component receives a greater weight.

Disclosure of information about operations, revenues, licensing and contracts represents the basic building blocks of a transparent oil, gas and mining sector. The RGI finds that transparency is possible—that a significant number of countries disclose comprehensive information about their oil, gas and mining operations and payments—but that this practice is not yet widespread. While 13 countries score satisfactorily, 45 countries earn scores below 70 on this component (see Figure 1).

Figure 1: Reporting Practices: ranking and scores

   For more detail, go to the RGI Data Tool

 

The 13 satisfactory performing governments, such as Chile and Trinidad and Tobago, publish comprehensive, timely and periodic information about extractive sector operations and payments, including financial reports by the government agencies directly in charge of overseeing and regulating the sector, as well as state-owned companies and natural resource funds when they exist. Satisfactory performers also have several sources of information, reflecting division of roles and authority.

Comprehensive and periodic reports are important not only for the information they disclose. They are evidence of good accounting practices and technical capacity. Despite the value of this information, among countries with partial, weak and failing performance, the majority of available reports are outdated (covering years prior to 2009) or lack comparable data for previous years. When examined in more detail, 23 countries, including Azerbaijan and Liberia, lack timely information about reserves and investments in exploration. Eight countries, such as Kuwait and Turkmenistan, do not report up to date production volumes. 21 countries, including Guinea and Ecuador, do not publish timely information on primary sources of revenue such as royalties, taxes and profit shares; and the majority of surveyed countries does not publish or disclose historical information on smaller, secondary sources of revenues such as bonuses, dividends or license fees.

Countries with unsatisfactory scores also tend to have fewer sources of information on the operations and payments in the extractive sector. In Afghanistan, Cameroon, the DRC and Mozambique, the best or only reports come from the EITI, and even this data is generally outdated. Central banks sometimes publish relevant reports (e.g. Algeria, Gabon and Saudi Arabia) but reports from the agencies directly in charge of regulating the extractive sector are often missing.

Publishing information about contracts and the licensing process is another area where the RGI reveals good practices as well as shortcomings. In 22 out of 58 countries, including Sierra Leone and Egypt, the licensing process is specified by law and governments provide information as part of the preparations for license allocations, including some contract terms, geographic data and details about the application and allocation process. However, only seven countries follow up with comprehensive disclosure about the results of the licensing rounds including bids received, winning bids and reports from the licensing authority about its activities. 33 countries, e.g. Russia and South Africa, publish scant or no information about their licensing practices. (See Box 1 on contract transparency).

Box 1: Contract Transparency

In recent years there has been progress towards contract transparency. Ten countries surveyed in the Index publish all or most of their contracts and licenses, including the DRC, Liberia and Peru. Azerbaijan, Ghana and Mongolia have released individual contracts which govern large extraction projects. In addition, Afghanistan and Guinea announced the disclosure of mining contracts after the close of the RGI research period. Despite this progress, contract transparency remains the exception rather than the rule.

Where contracts or licenses are available, civil society groups, journalists and public officials have used them to improve oversight. For example, in Peru, the publication of all mining licenses enabled Grupo Propuesta Ciudadana (a civil society organization) to launch a website that displays concessions, including location, ownership stakes, investment terms, production and rent generation, as well as their overlap with natural protected areas and indigenous territories. [i] In the DRC, civil society used published oil and mineral contracts in their research to uncover the beneficiaries of mineral extraction, and to monitor the implementation of the agreements. [ii]

Contract transparency appears to be easier when petroleum and mining fiscal terms are standardized and established in legislation. In a several countries where contracts are published—including Norway and the United States — the legal regime leaves little or no discretion to the license-awarding agency to deviate from terms and principles contained in legislation, regulations or model agreements. Where terms are standardized and discretion is limited, governments have little incentive to keep contracts opaque, since each project is governed by a generally-applicable set of rules. By contrast, in 28 of the countries where contracts are not publicly available, the authorities do possess discretion to tailor deals to individual companies. [iii]

 

Finally, environmental and social impact assessments have received attention under corporate social responsibility processes, e.g. the International Financial Corporation (IFC) sustainability standards[iv] and the Global Reporting Initiative,[v] but country practices remain uneven. Almost all countries have legislation that requires environmental impact reports prior to the award of a license or project implementation.[vi] However, only 14 countries, including Cameroon and Mexico, publish environmental impact reports after consultations and before the award of any mineral rights.


i http://190.223.113.142/maplab_projects/gmf_apps/desco/desco.phtml

ii http://www.congomines.org/fr/category/themes/acces-ressources/

iii The countries are: South Sudan, Algeria, Trinidad and Tobago, Cameroon, Libya, Nigeria, Iran, Papua New Guinea, Iraq, Gabon, Yemen, Russia, Zimbabwe, Sierra Leone, Guinea, Qatar, Bahrain, Malaysia, Equatorial Guinea, Botswana, Bolivia, Myanmar, Mozambique, Cambodia, Turkmenistan, Azerbaijan, Kuwait and Morocco.

iv IFC Sustainability and Performance Standards are available here: http://www1.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/IFC%20Sustainability/SiteMap

v The Global Reporting Initiative framework is available here: https://www.globalreporting.org/reporting/reporting-framework-overview/Pages/default.aspx

vi With the exception of Timor-Leste, China, Equatorial Guinea, Libya, Turkmenistan, Iran and Myanmar.