1. The Extractive Industry Transparency Initiative (EITI)
Presentation for the
EITI Philippines National Planning Workshop
18-19 January 2013
Manila
Philip Chan –

2. The Extractive Industry Transparency Initiative (EITI)
Overview
Value of Transparency
What is EITI?
Why EITI?
Which Countries are implementing EITI?
How does EITI work?
How is EITI implemented?
What are the benefits of implementing EITI?
What is the role of the WBG and the MDTF?

3. Value of Transparency
Reduce Opportunities for Corruption: by providing a public statement of payments and revenues, EITI makes significant non-payment (or leakage or non-receipt) of revenues easier to detect.
Reducing Instability and risk of conflict - communities and civil society can clearly assess how the risks, benefits and responsibilities are allocated among the various stakeholders
Tool for education: improve government officials outside the Ministries of Energy and Mineral Resources and civil organizations better understand the extractive sectors.

4. Value of Transparency Access to capital and investment climate:
improves sovereign and corporate credit ratings
adds predictability as potential investors understand what they are expected to pay
Help sustain development efforts: governments and investors can be held accountable for their commitments
Assessing benefits: governments can assess whether their contracts and laws are fair and comparable in terms and benefits to those in other countries with similar endowments

5. What is EITI? $ Paid = $ Received
Global Standard: to promote revenue transparency and accountability
$ Paid = $ Received
Systematic Process: provides a platform to systematically report on, review, and assess what is being paid by companies and received by governments
Government led: but implemented with active involvement of partners from industry and wider society

6. What is EITI?
EITI Board and International Secretariat sets and oversees the rules that govern the initiative globally
60 of the worlds largest oil, gas and mining companies support and actively participate in the EITI Process
EITI has won the support of over 80 global investment institutions that collectively mange US16 trillion.

7. Why EITI? A Response to the Paradox of Plenty: the Resource Curse
Importance of Transparency for Informing Public Debate: Australians and Americans want to know if companies are paying their fair and reasonable level of taxes and royalties
Global Corporate Responsibility: Europeans and Americans want to know if their companies are operating fairly in countries around the world

8. Implementing EITI to date
EITI: Global Implementation
As of 14 January 2012
EITI Implementing Countries 37
Compliant 18
Candidate 19
Countries that have published EITI Reports 32
EITI Reports Published
119
Fiscal Years Covered in EITI Reports
154
Total Government Revenues Generated to date
842 Billion USD
Validations Completed 28
Validations Scheduled for 2013 12

9. How does EITI Work? Government Discloses Receipt of Revenues
Extractive Companies Disclose Payments
Government Discloses Receipt of Revenues
Independent Administrator Reconciles the Payments
EITI Country Report
Oversight by a EITI Multi-Stakeholder Group

10. Functions of the EITI Multi-Stakeholder Group
How does EITI Work?
Functions of the EITI Multi-Stakeholder Group
Ensure sustained political commitment and resource mobilization
Overall strategic direction of the initiative
Determines the scope of the EITI program
Develops and fully consults an EITI work plan
Assessing and removing barriers to implementation
Oversees the audit / reconciliation process
Raise public awareness of EITI

11. EITI Implementation Process
Sign up phase (candidacy)
Issue government announcement
Commit to work with all stakeholders
Appoint implementation leader
Establish multi-stakeholder committee
Compose and publish workplan
Disclosure
Disclose payments and revenues to administrator
Receive report from administrator
Identify and explain discrepancies
Recommend improvements
Preparation
Engage industry and civil society
Remove obstacles to implementation
Agree materiality definition/reporting template
Select and approve neutral EITI administrator
Ensure full industry participation
Ensure company and government information
submitted is based on properly audited accounts
Dissemination
Disseminate EITI report
Review lessons learned and repeat
Country undertakes external validation

12. What are benefits of implementing EITI?
Demonstrates national commitment to revenue transparency and accountability domestically and internationally
Demonstrates national benefits of extractive industry projects
Improves revenue collection and promotes a culture of accountability
Systematic framework for collaboration - > Reduces risk of conflict

13. Potential Benefits of EITI the Philippines
Help government and citizens better respond to challenges associated with the legacy of mining in the Philippines
Mitigate potential future conflict related to arrival increased mining investment after regulatory and fiscal reforms in mining sector are in place
Reconnect national government with provincial and local communities
Complement and supports other government reform initiatives under EO 79

14. EITI improves governance
Mongolia, Gabon, and Nigeria:
Helped standardize tax and revenue reporting systems
Improved collaboration among tax, regulatory and oversight agencies
Allowed for better monitoring of EITI revenues from EI projects
Improved Governance Capacity:
Ability to produce more accurate data on revenue streams for budget planning
Improved capacity to cross check figures provided from local to central levels of governments.
Improved ability of government and civil society to monitoring performance of EI

15. EITI reduces opportunities for corruption
EITI Reporting Process: establishes clear baseline for verification of revenue flows
EITI Reconciliation / Verification Process:
Clarify payment reporting requirements
Establish a standard process for clarifying discrepancies
Provides more accurate information on oil, gas, and mining revenues where none existed before
Strengthened Audit Standards:
Local audit standards are raised to international levels
Opportunity for Public Scrutiny:
Process provides reliable information for public scrutiny of revenue flows

16. Improving the Business Environment
Benefits to Industry
Establish a clean and predictable process of payments disclosure and reporting
Reduce corporate and operational risks and cost of capital for companies
Reduce reputation risk and conflict as companies are able to demonstrate payments are made according to law and how they contribute to national economy

17. Transparency in disclosure of tax payments is associated with improved financial performance

18. Transparency in Disclosure of tax payments is associated with improved financial performance

19. EITI helps reduce risk of corruption
Transparency Reduces Risk of Corruption

20. EITI can help improve access to finance
Transparency Improves Sovereign and Corporate Credit Ratings
Lenders and credit rating
Agencies have a strong
interest in transparency
Government commitments
to transparency
can improve access to
commercial and
concessional
finance.

21. EITI improves civil society capacities
Improved CS capacity to engage responsibly and influence outcomes in the sector:
Access to regular and reliable information helps improve the quality of engagement and debate
Improved quality dialogue and engagement with other stakeholders helps enhance understanding and trust among all
Improved ability to dialogue and represent its interests increases CS capacity to influence policy on EI issues and revenue allocation

22. What is the role of the World Bank in EITI?
Promoting the EITI as a global standard for EI revenue transparency and accountability
Primary source of technical and financial assistance for implementing governments and civil society organizations.
WBG sits as a non-voting member of the EITI Board.

23. THANK YOU
Philip Chan –

24. The Natural Resource Revenue Value Chain

25. Which Countries are Implementing EITI
EITI Country Portfolio Summary – As of January 2012
EITI Compliant – Validated as Compliant and issued EITI Reports (14)
EITI Candidates – published one or more EITI Reports and validation process done or underway (13)
EITI Implementation in Progress – working towards first report (10)
Endorsed EITI – some making progress towards candidate status (10)
Pipeline Countries - WBG / other agencies are in contact with (16)
Azerbaijan
Cameroon
Tanzania
Botswana
Angola
Liberia
Gabon
Albanian
Ethiopia
Malawi
Timor-Leste
Sierra Leone
Burkina Faso
Ukraine
Rwanda
Mongolia
Mozambique
Colombia
South Africa
Ghana
Republic of Congo
Zambia
Guyana
Zimbabwe
Norway
Cote d’Ivoire
Afghanistan
Suriname
Cambodia
Kyrgyz Republic
Kazakhstan
Iraq
Solomon Islands
Tajikistan
Nigeria
Guatemala
Chad
United States
Bulgaria
Niger
Trinidad and Tobago
Indonesia
Australia
Senegal
Yemen
DRC
Togo
Philippines
Sudan
Central African Republic
Madagascar
Uganda
Mali
Guinea
Lao PDR
Peru
Mauritania
Vietnam
Papua New Guinea
Egypt
35 EITI Implementing Countries
9 Countries Endorsed EITI
16 Countries in Dialogue