EITI in Equatorial Guinea. Governance, Transparency and the

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• Governance, Transparency and the Management of
  Natural Resources
  
• Silvana Tordo
• Senior Energy Economist,
• Oil, Gas and Mining Policy Division
• Corporate Council on Africa
• June 22, 2005

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• Agenda
• Developmental Relevance of Transparency
• The Extractive Industry Transparency Initiative
• Issues arising from implementation
• EITI in Equatorial Guinea

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• How to use Oil, Gas and Mining resources for
  sustainable development and poverty alleviation?
  
• Resource rich developing countries have
  experienced
  
• Low per capita income
• Slow progress on human development
• Social and political instability and violence
• Potential for good has not been realized

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• Technical factors
• Dutch Disease from spending exchange rate
  effects absorption problems picking the
  winners
  
• Revenue volatility and expenditure stabilization
• Revenue exhaustibility and saving for future
  generations
  
• Resource curse and degenerating economic
  performance
  
• Political factors
• Diminished accountability
• Underinvestment in capacity

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• Good governance is critical
• Good governance features
• Clear and stable laws and regulations
• Efficient and fair fiscal policy
• Rule of law
• Adequate government capacity and skills
• Balance between private and public sector
• Dialogue between government and civil society
• and
• Transparency in public finances and
  administration.
  

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• Transparency is one of the fundamental building
  blocks of good governance
  
• Transparency
• Increases accountability and reduces the risk of
  waste and corruption
  
• Fosters democratic debate
• Improves macro-economic management
• Improves the investment climate

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• The Extractive Industry Transparency Initiative
  (EITI) focuses on resource revenue transparency.
  
• Launched by UK PM Tony Blair in Johannesburg,
  Sept 2002
  
• Escalating engagement of stakeholders
• Emerging consensus on principles, objectives and
  criteria
  

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• Principles and Objectives of the EITI
• Aims to ensure that resource revenues are
  properly accounted for to contribute to
  sustainable development and poverty reduction
  
• Provides guidelines to stakeholders on auditing,
  reporting and disseminating information on
  resource payments and revenues.
  

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• Implementation Criteria
• Regular publication of all material payments and
  receipts relating to oil, gas and mining in a
  publicly and readily accessible form
  
• Payments and revenues are reconciled by a
  credible, independent administrator, applying
  international auditing standards
  
• This approach is extended to all companies
  including state owned companies
  
• Civil society is actively engaged in the design,
  monitoring of this process and contribute towards
  public debate
  
• A public, financially sustainable work plan for
  all the above is developed by the host
  government, including measurable targets, a time
  table for implementation, and an assessment of
  potential capacity constraints.

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• Role of the World Bank
• Early and active support of EITI UK DfID
• Key element in response to Extractive Industries
  Review
  
• Additional WBG staff and financial resources
• Management of Multi-donor EITI Trust Fund
• Country programs
• Mainstreaming in WBG work
• Close coordination with IMF

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• EITI Implementation Issues and Challenges .
• Operational issues
• Definition of audit
• Aggregation vs. disaggregation
• Measurement of progress Validation
• Voluntary vs. mandatory
• Stakeholders issues
• Implementing countries
• Industry concerns
• NGOs
• IFIs

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• Equatorial Guineas reform agenda
• The Government has asked for the assistance of
  the Bank in implementing EITI and, more
  generally, in preparing a governance and poverty
  reduction strategy.
• The Bank and the Government are currently
  negotiating an advisory services agreement to
  assist the Government in the design of governance
  reforms focusing on the hydrocarbon sector and on
  resource revenue management.
• A comprehensive reform plan is being designed
  following the lines of the G-8 anti-corruption
  and transparency compact.

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• EQGs Implementation Arrangements
• Sept. 2004 decision to implement the EITI.
• Since then various WB/IMF seminars on governance
  and transparency, EITI seminars in Paris and
  London
  
• Feb. 2005 creation of Government Task Force to
  spear head implementation. Its tasks
  
• Define the Governments disclosure and
  verification policy
  
• Design and implement the EITI information
  campaign
  
• Prepare the Report on receipts on behalf of the
  Government.
  
• Propose actions in support of civil society
  active participation
  
• Ensure the monitoring of EITI implementation
  measures
  
• Define the action plan and timetable for EITI
  implementation

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• EQGs Implementation Arrangements (cont.d)
• Meetings with Industry and local Civil Society
  Representatives
  
• First Stakeholders meeting was convened on March
  10th to define rules of engagement
  
• Objective and scope of the cooperation among
  Government, Industry and Civil Society to be
  agreed.
  
• Operating rules of the Stakeholders Group.
• Implementation milestones Action Plan (G8
  compliant).
  

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• EQGs Implementation Arrangements (cont.d)
• Creation of Legal and Institutional Framework
• Decree Nr. 87/2005 creating the National
  Commission for the implementation of EITI and of
  good governance in Equatorial Guinea
  
• Implementing regulation was enacted that defines
  a clear institutional framework for
  implementation of the EITI
  

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• Next Steps
• EITI Secretariat and National Commission to
  become operational (members, budget, operational
  rules)
  
• Agree on implementation mechanisms
• Finalise TOR for independent data aggregator
  and appoint.
  
• Finalise Action Plan
• Define reporting template and reporting
  guidelines.
  
• Define the Reporting Timetable.
• Widen and deepen Civil Society Participation
• various initiative from information to training.
• Communication campaign

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arency.org