improving extractives governance
PNGEITI Report Releases
The EITI holds all implementing countries to the same global standard. Through Validation, the EITI’s quality assurance mechanism, implementing countries are assessed on their ability to meet the provisions of the EITI Standard.
Papua New Guinea prepares for Second Validation on EITI Implementation
The Head of Papua New Guinea Extractive Industries Transparency (PNGEITI), Mr. Lucas Alkan announced today that the country will be validated for the second time since PNG signed up to implement the EITI global best practice Standard in 2013. The validation exercise is set to commence on the 30th of October 2020. Mr. Alkan stated that the validation is an essential feature of the EITI implementation process. It is intended to provide stakeholders with an impartial assessment of whether EITI implementation in a country is consistent with the provisions of the EITI Standard. PNG underwent its first validation in 2018 in which the EITI Board granted ‘meaningful progress’ in implementing the EITI Standard. The Board commended PNG’s efforts in implementing a number of reforms to address weaknesses in government systems and in improving the level of transparency in the country’s extractive sector. The Board recognised PNG’s efforts in ensuring appropriate multi-stakeholder oversight of EITI implementation and aligning objectives for the EITI with national priorities. It further commended the country’s efforts to produce EITI data in a timely manner and to effectively disseminate the findings of the EITI Reports to influence public debate. The Board welcomed the government’s continued commitment to strengthening government systems by using the EITI process as a diagnostic tool to support reforms. As part of improvements of such systems, the EITI Board encouraged PNG to pursue efforts to systematically disclose data required by the EITI Standard as part of routine government and company disclosures. The outcome of the first validation was a positive step for PNG in the EITI implementation process, and demonstrated that the EITI process can contribute to enhancing transparency and accountability in the management of resources related revenues. In granting ‘meaningful progress’ to PNG in its efforts to implement the EITI, the Board allowed 18 months (up till 30 April 2020) for PNG to take corrective actions on the areas identified to meet the EITI global standard before a second validation was undertaken. There were 14 areas identified as having made no progress or inadequate progress which required actions to be taken. The 14 corrective action areas included: public disclosure of information related to the award or transfer of mining tenements and oil and gas licenses pertaining to companies covered in the EITI Report; ensuring a comprehensive list of state participation in the extractive industries, including terms associated with state equity and any changes in the year under review, be publicly accessible; ensuring that complete production volume for oil and gas, and production values for each of the extractive commodities produced during the year under review be publicly accessible and disaggregated by commodity; ensuring that export volumes and values are disclosed publicly for each mineral commodity (including oil, condensate and gas) exported in the year under review; ensuring that the materiality threshold for selecting companies ensures that all payments that could affect the comprehensiveness of EITI reporting be included in the scope of reconciliation; undertake a comprehensive assessment of transactions between extractives SOEs (and their subsidiaries) and mining, oil and gas companies, as well as between the extractives SOEs (including their subsidiaries) and government in its scoping for future EITI Reports; establish whether direct subnational payments (to government entities) by extractives companies are material; an assessment of whether the payments and revenues are subject to credible, independent audit, applying international auditing standards; clarify which extractive revenues are recorded in the national budget; ensure that material subnational transfers of extractives revenues are publicly disclosed, when such transfers are mandated by a national constitution, statute or other revenue sharing mechanisms such as benefit-sharing agreements; ensure that reporting of mandatory social expenditures be disaggregated by type of payment and beneficiary, clarifying the name and function of any non-government (third-party) beneficiaries of mandatory social expenditures; and undertake a comprehensive review of all expenditures undertaken by extractives SOEs (and their subsidiaries) that could be considered quasi-fiscal. Mr. Alkan indicated that the onset of the Covid19 pandemic late last year and the associated lockdowns and restrictions to normal operations had severely affected our ability to prepare well by addressing the above areas before the second assessment. He said that due to the Covid19 pandemic, the EITI Board deferred PNG’s validation from April to October 2020. A further deferment to next year would work well for us in our continued effort to take corrective actions, however this did not seem imminent. Despite the Covid19 inflicted disruptions, he encouraged all stakeholders involved in the EITI implementation process to prepare as best as we could for the second validation. The Head of Secretariat emphasised that failure to make considerable improvements in the above areas (in the second validation) could result in PNG being suspended from the EITI in accordance with the provisions of the EITI Standard. Full details of the PNG’s Validation outcome can be viewed on EITI website or the PNGEITI website, www.pngeiti.org.pg File photo: February 2020, Port Moresby: PNGEITI Technical Working Group during the second Validation Workshop.
COMMENTARY: Extractive Industries Transparency Commission Bill Regional Consultation Underway
REGIONAL CONSULTATION FOR THE PROPOSED EXTRACTIVE INDUSTRIES TRANSPARENCY COMMISSION BILL IS UNDERWAY A Commentary By Gedion Timothy The extraction of minerals such as gold, copper, zinc and petroleum resources such as liquefied natural gas is complex and challenging. The complex and challenging environment presents both opportunities and challenges for economic advancement for any nation. Governments must be applying the right fiscal tools to derive best value from the extractive value chain particularly for countries like Papa New Guinea which is known to be richly endowed with natural resources and its difficult geography. Strong political leadership backed by a robust service delivery model is key to unlocking value for the extractive industry activities. It is good to note that the Papua New Guinea state wheels are in motion to implement ambitious state initiatives ranging from policy reforms to legislative changes to resources laws to unpack the economic value the resource sector has for Papua New Guinea’s future. For example, a proposal to establish a Sovereign Wealth Fund (SFW) was a brilliant move in itself with key officials from the department of Treasury and Bank of Papua New Guinea (BPNG) providing technical oversight- to initially park Government windfalls from the PNGLNG Project for budget support and future use. Drop in oil prices commencing 2014 appears to have temporarily watered-down efforts to get this wealth fund operational but Papua New Guineans still have the faith that the wealth fund will come to fruition at some point in time for the benefit of future generations. This is a clear testament of the fact that the PNG Government does not fold arms and watch as a by-stander only to collect its dues from the extractive industries for budgeting purposes but also an active participant in the economic value chain of resource projects. The PNG Mining Act provides for the State to acquire up to 30 percent share in any mining project and similarly the Oil and Gas Act provides for the state to acquire up to 22.5 percent shares in petroleum projects. The streamlining of Government business through the Kumul arrangements strongly demonstrate how smart those in leadership think and plan for the future of Papua New Guinea. The Kumul arrangement places the Sate in a better position than before to actively participate in PNG resources sector. Alongside these activities, the PNG Government is also serious about promoting transparency and accountability in the mining and petroleum sector which is the present powerhouse of the PNG economy. Since 2014, the PNG Government commitment is demonstrated through the publication of six reports in strict compliance with international reporting best practice known as the Extractive Industries Transparency Initiative Global Standard. The seventh PNGEITI Report will be published in the coming days. A small secretariat situated at the Department of Treasury coordinates a tripartite constituent of key Government agencies, mining & petroleum companies and civil society organisations for oversight and guidance in the publication process of the EITI Reports. Papua New Guinea is among a band of 53 countries promoting transparency and accountability in the mining and petroleum space through the EITI Reporting process. Close to seven years into implementing the EITI, a proposed legislation to transition the Papua New Guinea Extractive Industries Transparency Initiative National Secretariat into a statutory body is undergoing public consultation beginning this month. This follows the successful conclusion of a series of consultations among legal and technical officials of key government institutions, mining & petroleum companies and civil society organizations on the elements of what is proposed to be the Papua New Guinea Extractive Industries Transparency Commission in Port Moresby towards the end of last month. Head of PNGEITI National Secretariat Mr. Lucas Alkan thanked instrumentalities involved for progress made so far in shaping an appropriate legislation that will be a best fit for the replacement of the PNGEITI National Secretariat which is now situated at the Department of Treasury. “When enacted into law, the PNGEIT Commission will function as a statutory body for the implementation of the global Extractive Industries Transparency Initiative Standard and principles through the publication of EITI Reports,” Mr. Alkan says “The push for the establishment of the PNG EIT Commission is part of a bigger policy drive to institutionalize and systemize EITI reporting anchored into the PNG legal and policy framework. “PNG has made considerable progress with the publication of seven flagship PNGEITI Reports since PNG subscribed to the EITI Global Standard in 2014 to promote transparency and accountability in mining and petroleum sectors to enhance good governance and better management of proceeds from these important sectors of the economy. “Seven years into implementing the EITI Standards through the publication of EITI Country reports and considering the fact that PNG is endowed richly with mineral and petroleum resources, PNGEITI is maturing into its next stage to meet the evolving challenges of the industry. “What the PNGEITI Multi Stakeholder Group is doing now is to legally establish an entity to render administrative services for effective EITI implementation in Papua New Guinea. “I am pleased to note that considerable progress has been made so far with a draft bill already in our hands and also pleased to note that the PNGEITI is comfortable with this piece of legislation which will undergo further public consultation in the coming months. “A technical team conducting consultation on the draft bill commenced this week in Kokopo, East New Britain with a weeklong consultation scheduled to take place in Kavieng, New Ireland Province starting next week Monday, 12th July, 2021,” says Mr. Alkan. Papua New Guinea is richly endowed with natural resources for economic development and progress when the resource are put to prudent use as opposed to squandering them or improperly exploiting to the indulgence of a tiny minority. At the watchful eyes of the Papua New Guinea population, it is the function of the State to ensure that proceeds of economic activities associated with the resource sector is trickled down for the benefit of all citizens. The technical nature of the extraction of natural resources
Terms of Reference for the Redesigning of the PNGEITI website
The EITI is built on the notion that natural resources such as oil, gas, metals and minerals,belong to a country’s citizens. The EITI’s mission is to promote understanding of natural resource management, strengthen public and corporate governance and provide the data to inform greater transparency and accountability in the extractive sector. By becoming a member of the EITI, countries commit to disclose information along the extractive industry value chain – from how extraction rights (granting of mining and petroleum licences) are awarded, to how different revenues streams make their way through to the Government and how they benefit the public. Through participation in the EITI process, 55 countries have agreed to a common set of rules governing what has to be disclosed and when – the EITI Global Best Practice Standard. EITI countries disclose extensive amount of data and information as required by the EITI Standard. The EITI Standard requires that data is made available in accessible forms to all users.
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Terms of Reference for the preparation of the PNGEITI 2021 Report
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