Around the world, the extraction of oil, gas, minerals and metals is still nowhere near to bringing the benefits to ordinary citizens that it should. The EITI standard, alongside a number of other efforts, contributes to improving the situation, but we still have a long way to go. This is why I am encouraged by the recognition by our EITI stakeholders of the need to enhance the EITI.
Implementation of the EITI standard does not achieve enough in isolation, and improvements to the EITI should ensure that it links up better with other efforts to improve resource governance. We have further to go in making it more relevant and flexible in order to meet the needs of each of the implementing countries, and to have a greater impact on development.
There has recently been a lot of discussion of other transparency efforts, in particular the disclosure requirements in the US Dodd-Frank Financial Reform Act and the proposed changes to the EU directives designed to bring about similar rules in Europe. As I have said before and reiterated at the Mining Indaba in Cape Town, there are different opinions amongst EITI stakeholders about these proposals, but my own view is that they are complementary to the EITI. This is for three reasons.
Firstly, collecting data on companies’ payments in New York, Washington, London and Frankfurt is one form of transparency. Making sure that the reporting leads to better accountability in Kinshasa, Lima, Jakarta and Baku is another matter. The EITI is not only about publishing the numbers. Countries implementing the EITI have a platform for dialogue about all aspects of the use of their country's natural resources. The EITI multi-stakeholder groups will be potentially more influential when they have access to the information provided following the listings requirements.
Secondly, the EITI is not only about companies being required to report their payments to government. Governments also have to report on revenues received. Then there is an independent reconciliation of what the companies say they paid and what the government says it received. In doing this independent reconciliation, discrepancies and inaccuracies are uncovered and can be acted upon. In Nigeria, US$5 billion was uncovered in unpaid taxes through their EITI process.
Finally, a significant proportion of natural resources are exploited by companies that are not listed in the US nor in the EU, especially by state-owned companies. The EITI requires disclosure of all companies' payments in a country. This is because once a country joins EITI, all companies operating in the country, including national oil companies and non-listed companies, have to disclose.
The US Government backed the Dodd-Frank Act and is also a strong supporter of the EITI. When EU Commissioner Michel Barnier launched the European Commission's proposal, he encouraged more countries to follow the EITI standard. Many different efforts are required to ensure improved resource governance. In my view the work of the EITI and the new US/EU transparency requirements are complementary.