October: Tony Blair announces the Extractive Industries Transparency Initiative (EITI) at the World Summit for Sustainable Development in Johannesburg
February: EITI Paris Implementation Workshop.
March: International Advisory Group (IAG) formed to decide on the governance and future direction at the second EITI Conference.
June: EITI support and implementation recommended in the Commission for Africa Report at the G8 Gleneagles Summit.
October: First international EITI Board was formed consisting of 20 members representing implementing countries, supporting countries, civil society organisations, industry and investment companies during the 3rd EITI Global Conference in Oslo. Peter Eigen is appointed as Chair of the Board.
September: International Secretariat opens in Oslo with a 'Transparency Week'. 15 countries welcomed as EITI Candidate Countries.
February: Validation methodology agreed by Board at meeting in Accra, Ghana. The EITI welcomes seven new Candidate Countries.
February: Azerbaijan became the first EITI Compliant Country and Norway admitted as EITI Candidate Country during the 4th EITI Global Conference in Doha.
May: Four new countries were admitted as EITI Candidate Countries bringing total number of EITI implementing countries to 30.
October: 100th EITI reconciliation report published.
The history of the EITI
The idea of an “Extractive Industries Transparency Initiative” (EITI) was launched on the global stage in September 2002 by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg. A few years prior to this launch, civil society and company representatives alike had been lobbying for a global remedy to counter the lack of transparency around the vast government revenues from natural resources.
‘Publish What You Pay’
In the late 1990s, several academic pieces on what was increasingly becoming known as the “Resource Curse” or “Paradox of Plenty” were published by such acolytes as Jeffrey Sachs, Joseph Stiglitz, Terry Lynn Karl and Paul Collier. Journalists and writers were identifying more and more stories of corruption, conflict and mismanagement of the extractive sector. The problem went beyond the well-known Dutch Disease, the economic phenomenon where natural resource wealth makes other export sectors uncompetitive. Other common effects included the capturing of the revenues by elites, the stunting of the development of tax systems and exacerbated regional and community tensions.
The idea of the EITI followed campaigning by Global Witness, other civil society organisations and people like George Soros, increasingly under the campaign name of “Publish What You Pay”. This campaign slogan was drawn from the Global Witness report “A Crude Awakening”launched in December 1999, which focused on what it saw as the opaque mismanagement of oil in Angola. The report concluded by calling on the operating companies to adopt “a policy of full transparency [in] Angola and in other countries with similar problems of lack of transparency and government accountability”.
In February 2001, Lord John Browne, the then Chief Executive Officer of BP, responded to the campaign and committed to publish payments made to the Angolan government. This sparked a strong reaction from the Angolan government. In his 2010 memoir “Beyond Business”, Lord Browne explains how he received a cold letter from the head of the Angolan national oil company Sonangol, stating that “…it was with great surprise, and some disbelief, that we found out through the press that your company has been disclosing information about oil-related activities in Angola”. Lord Browne goes on to conclude “Clearly a unilateral approach, where one company or one country was under pressure to “publish what you pay” was not workable”. In order to achieve transparency, a global effort to level the playing field and require all companies in a country to disclose payments was needed.
Bringing stakeholders to the table: agreeing the EITI Principles
Following the publication of the Blair speech in October 2002, the UK Department for International Development convened a meeting of civil society, company and government representatives. An agreement emerged that some kind of reporting standard should jointly be developed. At a conference in London in June 2003, a Statement of Principles to increase transparency of payments and revenues in the extractive sector was agreed. These 12 EITI Principles centered on the need for transparent management of natural resources and affirmed the belief that “a workable approach to the disclosure of payments and revenues is required, which is simple to undertake and use” (10th EITI Principle).
Following this meeting, a few countries like Nigeria, Azerbaijan, Ghana and Kyrgyz Republic, explored how these principles might be applied. They were later joined by Peru, the Republic of Congo, Sao Tome e Principe, Timor-Leste, and Trinidad and Tobago.
Drawing from countries’ first experiences with EITI: The EITI Criteria
In March 2005, the EITI stakeholders and implementing countries again met in London. UK Secretary of State for International Development Hilary Benn summarised: “Our experience in the countries that have piloted EITI is that while different countries have taken different approaches to implementation, this needs to be backed up by clear international rules of the game for the initiative to be effective and credible”.
These different approaches to the Principles lead to the establishment of six Criteria which sought to establish the rules of the game. Benn also announced the establishment of an International Advisory Group, including representatives of governments, companies and civil society organisations, to take the EITI forward.
It was now becoming clear that the EITI was not evolving, as some had anticipated, into a voluntary standard for companies, but rather a disclosure standard implemented by countries. The Criteria focused on “regular publication of all material oil, gas and mining payments by companies to governments (“payments”) and all material revenues received by governments from oil, gas and mining companies (“revenues”) to a wide audience in a publicly accessible, comprehensive and comprehensible manner” (EITI Criteria 1). They also recognised that civil society had to be actively engaged in the process to ensure accountability (EITI Criteria 5).
Assessing transparency: EITI Validation
By the time of the 3rd Global Conference in Oslo in October 2006, the implementing countries, now joined by Niger and Cameroon, were preparing their first EITI reconciliation reports. Azerbaijan had already produced reports covering revenue from 2003-2005, and Nigeria had a report covering 1999-2004. Alongside the production of an EITI Source Book in 2005, which provided guidance on how to produce these reports, the International Advisory Group had sufficient emerging approaches to introduce the EITI Validation Guide, which set out the indicators that implementing countries had to meet in order to become EITI Compliant. The Validation Guide was introduced at the Oslo Conference, effectively marking the end of the beginning for the EITI.
At this time it was also agreed that the EITI should have its own governance structure, Board, and Secretariat. The International Secretariat was established in Oslo in September 2007.
With the Principles setting out the aims, the Criteria containing some minimum requirements, and the Validation Guide with its indicators, it was thought that the EITI had a structure in place to provide clear expectations for implementing countries. The EITI had, in effect, become a standard. In February 2009, Azerbaijan became the first country compliant with this standard, and Liberia, Timor-Leste, Nigeria and Ghana soon followed.
It quickly became clear that many issues had yet to be resolved, such as how long implementing countries had before they were required to meet the standard and how regular and timely the reporting needed to be.
The EITI Board has continued to issue further rules and guidance. The EITI Rules (replacing the Validation Guide) were issued in 2009 at the EITI Global Conference in Doha, and included six ‘policy notes’ which provided further clarification and guidance. The 2011 edition of the EITI Rules were adopted at the Global Conference in March 2011. This edition set out with greater clarity the requirements that implementing countries have to meet in order to become EITI Compliant. It also included a new requirement saying that EITI Reports need to be published regularly. To comply with this, countries have since moved to annual EITI Reports.
Beyond Transparency: EITI as a platform for change
At the 5th Global Conference in Paris in 2011, an evaluation of the EITI by Scanteam was published setting off a strategy review to develop a new standard to be launched at the 6th Global Conference in Sydney in May 2013. The evaluation recognised exciting innovations from many of the implementing countries – e.g. Liberia’s inclusion of forestry and agriculture in EITI Reports; Nigeria’s inclusion of physical and process audits, as well as financial audits; Ghana and Peru’s reports included data on the amounts paid to subnational levels of government. However, the Board and other stakeholders recognised that more was required to encourage countries to use the EITI as a platform for wider improvement of natural resource management.
By November 2012, 37 countries were implementing the EITI with 18 of these compliant to the EITI standard. Australia had begun to pilot EITI implementation in some of its provinces and Colombia, Ukraine and the United States had started preparation to implement. 70 major oil, gas and mining companies had expressed support for the EITI Principles. Over 100 EITI Reports had been published which covered a total of over US$700 billion of revenues paid.