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The Board agreed that Côte d'Ivoire has made meaningful progress in implementing the 2016 Standard.

Outcome of the Validation of Côte d'Ivoire.

Decision reference
2018-22 / BC-249
Decision basis
2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

Board decision

The Board came to the following decision regarding Côte d'Ivoire's status:

Following the conclusion of Côte d’Ivoire’s Validation, the EITI Board decides that Côte d’Ivoire has made meaningful progress overall in implementing the EITI Standard.

The Board congratulates the Government of Côte d’Ivoire and the Multi-Stakeholder Group (MSG) on the progress made in improving transparency and accountability in the extractive industries. Despite the small number and fragmented nature of civil society organisations interested in extractive industries in Côte d’Ivoire, active civil society engagement has generated a robust national debate about extractives revenue management and the impact on local communities. Robust dissemination and outreach efforts led by civil society have highlighted significant popular demand for information, particularly about subnational transfers, social expenditures, production data, local content requirements and artisanal mining. The government has been responsive to recommendations for reforms from the EITI, most recently evidenced by the launch of a new mining cadastre in July 2017.

The Board recognises Côte d’Ivoire’s efforts to go beyond the requirements of the EITI Standard in areas of exploration data (3.1) and social expenditures (6.1). The Board also commends the EITI’s coverage of the artisanal and small-scale mining sector and efforts to ensure updated and accessible information for affected communities through a variety of communication tools, including the Côte d’Ivoire EITI website. The Board takes note of the government’s commitment to enshrining the EITI principles in national legislation, such as the new mining code. The Board encourages the government to update the EITI’s governance documents to ensure clear, open and transparent nomination and replacement procedures, transparency in per diem payments and open management of the budget allocated to EITI implementation. The Board also encourages Côte d’Ivoire to continue improving disclosures related to the financial relationship between the state and state-owned companies, most notably on in-kind sales and swap agreements.

The Board has determined that Côte d’Ivoire will have 18 months, i.e. until 8 November 2019, before a second Validation to carry out corrective actions related to MSG governance (1.4), work plan (1.5), license allocation (2.2), license register (2.3), state-participation (2.6), in-kind revenues (4.2), barters and infrastructure arrangements (4.3), SOE transactions (4.5) distribution of revenues (5.1), subnational transfers (5.2), SOE quasi-fiscal expenditures (6.2) and documentation of outcomes and impact (#7.4). Failure to achieve meaningful progress with considerable improvements across several individual requirements in the second Validation will result in suspension in accordance with the EITI Standard. In accordance with the EITI Standard, Côte d’Ivoire’s MSG may request an extension of this timeframe, or request that Validation commences earlier than scheduled.

The Board’s decision followed a Validation that commenced on 1 April 2017. In accordance with the 2016 EITI Standard, an initial assessment was undertaken by the International Secretariat. The findings were reviewed by an Independent Validator, who submitted a draft Validation report to the MSG for comment. The MSG’s comments on the report were taken into consideration by the independent Validator in finalising the Validation report and the independent Validator responded to the MSG’s comments. The final decision was taken by the EITI Board.

 

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective actions to be undertaken by Côte d’Ivoire. Progress in addressing these corrective actions will be assessed in a second Validation commencing on 8 November 2019:

  1. In accordance with Requirement 1.4, the MSG should update its TOR, renew its membership in line with statutory procedures and the industry and civil society constituencies are encouraged to agree public nominations procedures ahead of MSG member selection. EITI Côte d’Ivoire should formalise its per diem policy to be in line with national practice. The government should ensure that the MSG has adequate financial oversight of the management of funds allocated to EITI implementation.

  2. In accordance with Requirement 1.5, the MSG should maintain a current work plan, fully costed and aligned with the reporting and Validation deadlines established by the EITI Board. The MSG is also encouraged to publish its budget and its financial accounts.

  3. In accordance with Requirement 2.2, the MSG is required to ensure that the relevant authorities, DGMG and DGH disclose the technical and financial criteria for all license awards and transfers taking place during the accounting year covered by the EITI Report, including license allocations pertaining to companies that are not included in the EITI Report. The MSG may wish to seek clarity from the relevant authorities on the conditions under which direct negotiations are used instead of competitive bidding for issuing licenses.

  4. In accordance with the EITI Requirement 2.3, the Government of the RCI is required to maintain a publicly accessible register. Similar to the mining sector, efforts should be made to ensure comprehensive disclosure of the information required under 2.3.a for the hydrocarbon sector.

  5. In accordance with Requirement 2.6, the RCI must disclose an explanation of the prevailing rules and practices regarding the financial relationship between the government and PETROCI. This could include the publication of PETROCI’s audited financial statement, its annual budget and an explanation of allocation of retained earnings for investments.

  6. In accordance with EITI Requirement 4.2, the government, including PETROCI and its subsidiaries, are required to disclose the volumes of crude oil and natural gas sold and revenues received. The published data must be disaggregated by individual buying company and to levels commensurate with the reporting of other payments and revenue streams. The MSG may wish to publish the volumes of oil and natural gas delivered, volumes sold, unit price by individual buyer that PETROCI is required to submit to DGI, in accordance with article 1066:10 of the tax code. 

  7. In accordance with Requirement 4.3, the MSG and the IA need to gain full understanding of the terms of the swap agreements, the parties involved, the resources which have been pledged by the state in the forms of crude oil, the value of the balancing benefit stream (natural gas, then electricity delivered). The MSG and the IA are required to ensure that the EITI Report addresses these agreements, providing a level of detail and transparency commensurate with the disclosure and reconciliation of other payments and revenues streams.

  8. In accordance with EITI Requirement 4.5, the MSG should undertake a comprehensive assessment of transactions between PETROCI and its subsidiaries and oil and gas companies, as well as between PETROCI subsidiaries and government entities including Côte d’Ivoire Energy, DGI and the treasury. The MSG may wish to publish the information submitted to DGI by PETROCI and Côte d’Ivoire Energy.

  9. In accordance with Requirement 5.1, EITI-Côte d’Ivoire should indicate extractive industry revenues, whether cash or in-kind, that are not recorded in the national budget and provide an explanation of the allocation of these revenues, with links to relevant financial reports, including from DGH, PETROCI and Côte d’Ivoire Energy. The MSG is encouraged to reference national revenue classification systems, and/or international standards such as the IMF Government Finance Statistics Manual.

  10. In accordance with Requirement 5.2, EITI Côte d’Ivoire is required to assess the materiality of subnational transfers, provide the specific formula for calculating subnational transfers of extractives revenues to individual local governments, disclose any material subnational transfers in the year(s) under review and highlight any discrepancies between the transfer amount calculated in accordance with the relevant revenue-sharing formula and the actual amount that was transferred between the central government and each relevant subnational entity.

  11. In accordance with Requirement 6.2, EITI Côte d’Ivoire, should undertake a comprehensive review of all expenditures undertaken by extractives SOEs, including PETROCI and its foundation that could be considered quasi-fiscal expenditures. The MSG should develop a reporting process with a view to achieving a level of transparency commensurate with other payments and revenue streams, and should include PETROCI’s subsidiaries and joint ventures, PETROCI’s Foundations, the DGH and possibly Côte Energy.

  12. In accordance with requirement 7.4, Cote d’Ivoire should ensure that the next annual progress report includes an assessment of the outcomes and impact of EITI implementation, including on broader natural resource governance.

The government and the MSG are encouraged to consider the other recommendations in the Validator’s Report and the International Secretariat’s initial assessment, and to document the MSG’s responses to these recommendations in the next annual progress report.

Background

The Government of the Republic of Côte d’Ivoire (RCI) expressed interest in implementing the EITI in May 2006 and was admitted as a Candidate country in May 2008. Despite the 2010-2011 political crisis, EITI Côte d’Ivoire completed a first Validation in 2010 and achieved compliance with the EITI Rules after a second Validation in May 2013.

The Validation process commenced on 1 April 2017. In accordance with the Validation procedures, an initial assessment  [English | French] was prepared by the International Secretariat. The Independent Validator reviewed the findings and wrote a draft Validation report [English | French]. Comments from the MSG [English | French] were received on 20 February 2018. The MSG considered that Côte d’Ivoire had addressed some of the corrective actions and provided supporting evidence. The Independent Validator reviewed the comments and responded to the MSG, before finalising the Validation report [English | French].

The Validation Committee reviewed the case on 26 April 2018. Based on the findings above, the Validation Committee agreed to recommend the assessment card and corrective actions outlined below.

The Committee also agreed to recommend an overall assessment of “meaningful progress” in implementing the 2016 EITI Standard. Requirement 8.3.c. of the EITI Standard states that:

ii.    Overall assessments. Pursuant to the Validation Process, the EITI Board will make an assessment of overall compliance with all requirements in the EITI Standard.

iv.   Meaningful progress. The country will be considered an EITI candidate and requested to undertake corrective actions until the second Validation.

The Validation Committee agreed to recommend a period of 18 months to undertake the corrective actions. This recommendation takes into account that the challenges identified are relatively significant and seeks to align the Validation deadline with the timetable for Côte d’Ivoire’s 2016 EITI Report.

Scorecard for Côte d'Ivoire: 2018

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Scorecard by requirement View more Assessment View more

Overall Progress

MSG oversight

1.1Government engagement

The government has reiterated its commitment to the EITI on multiple occasions and two senior government officials have been appointed to lead EITI implementation, albeit only the chair leads day-to-day implementation. Government officials participate actively in EITI reporting and MSG deliberations, but evidence of use of EITI data by the government to promote public debate or monitor government revenues remains limited.

1.2Company engagement

Senior industry representatives, participate actively in MSG meetings, although the representation of the mining industry sub-constituency can be improved. In addition to MSG meetings, companies participate in EITI reporting, in dissemination and outreach activities and in resolving conflicts. Oil companies’ representatives have provided their expertise to help explain the functioning of the production sharing agreements, while the contracts remain confidential. Mining companies also proactively disclose material payments as the sector continue to expend rapidly.

1.3Civil society engagement

Civil society representatives are fully, actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. They help lead day-to-day implementation through the appointment of a civil society representative as technical director of the EITI national secretariat. They also conduct studies, take the lead on outreach to local communities and dissemination campaign of EITI Reports. Having successfully campaigned for EITI implementation, civil society representatives work diligently to protect and use the space created by the EITI process to influence government policy. While the fragmented nature of the civil society constituency may have diminished their effectiveness, there are also ample evidence that civil society can influence government policy in the drafting of the new mining code.

1.4MSG governance

The MSG does not include appropriate representation of each constituency, and the process by which each stakeholder group nominated their representatives remains unclear. Most government representatives are no longer serving in the position for which they were nominated on the MSG, yet they continue to seat on the MSG and to receive perdiems. The MSG’s Internal Rules are publicly available but do not appear to be followed in practice. Moreover, the MSG’s per diem policy remains ad-hoc and opaque, which led to resentment between EITI focal points, who do all the work of EITI reporting but are not paid perdiems and MSG members who receive perdiem even after they leave the organisations that they represented on the MSG.

1.5Work plan

EITI Cote d’Ivoire work plans include objectives that reflect national priorities, such as the extension of the scope of EITI reporting to artisanal mining. Work plan activities are measurable, but not always time-bound, and not fully costed. The work plans also include activities aimed at addressing capacity constraints and activities aimed at implementing the new beneficial ownership roadmap and the government open policy.

Licenses and contracts

2.1Legal framework

EITI Cote d’Ivoire work plans include objectives that reflect national priorities, such as the extension of the scope of EITI reporting to artisanal mining. Work plan activities are measurable, but not always time-bound, and not fully costed. The work plans also include activities aimed at addressing capacity constraints and activities aimed at implementing the new beneficial ownership roadmap and the government open policy.

2.2License allocations

Two implementing decrees provide technical and financial criteria for the oil, gas and mining sectors. The 2015 EITI Report did not comprehensively disclose the license allocation process for 90 licenses awarded in the mining sector in 2015, although this information is now available in the country's online mining cadastre. The technical and financial criteria used in license transfer that occured in the oil and gas sector and the production sharing agreement, signed with ANADARKO in September 2015, were not published.

2.3License register

The RCI did not have a publicly available register or cadastre system for its oil, gas and mining industry, but the 2015 EITI Report includes comprehensive information on mining licenses in accordance with EITI Requirement 2.3.a, including names of license holders, location, size and coordinate for each mining license, dates of application award and expiration, allowing the reader to determine the validity period. It should be noted that the Report provided also detailed information on licenses held by artisanal miners of diamond and coltan and semi-industrial production of gold. However, the Report did not disclose comprehensive information of all licenses in the oil and gas sector.

2.4Policy on contract disclosure

The EITI Report provides a clear description of the government policy, which is not applied in practice. Despite a clear legal mandate to publish production sharing agreements in the hydrocarbon sector since 2012, the law has not been implemented in practice. Government officials at the Ministry of Hydrocarbon and Energy have argued against the publication of the production sharing agreements in a clear violation of article 12 of law N° 2012-369 of 18 April 2012.

2.5Beneficial ownership

Not assessed

The international Secretariat took note of the study published by the MSG in December 2016, which reviews the legal and regulatory framework and sets out a methodology for agreeing a definition of beneficial ownership, the mechanism of collecting and publishing beneficial ownership data as well as the level of details to be disclosed. However, the International Secretariat notes that many stakeholders were not aware of this study and implementation of the beneficial ownership roadmap has been delayed. Moreover, very few oil and gas companies disclosed their legal owners as part of the 2015 EITI Report.

2.6State participation

While the 2015 EITI Report clearly describes the prevailing rules and practices regarding the financial relationship between the government and SODEMI, the descriptions of the financial relationship between the state and the national oil company (PETROCI) remains unclear and not fully comprehensive. The rules and practices governing transfers of funds between PETROCI and the state retained earnings, reinvestment and third-party financing cannot be fully assessed without PETROCI’s financial statement, which is not published.

Monitoring production

3.1Exploration data

The 2015 EITI Report provides an overview of extractive industries, including significant exploration activities and ongoing project developments. The International Secretariat takes note that the Report also includes an overview of the artisanal mining sector of diamond and gold, including ongoing reforms to formalise the ASM sector.

3.2Production data

The 2015 EITI Report includes volume and value of production by commodity. The information is disaggregated by producers for the hydrocarbon sector, and by region for the artisanal mining of diamond. Information on production and export was reconciled with the producers in the case of oil and gas and clearly sourced to the DGMG, which monitor production in the mining sector.

3.3Export data

The 2015 EITI Report discloses total export volumes and the value of exports by commodity, and in some cases this information has been reconciled and disaggregated by exporter. Export data is clearly sourced, but the Report does not include information on how export data has been calculated.

Revenue collection

4.1Comprehensiveness

The 2015 EITI Report lists and describes all material companies and revenue streams. The materiality of revenues from non-reporting companies is assessed. While two mining companies making material payments (NEWCREST HIRECote d'Ivoire SA and Ampella Mining) were first omitted from the list of reporting companies, they were subsequently included in the reconciliation process and all but three oil, gas companies (Lukoil, CIPEM and PAN Atlantic) that made material payments in 2015 fully reported all payments in accordance with the agreed reporting templates. Payments made by the three non-reporting companies were relatively insignificant, less than 0.2% of total reported revenues from the extractive sector, therefore did not affect the comprehensiveness of the Report. Full government disclosure is provided for companies below the materiality threshold.

4.2In-kind revenues

The 2015 EITI Report reconciles the volumes collected by PETROCI on behalf of the government with company payments of in-kind revenues and discloses volumes of the state’s in-kind revenues sold by PETROCI as well as the transfer of sales proceeds to the Treasury. The volumes of oil and gas received by PETRCI were disaggregated by oil bloc, but the quantities of oil sold and revenues received were not disaggregated by buyer, except in the case of the domestic national refinery (SIR) and delivery of natural gas to Cote d’Ivoire Energy.

4.3Barter agreements

"Despite the IA and MSG conclusion that barter arrangements were not material in 2015, the 2015 EITI Report appears to describe two barter arrangements (Swaps of crude oil for natural gas and swap of natural gas for electricity) but does not provide sufficient detail on the terms of the contracts and parties involved. The 2015 EITI report was not sufficiently clear on the terms of the SWAPS agreements of crude oil for natural gas, which requires the valorisation of both products at market price to make the swap and the parties involved in the long terms of the long-term natural gas purchasing agreements for electricity supply."

4.4Transportation revenues

Not applicable

The IA and MSG concluded assessed the materiality of transport revenues and concluded that these payments were not material. The 2015 EITI Report and stakeholders’ consultation confirms that transport revenues were immaterial in the oil, gas and mining sector for the year covered by the Report.

4.5SOE transactions

The 2015 EITI Report discloses SODEMI’s transactions with the government and shows that SODEMI did not collect revenues from oil and gas companies. However, despite significant disclosures by PETROCI of its transactions with the state, several transactions involving PETROCI and Cote d’Ivoire Energy remains unreported and unclear to many MSG members.

4.6Direct subnational payments

Not applicable

Together with the IA, the MSG has considered definition of materiality with regards to direct subnational payments and concluded that such payments are not material due to the principle of unity of account, which mandate that all budgetary revenues are collected by the central government, registered in the Public Treasury account. Municipal taxes collected at the central level and then transferred to local communities are covered under Requirement 5.2, subnational transfers, below.

4.7Disaggregation

The financial data disclosed in the 2015 EITI Report is disaggregated by individual company, government entity and revenue stream. In-kind revenues, which represent the largest revenue stream to the government via PETROCI are also disaggregated by producing license. Following recommendations from the IA, the MSG has included a feasibility study of project level reporting in its 2017 work plan.

4.8Data timeliness

The MSG has made significant improvements in the timeliness of EITI reporting and regularly published timely EITI Reports in accordance with the EITI Requirement.

4.9Data quality

The IA undertook a review of the audit and assurance procedures in Cote d’Ivoire and recommended quality assurance procedures that were largely followed by reporting entities. Oil, gas and mining companies had their financial statements audited for data covered by the The IA undertook a review of the audit and assurance procedures in Cote d’Ivoire and recommended quality assurance procedures that were largely followed by reporting entities. Oil, gas and mining companies had their financial statements audited for data covered by the 2015 EITI report, and largely adhered to the agreed quality assurance procedures, except Newcrest Hire, Perseus Mining CI, and Amara Mining CI, which collectively paid 0.43% of total revenues. Newcrest Hire and Perseus Mining CI submitted certified data after the deadline for reconciliation. On the government side, IGE conducted an audit of all companies submitting data and certified all the state declarations except for DGH, which declared 6% of total revenues. The IA assessed the impact of these gaps on the quality of the report and concluded that despite these omissions data presented in the 2015 EITI Report reflect reasonably the extractive sector’s contribution to the state budget (2015 EITI Report, p.16).

Revenue allocation

5.1Distribution of revenues

While the report provides a diagram mapping out revenues flows between companies and government entities, and lists revenues that are not systematically recorded in the national budget, significant revenues (33.72% of the revenues that go through PETROCI and 6% of revenues collected by DGH) are not systematically recorded in the national budget. The Report did not explain the allocation of these revenues that were not recorded in the national budget. The Report only provides a link to the financial reports in the case of SODEMI, not for PETROCI and DGH that received revenues not recorded in the national budget.

5.2Subnational transfers

The 2015 EITI Report describes statutory subnational transfers of revenues to municipalities but does not provide the amount paid in practice. The International Secretariat concludes that the statutory subnational transfers were material in 2015, but not reported by the treasury.

5.3Revenue management and expenditures

Not assessed

EITI Cote d’Ivoire has made some effort to include information on the government’s budget-making process in the EITI Report. However, the MSG did not make efforts to include additional information on extractives revenues that are off-budget and earmarked to specific regions (CDLM) and specific government agencies (DGH).

Socio-economic contribution

6.1Mandatory social expenditures

The MSG agreed a definition of what constitutes mandatory and voluntary social payments and set a materiality threshold at zero for these types of payments. The 2015 EITI Report shows detailed information on mandatory and voluntary social payments made by each company (p.93). The Report also provides detailed payment of mandatory and voluntary social payments by company and by beneficiary (pp.109-110).

6.2Quasi-fiscal expenditures

Revenues received in-kind by DGH and allocated to training activities or for the purchase of equipments and not recorded in the national budget should have been reported as quasi-fiscal expenditures. Similarly, in-kind revenues of natural gas used to offset electricity bills and not recorded on the national budget the same year, should have been reported as quasi-fiscal expenditures. The budget of the PETROCI foundation, which also makes quasi-fiscal expenditures was not published.

6.3Economic contribution

The 2015 EITI Report shows that according to INS data, the extractive industries contributed 5.15% of GDP, 5.14% in government revenues and accounted for 10.81% of total exports from the country in 2015. Gold accounted for 6.16% of total export, while crude oil accounted for 4.44% of total exports. Mining companies employed 5,291 in 2015, whereas, oil and gas companies employed only 934.

Outcomes and impact

7.1Public debate

EITI Cote d’Ivoire has ensured that the EITI Reports are accessible to the public and contribute to public debate and conflict resolutions in some extractives regions. Dissemination activities involving civil society groups appear to have been effective in stimulating an informed debate about the management of the extractive sector. Industry representatives appear eager to use EITI data to improve community relations. The MSG has played a key role in developing more formalised consultation mechanisms with mining-affected communities, through village elders and traditional chiefs.

7.2Data accessibility

Not assessed

EITI data for 2014 and 2015 is available in machine readable format through the EITI Cote d’Ivoire website. Such efforts are encouraged but not required and are not assessed in determining compliance with the EITI Standard.

7.3Follow up on recommendations

The MSG has been thorough in taking steps to act upon lessons learned and monitoring progress with the implementation of recommendations in EITI Reports, but the RCI has made limited progress in implementing substantive recommendations made in EITI Reports. Together with the IA, significant efforts have been made to identify, investigate and address the causes of discrepancies in EITI reporting.

7.4Outcomes and impact of implementation

The 2016 APR is well structured and highlights that the implementation of the EITI is fostering dialogue on governance and transparency between stakeholders. All the recommendations from conciliation and validation reports are listed. The responsible entity, deadlines and corresponding MSG response are also indicated. However, the 2016 APR provides too little detail on dissemination activities and their impact.

Countries
Côte d’Ivoire