The EITI Board agreed that São Tomé and Príncipe has made meaningful progress with considerable improvements in implementing the 2016 EITI Standard.
The Board's decision
The EITI Board agreed that São Tomé and Príncipe has partly addressed the corrective actions from the country’s first Validation. Consequently, São Tomé and Príncipe has made meaningful progress overall with implementing the EITI Standard, with considerable improvements across several individual requirements.
The Board recognised São Tomé and Príncipe’s efforts to use the EITI to manage public expectations regarding the potential revenue and indirect contributions from the nascent oil and gas sector. São Tomé and Príncipe’s EITI implementation is also recognised as having increased collaboration among government agencies and improved the government’s public financial management systems. The second Validation has confirmed São Tomé and Príncipe’s efforts to use EITI reporting as a diagnostic instrument to support reforms in the licensing system, oversight of companies’ social expenditures and subnational revenue management.
The Board welcomed ongoing efforts to consider further the opportunities to improve government and company disclosures through systematic disclosures. The Multi-Stakeholder Group (MSG) should continue to ensure adherence to the EITI Principles and Requirements.
The Board has determined that São Tomé and Príncipe will have 12 months, i.e. until 29 June 2019 before a third Validation to carry out corrective actions regarding license allocations (2.2), license register (2.3) and data quality (4.9). Failure to achieve meaningful progress with considerable improvements across several individual requirements in the third Validation will result in suspension in accordance with the EITI Standard. In accordance with the EITI Standard, São Tomé and Príncipe’s MSG may request an extension of this timeframe or request that Validation commences earlier than scheduled.
São Tomé and Príncipe was admitted as an EITI Candidate in 2008. The first Validation of São Tomé and Príncipe commenced on 1 July 2016. On 8 March 2017, the EITI Board found that São Tomé and Príncipe had made meaningful progress in implementing the 2016 EITI Standard. Nine corrective actions were established by the EITI Board, pertaining to the following requirements:
MSG oversight (Requirement 1.4)
Work plan (Requirement 1.5)
License allocations (Requirement 2.2)
License register (Requirement 2.3)
Exploration data (Requirement 3.1)
Data quality (Requirement 4.9)
Social expenditures (Requirement 6.1)
Follow-up on recommendations (Requirement 7.3)
Outcomes and impact (Requirement 7.4).
The Board asked São Tomé and Príncipe to address these corrective actions to be assessed in the second Validation. STP has undertaken a number of activities to address the corrective actions:
At its 27 January 2017 meeting, the MSG appointed PWC (Portugal) as the Independent Administrator for the 2015 EITI Report.
On 16 March 2017, the MSG agreed the scope of the 2015 EITI Report with the Independent Administrator.
On 28 September 2017, the MSG approved the 2016 Annual Progress Report, in light of the corrective actions related to Requirement 7.4.
On 5 October 2017, the MSG agreed revised Terms of Reference (TOR) and work plan for 2017-2018 in light of corrective actions related to Requirement 1.4 and 1.5.
On 22 December 2017, the 2015 EITI Report approved by the MSG was published.
On 2 April 2018, the government invited EITI stakeholders to re-select their representatives on the MSG, in accordance with the approved TORs.
São Tomé and Príncipe’s second Validation commenced on 8 March 2018. The Secretariat assessed the progress made in addressing the nine corrective actions established by the EITI Board. The EITI International Secretariat’s assessment is that São Tomé and Príncipe has fully addressed six of the nine corrective actions, with significant improvements on the three outstanding requirements. The draft assessment was sent to the Multi-Stakeholder Group (MSG) on 1 June 2018. Following comments received on 25 June 2018, the assessment was finalised for consideration by the EITI Board.
The EITI Board agreed the following corrective actions to be undertaken by São Tomé and Príncipe. Progress in addressing these corrective actions will be assessed in a third Validation commencing on 29 June 2019:
In accordance with Requirement 2.2.i and iii, São Tomé and Príncipe is required to disclose the technical and financial criteria used in awarding licenses and any non-trivial deviations from the applicable legal and regulatory framework governing license transfers and awards related to the award or transfer of licenses pertaining to the companies covered in the EITI Report during the accounting period covered by the EITI Report.
In accordance with Requirement 2.3.b, São Tomé and Príncipe is required to maintain a publicly available register or cadastre system which includes the timely and comprehensive information on the date of application for each of the licenses pertaining to companies covered in the EITI Report. Any significant legal or practical barriers preventing such comprehensive disclosure should be documented and explained in the EITI Report, including an account of government plans for seeking to overcome such barriers and the anticipated timescale for achieving them.
In accordance with Requirement 4.9.a, the EITI requires an assessment of whether the payments and revenues are subject to credible, independent audit, applying international auditing standards. The MSG should ensure that future EITI reporting includes a clear statement from the IA on the comprehensiveness and reliability of reconciled financial data.