The EITI Board agreed that Seychelles has made meaningful progress overall in implementing the 2016 EITI Standard.

Outcome of the Validation of the Seychelles

Decision reference: 2018-49 / BC-257
Decision basis: 2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

1 October 2018

Board decision

Following the conclusion of Seychelles’ Validation, the EITI Board decided that Seychelles has made meaningful progress overall in implementing the EITI Standard.

The Board recognised the commitment by the Government of Seychelles and the Multi-Stakeholder Group (MSG) to transparency and accountability in its nascent oil sector and congratulates the government on the progress made inimproving transparency and accountability in the extractive industries. Seychelles’ EITI implementation was also recognised as having increased collaboration among government agencies and provided useful insights about developments in the petroleum sector. The Board welcomed ongoing efforts to explore opportunities to improve government and company disclosures through systematic disclosures. The Multi-Stakeholder Group (MSG) was also encouraged to further ensure EITI implemented takes the specific circumstances of the country and emerging sector into account. This could include seeking adapted implementation to ensure that the EITI process reflects the sector’s nascent stage.

The Board has determined that Seychelles will have 18 months, i.e. until 1 April 2020, before a second Validation to carry out corrective actions regarding the requirements relating to the Multi-stakeholder Group (1.4), workplan (1.5), license allocations (2.2), register of licenses (2.3), contract disclosure (2.4), state participation (2.6), data quality (4.9) and the review of outcomes and impact of EITI implementation (7.4).Failure to achieve meaningful progress with considerable improvements across several individual requirements in the second Validation will result in suspensionin accordance with the EITI Standard. Inaccordance with the EITI Standard, Seychelles’ MSG may request an extension of this timeframe, orrequest that Validation commences earlier than scheduled.

The Board’s decision followed a Validation that commenced on 1 January 2018. 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 Seychelles. Progress in addressing these corrective actions will be assessed in a second Validation commencing on 1 April 2020:

In accordance with Requirement 1.4. a and 1.4b.vi, the MSG should ensure that the industry constituency is adequately represented on the MSG and that there is a system in place for replacing representatives that leave their positions. In accordance with Requirement 1.4.b.vii, the MSG should also ensure that there is adequate record keeping of their discussions and decisions.
In line with EITI Requirement 1.5, the MSG should ensure it has a current EITI work plan outlining targeted objectives in line with the national priorities for the sector, and that the work plan is made widely available to the public, for example published on the national EITI website and/or other relevant ministry and agency websites, in print media or in places that are easily accessible to the public.
In accordance with EITI Requirement 2.2, the government should disclose a description of the process for transferring or awarding the license; the technical and financial criteria used; information about the recipient(s) of the license that has been transferred or awarded, including consortium members where applicable; any non-trivial deviations from the applicable legal and regulatory framework governing license transfers and awards. The MSG should ensure that there is clarity on the government’s plans in the year under review for the quarrying sector, and that there is a publicly available description on the allocation of mining licenses, the process for transferring licenses and the technical and financial criteria applied.
In accordance with EITI Requirement 2.3, the government should ensure that comprehensive information on petroleum licenses and agreements is made available, including dates of application and award of licenses/agreements.
In accordance with Requirement 2.4, the government and the MSG should clarify and document the government’s policy on disclosure of contracts and licenses, as well as actual practice, including any reforms that are planned or underway.
In accordance with Requirement 2.6, the Government of Seychelles should ensure that there is publicly-accessible information on the rules and practice of financial relations between SOEs and the state (including retained earnings, reinvestments and third-party funding), the level of state participation, including associated terms, and any change thereof in the year(s) under review.
In accordance with Requirement 4.9 and the standard Terms of Reference for Independent Administrators, the Seychelles should ensure that future EITI Reports provide a clearer assessment on the reliability of the data disclosed, and that actual audit practices by government entities are described.
In accordance with Requirement 7.4, the MSG should ensure that future annual reviews of outcomes and impacts include an assessment of progress made against each EITI Requirement. This should also include an assessment of the impact and outcomes of the work plan objectives. The MSG could also consider alternative ways to assess progress of EITI implementation that would suit the context of Seychelles in a request for adapted EITI implementation.

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 Seychelles committed to implement the EITI on 30 June 2013. The country was accepted as an EITI Candidate in 6 August 2014.

The Validation process commenced on 1 January 2018. In accordance with the Validation procedures, an initial assessment was prepared by the International Secretariat. The Independent Validator reviewed the findings and submitted a draft Validation report on 20 July 2018. Both papers were shared with the MSG for its feedback and comments were received on 20 August 2018. Based on the MSG’s comments, the Independent Validator finalised the Validation report and shared the response to the MSG on 1 September 2018.

The Validation Committee reviewed the case on 14 August 2018 and 18 September 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 Seychelles’ 2017 EITI Report.

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 is fully, actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. There have been regular public statements of support from senior government officials and, a senior government official has been appointed as EITI lead.
1.2Company engagement
At the initial stages of EITI implementation, companies appeared to be fully, actively and effectively engaged in the EITI process. Since the MSG was established in 2014, the main petroleum industry players ceased their activities in the country. This does not at the time of the assessment appear to have a negative effect on the EITI process.
1.3Civil society engagement
Civil society appear to be fully, actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. There appears to be some challenges with engaging civil society beyond the MSG in debates on the petroleum industry, given that there has not been any commercially viable discovery.
1.4MSG governance
The MSG had agreed a Terms of Reference for establishing clear governance and decision-making processes. MSG meeting minutes for 2016-2017 were not available at the time of the initial assessment. There appears to be a lack of clarity with regards to industry representation and how to replace members who leave their positions.
1.5Work plan
The Seychelles MSG work plan for the period 2014-2016 is linked to key national priorities that are aimed at enhancing transparency in the management of the natural resources. The 2017 work plan was however not made widely publicly available during 2017, and the objectives in the 2017 work plan do not appear to reflect national priorities for the extractive industries.
Licenses and contracts
2.2License allocations
PetroSeychelles publishes comprehensive information on allocation petroleum licenses/agreements. It is also described and referenced to in the EITI Report. There appears to be a lack of clarity on the allocation of quarrying agreements. There were no awards to transfers of petroleum or mining licenses in the years covered by the assessment.
2.3License register
License information on petroleum and quarrying agreements has been made available through government websites and in the EITI Report, although dates of application and award of the licenses are not disclosed.
2.4Policy on contract disclosure
The report describes the government’s policy on not disclosing contracts or license agreements, noting a lack of clear policy. In practice, quarrying leases and agreements appear to be accessible in person from the Registrar General’s Office.
2.1Legal framework
Various government agencies disclose descriptions or full documents of laws and regulations governing the sector, which are also described in the 2015-16 EITI Report.
2.5Beneficial ownership	Not assessed
Seychelles has published a beneficial ownership disclosure roadmap and requested reporting entities to disclose their ultimate owners. It is encouraging that the MSG has decided to collect ownership information and has tasked the IA with recommending a definition of beneficial ownership
2.6State participation
The EITI Report provides an explanation of the prevailing rules and practices regarding the financial relationship between the government and SOEs. There is however some lack of clarity related to the prevailing rules and practices regarding the financial relationship between the two of the SOEs (SEYPEC and PetroSeychelles).
Monitoring production
3.1Exploration data
The PetroSeychelles website provides information on petroleum exploration activities. Further details on the extractive sectors including exploration activities is provided in the 2015-16 EITI Report.
3.2Production data	Not applicable
There is currently no production in the petroleum sector. The 2015-16 EITI Report provides production data on volumes and values from quarrying activities are provided by commodity and by company.
3.3Export data	Not applicable
There are no exports of oil, gas and minerals from Seychelles, which is confirmed in the 2015-16 EITI Report and stakeholder consultations
Revenue collection
4.3Barter agreements	Not applicable
There is no evidence suggesting that infrastructure provisions and barter arrangements exist. The requirement on infrastructure provisions and barter arrangements is therefore not applicable to Seychelles.
4.6Direct subnational payments	Not applicable
There are no provisions on direct subnational payments and no indication that extractive companies make payments to sub-national levels of government. The requirement on subnational direct payments is therefore not applicable to Seychelles.
4.7Disaggregation
The 2015-16 EITI Report discloses the revenue data disaggregated by individual company, government entity and revenue stream. The report does not systematically disclose revenues by project.
4.9Data quality
The EITI Report appears to be of high quality, but closer adherence to the EITI’s Requirements is needed. There is no discussion of any gaps or weaknesses in reporting to the Independent Administrator. Agreed quality assurances were only partly followed. The EITI Report does not provide the IA’s clear assessment of the comprehensiveness and reliability of the data.
4.1Comprehensiveness
The MSG has agreed materiality thresholds for selecting companies and revenue streams. The report lists non-reporting companies and government entities and provides an assessment of the materiality of their payments. The government has provided full unilateral disclosure of all extractives revenues
4.2In-kind revenues	Not applicable
There is no production and thus no in-kind revenue collected by the government. The requirement on in-kind revenues is therefore not applicable to Seychelles.
4.4Transportation revenues	Not applicable
There is no indication that revenues from the transportation of commodities would constitute material payments. The requirement on transportation revenue is not applicable to Seychelles.
4.5SOE transactions
The 2015-16 EITI Report comprehensively discloses the transactions between the government and SOEs.
4.8Data timeliness
The EITI disclosures for 2015 were published ten days after the deadline, while the 2016 data in the report was published well in advance of the deadline (i.e. 31 December 2018).
Revenue allocation
5.1Distribution of revenues
The 2015-16 EITI Report provides an explanation of the flows of revenues in the extractive sector and while revenues are recorded in the national budget.
5.2Subnational transfers	Not applicable
Available documentation and the 2015-16 EITI Report indicate that sub-national transfers of extractive sector revenues do not exist in Seychelles. The requirement on subnational transfers is therefore not applicable to Seychelles.
5.3Revenue management and expenditures	Not assessed
The 2015-16 EITI Report provides an overview of the national budgeting process including a description of the role of key government agencies and auditing procedures.
Socio-economic contribution
6.1Mandatory social expenditures	Not applicable
The 2015-16 EITI Report confirms that manatory social expenditures do not exist in Secyhelles. The requirement on social expenditure is therefore not applicable to Seychelles. Voluntary social expenditures were disclosed by reporting companies.
6.2Quasi-fiscal expenditures	Not applicable
EITI reporting and stakeholder consultations confirmed that SOE quasi fiscal expenditures do not exist. The requirement on quasi-fiscal expenditures by state-owned enterprises is therefore not applicable.
6.3Economic contribution
The 2015-16 EITI Report provides details on the contribution of the sector. There are some immaterial inconsistencies in one of the figure provided in the report explaining the share of the contribution to the extractive sector to total government revenue.
Outcomes and impact
7.2Data accessibility	Not assessed
The Seychelles’ EITI Reports are in machine readable format. There are some obstacles to publishing EITI documents without Cabinet approval, and the draft open data policy has not been published.
7.4Outcomes and impact of implementation
The Seychelles EITI published its 2016 annual progress report in 2017, describing progress against work plan objectives and recommendations from the first EITI Report. It includes an assessment of progress against only against selected EITI Requirements, and does not include any assessment of the impact and outcomes of the work plan objectives.
7.1Public debate
The MSG has made considerable efforts to disseminate information about the EITI and the information disclosed, considering that petroleum exploration is not high on the public agenda unless there are any reports of a commercially viable petroleum discovery.
7.3Follow up on recommendations
The MSG has considered the findings and recommendations from EITI reporting, and made progress on implementing these.