The EITI Board agreed that Ghana has made meaningful progress in implementing the 2016 EITI Standard, with considerable improvements.

Outcome of the Validation of Ghana.

Decision reference: 2019-16 / BM-42
Decision basis: 2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

27 February 2019

Board decision

The Board came to the following conclusion:

The EITI Board agrees that Ghana has partly addressed the corrective actions from the country’s first Validation. Consequently, Ghana has made meaningful progress overall with implementing the EITI Standard, with considerable improvements across several individual requirements.

The Board recognises Ghana’s efforts to use the EITI to improve transparency in the management of its oil and gas state-owned enterprises, including their trading of the state’s in-kind revenues. Ghana’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 Ghana’s efforts to use EITI reporting as a diagnostic instrument to support reforms in the management of extractives licenses, accounting of off-budget revenues and subnational revenue management.

The Board welcomes ongoing efforts to consider further the opportunities to improve government and company disclosures through systematic disclosures. Ghana is encouraged to continue to ensure adherence to the EITI Principles and Requirements while strengthening transparency in the operations of its state-owned enterprises.

The Board has determined that Ghana will have 12 months, i.e. until 27 February 2020 before a third Validation to carry out corrective actions regarding comprehensiveness of disclosures (4.1) and quasi-fiscal expenditures (6.2). 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, Ghana’s MSG may request an extension of this timeframe, or request that Validation commences earlier than scheduled.

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective actions to be undertaken by Ghana. Progress in addressing these corrective actions will be assessed in a third Validation commencing on 27 February 2020:

In accordance with Requirement 4.1.c, Ghana should ensure that all companies making material payments to the government comprehensively disclose these payments in accordance with the agreed scope of EITI reporting. Ghana should clearly demonstrate that the selection of revenue streams for reconciliation ensures that all payments and revenues whose omission or misstatement could significantly affect the comprehensiveness of EITI reporting were included in the scope of reconciliation. Ghana should also ensure that reconciled financial data is consistently disaggregated by revenue stream, in accordance with Requirement 4.7. To strengthen implementation, Ghana is encouraged to consider the extent to which a clear quantitative materiality threshold for the selection of revenue streams for reconciliation would demonstrably ensure the comprehensiveness of reconciliation.
In accordance with Requirement 6.2, Ghana should undertake a comprehensive review of all expenditures undertaken by extractives SOEs that could be considered quasi-fiscal. Ghana should develop a reporting process for quasi-fiscal expenditures with a view to achieving a level of transparency commensurate with other payments and revenue streams.

Background

Ghana was admitted as an EITI Candidate in February 2007. The first Validation of Ghana commenced on 1 July 2016. On 8 March 2017, the EITI Board found that Ghana had made meaningful progress in implementing the 2016 EITI Standard. Eight corrective actions were established by the EITI Board, pertaining to the following requirements:

License registers (Requirement 2.3);
State participation (Requirement 2.6);
Production data (Requirement 3.2);
Export data (Requirement 3.3);
Comprehensiveness (Requirement 4.1);
Sale of the state’s share of production or other revenues collected in-kind (Requirement 4.2);
Transactions related to State-owned enterprises (SOEs) (Requirement 4.5);
Quasi-fiscal expenditures (Requirement 6.2).

The Board asked Ghana to address these corrective actions to be assessed in the second Validation. Ghana has undertaken a number of activities to address the corrective actions:

At its 20 April 2017 meeting to discuss the findings of Validation, the MSG agreed a plan of action for addressing corrective actions from Ghana’s 2016 Validation.
On 31 July 2017, the MSG wrote to affected institutions to implement the 2016 GHEITI Validation corrective measures.
On 27-28 June 2018, GHEITI organised a Technical Roundtable Meeting on Commodity Trading Transparency together with NRGI and the International Secretariat.
On 29-30 September 2017, GHEITI organised a follow-up technical committee with relevant entities on the implementation of past EITI recommendations and Validation corrective actions in Koforidua.
On 30 January 2018, the MSG agreed the scope of the 2016 EITI Reports with the Independent Administrator, Boas & Associates.
GNPC submitted a report dated 8 February 2018 on its implementation of their corrective actions to GHEITI and the IA.
On 27-28 June 2018, GHEITI organised a Technical Roundtable Meeting on Commodity Trading Transparency together with NRGI and the International Secretariat.
In August 2018, the MSG approved and published the Commodity Trading pilot report covering 2015-17.^{^[1]}
On 7 September 2018, Ghana EITI published two 2016 EITI Reports, covering mining^{^[2]} and oil and gas^{^[3]} respectively.
On 7 September 2018, the Finance Ministry’s Chief Director Patrick Nomo wrote to the Independent Administrator Boas & Associates with an update on progress in the Finance Ministry’s repayment of a USD 50m facility to GNPC, due for inclusion in the 2019 national budget.^{^[4]}
On 1 November 2018, the International Secretariat undertook stakeholder consultations with representatives from all three constituencies on the GHEITI MSG at the Africa EITI Conference on Beneficial Ownership Transparency in Dakar.
On 26 November 2018, the Ministry of Finance’s Real Sector Division Director Frimpong Kwateng-Amaning wrote to GNPC Chief Executive Officer Linda Tamakloe requesting evidence of progress in addressing corrective actions related to quasi-fiscal expenditures.^{^[5]}
On 10 December 2018, the MSG submitted GNPC’s 2016 audited financial statement to the EITI International Secretariat and highlighted portions in the statements covering the terms associated with GNPC’s equity in its seven subsidiaries.

Ghana’s second Validation commenced on 8 September 2018. The Secretariat assessed the progress made in addressing the eight corrective actions established by the EITI Board. The EITI International Secretariat’s assessment is that Ghana has fully addressed five of the eight corrective actions, with significant improvements on the three outstanding requirements. The draft assessment was sent to the Multi-Stakeholder Group (MSG) on 9 January 2018. Following MSG comments received on 30 January 2019, the assessment was finalised for consideration by the EITI Board.

^{^[1]} Ghana EITI (August 2018), ‘Ghana commodity trading pilot report’, accessed here in October2018.

^{^[2]} Ghana EITI (September 2018), ‘GHEITI Report on the mining sector 2016’, accessed here in September 2018.

^{^[3]} Ghana EITI (September 2018), ‘GHEITI Report on the oil and gas sector 2016’, accessed here in September 2018.

^{^[4]} Ministry of Finance (September 2018), ‘Letter: Progress on the repayment of US$ 50.0 million facility between Ministry of Finance and GNPC’, unpublished, provided by the GHEITI Secretariat.

^{^[5]} Ministry of Finance (November 2018), ‘Letter: Request for information to support evidence of progress made on Ghana’s Validation corrective measures’, unpublished, provided by the GHEITI Secretariat.

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 and the government appears to have a strong commitment to the implementation of EITI in Ghana. The attendance of the Chair is less frequent than that of other MSG members, but this does not seem to reflect a lack of government engagement on the whole.
1.2Company engagement
Companies are actively engaged with EITI implementation and see value and tangible outcomes resulting from their participation in the process, citing in particular an improvement in their relationship with communities. The more limited participation by companies from the oil/gas sector beyond those represented on the MSG reflects the relatively recent emergence of the sector and lack of organisation among petroleum companies in the country.
1.3Civil society engagement
Civil society stakeholders are actively engaged in the EITI process. There is an enabling environment for civil society participation in Ghana, and civil society representatives have been key drivers of the EITI process and implementation. There seem to be some challenges related to communicating and consulting with all interested civil society stakeholders during the EITI reporting cycle, and not only after the publication of reports, which might be related to limited capacity on both sides.
1.4MSG governance
Stakeholders are adequately represented on the multi-stakeholder group (MSG). The MSG has a chair and co-chair and meets regularly to review and guide implementation in the country. They have also participated in ad hoc meetings and have established sub-committees tasked with specific aspects of EITI implementation. There seem to be some issues and practices of the MSG that would need to be clarified in the Ghana EITI Bill.
1.5Work plan
The work plan has clear objectives linked to national priorities for the extractive sector, as well as detailed actions and timelines, although it does not reflect the full scope of GHEITI’s work. Costing is missing for some items, and implementation is slightly behind schedule. In particular missing funds for the 2015 GHEITI report is of concern.
Licenses and contracts
2.2License allocations
The 2014 EITI Reports comprehensively disclose the respective process for awarding licences. The technical and financial criteria for awarding licenses are described in general terms on the Ghana EITI website. The efficiency and effectiveness of licensing procedures are discussed in the reports, leading to recommendations for change which have potentially contributed to sector reforms.
2.3License register
Despite gaps and inconsistencies in the 2016 EITI Reports, Ghana’s Petroleum Register and Online (mining) Repository provide all information required by Requirement 2.3.b for all active mining, oil and gas licenses.
2.4Policy on contract disclosure
The government’s policy of not publishing contracts is clearly described in the 2014 EITI Reports. The report also describes the actual practice of publishing certain contracts. The reports have recommended to make contract public.
2.1Legal framework
The legal framework and fiscal regime governing the extractive industries are described in different sections of the 2014 EITI Reports. Information on the roles and responsibilities of the relevant government agencies is included in the reports, as is information on reforms of the system.
2.5Beneficial ownership	Not assessed
Stakeholders in Ghana seem committed to and in favour of beneficial ownership transparency and requirements related to beneficial ownership disclosure appear to be well understood. The multi-stakeholder group has already initiated the implementation of the beneficial ownership requirements by advocating for beneficial ownership disclosure in the amended Companies Act 2016.
2.6State participation
There were no material revenues related to SOEs in mining in 2016. The 2016 EITI Report confirms the materiality of state participation in oil and gas, and comprehensively lists all state participations upstream, including the lack of changes in 2016. The terms associated with GNPC’s equity participations are described in the EITI Report and GNPC’s published 2016 audited financial statements. The report describes loan and guarantee arrangements.
Monitoring production
3.1Exploration data
The 2014 EITI Reports contain informative overviews of both the oil/gas and mining sectors and broad information on exploration activities.
3.2Production data
The 2016 EITI Reports provide official production volumes and values for all six key extractives commodities produced in 2016.
3.3Export data
The 2016 EITI Reports provide official export volumes and values for each of the five extractives commodities exported in 2016.
Revenue collection
4.3Barter agreements	Not applicable
The requirement on infrastructure provisions and barter arrangements is not applicable to Ghana.
4.6Direct subnational payments
Subnational direct payments exist in the mining sector, and the 2014 EITI Report adequately explains direct payment of property rates by mining companies to District Assemblies.
4.7Disaggregation
The 2014 EITI Reports disclose of revenue data disaggregated by individual company, government entity, and revenue stream.
4.9Data quality
All templates submitted by companies and government entities met the previously agreed completeness, integrity, and reliability tests, concluding that the data provided was reliable.
4.1Comprehensiveness
The 2016 EITI Reports provide a definition of the materiality thresholds for selecting companies and revenues. While the exclusion of three oil and gas revenue streams for not being extractives-specific is a concern, the lack of payments associated with these three is demonstrated in the report. While all government entities reported comprehensively, four material oil and gas companies accounting for 51.9% of total government oil and gas revenues in 2016 did not report. Full unilateral government disclosures of material revenues is provided.
4.2In-kind revenues
There are no in-kind revenues in mining. In oil and gas, the 2016 EITI Report and the pilot commodity trading report disclose the volumes of the state’s in-kind revenues of oil and gas collected in 2016 and the proceeds of sales of the state’s in-kind revenues, disaggregated by buyer. The pilot trading report reconciles sales of oil, not gas.
4.4Transportation revenues	Not applicable
No evidence that such revenues exist in Ghana. The requirement on transportation revenue is therefore not applicable to Ghana.
4.5SOE transactions
There were no material SOEs in mining in 2016. In oil and gas, the 2016 EITI Report discloses and reconciles companies’ in-kind payments to GNPC, although there are significant gaps in the reconciliation of in-kind gas revenues. The report confirms the lack of dividend payments from GNPC and discloses, but does not reconcile, budget transfers to GNPC, although these transfers are reflected in both GNPC’s 2016 audited financial statements and the 2016 national budget.
4.8Data timeliness
The 2014 EITI Reports were published on 18 January 2016, about one year after the end of the financial year covered.
Revenue allocation
5.1Distribution of revenues
The 2014 EITI Report on mining gives a clearer picture of the distribution of revenue than the oil and gas report. The latter report contains much institutional detail and quantitative information on revenue flows but fails to pull this information together into a clear picture of the distribution of revenue, in particular of the streams channelled to/through the Ghana National Petroleum Corporation (GNPC).
5.2Subnational transfers
The 2014 Ghana EITI mining report discloses sub-national transfers and the applicable revenue sharing formula. There is no discussion of sub-national transfers in the oil and gas report, and there is no evidence that such revenues exist in Ghana.
5.3Revenue management and expenditures	Not assessed
The 2014 EITI Reports contain helpful information on Ghana’s budget and auditing process. Information on expenditures from extractive sector revenues is reported in considerable detail across some institutions, but could be more useful if it were complete and presented in a broader budgetary context.
Socio-economic contribution
6.1Mandatory social expenditures	Not applicable
The 2014 EITI Reports explain that there are no mandatory social expenditures in Ghana. The 2014 EITI Reports contain descriptions and some figures of voluntary corporate social responsibility projects by some companies, without being consistent and comprehensive across each sector.
6.2Quasi-fiscal expenditures
There were no quasi-fiscal expenditures in mining in 2016. In oil and gas, the 2016 EITI Report provides a partial description of four types of expenditures that it categorises as quasi-fiscal, although these expenditures either did not take in the year under review (2016) or do not appear to fit the categorisation of quasi-fiscal expenditures. There is publicly-available evidence of other GNPC expenditures in 2016 that could be considered quasi-fiscal.
6.3Economic contribution
The 2014 EITI Report includes, in absolute and relative terms, the contribution of the extractive industries to GDP, government revenue, exports and employment. The only small exception is information on key regions of non-gold production in the mining report.
Outcomes and impact
7.2Data accessibility	Not assessed
The EITI Reports are accessible in print and summarised formats. They are not machine readable, although key information is available from the Ghana EITI open data dashboard. The data is from the 2012/13 reports and do not include 2014 data.
7.4Outcomes and impact of implementation
The annual progress report 2015 was submitted within the deadline and adequately reflects Ghana EITI’s main activities and progress made during 2015. The report and the completion of a formal impact assessment demonstrates openness to public scrutiny.
7.1Public debate
Ghana EITI has made various efforts to ensure that EITI disclosures are actively promoted. Ghana EITI appears to maintain a high level of dissemination and outreach activities. Public events and roundtables have also been organised to discuss issues such as beneficial ownership, transfer pricing and artisanal and small-scale mining. Some stakeholders find that reports can be made more comprehensible to the public.
7.3Follow up on recommendations
The multi-stakeholder group has taken steps to act upon lessons learnt, to identify, investigate and address the causes of any discrepancies, and to develop and follow up on policy and sector relevant recommendations for improvements in the EITI Reports. Ghana EITI have implemented several of the recommendations to improve sector governance.