The EITI Board agreed that Armenia has made satisfactory progress in implementing the 2016 EITI Standard.

09.07.2020
Decision 2020-39/BC-292
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Keywords: Validation
Country: Armenia

The Board's decision

The Board came to the following decision:

Following the conclusion of Armenia’s Validation, the EITI Board agrees that Armenia has made satisfactory progress overall in implementing the 2016 EITI Standard.

The Board commends the Government of Armenia and the Multi-Stakeholder Group (MSG) for the exemplary progress in implementing the EITI Standard and for the country’s efforts to expand the scope of EITI reporting to issues of national concern. The Board also notes that the EITI process is robustly embedded in the broader transparency and reform agenda of the mining sector in Armenia. Moreover, the EITI has helped to contribute to a new culture of dialogue in the country by encouraging cooperation between different constituencies and providing input to mining sector reforms.

At the same time, the Board recognises that the broader environment for EITI implementation remains challenging due to opposition to mining, related to the sector’s potential environmental and social impacts. Therefore, the Board stresses the importance of ensuring continued stakeholder engagement and continued use of the EITI as a platform for discussion of topics of particular relevance for Armenia.

The Board also highlights Armenia’s steps to transition to systematic disclosures, including routine disclosures of metal mining contracts and the country’s commitment to establish a beneficial ownership register. The Board encourages further actions on ensuring routine company and government disclosers of extractives data, as well as further work on increasing use of EITI data.

The Board recognises the MSG’s efforts aimed at addressing requirements related to subnational transfers, covering transfers of environmental payments from the state budget to affected communities, and social expenditures. The Board encourages Armenia to continue the ongoing reforms related to subnational transfers in order to ensure systematic and sustainable disclosure of environmental payments.

The Board encourages Armenia to consider strategic recommendations in the Secretariat’s initial assessment and the Validator’s report and welcomes the country’s efforts to go beyond the EITI Standard in order to ensure that EITI activities remain embedded in the national priorities.

The Board has determined that Armenia will be re-Validated in three years, i.e. on 9 July 2023.

Assessment card

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Background

Armenia joined the EITI in March 2017. The first Validation commenced on 9 September 2019. In accordance with the Validation procedures, an initial assessment [English | Armenian] was prepared by the International Secretariat. The draft Validation report [English | Armenian] was submitted to the MSG for comments on 9 April 2020. Due to the Covid-19 outbreak, the MSG requested to extend the deadline for comments. The MSG’s comments [English] were received on 14 May 2020. The comments include new information related to environmental payments (Requirement 5.2) and social expenditures (Requirement 6.1) that was disclosed after the commencement of the Validation.

The Independent Validator reviewed the comments and responded to the MSG, before finalising the Validation report [English | Armenian].

The Validation Committee reviewed the following information disclosed after the commencement of the Validation:

  • Requirement 5.2: The Validation Committee considers the information provided by the MSG to meet the criteria for considering developments after the commencement of Validation. The new information (1) has the support of the MSG, (2) is specific and verifiable, (3) has potential to materially impact the assessment of the requirement, and (4) was presented in a reasonable timeframe. By agreeing to include all subnational transfers related to environmental payments by metal mining companies in the scope of EITI reporting, the MSG has de facto considered these payments to be material, with a materiality threshold of zero. In line with the proposed corrective action, Armenia has disclosed the basis for calculating the total amount of environmental payments to be redistributed to communities and the resulting amounts by year for 2016-2019 (here – columns R and S). Armenia has also disclosed the proportions reserved for each community (2016, 2017, 2018, 2019). The total amounts assigned for each community, the actual transfers and discrepancies are summarised in a table (here). All of the links above reference documents that are available on the Armenia EITI website. The Validation’s Committee view is that progress on Requirement 5.2 can be considered ‘satisfactory’ if the information published after the commencement of Validation is taken into account.

  • Requirement 6.1: The Validation Committee considers the information provided by the MSG to meet the criteria for considering developments after the commencement of Validation. The new information (1) has the support of the MSG, (2) is specific and verifiable, (3) has potential to materially impact the assessment of the requirement, and (4) was presented in a reasonable timeframe. By agreeing to include all mandatory social payments by metal mining companies in the scope of EITI implementation, the MSG has de facto agreed that all these expenditures are material, with a materiality threshold of zero. In line with the proposed corrective action, Armenia has disclosed the nature of in-kind social expenditures and information about third-party beneficiaries by year for 2016-2018 (here). This information includes both disclosures by companies and by beneficiary communities. The Validation Committee’s view is that progress on Requirement 6.1 can be considered ‘satisfactory’ if the information published after the commencement of Validation is taken into account.

The Validation Committee reviewed the case on 24 June 2020. Based on the findings above, the Validation Committee agreed to recommend the assessment card outlined below.

The Committee also agreed to recommend an overall assessment of "satisfactory progress" in implementing the 2016 EITI Standard. Requirement 8.3.b of the 2016 EITI Standard states that:

Where Validation verifies that a country has made satisfactory progress on all of the requirements, the EITI Board will designate that country as EITI compliant.

EITI compliant countries must maintain adherence to the EITI Principles and Requirements in order to retain Compliant status.

Corrective actions

The government and the MSG are encouraged to consider the recommendations in the Validation Report and the International Secretariat’s initial assessment that could help Armenia make ever greater use of the EITI as an instrument to support reforms, and to document the MSG’s responses to these recommendations in the next annual progress report.