Mauritania has made meaningful progress with considerable improvements in implementing the 2016 EITI Standard.

Outcome of the Validation of Mauritania.

Decision reference: 2020-76 / BM-48
Decision basis: EITI Articles of Association 2019-2021, Article 12.1. ix)

15 October 2020

Board decision

The EITI Board agreed to the following:

The EITI Board agrees that Mauritania has fully addressed all three corrective actions from the country’s second Validation and has made meaningful progress in addressing Requirement 2.5 on beneficial ownership (initial criteria). Consequently, Mauritania has made meaningful progress overall in implementing the 2016 Standard, with considerable improvements across several individual requirements. The Board decided to consider new information that the MSG published during Validation.

The Board congratulates Mauritania for addressing the issues identified in its second Validation, some of which have been addressed through systematic disclosures. In particular, the mining cadastre has advanced and is supplemented by a website by the Mining Directorate providing more up to date information on licenses, production and exports.

The Board congratulates Mauritania’s state-owned mining enterprise SNIM for publishing agreements with companies, which highlight the SOE’s role in non-extractive activities. The Mauritania MSG’s work plan and monitoring and evaluation framework are recognised as examples of best practice. The Board welcomes the MSG’s additional work on identifying and disclosing quasi-fiscal expenditures undertaken by the SNIM, ensuring an equivalent level of transparency as for budgeted government expenditures.

The Board takes note of Mauritania’s efforts to establish a register of beneficial owners and encourages the country to take further steps in implementing this requirement in light of the provisions of the 2019 EITI Standard.

Mauritania is encouraged to ensure that EITI implementation is institutionalised in government and company systems through the transition to systematic disclosures of information required by the EITI Standard. The Board takes note of Mauritania’s transition to systematic disclosures of EITI data through government and company systems. The Board further encourages the MSG to contribute more actively to issues of public debate, such as license allocations contract disclosures, transparency of state-owned enterprises and the management of sovereign funds. Communication of EITI data and findings could be better tailored to issues of public concern, especially at the community level.

The Board has determined that Mauritania will have 18 months before a fourth Validation, i.e. until 15 April 2022, to carry out the corrective action on beneficial ownership (Requirement 2.5). Failure to achieve satisfactory progress in the fourth Validation will result in delisting in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, Mauritania’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 Mauritania must ensure for its fourth Validation commencing on 15 April 2022, that it meets all requirements of the 2019 EITI Standard. In particular,

In accordance with Requirement 2.5 and the Board-agreed framework for assessing progress, Mauritania is required to disclose the beneficial owners of all companies holding or applying for extractive licenses by 31 December 2021.

Background

Mauritania was accepted as an EITI Candidate in September 2007 and was designated as compliant with the EITI Rules in October 2010. Mauritania was re-evaluated according to the 2011 EITI Rules and was declared compliant on 15 February 2015. Mauritania’s first Validation against the (2016) EITI Standard commenced on 1 July 2016. The Board found the country had made meaningful progress (March 2017). In its second Validation, the EITI Board assessed that Mauritania had made meaningful progress with considerable improvements in implementing the 2016 EITI Standard (February 2019). Four corrective actions were identified by the Board. The Board encouraged Mauritania to address these corrective actions to be assessed in a third Validation commencing on 27 February 2020. On 13-14 February 2020, the EITI Board approved Mauritania’s request for transitional arrangements with respect to the 2019 EITI Standard. This Validation is thus based on the 2016 EITI Standard.

Mauritania’s third Validation commenced on 27 February 2020. The International Secretariat has assessed the progress made in addressing the four corrective actions established by the EITI Board following Mauritania’s second Validation. These are: license allocations (Requirement 2.2), license register (Requirement 2.3), state participation (Requirement 2.6) and outcomes and impact of implementation (Requirement 7.4). Progress in implementing Requirement 2.5 on beneficial ownership, as well as new Requirements 1.5 and 6.2 of the 2016 EITI Standard were also assessed. New information was disclosed after commencement of Validation and is highlighted below.

The draft assessment was sent to the multi-stakeholder group (MSG) on 8 July 2020 [English | French]. Following an extension, comments from the MSG were received on 27 July 2020 [English | French]. The MSG comments contained new information related to the initial criteria of beneficial ownership disclosure.

The assessment was finalised for consideration by the EITI Board (Validation Committee) 2020 on 16 September 2020.

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

Requirement 2.2: The Validation Committee considers the information provided by the Ministry of Petroleum, Energy and Mines, submitted 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. The explanatory note, published by the Oil Directorate (DGH) on 12 May 2020, to fulfil the Requirement 2.2.a on the comprehensive declaration of the license awarding process and criteria. The note clarifies that the country only enters direct negotiation with the oil and gas majors and as such, does not evaluate technical and financial criteria in license allocation. All licenses awarded during the period under review were direct negotiation with major IoCs and as such technical and financial criteria were waived. The note is available on the EITI Mauritania website. The Validation’s Committee view is that progress on Requirement 2.2 can be considered ‘satisfactory’ if the information published after the commencement of Validation is taken into account.

Requirement 2.3: 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) had the support of the MSG, (2) was specific and verifiable, (3) had potential to materially impact the assessment of the requirement, and (4) was presented in a reasonable timeframe.

To address the lack of complete coordinates (Requirement #2.3.b.iii)) the DGH published (on 12 May 2020) two documents containing the coordinates of all blocks that hold licenses in 2017. The list of coordinates is complete, even though it is not entirely accurate. The Validation’s Committee view is that progress on Requirement 2.3 can be considered ‘satisfactory’ if the information published after the commencement of Validation is taken into account.

Requirement 2.5: The Validation Committee considered the information provided by the MSG to meet the criteria for considering developments after the commencement of Validation. The new information (1) had the support of the MSG, (2) was specific and verifiable, (3) had potential to materially impact the assessment of the requirement, and (4) was presented in a reasonable timeframe.

To address the outstanding gaps of the initial criteria the country published the 2016 scoping study which includes a definition of politically exposed persons (PEPs). The Ministry of Petroleum, Energy and Mines issued supplementary instructions all companies holding a license to publish beneficial and legal owners. The MSG updated the list of beneficial owners to include the links to the stock exchange filings of the listed companies.

While the Validation Committee decided to consider the information submitted by the MSG after commencement of Validation, it considered there are two remaining gaps.

The Validation Committee was not satisfied with the argumentation of the MSG (in its response to the draft assessment, sent on 26 August 2020) that the lack of the legal basis to request beneficial owners of companies requesting a license cannot be published due to the lack of the legal basis to do so. The MSG has stated that the government is aiming at revising the information requests with the ongoing reform of the mining code.
The Validation Committee considered that significant gaps remained with regards to the availability of legal owners of mining companies. Thirty-five of 47 mining companies holding a license in the year under review did not declare legal owners. Thus, the Validation Committee does not agree with the MSG’s assessment of the quality and comprehensiveness of the published data.

The Validation Committee reviewed the case on 23 September 2020. Based on the findings above, the Validation Committee agreed to recommend the assessment card outlined above.

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 of Mauritania has made regular public statements of support for the EITI and a senior advisor to the Prime Minister leads day-to-day EITI implementation, with the authority and freedom to coordinate actions related to the EITI across relevant ministries and mobilise funding. High-level government officials participate in MSG meetings, government agencies participate in EITI reporting and the Ministry of Finance uses EITI Reports to monitor budget implementation.
1.2Company engagement
Companies are actively engaged in the design and implementation of the EITI, which has benefited from high-level participation from oil and gas companies in particular. There are no legal obstacles preventing company participation in the EITI process, with the Mining and Petroleum Codes providing an enabling environment for company participation in the EITI. However, companies could play a greater role in EITI dissemination and outreach to local communities.
1.3Civil society engagement
Civil society are somewhat engaged in the design, implementation, monitoring and evaluation of the EITI process. Participation of civil society representatives in the MSG has been uneven, due to capacity constraints that civil society has recognised and is addressing through its own code of conduct. There is an enabling environment for civil society participation in the EITI.
1.4MSG governance
The civil society constituency has agreed on criteria and procedures for the nomination of their representatives on the MSG, which are public and confirm the right of each constituency to appoint its own representatives. The industry constituency has agreed on eligibility criteria for their representation on the MSG, however there appears to be no clear selection procedures for industry representatives on the MSG. While these ad-hoc procedures do not have a negative impact on industry participation at this stage, it could be an issue in the future.
1.5Work plan
The 2020 work plan includes a mapping of EITI contributions to the economic growth strategy (the SCAPP), which is a national proprity. The work plan also includes a monitoring and evaluation framework to montior EITI's impact in Mauritania.
Licenses and contracts
2.2License allocations
The Oil Directorate (DGH) published a note on their website explaining the license awarding process and criteria for oil companies under the existing practice. The note clarifies that the country only enters direct negotiation with the oil and gas majors and as such, does not evaluate technical and financial criteria in license allocation. All licenses awarded during the period under review (2017) were direct negotiation with major IoCs and as such technical and financial criteria were waived.
2.3License register
To address the lack of complete coordinates (Requirement #2.3.b.iii)) the DGH published (on 12 May 2020) two documents containing the coordinates of all blocks that hold licenses in 2017. The list of coordinates is complete, even though it is not entirely accurate
2.4Policy on contract disclosure
Through the 2015 EITI Report and the notes published subsequently by the Ministry of Mines and Hydrocarbon, the MSG has documented the government’s policy on disclosure of contracts and licenses that govern the exploration and production of oil, gas and minerals.
2.1Legal framework
The 2014 EITI Report describes the legal framework and fiscal regime governing the extractive industries, including the lack of fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and responsibilities of the relevant government agencies. However, it appears that a number of reforms undertaken in 2013 and 2014 appear to be missing from the EITI Reports covering those respective years.
2.5Beneficial ownership
While the MSG has many necessary steps for the disclosure of beneficial owners, not all of the initial criteria for the assessment of beneficial ownership were met. For only 21 of the 57 companies that held a license in the year under review the legal owners were published. Beneficial ownership and legal ownership information was requested for all companies holding a license, but not requesting a license, because of the lack of a legal basis to do so. The mining code is under reform and will address that.
2.6State participation
In accordance with Requirement 2.6, the 2017 EITI Report and subsequent addendums confirm the materiality of two SOEs in the extractives, SMHPM and SNIM. They described the statutory financial relations between SNIM, SMHPM and the government in terms of dividends, retained earnings, reinvestments and third-party funding. The financial relations between the two SOEs and the government in practice in 2017 are detailed. The report lists the state participations in the extractive industries, including information on SNIM subsidiaries. The report describes the terms associated with the state’s free carried equity in mining companies and the terms associated with state participation and equity in oil, gas and mining companies. The report notes the existence of a sovereign guarantee on a third-party loan to SNIM, and subsequent documentation provides details of the terms of the loan guarantee (e.g. interest rate, tenor).
Monitoring production
3.1Exploration data
The 2014 EITI Report includes a detailed description of the extractive industries and of significant exploration activities. There does not appear to be significant informal activities in the extractive industries in 2014.
3.2Production data
The 2014 EITI Report provides production volumes and values for all of Mauritania’s mineral and oil production, disaggregated by commodity.
3.3Export data
The 2014 EITI Report provides export volumes and values for all of Mauritania’s exported mineral and oil commodities, disaggregated by commodity.
Revenue collection
4.3Barter agreements	Not applicable
The MSG has considered the existence of barter and infrastructure agreements and concluded that this requirement was not applicable to Mauritania in 2014.
4.6Direct subnational payments	Not applicable
The 2014 EITI Report incorrectly categorises three types of payments as direct subnational payments, as these payments were paid to the central government and earmarked for transfer to specific communes.
4.7Disaggregation
All reconciled financial data in the 2014 EITI Report was presented disaggregated by company, revenue stream and receiving government entity, although government unilateral disclosures were only disaggregated by company not by revenue streams.
4.9Data quality
In accordance with Requirement 4.9, the reconciliation of payments and revenues has been undertaken by an IA, appointed by the MSG, and applying international professional standards. The report includes an informative summary of the work performed by the IA and the limitations of the assessments provided. The report includes follow up on recommendations from past EITI Reports and Validation, as well as a set of new recommendations. Summary data tables have been published for the 2015 EITI Report.
4.1Comprehensiveness
The 2015 EITI Report provides, for both oil and gas and mining, a definition of the materiality thresholds for payments and companies to be included in reconciliation, including a justification for why the thresholds were set at these levels. The MSG was involved in setting the materiality thresholds for payments and for companies. The materiality of omissions from non-reporting companies is assessed and considered not to affect the comprehensiveness of the reconciliation. Full unilateral government disclosures of material revenues, including from non-material companies, was provided.
4.2In-kind revenues
The 2014 EITI Report confirmed the materiality of in-kind revenue in the oil and gas sector and disclosed volumes collected and sold as well as proceeds of sales. While it did not explicitly state that the state did not collect in-kind revenues in the mining sector, it provided a diagram of revenue flows that did not specify any in-kind revenues.
4.4Transportation revenues	Not applicable
The MSG has considered the existence of transport revenues and concluded this requirement was not applicable to Mauritania in 2014.
4.5SOE transactions
The 2014 EITI Report describes the role of SOEs operating in Mauritania and comprehensively disclosed and reconciled statutory financial transfers between SOEs and the government. While the 2014 EITI Report does not refer to any ad-hoc transfers from SOEs to the government in 2014, we understand that there were no such ad-hoc transfers in 2014.
4.8Data timeliness
Mauritania published its 2011, 2012, 2013 and 2014 EITI Reports within two years of the start of the fiscal year under review.
Revenue allocation
5.1Distribution of revenues
The 2015 EITI Report highlights the extractives revenue streams that are not recorded in the national budget and provides a general description of the management of these funds. Mauritania EITI has subsequently published an addendum from the FNRH with the fund’s general statutory asset allocation guidelines and the Cour des Comptes’ report on the FNRH as part of the 2015 budget execution report, which raises concerns over the lack of a clear asset allocation policy from the Ministry of Finance but adequately describes the allocation of FNRH assets in 2015.
5.2Subnational transfers	Not applicable
Despite ambiguities in the 2015 EITI Report regarding the existence of statutory subnational transfers, the MSG has followed up with relevant government entities and published addendums, including from the central bank, confirming the lack of subnational transfers in Mauritania.
5.3Revenue management and expenditures	Not assessed
The 2014 EITI Report provided limited information on earmarked revenues.
Socio-economic contribution
6.1Mandatory social expenditures	Not applicable
Although not explicitly stated in the 2014 EITI Report, we understand that mandatory social expenditures were not material in the mining, oil and gas sectors in 2014. The MSG has made efforts to include companies’ unilateral disclosures of voluntary social expenditures in the 2013 and 2014 EITI Reports.
6.2Quasi-fiscal expenditures
There is evidence that the MSG has considered quasi-fiscal expenditures since the second Validation. The 2017 EITI Report includes information on the outstanding sums, the conditions and calendar for repayment for quasi-fiscal expenditures by SNIM linked to the acquisition of biomedical equipment for the National Hepato-Virology Institute of Nouakchott and financing of production of fishing boats by COMECA. SNIM has subsequently published these conventions as well as the convention for the construction of the Nouakchott airport by NAJAH. Information on the outstanding sum and actual amounts disbursed on quasi-fiscal expenditures to NAJAH were subsequently published on the EITI-Mauritania website.
6.3Economic contribution
The 2014 EITI Report provided, in absolute and relative terms, the size of the extractive industries, their contribution to government revenue, exports and employment.
Outcomes and impact
7.2Data accessibility	Not assessed
Mauritania’s EITI data is available in machine readable format on the EITI global website, drawing on summary data tables completed by the national secretariat. However, these are not published on the EITI Mauritania website.
7.4Outcomes and impact of implementation
Through the efforts throughout the year to strengthen the monitoring of EITI implementation as well as the publication of an impact assessment, Mauritania has taken important steps to draw lessons from its assessment of outcomes and impact of EITI implementation. The Annual Progress Reports and the impact evaluation sufficiently address the gaps from second Validation.
7.1Public debate
The MSG has sought to ensure that EITI Reports are accessible and contribute to public debate. Dissemination activities involving civil society groups, parliamentarians and the media appear to be effective in stimulating an informed debate about the management of the extractive sector within the capital. Dissemination of the findings in EITI reports and follow-up on the recommendations by the relevant government agencies has also given the EITI new momentum. However, accessibility of EITI data beyond Nouakchott remains weak. Stakeholders affected by mining activities in rural areas appear to be rarely reached by dissemination of EITI information and their voices are rarely heard at the central level, where all decisions about the sector are made.
7.3Follow up on recommendations
The MSG and the government have taken steps to act upon lessons learnt, to identify, investigate and address the causes of any discrepancies and weaknesses of the EITI process and to consider the recommendations for improvements from the Independent Administrator, even if these are not consistently fully implemented.