Ethiopia

The government has made various public statements of support to the EITI, has appointed a senior individual to lead EITI implementation and is fully, actively and effectively engaged. There are opportunities to engage government agencies beyond the Ministry of Mines, Petroleum and Natural Gas in the EITI process.

Companies are fully, actively and effectively engaged in the EITI process. The government has ensured that there is an enabling environment for company participation with provisions in the 2013 Mining Operations Proclamation mandating payments disclosures as required by EITI.

There is evidence that the space for civil society in Ethiopia has narrowed since 2009, while there have been some encouraging signs of political opening since April 2018. In the period between 2014 and April 2018, there appeared to be limited freedom of expression, some degree of self-censorship on issues related to natural resource governance and greater restrictions and control over civil society operations imposed by the legal framework. An assessment of developments since April 2018 indicated a positive direction of travel in the environment for civil society freedoms of expression and operation in EITI implementation. However, despite easing of constraints on civil society’s freedoms of expression and operation in relation to EITI implementation since April 2018, evidence does not suggest that civil society is fully, actively and effectively engaged in all aspects of EITI implementation.

The multi-stakeholder group (MSG) has adopted internal governance rules that address all aspects of Requirement 1.4 and appears to largely follow these in practice. Although each stakeholder group has the right to appoint its own representatives, there appear to be no clearly-defined procedures for the selection of multi-stakeholder group members. There is little evidence of coordination in particular within the government and industry constituencies, which should be improved to make progress on EITI implementation and follow-up on recommendations from EITI reporting.

The multi-stakeholder group maintains an annual EITI work plan, that is publicly accessible, fully costed and aligned with the reporting and Validation deadlines established by the EITI Board. The 2017/18 work plan includes measurable and time-bound activities, identifies domestic and external sources of funding. The objectives of the EITI work plan are aligned with the EITI Principles and reflect to some extent the national priorities for the extractive industries.

The 2015/16 EITI Report describes the process for awarding licenses in the mining, oil and gas sectors, but significantly less detail on license transfers. The report describes mining, oil and gas license awards in 2015/16, but does not specify whether any mining, oil and gas licenses were transferred in the period. Detailed technical and financial criteria are described for mining license awards, but not for transfers, nor for oil and gas license awards or transfers. Stakeholder consultations confirmed that no transfers of licenses that involved companies making material payments to the government.

The 2015/16 EITI Report provides details of active mining, oil and gas licenses held in 2015/16, including license-holder name, dates of award and expiry, commodity(ies) covered and general area, but no coordinates or dates of application. The online Mining Cadastre Portal provides access to license holder name and coordinates for all licenses in mining, but not oil and gas. Stakeholders considered that it was possible that material mining companies could hold licenses awarded by Regional Governments that were not disclosed.

The 2015/16 EITI Report highlights the lack of legal constraints on the publication of mining contracts, but does not clarify whether the government’s policy is pro-disclosure. While the report implies that mining contracts are available upon request from the Ministry of Mines, Petroleum and Natural Gas, it does not comprehensively list publicly-available contracts.

The 2015/16 EITI Report provides an overview of relevant laws and regulations, fiscal terms, including the degree of fiscal devolution, as well as the government entity with primary responsibility for the mining, oil and gas sectors. There is scope for improvement of disclosures of ongoing or planned reforms related to extractives and public finance management.

Ethiopia EITI has agreed a three-year beneficial ownership roadmap and has piloted EITI reporting of legal and beneficial ownership of roughly half of material companies.

The 2015/16 EITI Report lists government interests in two extractives state-owned enterprises and minority interests in two mining companies. The description of the financial relationship between the state and the state-owned enterprises listed, and the terms associated with state equity in extractives companies are not described. It is not clear from the report whether the list of state extractives interests is comprehensive. While the report clarifies that the government did not provide any loans or guarantees to any extractives company in 2015-16, it does not describe whether the state-owned enterprises had any outstanding loans or loan guarantees extended to another extractives company.

The 2015/16 EITI Report provides an overview of the extractive industries, including informal activities and significant exploration work.

The 2015/16 EITI Report highlights weaknesses in official government production data and provides companies’ reporting of production volumes and values for each of the 14 mineral commodities produced in 2015/16.

The 2015/16 EITI Report provides three reporting companies’ export volumes and values, as well as government figures for export values of three commodities (gold, tantalite ore, platinum). However, the comprehensiveness of export data reporting is unclear, and the report does not highlight weaknesses in government record-keeping related to export data.

This requirement was demonstrated as not applicable in Ethiopia in 2015/16.

The 2015/16 EITI Report describes the seven types of direct subnational payments levied on extractives companies, although it is unclear if all seven revenue streams are extractives specific. The report includes the companies’ unilateral reporting of these payments, although the subnational direct payments made by material companies are not reconciled. The report is transparent about constraints hindering the inclusion of Regional Governments in the scope of reporting.

The 2015/16 EITI Report presents reconciled financial data disaggregated by company, government entity and revenue stream, although not yet per project for payments levied on a per-project basis.

The Independent Administrator has reviewed the statutory audit procedures covering reporting entities covered in the 2015/16 EITI Report as well as actual audit practices. While the report lists quality assurances requested from reporting entities, it is unclear from the report whether the multi-stakeholder group required the supreme audit institution to certify government EITI reporting. The 2015/16 EITI Report assesses the materiality of payments from entities that did not comply with the agreed quality assurance procedures, although there are gaps in the assurances regarding the comprehensiveness and reliability of reconciled data.

The 2015/16 EITI Report includes the MSG’s definition of materiality thresholds for payments and companies to be included in reconciliation. While it is unclear from the report whether all material companies and government entities reported fully, stakeholder consultations confirmed that all material companies and government entities submitted reporting templates. While final unreconciled discrepancies are listed and partly explained, the combined value of net discrepancies appears to be significant, at nearly one fifth of total reconciled revenues. In addition, full unilateral government disclosure of all extractives revenues, including from nonmaterial companies, was not provided disaggregated by revenue stream.

This requirement was demonstrated as not applicable in Ethiopia in 2015/16.

This requirement was demonstrated as not applicable in Ethiopia in 2015/16.

The 2015/16 EITI Report discloses dividends associated with government equity, although the report does not provide sufficient information to assess the comprehensiveness of reporting on individual free equity payments to government. The lack of explanation in the report for the exclusion of one state-owned enterprises (Ethiopian Mineral, Petroleum and Biofuel Co.) is a concern.

The 2015/16 EITI Report was published within two years of the end of the fiscal period covered.

The 2015/16 EITI Report illustrates that all extractives revenues collected by the Federal Government (aside from training fee contributions to the Petroleum Training Fund) are transferred to the Consolidated Revenue account and recorded in the national budget.

The 2015/16 EITI Report describes statutory subnational transfers and discloses the aggregate value of subnational transfers of royalties. The data is not disaggregated by Regional State Government. The report states that no nontrivial deviations from the applicable legal sharing formulas were identified.

It is encouraging that the MSG has made some attempts to include some information on the budget-making process and audit procedures in the EITI Report.

The 2015/16 EITI Report presents information on companies’ mandatory social expenditures. The data is not disaggregated between cash and in-kind, or by non-government beneficiary. Ethiopia has also made efforts to go beyond the minimum requirements by providing additional information on discretionary social expenditures as encouraged by the EITI Standard.

The 2015-16 EITI Report included data collection on quasi-fiscal expenditures from some, but not all, state-owned enterprises. The report does not document the multi-stakeholder group’s discussion of any quasi-fiscal expenditures undertaken by state-owned enterprises.

The 2015-16 EITI Report provides, in absolute and relative terms, the extractive industries contribution to GDP, government revenues, exports, employment as well as the location of production. The report is transparent about weaknesses in official government GDP and employment data.

At the time of Ethiopia’s Validation data from the three EITI reporting years (2013/14- 2015/16) is available in machine readable format through the EITI global website.

The multi-stakeholder group has made substantive efforts since joining the EITI in documenting the outcomes of EITI implementation. The 2016-17 Annual Progress Report provides a narrative account of EITI implementation in the past year and includes detailed outline and assessment of progress against workplan objectives, but does not include an assessment against the EITI Requirements or recommendations from the EITI Report.

The multi-stakeholder group has worked towards making the EITI Reports comprehensible and accessible online, and has developed an EITI open data policy. There is evidence that multi-stakeholder group members and leading on EITI outreach efforts and encourage public debate about extractives activities.

The multi-stakeholder group has taken concrete steps to act upon lessons learnt from EITI reporting and identified and investigated causes of any discrepancies. Further efforts could be done to ensure systematic follow-up on the recommendations and to document any follow-up by the government.