Kazakhstan

The government is fully, actively and effectively engaged in the EITI process, including through senior government participation and by providing funding for implementation.

Companies are providing substantial input to the EITI process and there is an enabling legal framework facilitating company participation in the EITI.

The space for civil society in Kazakhstan is clearly narrowing. There is limited freedom of expression, high levels of self-censorship and the legal framework is increasingly imposing greater restrictions and control over civil society. Notwithstanding this overall picture of the civic space, there is limited evidence that the broader situation is having an impact on civil society’s ability to participate in the EITI.

While the civil society constituency last undertook a renewal of its NSC (local MSG) representation in June 2019 following an open, fair and transparent process, the election procedure for nominating CSO NSC members continues to be boycotted in practice by several CSOs not part of the Dialogue Platform coalition, the platform established to structure the constituency’s engagement in EITI. Although the requirements for an open invitation to participate in the EITI and for an independent nomination process have been fulfilled, the broader objective of ensuring diverse and representative participation of civil society had not been achieved.

The NSC has developed a work plan that serves as a management tool for the secretariat and that is regularly updated. Although the work plan functions less well as a strategic planning tool for the NSC, this has not prevented the NSC from making sure that the EITI Report addresses relevant issues in the country nor has it prevented discussions and engagement on topics such as environmental reporting and contract transparency.

There appear to be inconsistencies in the number of mining, oil and gas licenses awarded in 2017 across the EITI Report and its addendum. In addition, neither the report nor its addendum provide a full list of bidders for each license awarded through tender in 2017, and the methodology of accessing non-trivial deviations in preparing the 2017 EITI Report remains unclear.

While dates of application for licenses awarded prior to 2018 are not publicly accessible, EITI Kazakhstan has been transparent about these gaps and has undertaken actions to ensure that dates of application would be publicly accessible for all mining, oil and gas licenses awarded from 2018 onwards.

The 2015 EITI Report and the draft supplementary report clarify that contract transparency is not practiced, and set out the legal provisions preventing contract transparency.

Kazakhstan has disclosed the required information related to the fiscal regime and level of fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and responsibilities of the relevant government agencies. Kazakhstan has also gone beyond the minimum requirements by providing a detailed account of reform efforts as encouraged by the EITI Standard.

Kazakhstan has made good progress on developing a legal framework for beneficial ownership reporting, although further work is needed to ensure that the new Subsoil code provides a sound foundation for comprehensive reporting and publication of this information.

The 2017 EITI Report and its addendum provide information on the financial relations in 2017 between SOEs and the state, although there are gaps in the coverage of some material SOEs’ reinvestments and third-party financing. Moreover, the terms associated with different SOE equity interests and the terms of all changes in state participation in the year under review are not sufficiently described. While an overview of third-party financing of SOEs and intra-SOE debt (loans and bonds) and loan guarantees is provided, it is unclear from the report which of these loans are guaranteed by the government.

Kazakhstan has disclosed an overview of the extractive sector, information about exploration activities as well as additional information on geological prospecting and reserves.

The addendum to the 2017 EITI Report provides ranges of production costs for all mineral commodities produced in 2017 aside from lead and zinc as well as estimates of production values for coal, oil and gas. However, the report highlights methodological concerns over the reliability of production value estimates based on average production costs.

Kazakhstan has disclosed all data related to export volumes and export values, as well as additional information on main export destinations.

The 2017 EITI Report provides a description of two types of barter arrangements, covering natural gas swaps with Russia and Uzbekistan on the one hand and the provision of two separate loans in exchange for future delivery of crude oil and liquefied natural gas. While the addendum to the 2017 EITI Report provides the volumes handled under the natural gas swap arrangement in 2017, it does not provide the volumes of crude oil and liquefied natural gas delivered in 2017 in reimbursement of the two pre-financing arrangements concluded by KazMunayGas.

Although some taxes are channelled to the local level upon payment, there is a centralised taxes and payments collection system monitored by the MoF.

The 2015 EITI Report is disaggregated by individual revenue stream, company and government entity.

Although the 2017 EITI Report does not include the IA’s clear assessment of the comprehensiveness and reliability of reconciled financial data presented in the report, its addendum published before Validation clarifies the IA’s view that the reconciled financial data is comprehensive and reliable.

Kazakhstan has ensured comprehensive disclosed of all payments and revenues pertaining to the extractive sector.

Although companies operating under PSAs in Kazakhstan has the option of paying production share in-kind, all such payments were effectuated in monetary payments in 2015.

The 2017 EITI Report provides descriptions of the system for transport of crude oil, natural gas and mineral commodities by pipeline and rail, but only provides information on the volumes transported and revenues received for crude oil and natural gas (by pipeline), disaggregated by route, not for rail transport of mineral commodities.

The only direct financial transactions between SOEs and the government appears to take the form of dividends (to Samruk-Kazyna) and the payment of taxes (to the Treasury and National Fund). These transactions have been fully disclosed.

Kazakhstan is well within the deadlines for annual EITI Reporting, and has also gone beyond the requirement by exploring opportunities to disclose data as soon as practically possible through continuous online disclosures as encouraged by the EITI Standard.

Kazakhstan has disclosed which extractive industry revenues are recorded in the national budget, and which once are allocated to the National Fund. In addition, the report references national budget classification codes as encouraged by the EITI Standard.

The 2015 EITI Report confirms that there are no statutory subnational transfers particular to the extractive sector in Kazakhstan.

The 2015 EITI Report discloses ad hoc spending of National Fund revenue earmarked for particular projects. It also includes an explanation of the budgeting process.

While the report and its addendum categorise social expenditures under memorandums as voluntary, opinions were split among stakeholders consulted over whether the additional social expenditures reported were voluntary, mandatory, or a mix of both. In addition, the data presented under BCC 206114 do not distinguish between cash and in-kind social expenditures, nor consistently identify non-government beneficiaries.

While there is evidence of the NSC’s (local MSG) efforts to report on quasi-fiscal expenditures, more work is required to ensure that a comprehensive list of clearly categorised quasi-fiscal expenditures is publicly disclosed, including quasi-fiscal expenditures other than those related to social development and local infrastructure (e.g. subsidies).

The 2015 EITI Reports discloses information on the contribution of the extractive sector to Kazakhstan's economy.

Kazakhstan has ensured that financial EITI data is available in machine readable format from Kazakhstan’s EITI website as well as from EGSU, the government's online portal. Further steps are also underway with regards to mainstreaming and open data.

The 2018 annual progress report provides a comprehensive overview of activities conducted in 2018, an assessment of progress towards meeting each EITI Requirement, an overview of the NSC’s (local MSG) feedback to the comments from the first Validation and EITI Reports as well as strengths and weaknesses of the EITI implementation. Additionally, the addendum to the 2017 EITI Report includes an assessment of impact and outcomes of the work plan implementation.

The NSC has ensured that the EITI Report is comprehensible, actively promoted, publicly accessible and contributes to public debate. Although no open data policy has been published, this does not seem to have affected the NSC practices of publishing all data in excel format.

Although the EITI Report does not include a stocktake of progress in implementing recommendations from previous reports, stakeholder consultations and other documents confirm that the NSC has considered the recommendations from the Independent Administrator, and the discrepancies are largely explained.