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Bishkek, Kyrgyz Republic

Kyrgyz Republic

Status
Meaningful progress
Joined
27 September 2007
Latest validation
2020
Latest data from
2017
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Overview and role of the EITI

The Kyrgyz Republic has significant deposits of coal, gold, silver, uranium and antimony, and nonferrous metals and minerals are key export commodities. The country also has some oil and natural gas resources. Gold extraction is the biggest contributor to the economy with about 70% of the government’s extractive revenue generated by the Kumtor gold mine. Despite falling commodity prices and production in recent years, mining remains the largest economic sector and is a core element for the National Development Strategy

The Kyrgyz Republic implements the EITI in alignment with national priorities for data mainstreaming and digitalisation as part of its Open Government Partnership action plan. The EITI can further play a role in supporting the government’s anti-corruption agenda by addressing corruption risks in the licensing process, disclosing company ownership and empowering citizens to keep the government accountable.

Economic contribution of the extractive industries

9.7%
to government revenues
42%
to exports
10%
to GDP
10%
to employment
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Download country data

Download open data on government and company revenues, revenues by revenue stream and indicator, summary data and more.


Innovations and policy reforms

  • The Law on Subsoil, amended in 2018, mandates that extractive companies report in accordance with the EITI Standard, enables transparency of license agreements and requires companies to disclose their beneficial owners when applying for licenses. In 2018, the government simplified the reporting process for companies in line with the EITI Standard and government requirements.
  • An EITI feasibility study evaluates systematic disclosure of extractives data. As part of EITI implementation, the State Committee for Industry, Energy and Subsoil Use began disclosing information on production volumes, taxes paid and payments in open data format.

Extractive sector data

Revenue collection

Level of detail 2

Revenue distribution

2017
Standardised revenue types

Top paying companies

2017

Extractive sector management

License and contracts

Extractive licenses are issued by tender, auction or direct negotiation and are granted by the State Committee for Industry, Energy and Subsoil Use (SCIESU). The government discloses license information via its online license registry, including license holders, coordinates, relevant dates and commodities produced. The register also links to the general business register and to the Open Budget Portal of the Treasury.

The Kyrgyz Republic has not published license agreements or other contractual arrangements with extractive companies, apart from the concession agreement of the Kumtor project, as legally mandated.

Beneficial ownership

The Law on Subsoil Use, enacted in 2018, requires public access to beneficial ownership information and imposes sanctions for non-reporting. In 2020, the government adopted amendments to the licensing regulation, enabling collection and publishing of beneficial ownership information and a template declaration form. Extractive companies are required to submit declaration forms as of March 2021.

The State Committee on Industry, Energy and Subsoil Use (SCIESU) is considering reforming the existing license register to include beneficial ownership information.  Currently, the committee collects information on company ownership in hard copies as a part of licensing procedures. 

To implement the beneficial ownership register, the government entered an agreement with Open Ownership to collected and disclose beneficial ownership data through the Open Ownership Register.

Revenue distribution

The fiscal system in the Kyrgyz Republic is highly centralised. All revenues from extractive industries go to the state budget and local governments collect property tax and land tax. While shares of revenues are distributed from the central government to local governments, it is unclear how these transfers are calculated.

Nonetheless, revenue transparency is improved with daily updated information available on the Open Budget website for all transactions to and from the Central Treasury disaggregated by company, budget level (regional or local) and revenue stream.


EITI implementation

Governance

The Kyrgyz Republic EITI is administered the Kyrgyz Republic Multi-Stakeholder Group (MSG), also known as the Supervisory Board. The MSG is hosted by the Ministry of Energy and Industry Department of Subsoil Use Policy and chaired by Toktobaev Akyl, Deputy Chairman of the State Committee for Industry, Energy and Subsoil Use (SCIESU).

Validation

Kyrgyz Republic was found to have made meaningful progress in implementing the 2016 EITI Standard in September 2020, following its second Validation. Kyrgyz Republic fully addressed 12 of the 20 corrective actions identified in its previous Validation. The next Validation is expected to commence in April 2023.

Scorecard

Latest Validation: 23 September 2020
Year

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 engages in EITI at a high level. Senior officials are represented and engaged. However, government funding and outreach to other donors was unsuccessful in 2017-2019. Despite future funding prospects, shortfalls in 2017-2019 caused challenges for reporting, outreach and dissemination. Therefore, while many aspects have been addressed, the overall objective of effective government engagement has not yet been fully achieved.

1.2Industry engagement

Although there is significant scepticism and to some extent active lobbying against the EITI within parts of the company constituency, some companies have been actively engaged through participation in MSG meetings. Many companies, including all large tax payers, participate in EITI reporting. The renewed industry engagement is welcome.

1.3Civil society engagement

There is an enabling environment for civil society to operate in the Kyrgyz Republic, and no concerns about civil society’s ability to participate in the EITI process.

1.4MSG governance

The constituency guidelines for nomination were developed prior to the commencement of Validation, and participation in the nomination process was open and transparent. Although the processes were concluded after commencement of the Validation, the EITI Board considered that the corrective action was fully addressed. Civil society and companies have appointed their representatives without interference. No stakeholders highlighted any significant deviations from the Memorandum of Understanding in practice.

1.5Work plan

The MSG has agreed an up to date work plan for 2016, with objectives for EITI implementation that are linked to national priorities for the extractive sector, as well as costed and time bound work plan activities and actions. Future work plans need to be clearer about the link between the work plan activities and the work plan objectives, and include more specific deadlines for each activity. It is also recommended that the Supervisory Board urgently agrees a fund raising strategy including plans for partial government funding in the future.

Licenses and contracts

2.1Legal framework

The 2013-14 EITI Report contains a comprehensive description of the legal framework including a detailed overview of the fiscal regime, changes to the legal framework, and reforms underway. Responsibilities of government entities involved in the management of the extractive sector are described. The fiscal system is centralised, with local governments only collecting property tax and land tax.

2.2License allocations

The Kyrgyz Republic comprehensively describes how licenses are awarded and transferred. Kyrgyz Republic has begun disclosing license information regularly. However, some gaps remain for 2015-2017 awards and transfers; no list of allocations through direct negotiations was available. The government confirmed there were no deviations from the licensing procedures, however the basis for the conclusion was unclear.

2.3License register

Kyrgyz Republic discloses information on license holders online, including coordinates, relevant dates, and commodity being produced. The register also links to the general business register and to the Open Budget Portal of the Treasury. Dates of application for licenses allocated before 29 March 2018 are not available. These dates cannot be compared with the license register due to poor technical usability.

2.4Policy on contract disclosure

The report explains the government policy on contract transparency and comments on the actual practice of contract disclosure. The report also discloses the only publicly available contract with the Kumtor Gold Company.

2.5Beneficial ownership

Not assessed

The Kyrgyz Republic took part in the beneficial ownership pilot, but only four companies disclosed their ultimate beneficial owners. The 2013-2014 EITI Report confirms that as of 2014, companies must disclose their beneficial owners when applying for a license and notify the government in case of changes in beneficial ownership. Failure to do so constitute grounds for revoking the license in accordance with the Subsurface Law.

2.6State participation

Kyrgyz Republic improves on most aspects of the corrective action. Ten state-owned enterprises (SOEs) are active in the extractive sector. Two companies were considered material, Kyrgyzaltyn OJSC and Kyrgyzneftegaz OJSC. Some disclosures governing the financial relationship between the government and SOEs exist. However, disclosures do not extend towards subsidiaries and joint ventures of SOEs. Lack of coverage of these entities made it impossible to conclude that extractive SOEs’ data is comprehensive. Information is not available on actual practices of these rules. Loan and loan guarantees was partially addressed, though debt agreements between SOEs and the Ministry of Finance were not accessible at the commencement of Validation.

Monitoring production

3.1Exploration data

The EITI Report provides a comprehensive overview of mineral resources and deposits, including “attractive” extractive projects, most of which are significant exploration projects.

3.2Production data

Kyrgyz Republic makes great efforts in pursuing comprehensive disclosure of production data. However public disclosures of the EITI Report continue to fall short of providing clear and comprehensive estimates of production volumes and values for all commodities. Production data does not seem to include silver, mercury, copper, iron and antimony. Kyrgyz EITI has begun to overcome the obstacle of state secrecy laws, though this barrier still exists. Kyrgyz Republic also published data after the commencement of Validation, though they did not cover all gaps in disclosures.

3.3Export data

Kyrgyz Republic discloses export volumes and values for most commodities. Some gaps remain and were hampered by state secrecy laws; in particular for gold export volumes and data on metal commodities. However, the EITI Board considered publications made after commencement of Validation, and consider that Kyrgyz Republic provided fully disaggregated export data, using international data standards for commodities, covering in excess of 99% of all extractive exports. The remaining ~1% relates to exports of metal commodities, under the Harmonised System code for metal ores.

Revenue collection

4.1Comprehensiveness

The report does provide an assessment of comprehensiveness of the reconciled financial data. However, some material payments and companies were excluded from reconciliation without sufficient evidence. There are barriers to ensure full government disclosure of extractive sector revenues. However, these are not clarified nor are plans to overcome these barriers.

4.2In-kind revenues

Not applicable

The 2013-14 EITI Report does not provide information on whether the government collects revenues in-kind. Government officials confirmed that in-kind revenues are not practiced.

4.3Barter agreements

Not applicable

The International Secretariat’s assessment is that the corrective action on infrastructure and barter arrangements has been addressed and that Requirement 4.3 was not applicable to the Kyrgyz Republic in the period under review.

4.4Transportation revenues

Not applicable

The International Secretariat’s assessment is that the corrective action on transportation revenues has been addressed and that Requirement 4.4 was not applicable to the Kyrgyz Republic in the period under review.

4.5SOE transactions

The report discloses some SOE transactions. Material dividend incomes and management fees are not reconciled. Additionally, dividend incomes collected by Kyrgyzneftegaz OJSC were not considered.

4.6Direct subnational payments

All revenue streams are recorded in the State’s single treasury account, even subnational revenues. Kyrgyz Republic clearly distinguishes mandatory social expenditures versus regular fiscal instruments. Full disclosures are not made for ‘Opportunity cost of provided land plots ’ as is required, even if included in the reconciliation exercise.

4.7Disaggregation

Data is disaggregated by individual payment, individual company and individual government entity. The data is not presented by project.

4.8Data timeliness

The draft 2013-2014 EITI Report was published online on 31 December 2015. The final 2013-2014 EITI Report was published and distributed among stakeholders on 16 February 2016.

4.9Data quality

Kyrgyz Republic have embedded several aspects into corporate filings to the regulator, with data reported to the regulator annually. The full plan for addressing the corrective action has not yet been completed, but significant progress has been made. There were minor issues related to adherence to standard reconciliation procedures, however the IA was able to provide an assessment on the comprehensiveness and reliability of reconciled financial data.

Revenue allocation

5.1Distribution of revenues

The 2013-14 EITI Report provides a list of revenues recorded in the national and local budgets. Stakeholders confirmed that all revenues are allocated in the budget.

5.2Subnational transfers

Kyrgyz Republic addresses material transfers from Treasury’s special account to to regions. How revenues should be distributed is provided but it remains unclear how the government calculates the transfers. Actual amounts are disclosed and disaggregated by project and beneficiary. However, the transfer amount calculated in accordance with the relevant revenue-sharing formula is not provided.

5.3Revenue management and expenditures

Not assessed

The 2013-14 EITI Report provides a description of the budget process, and auditing practices for state finances. The 2013-14 EITI Report also provides an overview on establishment of regional development funds - oblast and district levels that were introduced in November 2014 and that will receive a share of extractive related non-tax payments.

Socio-economic contribution

6.1Mandatory social expenditures

Social payments are mandatory, social package payments from companies are available. Additionally, social payments to the Issyk-Kul development fund, funded by the Kumtor Gold Company, are disclosed.

6.2Quasi-fiscal expenditures

Kyrgyz Republic discloses all quasi-fiscal expenditures for two material SOEs; Kyrgyzaltyn OJSC and Kyrgyzneftegaz OJSC. There was consensus among stakeholders consulted that these disclosures were comprehensive.

6.3Economic contribution

Kyrgyz Republic discloses information about contribution of the extractive industries to the economy, with a commentary from the IA that there is 6% discrepancy in comparison to the data by the National Statistics Committee. The report provides information on the extractives industries’ contribution to government revenues, exports and employment, although the IA does not comment on the methodology used to calculate these values.

Outcomes and impact

7.1Public debate

Kyrgyz EITI reporting is comprehensible and accessible to the general public. Several outreach and dissemination events have been organised in key mining regions. Restricted funding have limited efforts somewhat, however civil society and the regulator, SCIESU, have supported in its place.

7.2Data accessibility

Not assessed

Kyrgyz Republic’s EITI does not yet provide EITI data in easily accessible format. The MSG held a discussion to address this encouraged requirement, no actions were taken.

7.3Follow up on recommendations

The Supervisory Board ensured that there has been adequate follow up of the recommendations from EITI Reporting, including identifying, investigating and addressing the causes of discrepancies.

7.4Outcomes and impact of implementation

The Kyrgyz Republic reviews outcomes and impact on a regular basis. They monitor progress in meeting each EITI Requirement, including steps undertaken to exceed them.


Key documents


Contacts