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Manila, Philippines

Philippines

Status
Moderate
Joined
22 May 2013
Latest validation
2022
Latest data from
2018
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Overview and role of the EITI

The Philippines is a leading producer of nickel and a significant producer of gold and copper. The country also exports iron ore, chromium, zinc and silver, and produces some oil and gas. The extractive sector makes a relatively small contribution to the national economy, accounting for less than 1% of the country’s GDP and 7% of total exports in 2019.  

There is considerable anti-mining sentiment in the country, especially in communities affected by the environmental impacts and displacement of indigenous peoples caused by mining operations. There are also debates about whether local governments are getting their equitable share of natural resource revenues.

The EITI has been used as a platform to show the direct and indirect contributions of the extractive sector to the economy, improve public understanding of the management of natural resources and public availability of data, and create opportunities for stakeholder dialogue and constructive engagement in natural resources management. Philippines EITI (PH-EITI) aims to strengthen systematic disclosures, beneficial ownership and contract transparency, and to expand EITI reporting to cover non-metallic mines, royalty payments to indigenous communities, gender and small-scale mining. 

Economic contribution of the extractive industries

2.2%
to total government revenues
7.85%
to exports
.89%
to GDP
.5%
to employment
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  • Step 3

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

  • PH-EITI identified the formulation of policy proposals – including processes and mechanisms of natural resources governance – as one of its strategic objectives for 2020-2022.
  • In 2020, PH-EITI published a scoping study on Women and Large-Scale Mining in the Philippines. The study presents several recommendations for addressing key issues and policy gaps, including amendments to the Philippine Mining Act of 1995 to incorporate gender-sensitive provisions. It also suggests measures for mining companies and local governments on how mining can be more responsive to women and gender issues.       
  • PH-EITI carried out a study on beneficial ownership and politically exposed persons related to extractive companies to examine current disclosure practices, gaps and barriers.
  • PH-EITI conducted a mainstreaming feasibility study, which aims to inform EITI implementing agencies on how extractives information can be systematically disclosed.  

“Regulations must ensure balance between economic and environmental concerns to realise the best outcome for our people. The EITI helps in achieving that balance by providing fair and accurate data about the extractive industry. It is a source of credible information to inform policy makers on the appropriate fiscal regime for mining, and helps ensure that the extraction of our natural resources will substantially contribute to the sustainable development of the nation.”

Hon. Carlos G. Dominguez Secretary, Department of Finance

Extractive sector data

Production and exports

Gold

Revenue collection

Level of detail 2

Revenue distribution

2018
Standardised revenue types

Top paying companies

2018

Extractive sector management

License and contracts

Mining contracts are negotiated by the Department of Environment and Natural Resources (DENR) with permit holders or mining contractors. Major contract types include exploration permits (EPs), mineral production sharing agreements (MPSAs) and financial and technical assistance agreements (FTAAs) with foreign-owned corporations for large-scale exploration, development and use of mineral resources.   

Petroleum service contracts and coal operating contracts are awarded through competitive bidding and negotiations by the Department of Energy. The DOE secretary endorses the awardees to the President for final approval.

The DENR’s Mines and Geosciences Bureau publishes mining permits and contracts, while the Department of Energy publishes petroleum service contracts. PH-EITI also publishes extractive contracts via its online portal.

Beneficial ownership

In 2019, the Philippines’ Securities and Exchange Commision (SEC) mandated corporations to declare their beneficial owners and their information, including complete name, residential address, nationality, tax identification number, and percentage of ownership or voting rights. The SEC further clarified that this applies to foreign corporations in the Philippines. In 2021, it provided further guidelines on beneficial ownership transparency.

In 2021, PH-EITI launched an online beneficial ownership registry of extractives companies based on company declarations submitted to the SEC and PH-EITI. While many companies partially or fully disclosed beneficial ownership information, the registry is not yet comprehensive.

In 2021, the Philippines became a participating country in Opening Extractives, a global five-year programme delivered by the EITI and Open Ownership to strengthen the availability and use beneficial ownership data.

Revenue distribution

The Philippines’ Constitution and Local Government Code stipulate that local government units should have an equitable share in the proceeds derived from natural resources developed in their respective areas, and that these should benefit the inhabitants of those jurisdictions.

Local government units are entitled to a 40% share of the national government receipts from the preceding fiscal year from mining taxes, royalties, forestry and fishery charges, and other taxes, fees or charges, and from its share in any co-production, joint venture, or production sharing agreement.

Under the Local Government Code (Sections 289 to 292), shares of natural resource revenues are to be distributed to provinces (20%), municipalities (45%) and districts or barangays (35%), where the natural resources are developed in the respective provinces. Where they are developed in a highly urbanised or independent component city, they are distributed to municipalities (65%) and barangays (35%).


EITI implementation

Governance

PH-EITI is administered by the Philippines’ Multi-Stakeholder Group (MSG). The MSG is is hosted by the Department of Finance (DOF) and chaired by the DOF Undersecretary Bayani H. Agabin and DOF Assistant Secretary Valery Joy A. Brion (as Alternate Chairperson). It is composed of representatives from government, industry and civil society.

Validation

Philippines achieved a moderate overall score (80 points) in implementing the 2019 EITI Standard, following its second Validation. Corrective actions relating to “Stakeholder Engagement” will be reviewed in October 2022. The next Validation is expected to commence in April 2023.

Scorecard

Latest Validation: 17 February 2022
Year

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Component View more
Score

The three components of Validation each receive a score out of 100, as follows:

Low 0-49
Fairly low 50-69
Moderate 70-84
High 85-92
Very high 93-100
View more

Outcomes and impact

97 Very high
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Outcomes and impact

Effectiveness and sustainability indicators

3

1.5 Work plan

90

The 2021 work plan is informed by the PH-EITI’s strategic objectives for 2020-2022. While these objectives are relatively general, the planned outcomes for 2021 are more specific and address nationally relevant topics, such as the participation of indigenous communities, gender and anti-corruption. The work plan establishes an effective tool for planning and monitoring activities, and it’s structured following results-based management principles. Indicators are included to enable monitoring. The plan addresses systematic disclosures, as well as beneficial ownership and contract transparency. It includes activities to build stakeholders’ capacity and engagement, as well as legislative advocacy. However, the plan does not clearly address the scope of EITI disclosures or the policy changes that the MSG wishes to see result from the EITI. The plan has an overall budget, but individual activities are not costed. Due to budget cuts, activities will be undertaken online without separate funds allocated. The overall objective of the work plan serving as a key accountability document for the MSG vis-à-vis broader constituencies and the public is met. The MSG argued in its feedback on the draft assessment that the requirement had been exceeded. The Secretariat finds that while all aspects of the requirement have been addressed, there is not sufficient evidence to suggest an assessment of “exceeded”.

7.1 Public debate

100

PH-EITI has undertaken active and innovative communication efforts that enable evidence-based public debate on extractive industry governance, in line with the objective of the requirement. EITI Reports and other PH-EITI documents are comprehensible and actively promoted through regular national conferences, Extractive Transparency Weeks and roadshows. The language of activities varies according to regional needs, and PH-EITI has innovated to ensure that data is accessible to different groups (see e.g. community bulletin board). PH-EITI has successfully adapted its outreach efforts to the Covid-19 pandemic, organising its 2020 roadshow virtually. PH-EITI and Bantay Kita have produced communications materials in English and Tagalog, including infographics. Key materials are printed and distributed at events. PH-EITI has increased the media’s awareness of EITI data and its capacity to use it through a partnership with the Philippine Press Institute. Stakeholder consultations and the Outcomes and impact file demonstrate that EITI data is used to inform decision-making in the Congress.

7.2 Data accessibility and open data

90

PH-EITI has agreed an open data policy and EITI data on payments is available in csv format through the EDGE portal. Reconciliation report tables for 2018 are available in xlxs format. Monthly export data is published in open format by PSA. Data on production (Requirement 3.2)or contribution to the economy (Requirement 6.3) does not appear to be available in open format, beyond the EITI summary data files. DBM is launching an online portal with information on subnational transfers. Summary data files have been submitted to the International Secretariat, but feedback on the 2017 and 2018 files is yet to be addressed by PH-EITI. Consulted civil society actors noted that using the data for analysis regarding the proposed new mining fiscal regime was challenging as older data was not available in open format. The overall objective to enable the broader use and analysis of information on the extractive industries has been addressed. The MSG argued in its feedback on the draft assessment that the requirement has been exceeded. However, there is no indication that the encouraged aspects of the requirement (7.2.d) have been addressed.

7.3 Follow up on recommendations

90

The MSG has made efforts to strengthen the impact of EITI implementation by acting upon lessons learnt. The MSG does not appear to have a systematic approach to following up on recommendations from EITI reporting or Validation, although progress is documented in annual progress reports and PH-EITI has indicated it discusses the recommendations with the inter-agency Mining Industry Coordinating Council. Some civil society stakeholders noted that government agencies were not undertaking sufficient efforts to implement recommendations. Weaknesses in the monitoring and evaluation of IP royalties, timeliness of subnational transfers and the non-reporting of Semirara are examples of outstanding issues that have been identified in several EITI Reports. These issues appear to be occasionally discussed at MSG meetings, but not systematically tracked. It In the period under review PH-EITI has undertaken scoping studies on gender and mainstreaming. The 2021 EITI work plan demonstrates that the MSG has planned activities to follow up on recommendations from these studies. The Philippines has met the requirement’s overall objective, which is to ensure that EITI implementation is a continuous learning process that contributes to policy-making. The MSG feedback on the draft assessment noted that the civil society constituency questioned whether the requirement had been fully met. The Secretariat recognises that the assessment of this requirement is borderline between “mostly met” and “fully met”. On balance and in line with previous Validations, the Secretariat finds that the MSG has undertaken reasonable efforts to ensure follow-up of recommendations and lessons learnt. The requirement does not include an assessment of whether the government implements EITI recommendations.

7.4 Review of outcomes and impact of implementation

100

The MSG has undertaken efforts to review the outcomes and impact of the EITI that exceed the requirement. In addition to publishing annual progress reports, the MSG commissioned an impact study in 2018 that sought views from different stakeholders. The 2020 annual progress report captures PH-EITI’s efforts to take gender considerations and inclusiveness into account. Progress in implementing planned activities is captured in the 2020 Work Plan Progress Matrix. Stakeholders are able to provide feedback on the EITI process through outreach events. The requirement’s overall objective of regular public monitoring and evaluation of implementation that ensures the EITI’s accountability, has been addressed.

Stakeholder engagement

67.5 Fairly low
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Multi-stakeholder oversight

1.1 Government engagement

60

Senior government officials, including President Duterte, have publicly expressed support to the EITI. EITI is also featured in the Philippines’ OGP action plan. The national secretariat is hosted within the Department of Finance (DOF), which also chairs the MSG. PH-EITI lacked a national coordinator from July 2019 to March 2021, when an interim coordinator was appointed. The secretariat has high capacity and commitment. DOF is providing a full, active and effective government lead for EITI implementation. The government funds EITI implementation, although funding was significantly decreased due to the Covid-19 pandemic. According to some stakeholders, efforts to seek additional funding have been limited. Some civil society stakeholders noted that the government’s commitment to addressing shortcomings identified in EITI Reports was limited. The government does not appear to be utilising the MSG as a platform to engage with stakeholders on planned policy reforms. However, government agencies use EITI data to inform their decision-making. Government agencies are also providing requested information for EITI reporting, where available. Concerns related to data availability appear to be mostly related to weaknesses in technical systems, and government agencies have undertaken efforts to improve data management systems. DENR has also implemented an administrative order that compels mining companies to participate in EITI reporting. Consulted stakeholders noted weaknesses in the engagement of the Department of Energy (DOE). Its participation at MSG meetings was at a level that does not seem adequate to initiate reforms within the ministry or to ensure comprehensive disclosures. For example, it is yet to pass an administrative order that would compel coal producing Semirara Mining and Power Corporation to disclose information despite this issue being repeatedly discussed by the MSG. Engagement of other agencies is at a more senior level. Weaknesses in NCIP’s monitoring of IP royalties were also mentioned as a challenge. As weaknesses in DOE’s engagement are affecting the comprehensiveness of disclosures and the wider impact of the EITI in the coal sector, the Secretariat’s assessment is that the objective of the government’s operational engagement, as a means of facilitating all aspects of EITI implementation, is not fully met. The MSG argued in its feedback on the draft assessment that the requirement has been fully met. The feedback cites plans to finalise an administrative order that would compel oil, gas and coal companies to participate in EITI reporting. The Secretariat welcomes these plans but notes that measures to ensure comprehensive disclosures are yet to be implemented.

1.2 Industry engagement

90

The extractive industry is engaged in EITI implementation. Particularly MSG members from the Chamber of Mines (COMP) actively participate in the MSG’s work, including technical working groups and outreach events. Consulted stakeholders and MSG meeting minutes suggest that the engagement of oil and gas companies has been less consistent than that of mining companies representing COMP. However, only five oil and gas companies made material payments in 2018. The engagement of mining companies that are not members of COMP is limited, and there is no mechanism for liaison between COMP and these companies on EITI matters. The MSG seat reserved for non-chamber companies remains unfilled. This is a concern particularly as the scope of EITI reporting has extended to cover non-metallic mining. However, the 2021 work plan includes activities to engage further with non-metallic mining companies. The MSG also noted in its feedback on the draft assessment that it was challenging to engage with companies that were not members of industry associations. Consultations suggest that most companies primarily view EITI as a compliance exercise. EITI Reports help demonstrate the extractive sector’s contribution to the economy. Oil and gas companies proposed that the EITI could contribute more to a public discussion about the future of the sector. Some civil society stakeholders noted that companies should engage with the EITI and local stakeholders more actively in regions where exploration and extraction takes place. Most material companies (62/73 in 2018) participated in EITI reporting, although companies commented that the exercise was considered to be heavy. A long-standing issue is the non-reporting of Semirara Mining and Power Corporation (SMPC). The MSG argued in its feedback on the draft assessment that the lack of engagement by SMPC should not affect the assessment of industry engagement in the EITI. The Secretariat recognises the efforts undertaken by the MSG to engage with SMPC and notes that the company’s non-participation is reflected under Requirements 1.1 and 4.1. Tax information is confidential in the Philippines, but PH-EITI collects waivers from companies that enable the disclosure of information on revenues, as well as beneficial owners. The approach has helped overcome barriers to EITI reporting, but it makes disclosures reliant on companies’ willingness to disclose data, as the government cannot make unilateral disclosures of tax or beneficial ownership data. For the mining sector, DENR has introduced an administrative order that compels companies to disclose information to the EITI or face sanctions.

1.3 Civil society engagement

30

Civil society is actively engaged in the EITI, particularly through the Bantay Kita coalition. Civil society influences the scope of the EITI, uses EITI data for advocacy and analysis and actively participates in the MSG’s work. However, Validation identified obstacles related to civil society’s freedom to express views, operate and associate on issues related to the EITI, in particular on the subnational level. The objective of ensuring an enabling environment for civil society engagement in the EITI is therefore not fully met.

1.4 MSG governance

90

The MSG appears to be functioning in an effective and equitable manner, in accordance with the MSG ToRs. The objective of having an independent MSG that can exercise active and meaningful oversight of all aspects of EITI implementation in a way that balances the interests of stakeholders, has been fulfilled. Documentation on the process for nomination civil society and industry MSG members and PH-EITI internal rules are available on the PH-EITI website. Nominations appear to have been open and inclusive, and the MSG includes appropriate stakeholders. However, the seat reserved for non-Chamber mining companies remains unfilled (see Requirement 1.2). Including a representative from NCIP was recommended by both government and civil society stakeholders. MSG members liaise with their broader constituencies. The MSG’s meeting minutes, as well as a register of MSG decisions is available online. The MSG has technical working groups on gender and legislative advocacy. Some civil society representatives noted that government and industry were unwilling to discuss social and environmental concerns at the MSG. However, MSG meeting minutes suggest that civil society has been able to raise concerns at the MSG. Stakeholders from all constituencies were supportive of gearing the MSG’s work more towards analysis and impact. The MSG argued in its feedback on the draft assessment that the requirement has been exceeded. The Secretariat recognises the MSG’s efforts to extend the scope of EITI implementation and to adapt to Covid-19. However, the Secretariat does not consider there to be grounds to assess the requirement as “exceeded” for the reasons stated in the above assessment, as well as weaknesses identified in government and civil society engagement.

Transparency

76 Moderate
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Overview of the extractive industries

3.1 Exploration data

90

The Philippines has ensured that an overview of the extractive sector in the country and its potential, including recent, ongoing and planned significant exploration activities, is accessible to the public. Systematic disclosures of this information on the DOE and MGB websites are sufficient to address all aspects of this requirement, although these are also summarised in successive PH-EITI Reports.

6.3 Contribution of the extractive sector to the economy

90

The Philippines has addressed most aspects of this requirement by publishing the extractive industries’ contribution, in absolute and relative terms, to GDP (including informal activities), exports and employment. Public disclosures on the government’s extractive industry revenues are limited to the four sub-sectors considered material (metallic and non-metallic mining, coal, oil and gas), not for other extractive sub-sectors. However, PH-EITI reporting has been transparent about some of the constraints hindering disclosure of a figure on total government revenues from the extractive industries, including legal taxpayer confidentiality provisions. The issue of full government disclosure of all extractive revenues is covered in more detail under comprehensiveness (see Requirement 4.1).

Legal and fiscal framework

2.1 Legal framework

100

The Philippines has addressed all aspects of this requirement by ensuring that PH-EITI reporting summarises descriptions of the legal environment and fiscal regime for mining, coal, oil and gas, including the roles of government entities, the level of fiscal devolution and ongoing of planned reforms in mining, not oil and gas. Government websites provide much of this information in a dispersed manner, including updates on ongoing reforms in the petroleum sector. The Philippines has exceeded the minimum of this requirement by ensuring systematic disclosures of the information mandated under Requirement 2.1, ensuring timely public disclosures.

2.4 Contracts

60

The Philippines has made progress on most aspects of this requirement, including in clarifying the government's policy on contract disclosure and documenting actual practice. In practice, most mining contracts are published, and the three oil and gas contracts in production are published. While the MSG’s comments noted that contracts of coal had been published on the PH-EITI Contracts portal, the comprehensiveness of contract publications remains unclear (with the material company Semirara’s contract not appearing on the portal for instance). The MSG has included plans to assess the comprehensiveness of contact disclosure to date in its 2021 work plan. The recent publication of PMDC’s joint operating agreements (JOAs) with its operators, referenced in the MSG’s comments, is commendable. The MGB and DOE have confirmed that no operating contract has been awarded or amended in the 1 January - 31 March 2021 period. However, the 6th PH-EITI Report’s reference to the DOE’s inability to publish contracts whose project terms are still active is a concern, as it raises questions about the prospects for the systematic publication of new coal, oil and gas contracts and amendments in future. Nonetheless, government officials consulted did not raise any barriers to the publication of all operating contracts in the coal, oil and gas sectors, evidenced by the recent publication of some contracts. Of more immediate concern, there does not appear to be a comprehensive list of active contracts and licenses (including exploration licenses) indicating which contracts are publicly accessible and which are not. In addition, the full text of licenses does not appear to be published and it is unclear whether there are significant variations between licenses (permits).

6.4 Environmental impact

Not assessed

The Philippines’s 6th EITI Report provides a basis for stakeholders to assess the adequacy of the regulatory framework and monitoring efforts to manage the environmental impact of extractive industries, and to assess extractive companies’ adherence to environmental obligations. Indeed, it provides company disclosures of their contributions to environmental funds.

Licenses

2.2 Contract and license allocations

60

The Philippines has made progress in addressing the objective of this requirement, but a number of technical gaps mean the overall objective of transparency in license and contract allocations cannot yet be considered to be fully achieved. Mining: The 6th PH-EITI Report lists the licenses and contracts awarded in 2018, describes the statutory procedure for awards and transfers and the MSG has undertaken a review of non-trivial deviations from statutory procedures in practice in 2018, although stakeholders expressed concerns that consultation processes were not always followed in practice. However, as confirmed in the MSG’s comments on the draft assessment, the MGB has confirmed the lack of new mining license contract and license awards in 2018. The technical and financial criteria assessed for mining license and contract awards and transfers are described in the public domain and government officials confirm that there is no weighting applied to the criteria, even if this is not explicitly stated in disclosures on the MGB website. None of the mining licenses and contracts appear to have been awarded through bidding in 2018. Coal, oil and gas: The 6th PH-EITI Report and online government sources list the one new oil and gas contract award in 2018, while the MSG’s comments refer to a published letter from the DOE confirming the lack of any new coal contract awards or transfers in this period. The minutes of MSG meetings indicate that the DOE was expected to subsequently confirm whether there were any transfers of interests in oil and gas contracts in 2018, although there is no public record (nor reference in the MSG’s comments) of the DOE's clarification of the number of transfers in oil and gas contracts in 2018. The general procedures for awarding and transferring coal, oil and gas contracts are described, including an assessment of non-trivial deviations in practice. Public sources define the technical and financial criteria assessed for coal, oil and gas contract awards and transfers, but do not clarify whether any weightings are applied to criteria assessed in transfers. The bid criteria for awarding the oil and gas contract granted through bidding in 2018, and the full list of bidders was published on the PH-EITI Contracts portal and referenced in the MSG’s comments.

2.3 Register of licenses

30

There is no single license register that is publicly accessible for licenses and contracts in mining, coal, oil and gas in the Philippines. It is unclear whether the 6th PH-EITI Report lists all licenses and contracts held by material companies, or only those that gave rise to material payments to government in 2018 (i.e. producing licenses and contracts). While some of the information listed under Requirement 2.3.b is accessible for the mining, oil and gas licenses, there are significant gaps in dates of application, coordinates and commodity(ies) covered. In its comments, the MSG referenced the new publication of Contracts of Coal and oil and gas Service Contracts through the PH-EITI Contracts portal, albeit with gaps in dates of application and coordinates. While the DOE’s question about the relevance of dates of application is noted, the lack of coordinates is a broader concern, notwithstanding the West Philippine Sea contracts whose coordinates remain confidential for national security considerations. The lack of publicly accessible cadastral portals with key data such as coordinates constitutes a significant gap. The Philippines is therefore far from the objective of ensuring the public accessibility of comprehensive information on property rights related to extractive deposits and projects.

Ownership

2.5 Beneficial ownership

60

The Philippines has agreed appropriate definitions for the terms “beneficial owner” and “politically exposed person” (PEP), and established an enabling legal environment for beneficial ownership disclosure. While the 6th PH-EITI Report highlighted gaps in requirements for foreign companies to disclose their BO, a new SEC Memorandum Circular in 2020 effectively expanded BO disclosure requirements to foreign companies. While the SEC has started collecting BO data from all extractive companies, including foreign and companies applying for licenses, there are regulatory constraints hindering the publication of BO data given the lack of legal requirements to publish BO data and provisions of the Data Privacy Act. Information on legal owners of companies is available upon request from the SEC’s new platform (SEC Express) at a reasonable fee. Given confidentiality constraints, PH-EITI has worked with companies in the scope of EITI reporting to conclude waivers allowing for the publication of BO data. The 6th PH-EITI Report’s review of BO disclosures lists only 81 extractive companies that had been requested to report this data as of end 2020. The Philippines has established appropriate data quality assurances for BO disclosures. The MSG has published an assessment of the comprehensiveness and reliability of disclosures to date. Yet while information on the filings of companies publicly listed in the Philippines appears to be available online, the MSG does not appear to have published a comprehensive list of all extractive companies that are subsidiaries of companies publicly listed overseas, including references to their statutory filings at their respective stock exchange. Therefore, while the MSG has addressed most aspects of the initial criteria for the Validation of this requirement, there are key gaps related to the lack of an enabling legal environment for the disclosure of beneficial ownership information and the lack of systematic public disclosure of all extractive companies’ BO data given that disclosure consent forms were only requested from the 73 companies in the scope of EITI reporting in 2018.

State participation

2.6 State participation

60

The 6th PH-EITI Report, together with the SOEs' websites, addresses almost all aspects of the requirement, although there are a number of technical gaps such as the lack of information on the terms attached to state equity and participating interests in extractives projects and the lack of consideration of direct state loans and guarantees to extractive companies. Transparency in state participation is an area where SOE disclosures have been mainstreamed from the start, given the quality of SOEs' existing disclosures. While the MSG comments’ clarification of the terms of loans involving PMDC is welcome, they did not clarify the terms of any outstanding loans from the state to any extractive companies. The list of PNOC-EC participating interests in coal, oil and gas projects referenced in the MSG’s comments do not include the terms attached to PNOC-EC’s interest, including its level of responsibility for covering expenses at various phases of the project cycle (e.g. full-paid equity, free equity or carried interest).

4.2 In-kind revenues

Not applicable

The MSG appears to have considered the applicability of Requirement 4.2 based on 2018 data and has publicly documented its conclusions that the requirement was not applicable in 2018.

4.5 SOE transactions

Not applicable

As confirmed in the MSG's comments, the figures for 2018 dividends from SOEs in the 6th PH-EITI Report are related to dividend payments actually made in 2018. It can therefore be concluded that the MSG has adequately demonstrated that the requirement is not applicable in 2018 given that SOE dividends were below the materiality threshold of 2% of sector revenues.

Production and exports

3.2 Production data

90

The Philippines had addressed all aspects of this requirement aside from the publication of production values for crude oil, natural gas, condensate and coal at the start of Validation. However, the MSG has since published estimates of average commodity prices for coal, oil and gas, and related estimates of production values and referenced these in its comments.

3.3 Export data

90

All of the information listed under Requirement 3.3 is publicly available in the Philippines. The MSG’s comments noted that the data had been published with HS code numbers and the associated commodity names, aside from non-metallic minerals. Export information is provided in the Transparency template and since republished in the public summary data file in open data format on the PH-EITI website.

Revenue collection

4.1 Comprehensiveness

60

The Philippines has made progress in addressing the objective of this requirement, but there are gaps in the comprehensiveness of the disclosures of government revenues, particularly from the coal sector. The MSG's approach to materiality remains somewhat unclear and the value of the government's total revenues from the extractive industries, including from industries considered non-material, is not yet public. While the MSG’s comments justified the lack of review of materiality thresholds ahead of EITI reporting for 2018 on the basis that the structure of revenue streams has not changed over the years and that all of the largest producing extractive companies were included in the scope of reporting, the lack of justification for the scope of 2018 reporting on quantitative grounds based on 2018 data is problematic given the potential for non-producing companies to make material payments to government. The lack of reporting by a material companies accounting for a large share of government revenues from the coal sector is a concern. While the 6th PH-EITI Report and MSG’s comments describe the MSG and government's efforts to follow up with the non-reporting companies, there are stakeholder concerns among those consulted over whether the government has undertaken sufficient efforts to ensure participation in EITI reporting by all material companies selected to report. The lack of participation in EITI reporting by the sole material coal company after six years of EITI reporting is a concern, given estimates that the coal sector accounted for 7% of government revenues in 2018. Therefore, the broader objective of comprehensive disclosures cannot yet be considered fulfilled.

4.3 Infrastructure provisions and barter arrangements

Not applicable

The MSG appears to have considered the applicability of Requirement 4.3 based on 2018 data and has publicly documented its conclusions that the requirement was not applicable in 2018.

4.4 Transportation revenues

Not applicable

The MSG appears to have considered the applicability of Requirement 4.4 based on 2018 data and has publicly documented its conclusions that the requirement was not applicable in 2018.

4.7 Level of disaggregation

90

The 6th PH-EITI Report describes the MSG's definition of project and presents reconciled financial data disaggregated by government entity, revenue stream, company and (where relevant) project.

4.8 Data timeliness

90

PH-EITI financial data has been published in a sufficiently timely manner and the MSG has approved the period for reporting, although more information on the MSG's plans to improve the timeliness of reporting would be welcome.

4.9 Data quality and assurance

90

The Philippines has fulfilled the overall objective and has addressed all aspects of the requirement, ensuring that appropriate measures have been taken to ensure the reliability of disclosures of company payments and government revenues from oil, gas and mining. PH-EITI could do more to develop recommendations for the EITI to contribute to strengthening routine government and company audit and assurance systems and practices.

Revenue management

5.1 Distribution of revenues

90

While the 6th PH-EITI Report does not comment on whether all extractive revenues are recorded in the national budget, previous PH-EITI Reports had confirmed that this was the case in previous years. The MSG’s comments referenced assurances from the MGB, DOE and DBM at the MSG’s 70th meeting in June 2021 that this was still the case in 2018 and that no new extra-budgetary extractive industry revenues existed in 2018. It can therefore be assessed that the broader objective of the requirement of ensuring the traceability of extractive revenues to the national budget has been fulfilled.

5.3 Revenue management and expenditures

Not assessed

The MSG has addressed all aspects of this requirement, through PH-EITI reporting as well as relevant government websites. However, there is relatively little information in the public domain about the management of earmarked revenues, such as the Malampaya Fund, aside from a COA audit of the Fund in 2018.

Subnational contributions

4.6 Subnational payments

60

The Philippines has made progress in addressing most aspects of this requirement, but the large number of non-reporting LGUs due to challenges in the ENRDMT system means that the objective of transparency in direct subnational payments cannot yet be considered fulfilled. The ENRDMT system represents an example of best practice in government systematic disclosure of direct subnational payments, which should provide disaggregated data on all subnational revenue flows once technical challenges in the system are addressed.

5.2 Subnational transfers

60

The Philippines has addressed most aspects of this requirement, although the relatively small number of local government units for which subnational transfers are disclosed raises concerns about the comprehensiveness of disclosures of subnational transfers of mining revenues in the 6th PH-EITI Report. Indeed, subnational transfer data was only disclosed for 11 LGUs receiving shares of royalties from mineral reservations and 36 LGUs receiving shares of mineral taxes, which appears low relative to the number of LGUs entitled to receive shares of mineral revenues. While the MSG’s comments noted that the 6th PH-EITI Report’s disclosures of subnational transfers were comprehensive of all LGUs that actually received such transfers in 2018, it does not comment on whether these disclosures are comprehensive of all LGUs that should have received subnational transfers according to the statutory revenue-sharing formula. It would have been necessary to disclose the notional amount of subnational transfers that should have been transferred in 2018, including to LGUs that did not receive their share in 2018. Therefore, the broader objective of enabling stakeholders at the local level to assess whether the transfer and management of subnational transfers of extractive revenues are in line with statutory entitlements cannot yet be considered to be fulfilled.

6.1 Social and environmental expenditures

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The Philippines has addressed all aspects of this requirement by disclosing mandatory social expenditures as part of mining companies’ SDMP. The MSG's comments confirmed that Annex 20 is comprehensive of all mandatory social expenditures by reporting companies in 2018, and the description of in-kind expenditures and identity of non-government beneficiaries is provided in Annex 20 to the 6th PH-EITI Report. There do not appear to be any mandatory environmental payments to government in 2018. While there are gaps in company reporting due to 11 material companies’ failure to participate in the 6th PH-EITI Report, these gaps are covered under Requirement 4.1 given that they relate to overall company reporting. Therefore, the overall objective of providing a basis for assessing extractive companies’ compliance with their legal and contractual obligations to undertake social and environmental expenditures can be considered fulfilled.


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