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Pointe-Noire, Republic of Congo

Republic of the Congo

Status
Meaningful progress
Joined
27 September 2007
Latest validation
2020
Latest data from
2017
Visit the country website

Overview and role of the EITI

The Republic of the Congo’s economy is heavily dependent on the extractive sector, which contributed 67% of the government’s total revenue in 2019. It is a leading producer of crude oil and produces gold and diamonds through artisanal mining. However, social conflicts have arisen around how revenues from natural resources are managed.

The Republic of the Congo has used the EITI process to shed more light on how extractive licenses are allocated and on transactions related to crude oil and sales and state-owned enterprises. To advance the country’s transparency agenda, ITIE Congo is conducting ongoing analysis of past and future extractive revenues through financial modelling. It is also examining the mechanisms underpinning the valorisation of oil production to support revenue forecasting.

Economic contribution of the extractive industries

66.6%
to government revenues
85.8%
to exports
60.9%
to GDP
0.6%
to employment
  • Step 1
  • Step 2
  • 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

  • ITIE Congo is using the EITI data to conduct financial modelling activities of past and future extractive revenues to help inform decision making on future production.
  • In 2017, EITI reporting on the proceeds of the sales of the government's in-kind share of oil showed that only 10% of these revenues flow to the treasury, with remaining revenues channeled to the reimbursement of loans and pre-financing agreements. This data opened new avenues for civil society and donors to scrutinise the management of Congo’s oil revenues and to analyse the valuation of Congolese oil sales, particularly in the context of its oil-backed liabilities and sovereign debt management.
  • The Republic of the Congo uses EITI implementation to report on the management of its growing forestry sector.

Transparency and good governance are key points of the Government’s societal programme. The prospect of an emerging Congo is being realised: its modernisation and industrialisation are ongoing and using as a base the oil and mining revenues, which are now disclosed publicly on a routine basis through the EITI.

Michel Florent Okoko Permanent Secretary of the National Committee & EITI Advisor to the Minister of Finance, Republic of the Congo

Extractive sector data

Production and exports

Crude Oil

Revenue collection

Level of detail 2

Revenue distribution

2017
Standardised revenue types

Top paying companies

2017

Extractive sector management

Licenses and contracts

Oil and gas exploration and production licenses are awarded through either an open tendering process or by mutual agreement with the government, and are published in a public repository. Research and mining licenses are awarded by the Minister of Mines on a first come first served basis.

In accordance with the Hydrocarbon Code and Mining Code, all oil, gas and mining (including production sharing contracts) are published in the Journal Officiel on the government’s website. Some contracts are also available through the Resource Contracts Portal.

Beneficial ownership

In 2020, a draft law on beneficial ownership was proposed by the Ministry of Finance and Budget through the National Agency for Financial investments (ANIF). The draft law, which builds on the transparency law of March 2017, has yet to be legislated.

The Republic of the Congo’s 2018 EITI Report provides some beneficial ownership data for 14 extractive companies, however only four companies provide detailed data. The definition for beneficial ownership used in EITI reporting is based on the Fourth European Union Anti-Money Laundering Directive.

Revenue distribution

In accordance with Decree n°2000-186, surface royalties paid by oil and gas companies are collected by the central government and subsequently distributed as follows:

  • One third to the Public Treasury;

  • Two thirds to public authorities.

The Minister of Finance determines the regional public authorities and beneficiaries that receive shares of extractive revenues, and further decides how these revenues are distributed between different communities.


EITI implementation

Governance

ITIE Congo is administered by the Republic of the Congo Multi-Stakeholder Group (MSG) in accordance with the Decree 2019-383. The MSG is chaired by the Minister of Finance and Budget, Mr Roger Rigobert Andely. The National Coordinator is Mr Michel Okoko.

Validation

The Republic of the Congo was found to have made meaningful progress with considerable improvements in implementing the 2016 EITI Standard in September 2020, following its second Validation. The Republic of the Congo has fully addressed six of the 15 corrective actions identified in its previous Validation. The next Validation is expected to commence in July 2022.

Scorecard

Latest Validation: 11 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 is committed to the EITI and relevant government representatives are part of the MSG. Participation in MSG meetings is relatively low, but meetings are usually quorate.

1.2Industry engagement

Companies are actively engaged in the design and implementation of the EITI, including MSG deliberations.

1.3Civil society engagement

Civil society is actively engaged in the EITI process, but the application of the civil society protocol, particularly as it relates to freedom of operation, is limited to civil society members on the MSG. This controlled space for civil society is narrowly defined to MSG members and excludes important actors substantially engaged in the EITI process who face operational administrative or practical constraints in some aspects of their engagement, particularly in public EITI dissemination and outreach events.

1.4MSG governance

The MSG includes relevant actors with adequate representation of key stakeholders. The new MSG members and revised MSG TOR were agreed after the start of Validation, in 2020. The MSG met infrequently in an ad hoc manner in the 2017-2019 period, with gaps in attendance and record keeping. The MSG's policy on per diems has been formalised, even if the actual practice remains unclear. Adherence to the MSG’s new TOR, which is in line with Requirement 1.4.b, will be assessed in the third Validation, including internal governance and the per diem practice.

1.5Work plan

EITI Congo work plans include objectives that reflect national priorities, such as the extension of the scope of EITI reporting to the forestry sector and the drafting of a transparency law. Work plan activities are measurable and time-bound, structured to achieve the agreed objective. The work plans also include activities aimed at addressing capacity constraints and activities aimed at embedding EITI reporting in government system through the Transparency Code.

Licenses and contracts

2.1Legal framework

The 2014 EITI Report provides an overview of the legal framework and fiscal environment in the mining, oil and gas sectors. However, it does not clearly detail the functions of the different government entities in the sectors. The description of revenue flows shows which government entity collects which revenue stream and most government agencies’ role is limited to collecting taxes and revenue, except DGH, which also plays a regulatory role.

2.2License allocations

The 2017 EITI Report provides information on mining, oil and gas licenses awarded in 2017 and confirms the lack of transfers. The report provides an overview of the process for awarding and transferring licenses, including the statutory technical and financial criteria for oil and gas license awards, but only the technical and financial criteria assessed in practice in the mining license awards in 2017. The existence and nature of criteria assessed for license transfers is unclear. The report lists the companies that received licenses in 2017, but only provides an assessment of non-trivial deviations from statutory procedures for licenses in mining, not in oil and gas.

2.3License register

The 2017 EITI Report provides copies of the license registers for mining and oil and gas, which provide most of the information listed under Requirement 2.3.b. The online oil and gas cadastre provides all information listed under Requirement 2.3.b for all active licenses. While the 2017 EITI Report does not provide coordinates for mining licenses, the Decree numbers provided allow users to locate the coordinates of specific licenses from the Decrees awarding them, accessible on the official gazette website.

2.4Policy on contract disclosure

The government’s policy requires that all contracts signed by the state with mining, oil and gas companies, including PSCs to be published in the Journal Officiel and are therefore public documents. A new Transparency Law has expanded the scope to include forestry contracts. In practice, contracts are published in the Journal Officiel with a link to the website of the Secretary General of the Government and some contracts are available on the EITI Congo website.

2.5Beneficial ownership

Not assessed

EITI Congo has agreed a three-year beneficial ownership roadmap and the March 2017 Transparency Law codifies government beneficial ownership policy, although the 2014 EITI Report does not explicitly address beneficial ownership.

2.6State participation

The 2017 EITI Report demonstrates the materiality of the oil and gas SOE’s (SNPC) revenues and payments to government, and provides a description of the statutory financial relations between SNPC and the state. The report’s description of the practice of SNPC’s financial relations covers the SOE’s lack of dividends, retained earnings and third-party financing by oil and gas operators, although the report does not describe in sufficient detail the statutory financial relations between SNPC and the government nor provide analysis of the change in SNPC’s statutes in November 2017. The EITI Report does not comprehensively describe SNPC’s reinvestments in 2017. The report describes SNPC’s interests in upstream oil and gas companies, subsidiaries and projects, but does not consistently provide the terms associated with SNPC’s equity. The state’s lending to SNPC and to CORAF is described, including key terms for loans to SNPC but not to CORAF. However, the comprehensiveness of the report’s description of loans and guarantees is unclear.

Monitoring production

3.1Exploration data

The 2014 EITI Report provides an overview of the mining, oil and gas sectors, but does not provide a clear description of significant exploration activities undertaken in 2014.

3.2Production data

The 2017 EITI Report provides production volumes and values for each extractives commodity it produced in 2017 aside from production values for certain quarrying products such as sandstone and limestone. However, these quarrying products were not within the scope of operations of material mining companies in the 2017 EITI Report.

3.3Export data

The 2014 EITI Report provides export volumes and values for crude oil and diamonds, but not for gold from artisanal mining.

Revenue collection

4.1Comprehensiveness

The MSG has agreed materiality thresholds for selecting companies and revenue streams, although the setting of a qualitative threshold for selecting companies means that companies that had ceased activities in 2014 were nevertheless included in the scope of reporting. The 2014 EITI Report lists and describes all material companies and revenue streams. The materiality of revenues from non-reporting companies is assessed, although the netting out of discrepancies tends to underestimate their cumulative value. Full government disclosure is provided.

4.2In-kind revenues

The 2017 EITI Report provides the volumes of the state’s in-kind revenues that were collected, the volumes actually sold and the proceeds of the sales, disaggregated (but not reconciled) by buyer and y cargo. This includes sales of the state’s in-kind revenues handled by SNPC as well as those under the alternative marketing arrangement with Total EP Congo on the Nkossa/Nsoko field. The disclosures include in-kind payments that are part of the reimbursement of pre-financing arrangements with traders. The MSG included unilateral government disclosures of cargo-level disclosures of all oil and gas companies’ sales of their equity oil.

4.3Barter agreements

The 2017 EITI Report describes a barter-type infrastructure arrangement involving ENI’s development and management of the CEC integrated power project, including the terms of the relevant agreements and contracts, the parties involved, the resources which have been pledged by the state, and the value of the balancing benefit stream. The report describes two other types of arrangements that it does not categorise as barter-type arrangements, related to the reimbursement of the cost of infrastructure projects funded under the framework government-to-government agreement with China and the repayment of pre-financing agreements with commodity traders. There is insufficient information in the report to assess whether the financing agreements constitute a form of barter-type arrangement.

4.4Transportation revenues

Not applicable

While there is evidence of the MSG’s assessment of the materiality of the Maritime Tax (see Requirement 4.1), the Maritime Tax is a payment from oil and gas companies to a private company.

4.5SOE transactions

The 2017 EITI Report comprehensively addresses the role of SOEs, including comprehensive and reliable disclosures of material company payments to SNPC and SNPC transfers to the Treasury. The lack of government transfers to SNPC in 2017 is confirmed. The report provides the volumes of the state’s crude oil that were transferred to SNPC’s subsidiary CORAF in 2017 and confirms the lack of payment for these deliveries. While the report only provides SNPC’s unilateral disclosures of transfers of a share of the proceeds from the sale of the state’s in-kind revenues in reimbursement of China-funded infrastructure loans and of pre-financing agreements with commodity traders, these accounts do not represent government accounts.

4.6Direct subnational payments

Not applicable

While the 2014 EITI Report could be clearer in stating that direct subnational payments from extractives companies do not exist, the International Secretariat’s understanding is that this is not applicable in the period under review.

4.7Disaggregation

The 2014 EITI Report presents reconciled financial data disaggregated by receiving government entity, by company and by revenue stream.

4.8Data timeliness

Although the timeliness of the ROC’s EITI reporting has slipped since 2014, data in the ROC’s EITI Reports has always been published within two years of the end of the fiscal period under review.

4.9Data quality

The MSG approved ToR for the IA in line with the Board-approved template as well as the recruitment of the IA. There were no significant deviations from the IA’s ToR in practice, and the MSG approved the reporting templates. The 2017 EITI Report provides a review of statutory audit and assurance procedures. It describes quality assurance procedures and provides an assessment of compliance with these procedures in practice. The report includes the IA’s assessment that the reconciled financial data is comprehensive and reliable, as well as a review of follow-up on past EITI recommendations and new recommendations. The MSG has prepared summary data for the 2017 EITI Report.

Revenue allocation

5.1Distribution of revenues

The 2017 EITI Report confirms that all mining revenues are recorded in the national budget and lists specific oil and gas revenues accounting for 58.17% of 2017 oil and gas revenues that are not recorded in the national budget. However, the report does not categorise the two types of in-kind deductions from the state’s Profit Oil as off-budget revenues, even though it clearly describes the nature and volumes of these deductions. There is no evidence of these oil and gas revenues in the 2017 budget execution report or the government’s 2017 balance sheet (TOFE), although they have been reflected in the government’s TOFE from mid-2018. While the report provides a general description of the allocation of most off-budget oil and gas revenues, it highlights that the IA was not provided access to the details of the agreements related to these deductions from transfers to the Treasury.

5.2Subnational transfers

Not applicable

The 2014 EITI Report describes the general system of subnational transfers of oil and gas royalties to host local governments. However, the International Secretariat understands that the statutory subnational transfers were not effective in 2014 due to the lack of implementing regulations. The report does not refer to any ad-hoc subnational transfers.

5.3Revenue management and expenditures

Not assessed

EITI Congo has made modest efforts to include additional information on earmarks of extractives revenues for off-budget infrastructure projects (see Requirements 4.3 and 5.1) and the budget-making and audit processes.

Socio-economic contribution

6.1Mandatory social expenditures

While the 2017 EITI Report provides a cursory and general description of social expenditures mandated by law or the contract with the government that governs the extractive investment, the legal or contractual basis for mandatory social expenditures reported is unclear from the report. the report presents oil and gas companies’ unilateral disclosures of social expenditures categorised as mandatory, although it is unclear whether these disclosures are comprehensive. The report confirms that all mandatory social expenditures were made in cash, but provides descriptions of the expenditures and the identity of the beneficiary for only some, not all, of the mandatory social expenditures reported.

6.2Quasi-fiscal expenditures

This requirement is not applicable in the mining sector, but has appeared to be applicable in the oil and gas sector in recent years. The 2017 EITI Report lists three quasi-fiscal expenditures by the SNPC foundation that have been mis-categorised. The report describes the allocation of oil and gas revenues not transferred to the Treasury, at least three of which appear to be forms of off-budget repayment of sovereign debt and infrastructure works. However, the lack of sufficient information on these arrangements constrains the ability to properly categorise these arrangements. Since mid-2018, the deductions from the state’s petroleum revenues for reimbursements of some ‘special agreements’ have been reflected in the government budget and TOFE, albeit without sufficient details. The detail of the agreements underpinning these deductions from government revenues have not yet been clarified to date.

6.3Economic contribution

The 2017 EITI Report provides, in relative and absolute terms, the extractive industries’ 2017 contribution to GDP, government revenues, exports, employment and the location of extractive activities. There is some coverage of artisanal mining production.

Outcomes and impact

7.1Public debate

While the 2016 and 2017 EITI Reports have been published since the first Validation, there has been little concerted effort towards outreach and dissemination by the MSG or national secretariat beyond a press conference to launch the annual EITI Report. Terms of Reference for dissemination of the 2016 and 2017 EITI Reports in Brazzaville have been agreed, but partly implemented at the start of Validation.

7.2Data accessibility

Not assessed

EITI-Congo does not yet provide EITI data in open data formats, despite some effort to develop an online portal with SAP. However, mainstreaming transparency in government systems through the transparency law has been a major achievement for the MSG.

7.3Follow up on recommendations

The MSG has been thorough in taking steps to act upon lessons learned and monitoring progress with the implementation of recommendations in EITI Reports. Together with the IA, significant efforts have been made to identify, investigate and address the causes of discrepancies in EITI reporting.

7.4Outcomes and impact of implementation

EITI-Congo has produced annual progress reports for 2014 and 2015 that thoroughly document progress and outcomes of implementation.


Key documents


Contacts