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Dili, Timor-Leste

Timor-Leste

Status
Satisfactory progress
Joined
22 February 2008
Latest validation
2019
Latest data from
2016
Visit the country website

Overview and role of the EITI

Timor-Leste’s economy has been heavily dependent on oil and gas, which accounted for over 90% of the country’s revenues in 2017. However, due to the closure of fields, oil revenues have been in decline, and government revenues from the sector dropped to 70% in 2018.

All of Timor-Leste's oil revenues are deposited in the Petroleum Fund. However, there is considerable public debate about expenditures exceeding the annual allowable amount that can be withdrawn from the fund, which had a balance of USD 15.8 million by the end of 2018.

In this context, Timor-Leste has been using EITI reporting to shed light on transfers from the Petroleum Fund to the national budget. The EITI is also serving as a platform for dialogue between government, industry and civil society.

Economic contribution of the extractive industries

70%
to government revenues
74%
to exports
36%
to GDP
  • 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

  • The Timor-Leste government maintains a Transparency Portal  which gives oversight over budget expenditures as well as up-to-date information on the extractive sector including the legal framework, licensing, contracts, production, social expenditures and non-tax revenues.
  • EITI reporting has been used to disclose the status of the Petroleum Fund and how funds are transferred to the national budget. The Petroleum Fund website contains quarterly and annual reports with data on budget allocations.

Extractive sector data

Revenue collection

Level of detail 2

Revenue distribution

2016
Standardised revenue types

Top paying companies

2016

Extractive sector management

License and contracts

Production sharing contracts (PSCs) in both the Joint Petroleum Development Area (JPDA) and the Timor-Leste Exclusive Area (TLEA) are awarded on the basis of competitive bidding, in accordance with the Petroleum Activities Law. Mining licenses are awarded on a first come first serve basis by the Petroleum and Mineral Authority (ANPM), as per the ministerial decree.

The ANPM maintains an online public cadastre with license information for both petroleum and mining. It also publishes PSCs as well as a list of active PSCs and mining licenses. Some contracts are also published on resourcecontracts.org.

Beneficial ownership

Timor-Leste does not have a legal framework mandating the disclosure of beneficial owners. The country also does not have a public beneficial ownership register. However, as most extractive companies operating in the country are publicly listed companies, EITI reporting provides links to the stock exchanges where companies are listed. 

In 2019, TL-EITI commissioned a beneficial ownership feasibility study to establish a definition of beneficial ownership and provide recommendations for beneficial ownership disclosure.

Revenue distribution

All of Timor-Leste’s oil and gas revenues are deposited to the Petroleum Fund, which is solely invested in international financial assets. The amounts transferred from the fund to the state budget are guided by the Estimated Sustainable Income (ESI), set at 3% of total petroleum wealth. However, since the creation of the fund in 2017, the government has withdrawn an average of 5% of the fund. 

There is no mechanism for subnational revenue allocations in Timor-Leste. Some companies pay voluntary social expenditures for community development initiatives.


EITI implementation

Governance

TL-EITI is administered by the Timor-Leste Multi-Stakeholder Group (MSG). The MSG is hosted by the Ministry of Petroleum and Mineral Resources and chaired by Dr. Victor da Conceição Soares, Minister of Petroleum and Mineral Resources.

Validation

Timor-Leste was found to have made satisfactory progress in implementing the [2016] EITI Standard in February 2018, following its second Validation. Timor-Leste fully addressed the corrective actions identified in its previous Validation. The subsequent Validation commenced in January 2022.

Scorecard

Latest Validation: 28 October 2019
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 multi-stakeholder group (MSG).

1.2Industry engagement

The issues regarding disaggregated data and confidentiality agreements were addressed during the preparation of the 2014 and 2015 EITI Reports. Discussions during MSWG meetings subsequent to the first Validation show that the companies are continuously engaged in the EITI process and are willing to adhere to the principles of the EITI. Even though the constituency has reserved the right to require confidentiality agreements if it becomes necessary, it appears that the companies are willing to forego these agreements as long as they are satisfied with the credibility of the Independent Administrator (IA). To ensure this, companies were closely involved in the selection of the IA for the 2014 and 2015 EITI Reports.

1.3Civil society engagement

Civil society has made efforts to improve the quality of their participation in the EITI process as shown by the contributions to the discussions of the EITI Report, annual progress report and mainstreaming, consultations with local CSOs, regular participation in MSWG meetings and efforts to improve the process for selecting representatives to the MSWG.

1.4MSG governance

It appears that the CSO representatives have implemented the activities in the capacity building plan and have sought external assistance from government and international partners to improve their understanding of the sector and of revenue management. Civil society has also addressed the issue of language barrier by pushing for the use of Tetum in all meetings and documents. Consequently, they have been able to participate in the technical discussions related to EITI reporting such as the sustainability of the petroleum fund, the need for disaggregated data for social expenditures and local content, and the scope of beneficial ownership disclosures.

1.5Work plan

The work plan has clear objectives linked to national priorities for the extractive sector, as well as more detailed actions and timelines. Costing is missing for some items, and implementation is slightly behind schedule.

Licenses and contracts

2.1Legal framework

Comprehensive disclosure of relevant laws, regulations and fiscal regime in both the 2012 and 2013 EITI Reports.

2.2License allocations

The 2013 EITI Report and the Supplementary Report provide sufficient detail about license allocations including the financial and technical criteria and deviations applicable to PSC 11-106. This requirement was not applicable in 2012 as no licenses were transferred or awarded.

2.3License register

Although coordinates are not all available online, ANPM (National Petroleum and Mineral Authorities) has confirmed that they can be obtained without restriction. ANPM has provided reasonable justifications for why the date of application for the licenses is not available. On balance, the Secretariat’s assessment is that it would be disproportionate to consider this requirement unmet, and that there has been satisfactory progress with meeting this requirement. It is recommended that ANPM updates its online license map to include these details for future PSC awards.

2.4Policy on contract disclosure

The 2013 EITI Report refers to contract summaries found in other sources such as the NPA’s website and “Jornal de Republica”. The 2016 EITI work plan also lists contract transparency as a priority. The EITI Report comments on actual practice on contract transparency, and government representatives have clarified the government’s policy on contract disclosure.

2.5Beneficial ownership

Not assessed

There is no evidence that the multi-stakeholder group has discussed this topic in any detail.

2.6State participation

Not applicable

The 2013 EITI Report states that this requirement is not applicable in Timor-Leste as state-participation does not yet give rise to material revenues. However, some information related to Timor Gap has been provided.

Monitoring production

3.1Exploration data

The 2013 EITI Report provides an overview of the sector, including a brief overview of one exploration activity.

3.2Production data

Production volumes are not disaggregated by commodity, and production values by commodity are not included in the EITI Report but ANPM (National Petroleum and Mineral Authorities) subsequently provided this information on their website.

3.3Export data

Export values are not disaggregated by commodity, and export volumes by commodity are not included in the EITI Report but ANPM (National Petroleum and Mineral Authorities) subsequently provided this information on their website.

Revenue collection

4.1Comprehensiveness

For both 2013 and 2013 EITI Reports, disclosures of payments and revenues are comprehensive.

4.2In-kind revenues

Not applicable

The 2013 and 2012 EITI Reports confirm that in-kind revenues were not applicable in 2012.

4.3Barter agreements

Not applicable

There was no mention of barter and infrastructure payments in the 2013 and 2012 EITI Reports. However, the 2015 Annual Activity Report confirms that barter and infrastructure arrangements are not applicable.

4.4Transportation revenues

Not applicable

The 2013 and 2012 EITI Reports include disclosure of a pipeline fee. Given that the fee is not material relative to total government revenues from the sector, the International Secretariat’s initial assessment is that this requirement is not applicable.

4.5SOE transactions

The 2013 Report discusses Timor GAP’s (the national oil company) financial relationship with the government, as well as its management of Tasi Mane project and provides all disclosures related to transactions between the government and Timor GAP.

4.6Direct subnational payments

Not applicable

There was no reference to subnational direct payments in the 2013 and 2012 EITI Reports. However, the 2015 EITI Annual Activity Report confirms that subnational direct payments are not applicable.

4.7Disaggregation

All revenues in the 2014 and 2015 EITI Reports are disclosed to the levels required by the Standard. Further, the data is disaggregated by individual project. Consequently, the corrective action on Requirement 4.7 has been addressed.

4.8Data timeliness

The 2013 EITI Report was published by the deadline of 31 December 2015. The national multi-stakeholder group is encouraged to explore opportunities for publishing more timely EITI data.

4.9Data quality

The Secretariat is satisfied that the 2014 and 2015 EITI Reports were produced in accordance with the ‘agreed upon procedure for EITI reports’ as outlined in the standard Terms of Reference for Independent Administrators developed by the EITI Board. There was a concerted effort from the MSWG to address the deficiencies in the reporting process, particularly in ensuring that the templates were developed in consultation with the IA. The 2014 and 2015 EITI reports also now clearly explain the assurance procedures for companies and government. Concerns regarding the credibility of the IA have been addressed, with the MSWG members confirming that they perceive the current IA to be credible and competent.

Revenue allocation

5.1Distribution of revenues

The 2012 and 2013 EITI Reports disclose how revenues are allocated.

5.2Subnational transfers

Not applicable

The 2014 Annual Activity Report confirms that sub-national transfers are not applicable.

5.3Revenue management and expenditures

Not assessed

In response to public interest in spending, the national multi-stakeholder group has included transparency in public expenditure, including investment decisions as one of its priorities in the 2015 and 2016 work plans. There are references to how to access further budget and expenditure data in the 2015 Annual Activity Report.

Socio-economic contribution

6.1Mandatory social expenditures

The Secretariat is satisfied that the type and value of mandatory social expenditures have been sufficiently explained and disclosed for all relevant companies in the 2014 and 2015 EITI Reports to the levels required by the Standard. Extensive discussions on the type and nature of social expenditures of companies were had during the International Secretariat’s meeting with the MSWG in April 2017. The inputs provided by ANPM and the companies during that meeting clarified what should be considered mandatory social expenditures in Timor-Leste and these were accordingly reflected in the 2014 and 2015 EITI Reports.

6.2Quasi-fiscal expenditures

Not applicable

State-participation in the extractive sector does not yet give rise to material revenue in Timor-Leste both for the 2012 and 2013 EITI Reports.

6.3Economic contribution

Most of this data has been provided, however estimates of informal sector activity and data on extractive industry revenue as a percentage of total government revenue should be disclosed in the future.

Outcomes and impact

7.1Public debate

The national multi-stakeholder group has taken steps to ensure that the EITI Report is comprehensible, actively promoted and publicly accessible. Through the organisation of dissemination events and workshops, TL-EITI has ensured that the EITI has also contributed to public debate.

7.2Data accessibility

Not assessed

TL-EITI does not yet provide EITI data in open data formats. There are considerable efforts underway to mainstream transparency in government systems.

7.3Follow up on recommendations

The national multi-stakeholder group has taken steps to act upon lessons learnt, to identify, investigate and address the causes of any discrepancies and to consider the recommendations for improvements from the Independent Administrator.

7.4Outcomes and impact of implementation

The Secretariat is satisfied that the MWSG has exerted efforts to assess impact and outcomes from their EITI implementation as documented in their 2016 Annual Progress Report. Consequently, the corrective action on Requirement 7.4 has been addressed.


Key documents


Contacts