Publisher: 
EITI
Publication Type: 
Analysis by the EITI
Published Date: 
August, 2015

EITI Brief: Contract transparency in EITI countries

Contracts, licenses and associated agreements establish many of the commitments between government and companies in the extractive industries. In some cases, the terms of these contracts and licenses may be standard and complemented by taxation regimes. In other cases, these contracts, licenses and agreements include detailed terms for how resource owners and companies agree to share risk and reward over the life of long-term resource extraction projects.
 
Countries that implement the EITI are required to publish the government’s policy on contract transparency (EITI Requirement 12.b). This paper provides an overview of EITI reporting on contract transparency in the 23 countries which had produced EITI reports under the EITI Standard as of 31 December 2014.
 
This publication is only available in English.
  • View also a blog on contract transparency from November 2016: "Contract transparency opening up slowly, but steadily"
  • The 2018 Brief on contract transparency is available here.

    Download the 2018 PDF​
    Download the 2015 PDF

  • Contents

    Executive summary

    EITI Requirements related to contract transparency
    Overview of coverage of contracts in EITI Reports
    Conclusions

    Annex - Country by country review

    Executive summary

    Contracts, licenses and associated agreements establish many of the commitments between government and companies in the extractive industries[1]. In some cases, the terms of these contracts and licences may be standard and complemented by taxation regimes.In other cases, these contracts, licenses and agreements include detailed terms for how resource owners and companies agree to share risk and reward over the life of long-term resource extraction projects. Fiscal terms will address how costs and profits are shared between the parties and how taxes, royalties and other extraction related fees are to be calculated and paid.  

    Countries that implement the EITI are required to publish the government’s policy on contract transparency (EITI Requirement 12.b). This includes stating whether the legal framework governing the extractive industries, such as for example the petroleum or mining law, mandates the publication of the contracts that the government and extractive companies enter into, or whether there are confidentiality clauses preventing the disclosure of such contracts. Countries are also required to state the prevailing disclosure practice (EITI Requirement 12.b) enabling a verification of whether the policy is being implemented or whether there are deviations.  In addition, the EITI encourages implementing countries to publicly disclose any contracts and licenses that provide the terms attached to the exploitation of oil, gas and production contracts (EITI Requirement 12.a).

    This paper provides an overview of EITI reporting on contract transparency in the 23 countries which had produced EITI reports under the EITI Standard as of 31 December 2014[2].  Key findings include:

    • Half of the implementing countries covered by the review have not fully confirmed the government’s policy on contract transparency in their EITI reports. This includes countries with both oil and mining sectors, but where information is lacking for one or both sectors.  Despite the lack of a policy statement, several of these countries confirm that in practice contracts are either partially or not disclosed.
    • In seven countries, the EITI Report states that the government’s policy provides for full contract transparency, however only two of the countries state in the EITI Report that there is full contract transparency in practice. It is not clear from the remaining reports whether all contracts are disclosed in practice, and some reports confirm that contracts are not disclosed despite a policy mandating disclosure.
    • Where the policy prevents contract disclosure, actual practice seems to be consistent with the policy. In other words, none of the EITI Reports indicate that contracts are being disclosed in practice despite there being a policy preventing such disclosures.
    • There does not appear to be any difference in the occurrence of government policy mandating disclosure of oil and gas contracts compared to mining contracts.

    It should be noted that the findings presented in this brief are based solely on information provided in the EITI Reports. The brief does not seek to complement the information in the EITI Reports with other publicly available information on contract transparency, nor does it seek to verify the information provided in the EITI Reports.  Section 2 below recalls the EITI Requirements on contract disclosure; section 3 provides an analysis of key findings of the review; section 4 outlines conclusions focusing on areas of improvements; and section 5 contains a country-by-country review of contract transparency.

    EITI Requirements related to contract transparency

    EITI Principle 6 recognises that achievement of greater transparency must be set in the context of respect for contracts and laws. The EITI Standard requires that the EITI Report documents the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil, gas and minerals (requirement 3.12b). The EITI Standard also encourages implementing countries to disclose contracts and agreements that establish the terms for the exploitation of oil, gas and minerals (requirement 3.12a). The EITI Requirements are set out in full below. 

    Requirement 3.12 sets out the reporting requirements related to contracts:

    a) Implementing countries are encouraged to publicly disclose any contracts and licenses that provide the terms attached to the exploitation of oil, gas and minerals.

    b) It is a requirement that the EITI Report documents the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil, gas and minerals.  This should include relevant legal provisions, actual disclosure practices and any reforms that are planned or underway. Where applicable, the EITI Report should provide an overview of the contracts and licenses that are publicly available, and include a reference or link to the location where these are published.

    c) The term contract in 3.12(a) means:

    • The full text of any contract, concession, production-sharing agreement or other agreement granted by, or entered into by, the government which provides the terms attached to the exploitation of oil gas and mineral resources.;
    • The full text of any annex, addendum or rider which establishes details relevant to the exploitation rights described in 3.12(c)(i) or the execution thereof; and.
    • The full text of any alteration or amendment to the documents described in 3.12(c)(i) and 3.12(c)(ii).

    d)      The term license in 3.12(a) means:

    • The full text of any license, lease, title or permit by which a government confers on a company(ies) or individual(s) rights to exploit oil, gas and/or mineral resources.;
    • The full text of any annex, addendum or rider that establishes details relevant to the exploitation rights described in in 3.12(d)(i) or the execution thereof; and.
    • The full text of any alteration or amendment to the documents described in 3.12(d)(i) and 3.12(d)(ii).

     Source: EITI Standard, p. 25.

    Overview of coverage of contracts in EITI Reports

    Comments on methodology

    This review of the EITI reporting on contract transparency assesses both government policy on contract disclosure and actual disclosure practice. Both policy and practice have been classified into four sub-categories, namely full disclosure, partial disclosure, no disclosure and no policy confirmed, as explained below.  

    • Full disclosure is used when the EITI Report confirms that the full text of all contracts, side agreements, riders etc. are publicly available. It also includes instances where the EITI Report confirms that all terms are set out in legislation rather than in contracts or agreements.
    • Partial disclosure is used when the EITI Report confirms that some, but not all contracts, are publicly available.  It also includes cases where some or all contracts are published, but where certain information is redacted or where only parts of the contract are published.
    • No disclosure is used when the EITI Report confirms that no contracts are published. Countries that only publish model contract templates are also placed in this category.
    • No policy confirmed is used when the EITI report does not confirm the prevailing practice for contract transparency, or when the policy on contract transparency is not stated or unclear.

    Where contracts are fully or partially disclosed, the brief provides some commentary on how the contracts can be accessed (in accordance with requirement 3.12.b). Where the EITI Reports provides commentary on reforms that are underway related to contract transparency, these are flagged in the country-by-country review.

    Finally, it should be noted that the findings presented in this brief are based solely on information provided in the EITI Reports. The brief does not seek to complement the information in the EITI Reports with other publicly available information on contract transparency, nor does it seek to verify the information provided in the EITI Reports.

    Analysis of key findings

    In accordance with the methodology set out above, the main findings from the review are summarised in table 1 below, with details provided in section 4 of this brief. 

    The review shows that almost all countries include a detailed description of the various contract types that are applicable to the oil, gas and mineral sectors. Whilst the inclusion of this information in EITI Reports mainly relate to EITI Requirements 3.9 and 3.10 on license registers and allocations, an understanding of the contractual framework that is applicable in each implementing country is helpful to the discussion on contract transparency. Findings reveal that Production Sharing Contracts (PSC), where the detailed terms governing exploration and extraction are set out in the contract, are by far the most widely used contract type in the oil and gas sector. Countries[3] such as Norway and Zambia use petroleum licenses and have the terms governing the extraction set out in legislation. In Iraq and the Philippines service contracts are used.  In the mining sector, there is a wide range of different types of permits, authorisations, licenses, contracts and agreements across the implementing counties. In some countries, the key terms governing exploration and production are set out in legislation whereas in others contracts and agreements accompany the various licenses.

    With regards to disclosure of the government policy on contract transparency, half of the countries did not fully confirm the policy in the EITI Report. In some cases like for example Iraq and Mongolia, the EITI reports note that the policy is not available. In other cases, the EITI reports simply do not comment on government policy.  There are also cases where the EITI report comments on the disclosure practice, but does not confirm if this is consistent with policy. For example, Liberia’s EITI Report comments on the number of contracts that have been published as well contracts that are not yet publicly available, but neglects to state that the LEITI Act mandates publication of contracts.  There is little distinction between policy related to exploration and production contracts in the EITI Reports. Only Mali’s EITI Report seems to comment that the legal requirement to publish contracts is only applicable to production contracts.  Additionally, in countries with both oil and mining sectors, there is a tendency for EITI Reports to provide more information on the oil and gas sector compared to the mining sector. However, there does not appear to be any difference in the occurrence of government policy mandating disclosure of oil and gas contracts compared to mining contracts.

    According to the EITI Reports, government policy provides for full contract transparency in seven countries: Burkina Faso (mining), the Republic of Congo (oil and gas), Côte d’Ivoire (oil and gas), the Democratic Republic of Congo (oil, gas and mining), Mauritania (mining), Niger (oil, gas and mining) and Zambia (mining).  The main legal instruments allowing for contract disclosure were laws and the petroleum/mining codes. However, in practice, contractual terms are only fully disclosed in two countries, Niger (oil, gas and mining) and Zambia (mining), whereas in the remaining five countries there is no or partial disclosure. None of the EITI Reports attempt to explain this discrepancy between policy and practice, nor do they outline any recommendations related to contract disclosure.

    Where the policy prevents contract disclosure, actual practice seems to be consistent with the policy.  In countries like Albania and Cameroon, the EITI Report contains specific references to legal and contractual provisions preventing disclosure. In Mongolia, Mozambique and the Philippines, there seems to be confidentially provisions in some contracts that may affect whether the contracts are disclosed or not.

    With regards to publication channels, government websites or national EITI websites seem to be the most common publication channel. Other publication channels include Official Gazettes, public authorities and cadastre systems.

    Table 1 – Summary of key findings

    Country

    Sector

    Does government policy provide for full, partial or no contract disclosure?  

    Are contracts fully, partially or not disclosed in practice?

    Publication channel

    Albania

    Oil, gas and mining

    No disclosure

    No disclosure

     

    Burkina Faso

    Mining

    Full disclosure

    No disclosure

     

    Cameroon

    Oil and gas

    No disclosure

    No disclosure

     

    Mining

    No policy confirmed

    No disclosure

     

    Congo, Rep. of

    Oil and gas

    Full disclosure

    Partial disclosure

    EITI website[4]

    Mining

    No policy confirmed

    Not confirmed

     

    Côte d'Ivoire

    Oil and gas

    Full disclosure

    No disclosure

     

    Mining

    No policy confirmed

    Not confirmed

     

    DRC

    Oil, gas and mining

    Full disclosure

    Partial disclosure

    Ministry website[5]

    Ghana

    Oil, gas and mining

    No policy confirmed

    No disclosure

     

    Iraq

    Oil and gas

    No policy confirmed

    No disclosure

     

    Kazakhstan

    Oil, gas and mining

    No disclosure

    No disclosure

     

    Liberia

    Oil, gas, mining and forestry

    No policy confirmed

    Partial disclosure

    EITI website[6]

    Madagascar

    Oil and gas

    No disclosure

    No disclosure

     

    Mining

    No policy confirmed

    No disclosure

     

    Mali

    Mining

    Partial disclosure

    Partial disclosure

    Ministry website[7]

    Mauritania

    Oil and gas

    No policy confirmed

    Partial disclosure

     

    Mining

    Full disclosure

    No disclosure

     

    Mongolia

    Oil, gas and mining

    No policy confirmed

    No disclosure

     

    Mozambique

    Oil, gas and mining

    Partial disclosure

    Partial disclosure

    Ministry website[8]

    Niger

    Oil, gas and mining

    Full disclosure

    Full disclosure

    Official Gazette

    Norway

    Oil and gas

    Partial disclosure

    Partial disclosure

    Petroleum directorate website[9]

    Philippines

    Oil, gas and mining

    Partial disclosure

    Partial disclosure

    Government website[10]

    Sao Tome e Principe

    Oil and gas

    Partial disclosure

    Partial disclosure

    Registration & Public Info. Office (RPIO)

    Solomon Islands

    Mining

    No policy confirmed

    No disclosure

     

    Timor Leste

    Oil and gas

    Partial disclosure

    Partial disclosure

    National Petroleum Authorities[11]

    Togo

    Mining and water

    No policy confirmed

    No disclosure

     

    Zambia

    Oil and gas

    No policy confirmed

    Not confirmed

     

    Mining

    Full disclosure

    Full disclosure

    Cadaster

    Conclusions

    This brief has reviewed the early findings of EITI reporting on contract transparency in the 23 countries that published EITI reports as of 31 December 2014.  To conclude, this brief outlines some areas for improvements for consideration by implementing countries and other stakeholders:

    1. While several reports include substantial information on the types of licenses and contracts that are applicable in the country, more work is needed in most countries in terms of disclosing the government’s policy in accordance with the EITI Requirements. Some countries have included clear references to the associated legal or contractual texts regulating disclosure, which helps ascertain the policy. Some of the reports also provide incomplete or incorrect information regarding policy and actual practice. Whilst this brief has only considered what is stated in the EITI Report, implementing countries are encouraged to consider the findings and identify areas for improved reporting in the future.
    2. In countries where the government policy provides for full or partial disclosure and where there is partial disclosure in practice, the EITI reports do not provide detailed information about which contracts or what parts of a contract or side agreements are not publicly disclosed. Further commentary on the actual practice seems to be needed to provide a complete picture.
    3. A few EITI reports, including from Cameroon, Ghana, Iraq, Mongolia and Norway, state that model contracts or licenses agreements are publicly available. However,  in most EITI Reports whether contracts are either confidential or public, there is no little information about whether model contracts exist and where they can be accessed.
    4. Most of the contracts that are published online are available in locked pdfs. As with other EITI information and data, countries that allow for contract disclosure could consider making the information accessible and searchable. This can be done by developing a public online registry containing the terms and conditions, or even integrate these in existing licence registries.
    5. There appears to be a discrepancy between the discrepancy between policy and practice in many implementing countries. Some EITI Reports, including from DRC, Ghana, Kazakhstan and Mongolia, recommends that the MSG considers contract disclosure. The multi-stakeholder group in these countries are required to document its response to these recommendations and progress in addressing the recommendations in the annual activity reports to be published by 1 July 2015.
    6. New standards for disclosing contracts in open and machine-readable formats are emerging[12]. No country has yet made their contracts available in such standards, but some organisations have taken public contracts and made available in open formats[13].

    References in text

    [1] Throughout this paper, the terms ‘contract’ and ‘license’ are used as defined in requirement 3.12(c) and 3.12(d).

    [2] A list of countries is provided in Table 1 below.

    [3] Whilst the EITI countries United Kingdom and the United States also have licence systems, neither country has yet produced an EITI Report.

    [4] See http://www.itie-congo.org/index.php?option=com_content&view=article&id=102&Itemid=127 

    [11] See http://www.anp-tl.org/webs/anptlweb.nsf/vwAll/TLEA

    [12] Open Contracting has launched a 1.0 version of the Open Contracting Data Standard. See http://www.open-contracting.org

    [13] Open Oil has published concession data from 69 contracts. See http://openoil.net/2015/05/22/come-and-get-it-openoil-publishes-first-open-api-for-oil-rights/. The Natural Resource Governance Institute, World Bank and Columbia University have developed http://www.resourcecontracts.org, a contract portal, which enables governments, researchers and CSOs to publish, access and analyse extractive contracts. The portal contains over 300 documents from 54 countries. A partnership model which could be replicated in other countries has already been piloted between the resourcecontracts.org team and the Government of Guinea to develop a Guinea-specific website (http://www.contratsminiersguinee.org/).

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