What is the EITI?
The EITI (Extractive Industries Transparency Initiative) is the global standard for the good governance of oil, gas and mineral resources.
It requires disclosure around how licences are allocated, who owns them, the legal, fiscal and contractual framework, production, state-ownership, payments to governments, and allocation of the revenue. It is implemented by countries and overseen in each country by a committee of representatives from governments, companies and civil society.
What is the legal status of the EITI?
The EITI is established as a non-profit association under Norwegian law. It is registered as “The Association for the Extractive Industries Transparency Initiative” or “EITI Association”. See also the articles of association.
What is the EITI Standard?
The EITI Standard is the set of requirements countries have to comply with once they have been admitted as an EITI implementing country. Learn more here.
How can a country apply to become an EITI implementing country?
When a country has completed the sign-up steps, the government can submit an EITI candidate application, endorsed by the national multi-stakeholder group, to the EITI Board. The application should describe the activities undertaken to date and provide evidence demonstrating that each of the sign-up steps have been completed. The application should include contact details for government, civil society and private sector stakeholders involved in the preparations for implementing the EITI.
Once submitted, the application will be made publicly available on the EITI website. The EITI Board, working through the Outreach and Candidature Committee, will review the application and assess whether the sign-up steps have been completed. The International Secretariat will work closely with the government and other stakeholders to clarify any outstanding issues. Based on this and any other available information, the EITI Board will take a decision.
My country does not have significant revenues from extractive resources, should it still implement the EITI?
A country should only implement the EITI if it is useful. The process may be useful even in countries that do not have significant revenues from extractive resources.
For example, the EITI might establish a valuable forum for dialogue about areas of potential concern in the sector such as establishing the process for allocating licences, setting tax and royalty levels and the legal framework. Some countries have decided to implement the EITI Standard to demonstrate international or regional leadership and/or to persuade others to follow.
My country is already transparent about its revenues from extractive resources. What do we have to gain from the EITI?
Many countries use the EITI to publicly verify that company and government accounting and auditing systems are working efficiently and effectively. The EITI is also used to highlight opportunities to reform and strengthen these systems. The EITI is not just about transparency, it is also about accountability. By establishing a multi-stakeholder platform and informing public debate, the EITI can improve dialogue and trust between all key parties, especially on areas of contention.
Why do we need EITI if we have disclosure requirements for companies in the EU and Canada?
The European Union has passed legislation that requires that all companies listed in the EU disclose their payments to governments in all countries where they operate. Canada and other countries have passed similar legislation.
In short, the EITI complements these other efforts:
- If a country decides to implement the EITI, all companies operating in the country, including state-owned enterprises, are required to publish what they have paid to the government, wherever they are registered. This creates a level playing field inside the country where the resources are rather than in the home country of the companies.
- The EITI requires a reconciliation of what government discloses that it has received, as well as what companies report they have paid.
- The EITI is much wider than just payments. It covers the whole value chain. It is one thing to know how much money a company has paid, but it is also useful to know its production and the legal, fiscal and contractual arrangements, who owns the licence and where the money goes.
- Most importantly, the EITI establishes a mechanism for debate about the resources inside the country.
Read more on this subject here. The US had enacted similar legislation, but it was repealed in January 2017. Read our statement.
What is the difference between the EITI and the other efforts to improve revenue transparency?
There are four key ways in which the EITI differs from these complementary efforts to improve revenue transparency:
- The EITI is not only about publishing the numbers. Countries implementing the EITI have a multi-stakeholder platform for dialogue about all aspects of the use of their country's extractive resources.
- The EITI is not only about companies being required to report their payments to governments. Governments also have to report on revenues received. Then there is an independent reconciliation of what the companies say they paid and what the government says it received. In doing this independent reconciliation, discrepancies and inaccuracies are uncovered and can be acted upon. For example, in Nigeria, USD10 billion were uncovered in unpaid taxes through their EITI process.
- A significant proportion of extractive resources are exploited by companies that are not listed in the EU, especially by state-owned enterprises. The EITI requires disclosure of all companies' payments in a country.
- The EITI upholds an international standard, but is implemented nationally. This means that the national multi-stakeholder group determines how to adapt the EITI implementation process to reflect local circumstances, needs or preferences. Examples would be a specific legal environment or the detail of the payments to be published.
What are the costs of EITI implementation?
The costs of EITI implementation in each country vary widely, depending on the complexity of the extractive industries, the scope of the reporting exercise, and the amount of related capacity building and communications activities. EITI implementation does not need to be a heavy financial burden and proportionality should be considered in deciding the scope of the process at the national level. Care should be taken to ensure that the scope of the EITI is reasonable in light of the total revenues from the sector.
The EITI process is led by the government, and all implementing countries provide financial means for the implementation of the national EITI work plan. Technical and financial assistance is available from a number of bilateral and multilateral donors, for example, the Extractive Global Programmatic Support (EGPS) Multi-Donor Trust Fund managed by the World Bank. The International Secretariat does not provide direct financial support, but it can provide advice regarding accessing technical and financial assistance.
Since 2017, implementing countries are required to make a financial contribution of USD 10,000 to the International Management (the Secretariat and the Board) of the EITI to help cover some of the support that they get from the international body. See the related Board decision.
What is an EITI Report?
Countries implementing the EITI Standard publish annual reports covering how the sector is governed from how licences are allocated, who owns them, the legal, fiscal and contractual framework, production, state-ownership, payments to governments, and allocation of the revenue. On payments, companies report payments to government (taxes, royalties, etc.) and the government reports what it has received. An Independent Administrator reconciles these figures.
How does the EITI assess progress against the Standard?
A country is assessed against the standard in a process called Validation within 2.5 years of becoming a member. The Validation of a country against the Standard can yield the following results: Satisfactory progress, meaningful progress, inadequate progress and no progress. They reflect the degree of how each requirement is met and if the broader objectives have been fulfilled. See more here.
As well as assessing the progress against the requirements, Validation also seeks to assess the impact of the process on the sector and make wider recommendations on governance.
Learn more about Validation here.
What does it mean to be suspended from EITI?
A country implementing the EITI can be suspended for many reasons - both political and technical. For example, the relations necessary for EITI implementation might temporarily not exist after political upheaval. Or the country may have failed to meet a reporting deadline. A country can also be suspended if it is found to have made inadequate progress against meeting the requirements.
Is the EITI voluntary?
As sovereign states, countries can of course choose whether or not to implement the EITI. However, once implementation begins, the country is required to comply with the EITI Requirements. To do this, all companies and government agencies making or receiving payments must participate. The EITI leads to full disclosure within implementing countries. EITI implementation is mandated by law in a number of countries, including Liberia, Nigeria and Norway.
What are the benefits of the EITI?
View our page on benefits
What are the proven impacts of EITI?
Countries implement the EITI for a wide variety of reasons. It is therefore unsurprising that the impacts have also been varied. Please see our news items, blogs and the EITI Progress Report for examples and our page on impact around methodology.