Impatient to implement the EITI Standard, Lebanon races ahead on key provisions

Minister of Energy and Water “crashes” EITI workshop in Beirut. “We’re serious about this process. We are not looking for a rubber stamp”.

“Sometimes you invite a minister to an event and they end up cancelling in the last minute”, said EITI Regional Director Pablo Valverde at a recent workshop in Beirut. “You don’t often see the opposite, a minister showing up to a workshop without an invitation!”

“This is a strong testimony to the government’s commitment to the EITI process and to a well-governed extractive sector more broadly”, said Norwegian Ambassador Lene Lind.

The workshop, organised by Publish What You Pay (PWYP) and the Norwegian Embassy, was an opportunity for civil society and other stakeholders to discuss next steps in Lebanon’s preparations to implement the EITI Standard, the global standard for transparency and good governance in the extractive sector.

The Government of Lebanon committed to implement the EITI in January 2017 and nominated Minister of Energy and Water Cesar Abi Khalil EITI Champion.

A strong message to investors

“Even though we do not implement the EITI yet, Lebanon has already used the EITI Standard to develop the draft petroleum transparency law that is currently being debated by parliament”, said Minister Abi Khalil. “The model contract of the Exploration and Production Agreements also take into account the disclosure requirements of the EITI”.

Article 35 of the model contract states that confidentiality clauses shall not apply “to the extent that confidential information is disclosed in order to comply with the Extractive Industries Transparency Initiative or any similar international initiative”.  “We think that showing our commitment to integrate the EITI into our systems already from day one sends a strong message to all stakeholders and to investors”, added the minister.  

Building trust to buck the trend

Lebanon has a vibrant civil society, and discussions at the workshop demonstrated that building trust between stakeholders will need to be a priority for the government. A common question among participants was that “corruption is everywhere in our society. Why should the extractive sector be any different?”

According to Walid Nasr of the Lebanon Petroleum Administration (LPA), the government has worked conscientiously to avoid a similar fate for the sector. “It is the right time to look at the groundwork that Lebanon has established and to treat the government’s preparations for the sector on their own merit. As we move towards testing the system in practice, we want civil society to help us continue to make progress through constructive and informed discussions. We see the EITI as the platform to do this.”

The Norwegian Ambassador praised this willingness to engage with civil society, noting that “natural resources belong to the citizens of the country, and ensuring that civil society has space to engage in discussions of natural resource governance will be critical to the successful development of Lebanon’s hydrocarbon sector.”

Racing ahead

“It will not be clear what companies will operate in the sector before the end of the year”, said Diana Kaissy, MENA Coordinator at PWYP, “so Lebanon’s candidature to the EITI will need to wait until industry can nominate representatives to the EITI multi-stakeholder group. We in civil society need to make sure that we are organised for when that happens so that we can hit the ground running”.

Setting up a multi-stakeholder group with participation from civil society and industry is a requirement for implementation of the Standard, and Lebanon will not realistically be able to submit a candidature to the EITI International Board before 2018.

According to Walid Nasr, this has not stopped Lebanon from making progress on key EITI provisions such as contract transparency and beneficial ownership. “The law requires that all contracts with sub-contractors be awarded through public tenders, and all such contracts will be public. Furthermore, the draft petroleum transparency law that is expected to be passed by the end of May includes an obligation to publish the beneficial owners of companies operating in the sector. This is information that companies have to submit when they submit their tender”.

Strengthening systems, not replacing them

One central question throughout the day was the extent to which the EITI should act as an “independent auditor” of the sector or play a different role. “Lebanon would not be the first country to view the EITI in those terms”, said Pablo Valverde, “but frankly that would be a missed opportunity. The EITI is not primarily about monitoring, it’s about improving the governance of the sector.”  

Meanwhile Minister Abi Khalil was clear about his expectations: “We’re not looking for something to replace the normal checks and balances in our democratic system. What we want from the EITI is a way to strengthen our government systems and help us effectively monitor our sector”.

 

Image: Norwegian Embassy in Lebanon, facebook.