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Improving government systems: a priority for Philippine EITI

The EITI reports of the Philippines have always served as a diagnostic tool to evaluate government systems and a platform for stakeholders to collectively agree on recommendations for reforms. The recently published PH-EITI Report for fiscal years 2015 and 2016 describes progress in levels of transparency, as well as areas where governance of the extractive sector may be improved.

Improvement in local government reporting 

Transparency in local government revenues has improved from previous years. Acting on recommendations from the EITI, the Bureau of Local Government Finance launched an online reporting mechanism in 2015 whereby local government units are asked to report revenues from mining operations as part of their regular reporting obligations. Reporting is now based on the level of disaggregation required by the EITI Standard, which means that local government units are now required to report collections from each company and revenue stream, unlike the previous practice of reporting aggregate amounts for revenues.  The recent PH-EITI report notes that changes in the reporting system resulted in a more efficient and timely submission of data from local government units. Consequently, the amount of reconciled data from local governments increased by 61% from 2014 to 2016. 

Evaluation of royalty payments for Indigenous Peoples

Companies in the Philippines are required to pay royalties to Indigenous Peoples (IPs) within the localities where these companies operate. The amounts are fixed in the Memorandum of Agreement between companies and the IPs. The government is supposed to monitor the execution of these agreements through the National Commission for Indigenous Peoples (NCIP).  Although the royalties are not paid to the government, they are disclosed in the EITI Report to evaluate whether companies are paying the IPs and whether NCIP is monitoring these payments. The recent EITI Report reveals that NCIP reported significantly lower royalty payments for IPs compared to the payments disclosed by companies. A discrepancy of 323% (PHP121 million or USD 266,000) for 2015 and 353% (PHP103 million or USD 217,627) for 2016 was identified in the EITI Report.  These findings suggest the need to regularly monitor payment of IP royalties, which PH-EITI has been seeking to address through the implementation of a monitoring mechanism within NCIP.

Need to improve monitoring of companies’ environmental and social obligations

To monitor whether companies are complying with their commitments under their Environment Compliance Certificates (ECC), Environmental Protection and Enhancement Plans (EPEP), Environmental Impact Assessment (EIA) and Social Development Management Programs (SDMP), a multi-stakeholder body called the Mining Monitoring Team (MMT) has been created by the Mines and Geosciences Bureau in every region. These MMTs are mandated by law to issue Mining Monitoring Reports (MMR) and Integrated Safety and Health, Environment and Social Development (ISHES) Report to evaluate company compliance with their environmental and social obligations.  The PH-EITI Report reveals that there are lapses in the production of these reports. For the years 2015-2016, only 12 out of 43 companies have complete MMRs that are supposed to be issued quarterly. For ISHES, only 4 out of 24 companies have complete ISHES for the same period. In addition, the reports have no standard information, making a comparison of compliance across companies difficult. To address this, PH-EITI recommends that the Mines and Geosciences Bureau adopt a regular evaluation mechanism and a standardised reporting format that will easily indicate gaps in compliance.