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Kazakhstan’s 2015 EITI Report shows significant revenue drop

Kazakhstan’s 2015 EITI Report shows significant revenue drop

11 November 2016

Oil and gas income more than halved

Kazakhstan has released its 2015 EITI Report, documenting a substantial decrease in revenue from the extractive sector in 2015 compared to the previous year. Low commodity prices, devaluation of the national currency, tenge, and decline in oil output means that the government collected only USD 12 billion in taxes and other payments from the sector. In comparison, the sector yielded more than USD 26 billion in 2014.

Despite this fall in revenues, the report shows sizable exports, with total oil and gas exports worth USD 27 billion, or 60% of the country’s total export. With the much delayed Kashagan project recently resuming production, the outlook for 2017 should be more promising. Kashagan is the world’s largest oil and gas field located in the Caspian Sea, with total investments amounting to USD 50 billion.

Transparent social projects

Kazakhstan EITI launched the report at the VIII EITI National Conference on 26 October 2017, back to back with the 35th EITI Board meeting in Astana [see a blog here]. One of the challenges highlighted at the conference was the need to go beyond tax transparency. “Our ongoing effort in bringing about a better EITI process in Kazakhstan is reflected in our annual EITI reports. In this report, we have gone beyond reconciliation of tax and revenue payments and included social expenditures disaggregated by social programs, agreements and constructed infrastructure sites” said the chairman of the National Stakeholders Council and State Committee of Geology and Subsoil Use Bazarbay Nurabaev. “All of this information is available online for public use” he added.

Social prosperity and benefits for the citizens is important for social stability in resource rich Kazakhstan. “Our EITI process is technically sound but we try to go beyond the numbers in our reports,” said the Kazakh EITI national coordinator Ruslan Baimishev. “The detailed information about the social payments of subsoil users will hopefully improve the effectiveness and transparency of social payments in Kazakhstan” he added. Based on the recommendations from previous EITI reports the government established a budget classification code for social payments enabling tracking of these payments at state and local levels. Social payments worth USD 252 million were paid by oil, gas and mining companies in 2015, according to the EITI Report.

Towards beneficial ownership transparency

Looking ahead, Kazakhstan EITI is working together with relevant government departments to amend the existing legal framework to enable beneficial ownership disclosure in the extractive industries. This will ensure that all oil, gas and mining companies operating in Kazakhstan will be transparent about who owns them and profits from their activities. The legal amendments included changes to the draft Subsoil and Subsoil Use Code, which is due to be discussed in the Kazakh Parliament in the coming year.

For further information about the EITI process in Kazakhstan please visit the country page or contact the EITI team at the International Secretariat.