Despite lower revenues the second PH-EITI Report blazes new trails in monitoring and reform of mining revenues.
Revenues from the mining sector in the Philippines are low, but are significant for local communities. Its first EITI report disclosed locally relevant information such as procedures for free and prior informed consent by mine-affected communities and provisions for environmental rehabilitation funds. Now its second EITI Report provides unprecedented oversight of mining companies’ social expenditures and disbursement of extractive revenues to local governments.
"We have made good progress through this second EITI Report, both with greater openness in areas like monitoring mining companies’ social programs and with reforms in disbursement of funds to local governments,” says Hon. Ma. Teresa Habitan, Assistant Secretary of the Department of Finance and Chair of the PH-EITI MSG. “Opportunities for more disclosures in future EITI Reports have also been highlighted with scoping studies of small-scale metallic mining and large-scale non-metallic mining. The EITI process becomes a virtuous cycle by supporting such reforms.”
Social programme monitoring
In this second EITI Report, the annual implementation of mining companies Social Development and Monitoring Programmes (SDMP) is tracked and assessed publicly for the first time. Representing 18% of mining companies’ total payments, it is hoped that this social expenditure will increase local development. Of 25 companies, the assessment finds that seven companies spent more in 2013 than their quota under their respective SDMPs while six companies executed less than half of their annual requirements. Companies are able to offset such backlogs in subsequent years, but the annual evaluation provides tools for citizens to monitor mining companies’ mandatory social spending.
Local government transfers
Of equal benefit for local communities, the 2013 PH-EITI Report provides details of subnational transfers. Following recent reforms, local governments are now entitled to 40% of royalty income from mineral reservations, of energy resources production and of mining taxes. The report highlighting deviations from the rules governing the local governments’ use of these and other funds from central government. Following recommendations in the first PH-EITI Report, rules for streamlined disbursement of local government funds starting with the 2016 Budget should both quicken disbursements and improve local governments’ oversight and planning capacity.
“The EITI report demonstrates how transparency contributes to the integrity of our revenue system,” Secretary of Finance Cesar Purisima says in the introduction to the 2013 PH-EITI Report. “This should inform us how to best manage extractive resource revenues and answer the question whether we are indeed getting our fair share from extraction of our natural resources.”
These reforms have taken place on a backdrop of lower government revenues from the extractive industries, falling 23% to around USD 982 million in 2013. Total oil and gas revenues, which account for almost all the revenue, fell by almost a quarter, while total mining revenues, fell by 22%.