Seychelles has made meaningful progress in implementing the 2019 EITI Standard, with considerable improvements.

Outcome of the Validation of the Seychelles.

Decision reference: 2020-67 / BC-295
Decision basis: EITI Articles of Association 2019-2021, Article 12.1. ix)

11 September 2020

Board decision

The Board came to the following decision:

The EITI Board agrees that Seychelles has fully addressed three of the eight corrective actions from the country’s first Validation. Consequently, Seychelles has made meaningful progress overall in implementing the 2019 EITI Standard, with considerable improvements across several individual requirements.

The Board congratulates Seychelles for transitioning to an approach to EITI implementation that is proportionate considering the role of the extractive sector in the Seychellois economy. The successful disclosure of summary data covering financial years 2017 and 2018 and the publication of contextual information on the websites of PetroSeychelles and other government institutions is commendable. Seychelles in encouraged to disclose information on the management and monitoring of the environmental impact of the extractive industries.

The adoption of beneficial ownership legislation that guarantees public access to information regarding the beneficial owners of extractive companies demonstrates Seychelles’ commitment to transparency that is embedded in government systems. The government and extractive companies are encouraged to ensure that corresponding disclosures are comprehensive, reliable and timely.

Seychelles is encouraged to ensure that multi-stakeholder oversight of the EITI corresponds to the new approach to implementation. The multi-stakeholder group has an important role in overseeing the comprehensiveness, reliability, accessibility and timeliness of routine disclosures of data.

The Board has determined that Seychelles will have 18 months before a third Validation, i.e. until 11 March 2022, to carry out corrective actions regarding work plan (Requirement 1.5), license allocations (Requirement 2.2), license register (Requirement 2.3), contracts (Requirement 2.4), beneficial ownership (Requirement 2.5), data accessibility (Requirement 7.2) and outcomes and impact (Requirement 7.4). Failure to achieve satisfactory progress in the third Validation will result in temporary suspension in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, Seychelles’ Multi-Stakeholder Group (MSG) may request an extension of this timeframe or request that Validation commences earlier than scheduled.

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective actions to be undertaken by Seychelles. Progress in addressing these corrective actions will be assessed in a third Validation commencing on 11 March 2022:

In accordance with Requirement 1.5, Seychelles should ensure that the EITI work plan includes objectives and activities that reflect the scope of EITI implementation and systematic disclosures of data. The work plan should reflect the MSG’s role in overseeing that systematic disclosures are timely, comprehensive and reliable and outline plans for ensuring the disclosure of petroleum contracts. Follow up of recommendations from Validation should be reflected in the work plan.
In accordance with Requirement 2.2, Seychelles is required to disclose any non-trivial deviations from the applicable legal and regulatory framework governing license awards. The list of applicants and the bid criteria related to any bidding processes that took place in the reporting period should be comprehensively disclosed. This applies to any companies submitting competing proposals through the “open file” procedure.
In accordance with Requirement 2.3, Seychelles is required to disclose the dates of application and the duration of currently held petroleum licenses.
In accordance with Requirement 2.4, Seychelles is required to disclose the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil. The MSG is expected to agree and publish a plan for disclosing contracts with a clear time frame for implementation and addressing any barriers to comprehensive disclosure. Seychelles is required to disclose any contracts and licenses that are granted, entered into or amended from 1 January 2021.
In accordance with Requirement 2.5 and the Board-agreed framework for assessing progress, Seychelles is required to disclose the beneficial owners of all companies holding or applying for extractive licenses by 31 December 2021.
In accordance with Requirement 7.2, the MSG should agree and publish an open data policy on the access, release and re-use of EITI data. Government agencies and companies are expected to publish EITI data under an open license, and to make users aware that information can be reused without prior consent.
In accordance with Requirement 7.4, the MSG should annually review progress in implementing all applicable EITI Requirements, including the timeliness, comprehensiveness and reliability of systematic disclosures. This process should inform the next EITI work plan. The review of outcomes and impact of EITI implementation should be publicly available.

Background

Seychelles joined the EITI in 2014. Seychelles’ first Validation under the EITI Standard concluded in October 2018, in which the EITI Board found that Seychelles had made ‘meaningful progress’ in implementing the EITI Standard. Eight corrective actions were identified by the Board, to be assessed in a second Validation commencing on 1 April 2020.

Seychelles’ second Validation commenced on 1 April 2020. The EITI International Secretariat has assessed the progress made in addressing the eight corrective actions established by the EITI Board following Seychelles’ first Validation in 2018. The eight corrective actions relate to:

MSG governance (Requirement 1.4),
Work plan (Requirement 1.5),
License allocation (Requirement 2.2),
License register (Requirement 2.3),
Contract transparency (Requirement 2.4),
State participation (Requirement 2.6),
Data quality (Requirement 4.9),
Review of outcomes and impact (Requirement 7.4).

Seychelles has undertaken a number of activities to address the corrective actions:

Submitting a request for proportionate implementation to the EITI Board, which was approved in October 2019.
Disclosing summary data from 2017 and 2018 in February 2020.
Disclosing license information on the PetroSeychelles website.
MSG pre-Validation review of progress in addressing corrective actions and recommendations from the 2015-2016 EITI Report.
The MSG met six times between November 2018 and March 2020.

In October 2019, the EITI Board approved Seychelles’ request for proportionate implementation covering reporting years 2017-2021.The Board-approved approach entails that Seychelles EITI focuses on the petroleum sector. As the MSG did not consider there to be any material oil revenues and data quality assurances were in place, revenues would be unilaterally disclosed by the government. The Board confirmed that in addition to the requirements not found to be applicable in the first Validation, Requirements 3.2 (production data), 3.3 (export data) and 6.3 (economic contribution) were not applicable. Practical limitations to industry engagement would be considered in Validation. The Board-approved approach to implementation is reflect in this second Validation.

Seychelles’ second Validation commenced 1 April 202. The Secretariat assessed the progress made in addressing the eight corrective actions established by the EITI Board. Progress in implementing Requirement 2.5 on beneficial ownership, as well as new Requirements 6.4 and 7.2 of the 2019 EITI Standard were also assessed. The EITI International Secretariat’s assessment is that Seychelles has fully addressed three of the eight corrective actions and partly addressed three other corrective actions.

The draft assessment was sent to the MSG on 10 June 2020. Following MSG comments received on 17 July 2020, the assessment was finalised for consideration by the EITI Board.In its feedback, the MSG contested the assessment of Requirement 1.5 on the work plan as “Inadequate progress”, arguing that the assessment should be “meaningful” or “satisfactory progress”.

Assessment of EITI requirements

Not met
Partly met
Mostly met
Fully met
Exceeded

Scorecard by requirement View more	Assessment View more
Overall Progress
MSG oversight
1.5Work plan
The work plan includes activities related to EITI implementation, However, the work plan does not address the scope of EITI implementation or reflect the transition from traditional EITI reporting to systematic disclosures. The objectives are not clearly linked to national priorities or the MSG’s vision for EITI implementation. Follow up on recommendations from Validation or previous EITI Reports is not included. The work plan does not include a plan for disclosing petroleum contracts from January 2021 onwards (see Requirement 2.4).
1.1Government engagement
The government is fully, actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. There have been regular public statements of support from senior government officials and, a senior government official has been appointed as EITI lead.
1.2Company engagement
At the initial stages of EITI implementation, companies appeared to be fully, actively and effectively engaged in the EITI process. Since the MSG was established in 2014, the main petroleum industry players ceased their activities in the country. This does not at the time of the assessment appear to have a negative effect on the EITI process.
1.3Civil society engagement
Civil society appear to be fully, actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. There appears to be some challenges with engaging civil society beyond the MSG in debates on the petroleum industry, given that there has not been any commercially viable discovery.
1.4MSG governance
Meeting minutes demonstrate that the MSG is providing oversight of the EITI process, despite practical limitations to industry engagement. The assessment of “satisfactory progress” takes into account the Board-approved request for proportionate implementation, which notes limitations to industry engagement.
Licenses and contracts
2.1Legal framework
Various government agencies disclose descriptions or full documents of laws and regulations governing the sector, which are also described in the 2015-16 EITI Report.
2.4Contracts
The government’s policy regarding the disclosure of petroleum contracts had not been clarified since the first Validation.
2.2Contract and license allocations
Information about the recipients of petroleum licenses and the statutory award process has been disclosed. The corrective action related to the quarrying sector was addressed through the proposal for proportionate implementation. However, it is not disclosed whether the award of licenses to SSR Seychelles Alpha and Beta in 2018 followed the statutory “open file” procedure and whether any other companies submitted bids.
2.3Register of licenses
PetroSeychelles has disclosed on its website current and historical license information, including dates of award. However, dates of application and the duration of licenses are not available. The corrective action related to the quarrying sector was addressed through the proposal for proportionate implementation.
2.5Beneficial ownership
The 2020 Beneficial Ownership Act provides the legal framework for establishing effective beneficial ownership transparency in the extractive sector, although further regulations are required to establish detailed guidance for reporting. Disclosures under the Beneficial Ownership Act are yet to take place.
2.6State participation	Not applicable
The state currently has no commercial participation in the upstream petroleum sector. PetroSecyhelles operates a regulator on behalf of the government and promotes activities in the oil sector. SEYPEC no longer holds any interests in upstream oil companies.
Monitoring production
3.1Exploration data
The PetroSeychelles website provides information on petroleum exploration activities. Further details on the extractive sectors including exploration activities is provided in the 2015-16 EITI Report.
3.2Production data	Not applicable
There is currently no production in the petroleum sector. The 2015-16 EITI Report provides production data on volumes and values from quarrying activities are provided by commodity and by company.
3.3Export data	Not applicable
There are no exports of oil, gas and minerals from Seychelles, which is confirmed in the 2015-16 EITI Report and stakeholder consultations
Revenue collection
4.2In-kind revenues	Not applicable
There is no production and thus no in-kind revenue collected by the government. The requirement on in-kind revenues is therefore not applicable to Seychelles.
4.5SOE transactions
The 2015-16 EITI Report comprehensively discloses the transactions between the government and SOEs.
4.1Comprehensiveness
The MSG has agreed materiality thresholds for selecting companies and revenue streams. The report lists non-reporting companies and government entities and provides an assessment of the materiality of their payments. The government has provided full unilateral disclosure of all extractives revenues
4.3Infrastructure provisions and barter arrangements	Not applicable
There is no evidence suggesting that infrastructure provisions and barter arrangements exist. The requirement on infrastructure provisions and barter arrangements is therefore not applicable to Seychelles.
4.4Transportation revenues	Not applicable
There is no indication that revenues from the transportation of commodities would constitute material payments. The requirement on transportation revenue is not applicable to Seychelles.
4.6Direct subnational payments	Not applicable
There are no provisions on direct subnational payments and no indication that extractive companies make payments to sub-national levels of government. The requirement on subnational direct payments is therefore not applicable to Seychelles.
4.7Disaggregation
The 2015-16 EITI Report discloses the revenue data disaggregated by individual company, government entity and revenue stream. The report does not systematically disclose revenues by project.
4.8Data timeliness
The EITI disclosures for 2015 were published ten days after the deadline, while the 2016 data in the report was published well in advance of the deadline (i.e. 31 December 2018).
4.9Data quality and assurance
The approach to ensuring the reliability of revenue data is endorsed by the MSG and reflects the Board-approved proposal for proportionate implementation.
Revenue allocation
5.1Distribution of revenues
The 2015-16 EITI Report provides an explanation of the flows of revenues in the extractive sector and while revenues are recorded in the national budget.
5.3Revenue management and expenditures	Not assessed
The 2015-16 EITI Report provides an overview of the national budgeting process including a description of the role of key government agencies and auditing procedures.
5.2Subnational transfers	Not applicable
Available documentation and the 2015-16 EITI Report indicate that sub-national transfers of extractive sector revenues do not exist in Seychelles. The requirement on subnational transfers is therefore not applicable to Seychelles.
Socio-economic contribution
6.3Contribution of the extractive sector to the economy
The economic contribution of the petroleum sector is immaterial.
6.4Environmental impact	Not assessed
While the 2015-2016 EITI Report summarised environmental provisions of the Model Petroleum Agreement and the 2016 Environmental Protection Act is available online, the MSG does not yet appear to have comprehensively considered the environmental impacts of the extractive industries despite stakeholder interest in the issue.
6.2SOE quasi-fiscal expenditures
6.1Social and environmental expenditures
Outcomes and impact
7.1Public debate
The MSG has made considerable efforts to disseminate information about the EITI and the information disclosed, considering that petroleum exploration is not high on the public agenda unless there are any reports of a commercially viable petroleum discovery.
7.2Data accessibility and open data
EITI revenue data is available in open format, but the MSG does not appear to have an open data policy.
7.3Follow up on recommendations
The MSG has considered the findings and recommendations from EITI reporting, and made progress on implementing these.
7.4Outcomes and impact of implementation
The Seychelles EITI published its 2016 annual progress report in 2017, describing progress against work plan objectives and recommendations from the first EITI Report. It includes an assessment of progress against only against selected EITI Requirements, and does not include any assessment of the impact and outcomes of the work plan objectives.