This post is part of a blog series that we are running over the next few weeks to highlight core open government issues and give you ideas to consider as you develop your new action plan. With the conclusion of the the Extractive Industries Transparency Initiative’s flagship conference EITI Conference in Peru, we want to continue the conversation on how open government tools can be used to improve natural resources governance.
-The OGP Support Unit
Three ways to improve natural resource governance in your next Action Plan
We know how critical the natural resource sector can be for a country’s development. However, only about 10% of the Open Government Partnership (OGP) commitments relate to natural resources. The drafting of new national action plans (NAPs) by June 2016 offers a unique opportunity to increase the commitment to good governance of the oil, gas, mining, and forestry industries. The OGP Openness in Natural Resources Working Group (ONRWG) has come up with three priorities that resource-rich countries should consider to improve the sector.
Beneficial ownership disclosure
The ONE campaign estimates that developing countries lose $1 trillion each year due to corrupt or illegal cross-border deals, many of which involve companies with unclear or secret ownership structures. Publishing information about companies’ “beneficial owners”—that is, the individuals that ultimately control or profit from a company—can help deter the syphoning of public money, conflicts of interest, and tax evasion, and ultimately, enable their detection.
There is a growing international trend to make ownership structures more transparent. In June 2013, G8 leaders agreed to a set of principles on beneficial ownership transparency, followed by the G20 in November 2014. In the natural resource sector, the 2016 Extractive Industries Transparency Initiative (EITI) standard, adopted at the most recent global EITI conference, requires countries to request, and companies to disclose, beneficial ownership information by 1 January 2020.
At the country-level, the UK is leading by example by creating a publicly accessible register of beneficial ownership information for British companies. The European Union, Denmark, the Netherlands, Norway, the Ukraine, and the US are following similar steps. Australia, Canada, Chile, Indonesia, Mexico, Mongolia, South Africa, Tanzania, and Tunisia should consider taking comparable measures, such as:
- Establishing a public register of beneficial owners in an open data format, as in the UK.
- Starting by disclosing beneficial ownership information in the extractives sector, and establishing a register of beneficial owners for license-holding companies, such as that required by the EITI.
Resource Contracts Transparency
Resource contracts include, among others, information on a project’s fiscal terms, environmental impact, and production timing, which should be disclosed to enable citizens to understand, monitor, and hold governments and investors accountable for their obligations. More, contract disclosure helps address the severe trust deficit in the extractive sector, and sets realistic expectations for all the stakeholders, which minimizes the occasion for conflict. It also reduces opportunities for corruption.
Contract disclosure is quickly becoming best practice in the natural resource sector. More than 25 countries publish contracts: since 2010, 12 countries have passed laws requiring contract publication, and countries like Guinea, Liberia, the Philippines, and the Republic of Congo have created online databases for their contracts. Corporations such as Rio Tinto, Tullow Oil, and Kosmos Energy have championed contract transparency to build trust and improve their licenses to operate.
Mexico and Liberia (as part of the Liberia EITI process) have incorporated resource contract disclosure commitments in their NAPs. The ONRWG encourages countries like Cote d’Ivoire, Indonesia, Mongolia, Tanzania, Tunisia, South Africa, and the Ukraine to commit to resource contract disclosure. Guidance may be taken from the following commitments:
- Use the EITI as a platform for discussion for contract disclosure, as in the Philippines. Through the Philippines’ OGP commitment to become EITI-compliant, arguments against disclosure and modes of disclosure were discussed and evaluated, resulting in an online resource contracts database.
- Publish data and contracts during each stage of bidding rounds for oil contracts, as in Mexico. Information on oil bids is disclosed from the moment the government calls for such bids. Parties are also required to disclose revenue-related information for monitoring of fiscal obligations.
- Use disclosure to audit awarding procedure, as in Liberia. Liberia has committed to conduct post-contract award process audit of material contracts, concessions, and licenses entered into by the government in mining, oil, forestry, and agriculture sectors within a certain period of time.
To help make contracting information more useful and accessible for stakeholders, countries should consider using the Open Contracting Data Standard.
Environmental data publication
Local communities can suffer from negative social and environmental impacts associated with oil, gas, and mining projects. Nevertheless, governments often do not provide communities with timely and useful information in terms of siting, mitigation, permitting, monitoring, and reclamation, as shown in the World Resources Institute’s 2015 Environmental Democracy Index.
Regional standards have been developed for the disclosure of environmental information in Europe, and are currently being developed in Latin America and the Caribbean. Brazil, China, Indonesia, and Thailand have also used their Freedom of Information laws to disclose environmental information.
Providing environmental information through data portals is becoming more common. Canada, Chile, Jamaica, Mexico, Mongolia, the US, and the UK all provide environmental information and compliance and enforcement actions by the government against corporations through online databases.
Tunisia, Mexico, Indonesia, and Colombia have incorporated pioneering environmental disclosure commitments in their respective action plans, which serve as examples of practical and implementable environment-related commitments:
- Integrating information systems of various government agencies, as in Colombia. Colombia committed to improve the inter-operability of information subsystems of the National System of Environmental Information.
- Develop and release environmental information relevant to oil, gas and mining, as in Mexico. Mexico committed to jointly develop with civil society a diagnosis of the existence, quality, accessibility, and gaps in the socio-environmental information in the mining industry. They have also committed to release the information in a transparent way, taking into account open data principles.
- Create a separate body dedicated to and responsible for collecting, analyzing, and publishing information about the environment, as in Tunisia.
The ONRWG urges these countries to continue advancing these commitments, and encourages countries such as Australia, Jordan, Mongolia, Paraguay, and Sri Lanka to include similar commitments, in their next action plans.
Clearly, there is much to be done—and much to learn—in the area of transparency in natural resources. The ONRWG helps initiate and sustain valuable and much needed collaboration and dialogue in this area. Join our cause and get in touch with us here.