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Mongolia

Transparency of Contracts of Public Resource Exploiting (MN0032)

Overview

At-a-Glance

Action Plan: Mongolia Action Plan 2016-2018

Action Plan Cycle: 2016

Status: Inactive

Institutions

Lead Institution: Central Government Authority

Support Institution(s): Central Government Authority responsible for Foreign Investment Mineral Resource Authority, Mongolian Petroleum Authority; Open Society Forum

Policy Areas

Anti-Corruption Institutions, E-Government, Extractive Industries, Fiscal Transparency, Land & Spatial Planning, Public Participation, Records Management, Water and Sanitation

IRM Review

IRM Report: Mongolia Mid-Term Report 2016-2018

Starred: No

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information Civic Participation

Potential Impact:

Implementation i

Completion:

Description

Status quo or problem addressed by the commitment: Ensuring information transparency of documents regulating relations between government and stateowned enterprises using public resources is important to establish accountability measures. In addition to this ensuring transparency of the use of public resources such as land, water and mineral is a priority for Mongolia. Main Objective: Ensure transparency of the agreements to use public resources Brief Description of commitment (140 character limit): Identify what is considered as public resources in mineral, land, water and petroleum category in Mongolia with the engagement of the public and civil society organisations. Identify types of documents such as agreements on utilising deposits, investment and sustainability agreements, shareholding and product sharing agreements, other similar agreements, local cooperation agreements and agreements for land and water usage and develop an information database of these documents that is accessible to the public.

IRM Midterm Status Summary

11. Transparency of contracts of public resource exploitation

Commitment Text:

Identify what is considered as public resources in the mineral, land, water and petroleum category in Mongolia with the engagement of the public and civil society organizations.

Identify types of documents such as agreements on utilizing deposits, investment and sustainability agreements, shareholding and product sharing agreements, local cooperation agreements and agreements for land and water usage and develop an information database of these documents that is accessible to the public.

Status quo or problem addressed:

It is important to establish accountability measures and information transparency of documents that regulate relations between government and state-owned enterprises who use public resources. In addition to this ensuring transparency of the use of public resources such as land, water and minerals are a priority for Mongolia.

Main Objective:

Ensure transparency in the agreements to use public resources.

Milestones:

11.1. Identify scope or relevance and relevant list of public resources

a. Minerals and Oil

b. Land and Water

11.2. Identify types of agreements and contracts to be covered

a. Use of deposit, investment, sustainability, shareholding, product allocation, and similar agreements.

b. Land and Water Usage Contract.

c. Local Cooperation Agreement and other similar agreements.

11.3. Develop contract database

11.4. Ensure access to contract database by the public

Responsible institution: Central Government Authority responsible for budget and financing issues

Supporting institutions: Central Government Authority responsible for Foreign Investment Mineral Resource Authority, Mongolian Petroleum Authority, Open Society Forum

Start date: 30 June 2016

End date: 30 June 2018

Context and Objectives

Mongolia’s economy is heavily dependent on the extraction of various natural resources found throughout its vast and sparsely populated territory.[Note101: Extractive industries accounted for 20 percent of Mongolia’s GDP, 18.6% of government revenue and 86.2% of total exports in 2016 according to the 2016 EITI report available here: http://www.eitimongolia.mn/sites/default/files/uploads/final-reports/Mongolia_EITI_Report_2016_English.pdf.%5D However, there has been a lack of transparency regarding contracts for natural resource exploitation, with civil society and the public unable to access and monitor contracts.[Note102: Natural Resource Governance Institute, 'Contract Transparency a Critical Component of Civil Society Oversight in Mongolia,' 19 November 2015, https://resourcegovernance.org/blog/contract-transparency-critical-component-civil-society-oversight-mongolia.%5D For example, although Article 36.1 of the 2014 Law on Petroleum stipulates that certain information on oil exploration and contracts should be shared to the public through mass media, this law is often not enforced.[Note103: Law of Mongolia on Petroleum (the new edition), available at: http://english.pam.gov.mn/content/-Law-of-Mongolia-On-Petroleum---the-new-edition--11370.shtml.%5D This commitment seeks to ensure greater transparency in public resource contracts by identifying the scope of public resources to be reported (within the categories of land, water, mineral, and petroleum), identifying the scope of contracts to be covered, and developing a contract database for public use. This commitment is a continuation of Commitment 3.3.1.5 from Mongolia’s previous action plan, which called for publishing all investment, stability, and production sharing agreements related to publicly-owned resources. Though not specifically mentioned in the commitment text, this commitment also attempts to address the 2016 General Administrative Law, which requires public consultations in the development stage of contracts on public interest affairs signed by government entities.[Note104: As clarified in IRM questionnaire completed by Enkhtsetseg Dagva, Program Manager, Open Society Forum, 23 April 2018.]

The publication of an accessible database on public resource contracts is relevant to the OGP value of access to information. Although not a specific milestone, the commitment mentions identifying what is considered a public resource through engaging civil society and the public, thus also making it relevant to the OGP value of civic participation. While the commitment lists categories of resources and types of contracts to be covered in the database, it does not provide detail on how the public will help develop the database or how the database will be promoted to the public. Additionally, it is unclear what is meant by the 'scope' of public resources to be included in the database. For example, this could mean the geographical scale of the extractives sites or the range of the public resources within the categories covered in the database.

Commitment 3.3.1.5 from the previous action plan could have had a potentially transformative impact on public access to contracts for natural resources, but due to the limited number of contracts available at the end of the action plan cycle, the IRM End of Term Report found that it improved access to information only marginally.[Note105: Independent Report Mechanism, 'Mongolia: 2014-2016 End-of-Term Report,' https://www.opengovpartnership.org/sites/default/files/Mongolia_EOTR_2014-2016.pdf, pg. 19.] Continuing to add contracts to the publicly available database is a laudable initiative toward greater transparency in the public resource sector, especially given the importance of these resources both to the country’s economy and to the lives of many rural Mongolians. However, the commitment does not call for any new methods of disseminating information on contracts to the public that might be more effective than a digital database, nor does it specify how civil society will influence the scope of resources and contracts to be made available. Therefore, the potential impact of this commitment is considered moderate.

Completion

As a result of a multistakeholder national discussion held in December 2014, representatives from government, civil society, and mining industries agreed to establish a publicly accessible online database for resource contracts.[Note106: See (in Mongolian): http://forum.mn/index.php?sel=project&menu_id=29&obj_id=5007.%5D In early 2017, the Open Society Forum, in cooperation with the Extractive Industries Transparency Initiative (EITI) Secretariat of Mongolia and the Ministry of Mining and Heavy Industry (MMHI), launched the Resource Contract Database (http://www.iltodgeree.mn). The database currently has 35 contracts, including one Production Sharing Agreement (DMW Petroleum AG), 22 cooperation agreements, and seven land and water usage agreements, among other agreements.[Note107: Available at: http://www.iltodgeree.mn/.%5D The contracts are available in text and PDF format and include annotations that explain relevant clauses and articles. Though still relatively low, the 35 contracts represent an increase from the seven that had been published on the database by the end of the first action plan period (June 2016).[Note108: Independent Report Mechanism, 'Mongolia: 2014-2016 End-of-Term Report,' https://www.opengovpartnership.org/sites/default/files/Mongolia_EOTR_2014-2016.pdf, pg. 19.] According to a memorandum of understanding signed in June 2017 by the Ministry of Mining and Heavy Industry, the EITI Secretariat, and the Open Society Forum, the EITI Secretariat is responsible for maintaining and updating the database while the MMHI provides support for collecting the contracts from various government organizations.[Note109: IRM questionnaire completed by Enkhtsetseg Dagva, Program Manager, Open Society Forum, 23 April 2018.]

In addition to the mining contracts on the Resource Contract Database, there are 25 contracts between mining companies and local governments published on Mongolia’s EITI website.[Note110: Available at: http://www.eitimongolia.mn/en/node/4875.%5D However, this is the same number of contracts reported in the IRM End of Term Report for the previous action plan.[Note111: Independent Reporting Mechanism, 'Mongolia: 2014-2016 End-of-Term Report,' https://www.opengovpartnership.org/sites/default/files/Mongolia_EOTR_2014-2016.pdf, pg. 17.] Mongolia also has seven contracts published on ResourseContracts.org, a global repository of extractive sector contracts.[Note112: See: http://www.resourcecontracts.org/search?q=mongolia.%5D Of the seven contracts, three are Production Sharing Agreements, while the others include a concession agreement, an amended and restated shareholders' agreement, an underground mine development and financing plan, and an asset sale and purchase agreement.

EITI currently rates Mongolia’s level of progress on contract disclosure as 'satisfactory' during the Second Validation (2018) against the EITI Standard.[Note113: See Mongolia’s progress by requirement for the second EITI validation (2018): https://eiti.org/mongolia#mongolias-progress-by-requirement.%5D Due to the ongoing nature of publishing mining contracts to the Resource Contract Database, the implementation of this commitment is assessed as substantial at the end of the first year of the action plan.

Next Steps

While the disclosure of resource exploitation contracts is an important goal, future commitments in this area could improve opportunities for the public to participate in the awarding of contracts, particularly at the local level. Also, the government could consider developing mechanisms for public accountability that cover issues such as the environment and public health. Furthermore, to achieve a higher potential impact, future commitments could more clearly specify the expected outcomes, as well as how they differ from existing government practices.


Mongolia's Commitments

  1. Mobile Application for Citizens Feedback and Requests

    MN0022, 2016, E-Government

  2. Starred commitment Improve Provision and Quality of Education and Health Services

    MN0023, 2016, E-Government

  3. Civic Engagement in Decision Making

    MN0024, 2016, Legislation & Regulation

  4. Transparent Funding of Political Parties

    MN0025, 2016, Anti-Corruption Institutions

  5. Create Favourable Environment for Media and Journalism

    MN0026, 2016, Civic Space

  6. National Action Plan for Combating Corruption

    MN0027, 2016, Anti-Corruption Institutions

  7. Transparency of Loans and Aid from Foreign Countries

    MN0028, 2016, Aid

  8. Online Registration of VAT

    MN0029, 2016, Capacity Building

  9. Improve Glass Account System

    MN0030, 2016, Anti-Corruption Institutions

  10. Make Government Procurement Process Transparent

    MN0031, 2016, Anti-Corruption Institutions

  11. Transparency of Contracts of Public Resource Exploiting

    MN0032, 2016, Anti-Corruption Institutions

  12. Information Transparency of the Owners of the Entities with Rights to Use Mineral Resources

    MN0033, 2016, Anti-Corruption Institutions

  13. Make Licenses, Information and Activities of the Companies Transparent and Effective by Government

    MN0034, 2016, Anti-Corruption Institutions

  14. Monitor and Ensure Implementation of Information Transparency and Information Access Right Act by Establishing National Information Transparency Committee and Creating Structure of Information Commissary.

    MN0001, 2014, Legislation & Regulation

  15. Modernize Performance Indicators of Information Transparency of Public Organizations Into ―”Citizen Targeted” Ones.

    MN0002, 2014, Capacity Building

  16. Starred commitment Launch ―Transparent Account Systemǁ in Order to Enable Consistent, Transparent Reporting to the Public and to Provide Comprehensive Information on Budget Revenue Collection, Income and Expenditure Details, as Well as Public Procurement and Investments.

    MN0003, 2014, Fiscal Transparency

  17. Develop Central Information Database of Minerals, Oil, and Land Tenure License Owners, Open to the Public.

    MN0004, 2014, E-Government

  18. Ensure Transparency All Agreements on Investment, Stability and Production- Sharing of Public-Owned Resources Such as Water, Minerals, Oil and Land.

    MN0005, 2014, Extractive Industries

  19. Starred commitment Publish List of Mandatory Public Information on Environment Such as Information Regarding Any Action Harmful to Natural Environment and People’S Health.

    MN0006, 2014, Environment and Climate

  20. Starred commitment Disclose Information to the Public Relating to Foreign Loan Assistance Projects and Programs, Including the Total Amounts, Terms, Payback Duration and General Provisions Related to the Loan Rate, Board Members, and Implementation Bodies. Information About the Terms of Implementation of the Projects as Well as General Conditions of Contracts Between Suppliers and Buyers Shall Be Disclosed as Well.

    MN0007, 2014, Aid

  21. Disclose Budget Funded Procurement Contracts Above 80.0 Million MNT

    MN0008, 2014, Open Contracting and Procurement

  22. Ensure Civic Engagement in Planning and Developing Public Services at Central and Local Levels by Introducing Communication Channels Such as Organizing e-Conferences, Public Hearings, and Open Meetings.

    MN0009, 2014, Public Participation

  23. Launch “Smart Government” Program, for Delivering e-Public Services to the People Regardless of Distance and Location Through the Public Service Portal.

    MN0010, 2014, E-Government

  24. Create a Single Access Public Service for Citizens Without Requiring Supplementary State Registered Data, Based on Principles of “One Citizen-One Public Servant”.

    MN0011, 2014, Public Service Delivery

  25. Improve and Develop Smart e-Service Capability for “One Window-Public Service” and Introduce It as a Standard Unit of Public Service.

    MN0012, 2014, E-Government

  26. Increase Number of “Public Service Online Machines” at Local Levels for Delivering Public Services to Individuals in Remote Areas, as Well as Increase the Content of Its Data.

    MN0013, 2014, E-Government

  27. Report Public Feedback on Government Performance Received from the Government’S “11-11” Center. Government Shall Also Establish a Data System That Responds to and Tracks Petitions and Enquiries.

    MN0014, 2014, Public Participation

  28. Develop and Publish E-Mapping of Crime Occurrence.

    MN0015, 2014, E-Government

  29. Create a United Information Database on Law Enforcement Activities, Crimes and Violation Records, and Ensure That the Database Is Accessible to Relevant Bodies.

    MN0016, 2014, E-Government

  30. Introduce a System of Random Disclosure to the Public of Asset and Financial Statements of Any Public Servants.

    MN0017, 2014, Asset Disclosure

  31. Publish the Asset and Financial Statements of Officials Who Work in Organizations with a High Likelihood of Corruption Index on Websites and Ensure Citizen Monitoring.

    MN0018, 2014, Asset Disclosure

  32. Create Regulation That Repeals Decisions Made Without Due Participation of Citizens and Contradict Public Interests, as Well as Hold the Officials at Fault Accountable.

    MN0019, 2014, Legislation & Regulation

  33. Deliver the Draft Laws, Acts, Amendments and Administrative Rules to Public Attention in Due Time. in Particular, Create an Opportunity for People to Access Such Information from “Public Service Online Machines”, Citizens Chambers, and the Public Libraries at Each Provincial Level.

    MN0020, 2014, Capacity Building

  34. Strengthen the Capacity of Citizens by Implementing Certain Projects to Enhance Legal Knowledge of Target Groups Using Simple Language.

    MN0021, 2014, Capacity Building