sharing in governance of extractive industries
Republic of the Congo’s parliament using EITI Reports to approve state budget
Oversight over government and state-owned enterprise is tightening.
Oil continues to dominate the state income – perhaps the reason why scrutiny is increasing. Image showing an ENI rig drilling in Congolese waters. Source: ENI , via geoexpro.com.
The latest EITI Report from Congo B on 2013 confirms the country’s continued high reliance on oil revenues for the state budget. As such, they make up 76% of the state’s income.
Perhaps it is due to their high dependence on oil income that considerable interest in verified figures on oil income is being demanded by the parliament and the ministry of finance.
Parliament demands timely figures
Both chambers of Parliament have asked EITI-Congo’s executive committee to publish the reports by 30 September each year (of previous year). This is to allow Parliament to check government figures of the previous fiscal period before adopting the State budget for the following year. Parliamentarians’ use of EITI data as a control and planning tool is a new aspect of EITI implementation in Congo.
State-owned enterprise publishes quarterly reports
The past year has also seen the tightening of the oversight of the state-owned oil company, SNPC (Société Nationale des Pétroles du Congo). In many countries state-owned enterprises (SOEs) can be a locus of significant revenue loss, if government oversight is weak. This is particularly the case when a large share of government income is paid in-kind, as with the Republic of the Congo. As part of the agreements with operators, the government has received 49 million barrels in 2013.
Upon demand of the Ministry of Finance, the SNPC now issues quarterly reports of verified accounts on the oil received from companies and revenues transferred to the state treasury. Along with the publications of production sharing agreements they provide detailed information about oil resource management by the SNPC.
Both the parliament and ministry of finance are demanding more timely and accurate reporting. This is a sign of tightened oversight on the sector.
Oil dominates government income
The large large share of revenues in 2013 orinigate from the oil sector. Despite the decline in production (10% compared to 2012) total revenue has remained relatively stable at US $5.1 billion. This stability is due to exploration activities and rising oil prices between 2012 and 2013. Most of these revenues are collected in kind (49 million barrels in 2013 representing 80% of total revenue from the extractives). Following the report, roughly half of the proceeds from selling the oil goes to repay oil infrastructure loans.
Oil discoveries in 2013, mainly on ENI’s Marine XII offshore block, should allow the country to keep production at unchanged levels, it might even increase in the medium term. The Republic of the Congo is the 5th largest crude oil producer in Africa. The plunge in oil prices these past few months could however further deepen the budget deficit for this current year.
The mining sector is hampered by a lack of infrastructure
The mining sector is still relatively small representing only 0.04% of total extractives revenue. This situation could change with the country’s iron, potassium and phosphate reserves estimated respectively at over 10 billion tons, 1 billion tons and 500 million tons respectively. Those reserves are not developed mainly because of a lack of infrastructure (poor transport network, unreliable electricity network).
No updated register but new legislation
A key recommendation worth noting is that Congo does not have an updated oil and mining registry, making a global overview of the sector and the availability of reliable data difficult.
This was also one of the main recommendations of EITI of 2012. An updated register would be a leap forward for the sector’s transparency and combined with the new legislation on transparency and tax accountability that was passed in 2014.
Note to editors: we encourage the republishing of our content. Please attribute this article with: "Republic of the Congo’s parliament using EITI reports to approve state budget” was published on eiti.org on 22 January 2015.
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