sharing in governance of extractive industries
Authored by Murjanatu Gamawa and Alex Gordy
The EITI Global Conference in Paris on 18-19 June will showcase emerging best practices in EITI implementation from 52 countries. Ghana has all the building blocks needed to lead Africa in systematically disclosing EITI data.
In March, Ghana EITI (GHEITI) convened a workshop to explore the future of EITI implementation, shifting the focus from publishing EITI Reports to encouraging the systematic disclosure of information by companies and government agencies. A key focal point of discussions was the evolving role of GHEITI’s multi-stakeholder group.
“The Multi-Stakeholder Group’s role shouldn’t fundamentally change with the move towards systematic disclosures, it will remain a key forum for multi-stakeholder consultations and for oversight of disclosures all along the extractives value chain,” Benjamin Nii Ayi Aryee, Advisor on Mining to the Minister of Lands and Natural Resources told the workshop. “Our disclosure tool will just become much more efficient.”
As Ghana addresses the few outstanding gaps from its second Validation, it has a chance to take the lead in Africa on systematically disclosing much of the data required under the EITI Standard. Routine disclosures of license data – through the Ghana Online Repository for mining and the Petroleum Register for oil and gas – has already demonstrated the potential. This timelier, more accessible data has already been widely welcomed. Citizens are able to access information about projects in their region and consider the impact on local communities. Government agencies are improving their management and revenue collection. Industry have welcomed greater clarity and consistency regarding security of their title rights.
The dedicated website for Ghana’s first (ongoing) oil and gas licensing round provides data on license allocations, including licenses offered, bidding process, and technical and financial criteria. When the round is concluded there will be additional information on bidders. This could easily be extended to petroleum licensing through direct negotiations. It could also be replicated for the first-come-first-served process in mining, leveraging the upgraded Minerals Commission website expected in 2019 and building on the tracking of new license applications through the Ghana Online Repository. Enabling public assessment of the efficiency of licensing systems is key to further bolster investor confidence amid discoveries set to double Ghana’s oil production by 2021 and continuing interest in mining licenses.
Information on subnational transfers of mining royalties, which is of considerable interest for host communities, is not yet available on the Office of the Administrator of Stool Lands’ (OASL) website. The OASL publishes information on royalties transferred to local governments through national newspapers, although discrepancies with national transfers according to the revenue-sharing formula are not yet highlighted. The Minerals Development Fund Board’s establishment in 2019 is an opportunity to routinely publish this data. More disaggregated production data (by region) than that currently disclosed by the Chamber of Mines – matching oil data from the Petroleum Commission – would further clarify royalty flows.
“Starting with data that does not require reconciliation, why don’t we just publish it without waiting for an Independent Administrator?” GHEITI National Coordinator Mohammed Bash Abdul-Razak asked. “There needs to be a transition for full systematic disclosure, but let’s move to gradually cut out the intermediary.”
Publishing Ghana National Petroleum Corp.’s audited financial statements is an important step in describing GNPC’s financial relations with government in practice. The Ministry of Finance’s quarterly and annual audited petroleum reports detail GNPC payments and transfers to government, as well as its aggregate crude oil sales on behalf of government. Semi-annual reports from the Public Interest and Accountability Committee (PIAC), an independent statutory body chaired by civil society, detail some of the quasi-fiscal expenditures GNPC is directed to undertake on behalf of government. Relatively small tweaks to these existing public disclosures to ensure a consistent comparison of statutory rules and practice – and systematic publication on the GNPC website – would allow GNPC to take the lead on SOE transparency among EITI implementing countries.
As in Norway and the UK, many of the largest companies operating in Ghana are domiciled in jurisdictions that require, by law, extractives companies to publish their payments to governments worldwide, on a per-project basis. A September 2018 report by NRGI found that a majority of mining companies in Ghana were subsidiaries of companies headquartered in Canada or the European Union (EU), where such reports are required. Several of the largest oil and gas companies, such as Tullow Oil, are also based in the EU. Twelve years of EITI summary data show clearly that the top ten extractives taxpayers accounted for between 93% and 99% of extractives revenues reconciled in GHEITI Reports.
Source: Ghana EITI summary data
Together with the Ministry of Finance’s quarterly and annual petroleum reports, annual budgets and public accounts audit reports, there is already much extractives revenue data already published routinely. There are challenges in terms of how disaggregated this data is: companies’ overseas payments to governments reports are not presented by revenue flow, while government revenue reports are not by company. Confidentiality provisions of Ghana’s Tax Code are a challenge, but not necessarily an insurmountable one: PIAC reports already name some of the country’s largest payers of corporate income tax, based on waivers provided by the Commissioner General of the Ghana Revenue Authority.
At the EITI Global Conference in June, efforts like these will be a key focal point of discussion. Systematic disclosures are not an “all or nothing” proposition. Building and amending government and company systems to routinely disclose data required under the EITI Standard will gradually reduce the need for ever-bulkier EITI Reports, ensure timelier data, and free up the multi-stakeholder group’s (MSG) time to focus on higher value-added EITI implementation.
This article was published on the EITI website on 11 April 2019.
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