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EURASIA REGIONAL TRAINING HUB
EITI Advanced CourseKHAZAR UNIVERSITY ▫REVENUE WATCH INSTITUTE
15-17 June 2012, Baku
xoş gəlmisiniz! ▪ Welcome!▫
ласкаво просимо▪გამარჯობა
▫ Добро пожаловать ▪ Тавтай морилогтун ▫ Қош келдіңіз ▪ Саламатсызбы ▫ Калима خوش
▪آمدید
Introductions:name, organization and…
What is something nice about your
country that most people do not know ?
What is something about the extractive
sector that most people in your country
do not know?
DAY 3DAY 3DAY 2DAY 2
Training OverviewTraining Overview
DAY 1DAY 1
Report AnalysisReport
AnalysisInnovationsInnovations
Theory of
Change
Theory of
Change
Action PlanningAction
PlanningExams/ Evaluati
ons
Exams/ Evaluati
ons
Value ChainValue Chain
Report QualityReport Quality
Country Presenta
tions
Country Presenta
tions
EITI as a “stepping stone”
to other reforms
EXTRACTIVE SECTOR VALUE CHAIN
EITI a Step TowardSustainable Development
Ensuring revenue
transparency
EITI in the value chain
Getting a good deal
Ensuring revenue
transparency
Managing Volatile resources
Deciding to extract
Investing in sustainable developme
nt
Step I: Theory of Change and
The Problem Tree
Problems
Causes(ref. value chain)
Roots ( hard to see causes)
Hint: be specific!
NOT ‘Lack of Transparency‘TRY ‘State owned oil Co. does not publish a budget or sales figures’
NOT ‘Lack of Accountability’ TRY ‘ Parliament does not have the tools and knowledge to understand payments from the extractive sector and hold ministries accountable’
The Metaphor of a Tree
Step 1: Start with 3 problems with the extractive sector in
your country
Step 2: Identify the underlying causes based on the value chain – where do
decisions go wrong?
Hint: Choose problems that are specifically related to the extractive sector.
Question: what is special about the extractive sector and it’s impact on development?
Causes (refer to Value Chain)
Roots ( hard to see causes)
Step 3: Roots explain why poor decisions on the value chain–these are sometimes hidden and many!
Roots ( hard to see causes)
Hint: ‘supply side’ capacity gaps :
• Technical expertise• Lack of international standards• Lack of clarity/ definitions • Adequate staff• Adequate financing• Necessary mandate/Authority• Monitoring and Enforcement• Information• Motivation/Political Will
… but don’t forget the problem includes lack of demand for change too!
• No mobilization/organization of stakeholders
• No international support• Lack of public awareness /pressure• Lack of political will• Lack of interest by media• Lack of awareness of oversight actors
Capacity Gaps
Roots ( hard to see causes)
Hint: think about barriers such as•Structural (lack of strong legislative /judiciary/accountability mechanisms, No access to information)
•Interests (status quo) e.g.• Elites (individuals, families)• Political (parties or politicians also branches e.g., executive) • Networks (factions)• Inter-ministerial rivalry
•Norms (lack of demand for change, no culture of political participation, fatalism, competition rather than coalition networks)
•Beliefs/ attitudes (short term: ‘oil will last my lifetime’; ‘gov. will take care of me’; lack of knowledge of rights; fear; perceptions of fairness; no faith in the state; no faith in the public; need to control the public)
Structural Barriers- Deep Roots
Don’t Get Stuck!
CAPACITY GAP/ STRUCTURAL BARRIER
ROOT CAUSES
POLICYCAUSES
Instructions
Step II:Building a Theory of Change
based on Transparency
Who is a stakeholder in your Problem Tree analysis ?
Hint: definition of a Stakeholder:•who is responsible for the action (implementation)?•who is responsible for decision-making ?•who is affected by the decision?•Others: who have a oversight or monitoring role on the quality of decision-making or who have an enforcement role.
A CB
Stakeholder labeling
Decision- maker
Affected Stakeholder
A CB Decision-
maker
Affected Stakeholder
How can we transform the problem with more transparency and EITI?
Instructions
Present your Tree! (5 min each)
Characteristics of a Quality EITI report
PurposeTo present 10 indicators of a high quality EITI
report and their application to <country>
http://data.revenuewatch.org/eiti/
EITI: a Model for Change
ACTIONDATA (Reports) INFORMATION
Is it good data?:
quality and accessibility
HOW do we use it better?Better report
analysis
WHO should act? WHAT should be
done?Advocacy: building support
Why do we care about report quality?
Report quality depends on local decisions and processes
Global Standards
EITI Rules
Independent Validation
Local Standards
TORsWorkplan
MOU
10 Indicators of Report Quality
Regularity1Timeliness2Materiality3Reliability of Data4Coverage5
Discrepancy6SOEs7Disaggregation8Comprehensibility9Accessibility10
Comparable, objective - NOT exhaustive Focused on reports - NOT process Based on requirements + Best practice (#s 8,9)
1. Regularity
Does the country produce reports every year?
Measured as: #of reports / # of implementing years
The closer the score gets to a 1, the closer the country is to producing reports every year E.g.: country X joined EITI in 2008 and has produced two reportsCountry X Score =2/4, or 0.5
1. Regularity
http://data.revenuewatch.org/eiti/indicators/regularity.php
1. Regularity
http://data.revenuewatch.org/eiti/indicators/regularity.php
1. Regularity and the EITI Rules
First EITI Report within 18 months. –Thereafter, annually.
REQUIREMENT 5E
2. Timeliness
2. Timeliness
http://data.revenuewatch.org/eiti/indicators/timeliness.php
2. Timeliness
http://data.revenuewatch.org/eiti/indicators/timeliness.php
2. Timeliness and EITI rules
–Data no older than the second to last complete accounting period –e.g., an EITI Report published in 2010
based on data no later than year 2008
–Note: after 1st validation…
REQUIREMENT 5E
3. Materiality (Requirement 9 +11)
Is it clearly defined?
Measured as:Is materiality defined in the report? (Y/N)
Materiality thresholds should cover important revenue flows without overburdening the compilation of an EITI report
3. Materiality –Country Thresholds
3. Materiality – is it clearly defined?
3. Materiality and EITI rules
•agreed by MSG in templates•must be disclosed in EITI report!
REQUIREMENTS 9 and 18
4. Data reliability
Is the data provided by company and government audited?
Measured as:Are EITI documents required to be based on audited financial statements? Y/N
If only some companies or agencies did so, RWI provides details in the notes.
4. Data reliability
3. Country Practice on Data Reliability
4. Data Reliability and EITI rules
–If data are already audited, EITI only requires their reconciliation
–If not, EITI requires that the MSG is content with the agreed method of ensuring all data is audited in the future (e.g., a time-bound action plan).
REQUIREMENTS 12 and 13
5. Coverage
Does the report include all main revenue streams and all additional information necessary to assess the value of in-kind receipts and to calculate royalties?
Main revenue streams measured by: Inclusion of all royalties, taxes, fees, bonuses and state-owned enterprise revenues (Y/N/NA)
Additional info measured by: Payment data from all significant companies, commodity prices, production data (Y/N/NA)
5. Coverage
5. Coverage and EITI rules
–Guidance on materiality• List of revenue streams that should be disclosed (R9d);
other payments may be material (R9 e to g)
–No mention of volumes and prices!–Ultimately, materiality defined nationally (9c)
REQUIREMENTS 9, 11, 14 and 15
6. Discrepancies
6. Discrepancies
6. Discrepancies and EITI rules
–Discrepancies must be identified
–Where possible, explained or addressed
–Recommendations for remedial actions
REQUIREMENTS 17 and 18 b5
7. State-Owned Enterprises (SOE)
Does the Report cover SOE payments and receipts?
Measured as: Are SOE revenue data clearly explained? (Y/N)SOEs, e.g. national oil companies- receive large revenues on behalf of government.
NOCs receive ~90% of oil revenues in Yemen, ~70% in Cameroon and ~60% in Nigeria
7. SOE Revenue Flows
7. SOES and EITI rules
–SOEs are often responsible for collecting certain revenue streams and selling physical products. They then transfer some or all of the proceeds to the treasury, either directly or as company dividends. These transactions should be explained clearly in the report.
REQUIREMENTS 9 and 11
8. Disaggregation
Is revenue data broken down and meaningful?
Best determinant of whether an EITI report is useable and significant
Measured by:
Disaggregation at company, revenue stream, project, commodity levels
8. Disaggregation (Best practice)
8. Disaggregation and EITI rules
–EITI policy is neutral
–Must be agreed at the national level!
REQUIREMENTS 9c
9. Comprehensibility (Best practice)
Can readers understand the report?
Measures whether reports have:
a) a summary with key findings and reconciled revenue totals;
b) a clear indication of what currencies and units of measurement are used; c) a written explanation of key findings and recommendations;
d) a definition of terms.
These indicators are not enough to capture readability. Many reports score well but are still hard to understand.
9. Comprehensibility
9. Comprehensibility cont’d
9. Comprehensibility and EITI rules
Rules mention “comprehensibility” • explanation of discrepancies• recommendations where necessary • Encourages summary and comparison of
revenue streams to total revenues etc
REQUIREMENTS 17 and 18
10. Accessibility
Can a citizen find and read the report?
Measured by: •Availability in the official languages of the country (Y/N)
•Accessibility on a government website (Y/N)These indicators may not enough to capture accessibility, e.g. does government make report data known through media?
10. Accessibility
10. Accessibility and EITI rules
–Paper copies distributed–Online dissemination–Written clearly in all appropriate languages–Outreach events
REQUIREMENT 18d
Instructions
1. REGULARITY (# OF REPORTS/#OF YEARS)
2. TIMELINESS(DATE OF REPORTS - DATE OF DATA)
3. MATERIALITY(IS IT DEFINED?)
Company Audit
No Company Audit
Government Audit
No Government Audit
4. DATA RELIABILITY(Are companies and government to provide
data from audited financial statements?)
5. COVERAGE AZB KAZ KYR MON AFG
a) royalties
b) taxes
c) surface, rental or license fees
d) bonusese) state-owned enterprise (SOE) paymentsf) Report covers all extractive sector companies.g) Report states the price of any product received or sold by government.h) Report states the quantity of resources produced.
CAUSES EXPLAINED
CAUSES NOT EXPLAINED
RECONCILED DATA FOLLOWING CORRECTIONS
RECONCILED DATA NOT PROVIDED
6.DISCREPANCY
7. SOE(ARE REVENUE FLOWS EXPLAINED?)
AZB KAZ KYR MON AFG
a) Companies
b) Projects
c) Commodities
8.Disaggregation
AZB KAZ KYR MON AFG
a) SUMMARYb) CURRENCIES AND UNITS EXPLAINEDc) KEY FINDINGS AND RECSd) DEFINITION OF TERMS
9.COMPREHENSIBILITY
IN OFFICIAL LANGUAGE
NOT IN OFFICIAL LANGUAGE
ON GOV WEBSITE
NOT ON GOV WEBSITE
10. ACCESSIBILITY
data.revenuewatch.org/eiti
Basic data
Report Quality Indicators
Compare indicators across countries
Instructions