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EITI releases new reporting guidelines for companies buying oil and gas, minerals
Kaieteur News – The Extractive Industries Transparency Initiative (EITI), last week, released new reporting guidelines for companies and commodity traders looking to buy oil, gas and minerals from governments. The guidelines promote a consistent approach to the disclosure of payments to states or to state-owned enterprises.
EITI Board Chair, Helen Clark
The guidelines cover five key steps to data publication. These are, mapping selling entities and transactions; determining the data to be disclosed, including the level of aggregation of the data; providing data assurances; communicating disclosures to selling entities; and determining the way in which data is presented and published.
The guidelines also cover two special cases, namely swap sales and resource-backed loans, the EITI indicated. The body was keen to highlight that the scale and economic significance of payments for these commodities make them a matter of public interest.
“In-kind payments alone”, the initiative said, “make up almost half of total government revenues declared through the EITI – approximately USD $1.2 trillion to date. Data from leading commodity traders shows that payments for purchases made from governments far exceed tax payments.”
The guidelines can be applied by any company in relation to any jurisdiction, but are particularly relevant where oil, gas or minerals are being sold on behalf of the state in countries implementing the EITI Standard.
Together with reporting by governments undertaken in accordance with the 2019 EITI Standard, they enable stakeholders to form a more complete picture of the terms of sale of mining, oil and gas resources.
With this, the body reminded that greater transparency mitigates the risks associated with such trades, which include revenue leakages, misallocation or diversion of revenues, inconsistent terms of trade, conflicts of interest, bribery, corruption and state capture.
In welcoming the guidelines, EITI Board Chair Helen Clark commented, “Commodity trades are essential to the global economy. They play an important role in the global flows of goods that underpin economic growth. These guidelines will help shed more light on the substantial commodity trades involving purchases of oil, gas and minerals from public entities.”
State Secretary Marie-Gabrielle Ineichen-Fleisch, Director of the Swiss Confederation’s State Secretariat for Economic Affairs (SECO) said, “I am delighted that SECO has been able to support the work of the EITI on commodity trading transparency. The guidelines reflect the consensus view of a wide range of stakeholders. I urge all trading companies – including those domiciled in Switzerland – to use the guidelines to build trust in a more transparent and accountable commodity trading sector.”
The EITI’s Working Group on Transparency in Commodity Trading was the driving force behind the guidelines. Participants include representatives of governments, industry, commodity traders and civil society.
These transparency-intended initiatives present themselves in a time where oil companies and commodity traders are competing to market Guyana’s crude for the next 12 months. In fact, 29 applicants, last week, submitted their Request For Proposals (RFP) to the National Procurement and Tender Administration Board (NPTAB)— the body responsible for selecting the winning company.
Kaieteur News had discovered that 14 of the applicants were linked to widespread corruption and fraud.
Public documents show for example that four of the world’s largest commodities trading firms – Trafigura, Vitol SA, Glencore PLC and Mercuria Energy Group have used intermediaries to funnel over US$31 million in bribes to corrupt Petrobras employees, so that they may win big contracts along with acquiring other benefits.
Investigations by the Brazilian government have resulted in convictions and fines that have ensnared senior executives of these companies, while others are still under investigation.
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