Extractive Industry Transparency Initiative (EITI) in Timor-Leste
|On 1 July 2010, Timor-Leste completed a seven-year process of becoming compliant with the standards of the Extractive Industries Transparency Initiative (EITI), which was appreciated by the Government and by La'o Hamutuk. Ever since then-Prime Minister Mari Alkatiri spoke at the founding conference of EITI in 2003, governments, civil society and oil companies have worked together to achieve this goal, and La'o Hamutuk congratulates them all for making Timor-Leste the third EITI-compliant nation in the world. Compliance was achieved after independent validators verified Timor-Leste's first EITI report (for 2008).|
Extractive Industries Transparency Initiative is a worldwide effort to improve transparency and accountability in management of revenues from oil, gas and mining, established in September 2002 by the British government, and now coordinated by Norway. EITI is a voluntary coalition of governments, companies, civil society groups, investors and international organizations. Oil-consuming and industrialized nations encourage EITI to improve revenue management by governments of oil exporting countries through the verification and publication of company payments and government revenues. A number of oil and mining companies say they are willing to use EITI as an international standard, although most will implement it only when governments of resource-producing countries require them to do so.
Transparency in revenue management alone does not ensure a fair and just use of non-renewable resources, and transparency alone does not address many other problems which confront citizens of extractive-dependent countries, such as sustainability, reducing petroleum dependency, violations of community and human rights, environmental protection and attention to vulnerable groups.
Iha loron 1 Julho 2010, Timor-Leste kompleta prosesu ida ba tinan hitu atu sai kumpridor ho standar Inisiativa Transparansi ba Industria Extrativa (Eng.), ka ho lian Ingles hanaran Extractive Industries Transparency Initiative (EITI), ne’ebe mak Governu (Port.) no La’o Hamutuk apresia. Komesa hosi tempu ne’ebe Primeiru Ministru Mari Alkatiri koalia iha konferensia lori hari EITI (Eng.) nian iha 2003, governu sira, sosiedade sivil no kompania mina sira servico hamutuk ona atu atinzi objektivu ida ne’e, no La’o Hamutuk kongratula sira tanba halo Timor-Leste sai hanesan nasaun kumpridor terseiru iha mundu. Timor-Leste sai kumpridor depois de ema independente ne’ebe halo validasaun (Eng.) verifika relatorio EITI Timor-Leste nian ba dala uluk (ba 2008).
Inisiativa Transparansia ba Industria Extrativa mak esforsa mundial ida atu hadi’a transparansia no akuntabilidade iha manajementu rendimentu hosi mina, gas no minerais, estabelese iha Setembru 2002 hosi governu Britania, no agora Norvegia mak kordena. EITI mak koalisaun voluntariamente entre governu sira, kompania sira, grupo sosiedade sivil sira, investidores sira no organizasaun internasional sira. Nasaun konsumidor mina sira no nasaun industializadu sira enkoraja EITI atu hadi’a manajementu rendimentu hosi governu nasaun exportador mina, liu hosi verifikasaun no publikasaun pagamentu kompania no rendimentu governu. Kompania mina no osan mean balu hateten sira sei pronto atu uza EITI hanesan standar internasional ida, maski barak hosi ne’e hein atu implementa nia somente to'o governu nasaun produtor sira obriga sira atu halo hanesan ne’e.
Transparansia iha manajementu rendimentu deit la asegura katak rekursu ne’ebe labele hafoun (non-renewable resources/rekursu nonrenovable) bele uza ho justu no los, no transparensia mesak labele responde ba problema barak seluk, ne’ebe sidadaun hosi nasaun ne’ebe depende ba extrativa sira konfronta, hanesan sustentabilidade, hamenus dependensia ba petroleum, violasaun direitu komunidade no direitu umanu nian, protesaun meio-ambiente no atensaun ba grupo vulneravel sira.
When pre-release versions of Timor-Leste's second EITI report, covering 2009, began circulating in December 2010, an erroneous web page from the EITI international secretariat said it had been released (this was corrected when La'o Hamutuk brought it to their attention.) A pre-release 2009 report was analyzed by Revenue Watch Institute and compared with those from 22 other EITI-engaged countries. Timor-Leste's report ranks a little worse than average, as summarized in this excerpt from the RWI website.
Timor-Leste's 2009 EITI report was released on 25 March 2011 at the Ex-Mercado Lama Convention Center. The event includes brief comments from Jose Amaral (NGO Forum), Manuel Tilman (President, Parliament Committee C), Secretary of State for Natural Resources Alfredo Pires, Tony Heynen (Eni oil company), and Martinha da Silva (EITI working group civil society rep).
La'o Hamutuk received electronic copies 10 days later, in English, Tetum, Portuguese and Bahasa Indonesia. (LH shrunk these files to about 1 MB each; the original higher-resolution files were posted to the websites of SERN and the Ministry of Finances about a month later.)
This report was released more than 14 months after the end of the reporting period, in spite of the Government's great pride in becoming EITI-compliant last July. It provides important information about oil and gas revenues during 2009, which comprised about 80% of our economy and paid for 95% of state activities. La'o Hamutuk expects to provide further analysis soon.
This report helps to complete other 2009 annual reports which omitted data, including those from the National Petroleum Authority ("The EITI report for 2009 will capture the details of revenues received and distributed.") and the Ministry of Finance on the Petroleum Fund ("The previous report provided by the Auditor and included in the Petroleum Fund Annual Report based on Guidelines adopted by the EITI is no longer deemed necessary as the Government has commenced issuing annual EITI Reports on a separate basis.").
Durante pre-lansamentu relatoriu EITI Timor-Leste ba dala rua nian, ba tinan 2009, ne’ebe sirkula ona iha fulan Dezembru 2010, iha informasaun ne’ebe lalos husi pajina web Sekertariadu Internasional EITI nian, ne’ebe hateten katak relatoriu EITI Timor-Leste nian publika ona (informasaun ida ne’e sira halo los, hafoin La’o Hamutuk lori asuntu ne’e ba sira). Versaun relatoriu EITI 2009 pre-lansamentu nian hetan ona analiza husi Revenue Watch Institute no halo komparasaun ho relatoriu husi nasaun 22 seluk ne’ebe involve iha EITI. Relatoriu husi Timor-Leste okupa iha numeru ida ne’ebe kiik liu duke media (rata-rata). Konforme parte husi rezumu husi RWI nia website.
Relatoriu 2009 ne’e lansa iha 25 Marsu 2011 iha Sentru Konvensaun Eis-Merkadu Lama. Eventu ne’e inklui komentariu badak husi NGO Forum nia reprezentante Jose Amaral, Manuel Tilman (Prezidente, Komisaun C, Parlamentu Nasional), Secretariu Estadu ba Rekursu Naturais Alfredo Pires, Tony Heynen (kompania mina Eni), no Martinha da Silva (representate husi sosiedade sivil iha Grupu de Trabalhu EITI nian).
La’o Hamutuk simu kopia eletronika ba relatoriu ne’e hafoin loron 10 husi loron lansamentu nian, relatoriu ne’e iha Ingles, Tetum, Portugese no mos Bahasa Indonesia. (LH hamenus dokumentus ne’e ba 1MB, dokumentus ho rezolusaun maka’as publika iha website SERN no Ministeriu Finansas durante fulan Abril).
Maske Governu orgulhu tamba Timor-Leste sai ona nasaun kumpridor ba EITI nian iha fulan Julhu tinan kotuk, relatoriu EITI ne’e foin lansa depois periodu relatoriu nian remata iha fulan 14 kotuk liu ba. Relatoriu ida ne’e fo informasaun importante nian kona-ba rendimentu mina-rai no gas durante 2009, ne’ebe finansia 80% Timor-Leste nia ekonomia no 95% finansia atividade estadu nian. La'o Hamutuk atu fo analiza tan iha tempu badak.
Relatoriu ida ne’e sei kompleta relatoriu annual seluk iha 2009 ne’ebe nia dadus laiha, inklu relatoriu Autoridade Nasional Petroleu ("Relatoriu EITI 2009 nian sei kapta ho deitalhadu ba reseitas ne’ebe simu no reseita ne’ebe distribui.") no Relatoriu Ministeriu Finansa nian kona-ba Fundu Petroleu ("Relatoriu anterior nian ne’ebe prepara husi Auditor no inklui iha Relatoriu Annual Fundu Petroleu bazeia ba Matadalan ne’ebe EITI adopta la presiza ona tamba governu hahu ona atu publika Relatoriu Anual EITI nian ketak.")
On 25-26 August 2011, the Ministry of Finance hosted a regional EITI conference "Beyond EITI: Timor-Leste Transparency Model" which was opened by President Jose Ramos-Horta and World Bank Managing Director Sri Mulyani. The following day, Prime Minister Xanana Gusmăo gave a keynote speech, and Finance Minister Emilia Pires opened the Procurement Portal (see page with the largest contracts from 2009-2011). La'o Hamutuk observed that the conference was ignoring some key issues, such as the just-passed laws weakening the Petroleum Fund and enabling borrowing, so we distributed some thoughts to the attendees. The Government celebrated the conference with a press release, and the Ministry of Finance published official notes from the conference a few weeks later.
Iha loron 25-26 Agosto 2011, Ministeriu Finansas organiza konferensia rejional EITI ho titulu "Beyond EITI: Timor-Leste Transparency Model." Presidente Jose Ramos-Horta (Eng.) no Banku Mundial Managing Director Sri Mulyani loke Konferensa ida ne'e. Loron ida tuir mai, Primeiru Ministru Xanana Gusmăo fo diskursu prinsipal, no Ministra Finansas Emilia Pires loke Portal Aprovisionamentu (hare pajina ida ho kontratu boot liu 2009-2011). La'o Hamutuk hare katak konferensia ida ne'e la fo atensaun ba asuntu importante, hanesan lei rua foin hetan aprovasaun atu hafraku Lei Fundu Petroliferu no kria prosesu atu deve. Entaun ami fahe hanoin balu ba partisipante sira. Ami sei tama dokumentu tan iha ne'e bainhira ami hetan.
As the end of 2011, Timor-Leste's Government revised its guidelines describing how companies should report their payments to EITI. The Government opened a tender in January 2012 for a company to prepare the 2010 and 2011 EITI reports, partly in response to concerns raised by civil society and others that continued use of the same auditor used for many other Government activities could jeopardize the integrity of the EITI process. In March, SERN awarded the $85,400 contract to Moore Stephens LLP, of London UK, which won out over Deloitte (Australia), Moore Stephens (Malaysia), Lochan & Co. (India) and Merit & Partners (Australia).
In April, Timor-Leste's Government announced new transparency portals on Foreign Aid and Government Results. However, La'o Hamutuk has observed that many Government transparency initiatives (especially the Procurement Portal) fall short of what is claimed, and we wrote an open letter (with annex) to the Minister of Finance explaining our concerns.
In April 2012, Focus on the Global South released Lessons of Transparency from EITI, a 30-page report which found many of the same limitations La'o Hamutuk has observed with the EITI process in Timor-Leste.
Moore Stephens presented draft reconciliation reports for 2010 and 2011 to the Timor-Leste EITI Multi-Stakeholder Working Group (MSG) in September, but oil companies objected to the level of disaggregation in the report, especially about penalties paid due to unsuccessful tax avoidance. Civil society representatives on the MSG advocated for this transparency, supported by the NGO Forum, and the discussion continued at MSG meetings on 5 October, 12 October and 16 November (minutes of earlier meetings are on the EITI-TL website). The MSG also adopted its work plan for 2012-2017.
At its meeting on 26 November, the MSG decided to publish the reports. Although some oil companies still prefer that it not be circulated, La'o Hamutuk posted near-final drafts of the reports for 2010 and 2011 reports in late November.
In April, EITI expert Diarmid O'Sullivan published What's the Point of Transparency? (also Tetum) which examines EITI and the governance of natural resources in Timor-Leste, Liberia and other countries. After describing the results from EITI to date, the author concludes that EITI is "a potentially useful catalyst for governance reforms, not a transformative one" and offers seven suggestions for making it more effective.
At the end of May, transparency activists from around the world, including representatives of governments, oil and mining companies, and civil society met in Sydney to revise the EITI standard. La'o Hamutuk sent a few comments on the proposed new draft to the EITI secretariat in early April. The revised standard was published in May.
At the end of 2013, the EITI Multi-Stakeholder Group (MSG) adopted their Workplan for 2014. However, in the two meetings held on 17 and 22 January, the MSG could not agree on a format for the reporting template for the 2012 report, which must be published before the end of 2014 to maintain Timor-Leste's compliant status. On 15 April, the civil society coalition Core Group Transparency released a statement Timor-Leste should publish its 2012 EITI Report with disaggregated template (also Tetum).
Following much discussion and controversy, Timor-Leste published its EITI report for 2012 in February 2015, more than a month after the deadline for compliance. (In June 2015, the EITI MSG replaced the report issued in February with a corrected version.)
Unfortunately, the report contains significantly less information than the 2010 and 2011 reports, with FTP (royalty) combined for all products (gas, condensate and LPG), and each company subsidiary's payments being given as one lump sum, rather than for each revenue stream and product. Although the report has more detail for situations when company and government figures didn't match, it has little on revenues received -- less than the Central Bank, Ministry of Finance and National Petroleum Authority had published more than a year ago. In spite of its reduced transparency, the report was lauded by the global EITI secretariat and Timor-Leste's government. La'o Hamutuk's blog explained why we see it as a step backwards.
The 2012 report laments that recommendations in previous reports have not been implemented, including creating a database of companies and conducting a scoping study prior to reconciliation. It also makes new recommendations to create a legal framework for EITI in Timor-Leste, add detail to the reporting template, begin working earlier and clarify confidentiality agreements demanded by the companies. Although these recommendations would improve technical implementation, they do not advance or protect transparency.
Nevertheless, the 2012 EITI report confirms that oil companies paid $266 million to Timor-Leste in 2012 for "Additional Taxes," which are taxes paid late and associated penalties. However, Timor-Leste could have to return these if the companies win their appeals. They include $25 million paid five years late by Woodside on 29 May 2012, but are mostly not broken down by company.
The 2013 EITI report was published in early 2016, and continues the same lack of disaggregation as the previous one. Timor-Leste's oil and gas revenues dropped from $3.58 billion in 2012 to $3.05 billion in 2013, a 15% decrease. Although declining prices had some effect, Bayu-Undan produced 2.5% fewer barrels in 2013, while Kitan production fell by 56.8%. Only $17.2 million was collected in "additional taxes," much less than in 2012.
In April 2016, following discussion within the Multi-Stakeholder Group (MSG), Timor-Leste published a supplement to its 2013 EITI report, with a little more information about employment and the no-bid PSC award. In August ANPM provided additional information on 2013 production from Bayu-Undan and Kitan.
Since late 2015, the companies had been urging the MSG to ask the global EITI secretariat for an exception ("adapted implementation" in EITI jargon) which would allow it to ignore EITI requirements to publish production and export volumes and values disaggregated by commodity (reported separately for LNG, LPG, condensate, etc.), as well as revenue data disaggregated by individual company, government entity and revenue stream. The MSG sent this request in May, and the EITI Board rejected it on 22 July. The Board found that the MSG "has not sufficiently demonstrated that it faces exceptional circumstances that necessitate deviations from EITI’s disclosure requirements. The request provided limited rationale for why publication of the information is considered commercially sensitive. In taking this decision, the EITI Board also emphasised the need for comparable treatment between countries and ensuring that the EITI Principles are upheld, including ensuring that the EITI process is sufficiently inclusive, and that the EITI Report is comprehensive, reliable and will contribute to public debate."
In August 2016, Timor-Leste opened a tender for a consultant to prepare and reconcile Timor-Leste's EITI reports for 2015 and 2016, which was awarded to Ernst and Young in October for $104,000 (right).
EITI requires compliant countries to be re-validated to see how they conform with the 2016 EITI Standard, and the global EITI conducted this process for Timor-Leste, using an independent validator, the Sustainable Development Strategies Group (SDSG), which visited Timor-Leste in June and July. In August, SDSG released a 99-page Report on initial data collection and stakeholder consultation, and in November they produced a Validation Report (including the draft scorecard at left), finding that "Timor-Leste’s implementation of EITI may be said to have taken some steps back in recent years", and highlighting
However, SDSG found that most of these problems resulted not from "a lack of data but rather strained relations among stakeholder groups, lack of trust, and lack of capacity. Implementation of EITI recently may even be said to be driven more by the desire to ‘check the boxes’ and avoid suspension rather than reflectively pursuing the overall objectives of disclosure and transparency." SDSG agreed with the EITI Secretariat that Timor-Leste's "progress has been meaningful (less than compliant, see box below) with respect to industry engagement, civil society engagement, MSG governance, level of disaggregation, data quality and assurance, social expenditures, and outcomes and impacts. In addition, we find that progress is likewise meaningful with respect to the work plan, register of licenses, production data, export data, and comprehensive disclosure of taxes and revenues."
After the report was circulated, the Multi-Stakeholder Working Group wrote comments as did others. The report and comments were submitted to the international EITI Board. The EITI Secretariat maintains a web page on Timor-Leste's 2016 validation, with more links and documents.
On 11 January, the EITI Board issued a decision on the validation, agreeing that "Timor-Leste has made meaningful progress overall in implementing the 2016 EITI Standard." The EITI Board slightly revised the scorecard from SDSG's draft, agreeing on the new one at right.
Timor-Leste was told to take "corrective actions", with a second validation to begin on 11 January 2018. They include (abridged):
According to EITI rules, Timor-Leste should have published its 2014 EITI Report by the end of 2016, but this was not done. Therefore, on 3 March 2017, the EITI Board decided to suspend Timor-Leste, effective immediately (official decision on EITI website). If the 2014 report is published before 30 June 2017, the suspension will be lifted, but if not, it will remain in force until the publication of the 2015 EITI report, which must be published by the end of 2017.
|Commentary and analysis from La'o Hamutuk|
Komentariu no analiza husi La'o Hamutuk
|Web links||Liga ba web|
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)