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IEITI Future Reports: Expectations and Challenges. Presentation delivered before EITI Compliance & 2 nd IEITI Report Conference Al- Rasheed Hotel & Oil Cultural Centre Baghdad Iraq 3-4 April 2013 By Ahmed Mousa Jiyad, Iraq/ Development Consultancy and Research, Norway.

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Presentation Transcript
slide1

IEITI Future Reports:

Expectations and Challenges

Presentation delivered before

EITI Compliance & 2nd IEITI Report Conference

Al-Rasheed Hotel & Oil Cultural Centre

Baghdad

Iraq

3-4 April 2013

By

Ahmed Mousa Jiyad,

Iraq/ Development Consultancy and Research,

Norway.

Email: mou-jiya@online.noPhone: (+47) 56595699

key message
Key Message
  • Future IEITI reports, compared with 2009 and 2010 reports, are expected to be more thorough, comprehensive and challenging. This is due to:
  • The Revised EITI Standard reflecting increasing importance of and pressure for real, effective, comprehensive and participatory transparency measures.
  • The complexity and diversity of the fiscal and financial frameworks of the contracting modalities in the Iraqi extractive industry and the lessons learned so far.
  • Thus it is imperative to have functional IEITI structure and reporting process.
international efforts for effective transparency
International efforts for effective Transparency
  • Section 1504 of the Dodd-Frank Wall Street Reform Act of 2010 already requires country-by-country reporting of paymentsto governments for all companies operating in the oil, gas, and mining sectors that report to the U.S. Securities and Exchange Commission.
  • Section 111 of the Cut Unjustified Tax Loopholes Act, introduced by U.S. Senators Carl Levin (D-MI) and Sheldon Whitehouse (D-RI) in February 2013 would require all multinational companies to disclose their employees, revenues, and tax payments on a country-by-country basis.
  • The European Unionis debating a law similar to that of the US.
  • Many CSOcalled EITI for tougher disclosure rules and standards. They urged the UK Government to seek EITI Board agreement (in its Oslo February 2013 meeting) on five suggestions.
  • Iraq-EU Partnership and Cooperation Agreement –May 2012 emphasises transparency and the needs to enhance it in Iraq.
  • MoU (17 March 2013) between MoO& USAIDto improve the effectiveness and transparency of MoO operations.
slide5

Revised EITI Standrad: to improve the EITI, by providing better EITI Reports, making implementation simpler, and the EITI a stronger platform for wider reforms.

slide6

The Proposals

  • P1: Contextual information .
  • P2: Revenues distribution.
  • P3: Earmarking for programmes or regions.
  • P4: Mainstreaming EITI data and governments system.
  • P5 & 6: Comprehensive data.
  • P7: Subnational transfers.
  • P8: Data quality.
  • P9: Disaggregation of data.
  • P 10,11 & 12: State-owned enterprises (SOEs).
  • P 13: Sale of in-kind revenues.
  • P 14: Social expenditures.
  • P 15: Transit fees.
  • P 16 & 17: Licenses & ownership.
  • P 18: Contracts.
  • P 19: Civil society participation.
  • P 20: Work-plan.
  • P 21 & 22: Use of EITI data.
  • P 23: Annual activity reports.
  • P 24: Annual review of EITI Reports.
  • P 25: Expert panel.
  • P 26 & 27: What and how to validate.
  • P 28: When to validate.
  • P 29: Who validates.
  • P 30: Financing validation.
  • P 31: Condensing to seven requirements.
  • P 32: Adapted implementation.
  • P 33: Policy notes.
adopting and enforcing the revised standard
Adopting and Enforcing the Revised Standard

After considering 33 Proposals &

10 Working papers

The revised EITI Standard will be adopted in EITI Global Conference in Sydney- “Beyond Transparency”, May 2013.

EITI Secretariat develops transition arrangements for consideration by the Board in Sydney;

The revised Standard comes into force on 1 January 2014.

slide8

Revised EITI Standard along theValue Chain:Ensuring that natural resource wealth transforms into citizen wellbeing

EITI Report

License

&

Contractss

Investment

Increase production

Revenue Sharing

Payments/ Revenues

petroleum flowcharts of resource and
Petroleum Flowcharts of Resource and….

IEA, WEO 2012. In kbd as on June 2012

re venue f low allocation
Revenue Flow & Allocation

$34b paid (25K) &18 to be paid to K

PDR

ID&$

MoF

UNCC:5%

DFI

IOBs:

LC-IB

PER

$

G

O

I

CBI

Annual Budget

FR

SO

IOCs

slide16

Testing!!

* ”R” less than 2- 30%:70%. ”R” is 2 or more 15%:85%

the way forward ieiti structural model reporting process
The Way Forward: IEITI Structural Model & Reporting Process

Tax Authority

IEITI

SOMO

MoO

+

KRG

IOCs

+

SCs

DFI

I

OBs

Rec-onciler

DM

slide18

First: The Mission and Challenges

  • Future IEITI Reports to be more detailed, comprehensive and challenging due to:
  • 1- The Revised EITI standard and requirements;
  • 2- Increasing calls for real and effective transparency measures;
  • 3- The Governing modalities and conditions in the Iraqi extractive industry.
  • Three distinct contracting frameworks: [LTSC ; national efforts] & PSCs (KRG).
  • Many major IOCs and many more Service Companies and Sub-Contractors
  • IOCs with multi-projects involvement
  • Payment: cash and in-kind (LTSC; KRG!!!!)
  • Many IOBs (through SOMO) and KRG (?)
  • Different legal obligations: IOCs vs. IOBs
  • Increasing domestic consumption of petroleum products/refining sector ( domestic revenues in ID, subsidies, accounting prices, etc)
  • Second: Corresponding Requirements
  • National Capacity Development and effective involvement in the IEITI reporting process:
    • IEITI Secretariat:
    • Institutional (structure, setup, etc.):
    • Systemic (rules, procedures, operational modalities, modus-operandi);
    • Human resources (professional and specialised staff: local content!)
  • Awareness & Outreach: Participation & public dialogue ( visibility, accessibility, connectivity, credibility and continuity)
  • MSG (Gov+IOCs+CSO)
  • “Reconciler-Auditor” & “Validator”
third suggestions
Third: Suggestions
  • Proper understanding of the LTSC contracts especially the provision pertaining to fiscal and financial implications. The same applies for PSCs of KRG.
  • Flows of Petroleum “ Oil & Gas” Resources and Revenues (Domestic & Export) require: comprehensive “material balances” and “Integrated National Metering System”.
  • Integrity of SOMO’s operations. Provide monthly data on quantity, quality (crude valuation), price, date of shipment, market destination, and any other vital information for each IOB
  • Meaningful coverage of “Other” Extractive activities of MIM.
  • IEITI should have well structured “Website/ Database” covering all information required for its annual reports, and accessible to the interested public.
  • Consider IEITI annual report as “on-going process” that begins on day one after releasing the previous Report and with full involvement of IEITI staff;
  • IEITI annual report “Timeline” should be carefully planned to allow enough space for proper review, debate and revision;
  • Elaborated Terms of Reference for IEITI report: methodology, terminology, contents, structure, coherence, “materiality threshold”, references, team composition etc.;
  • Independent Expert Review of the “Reconciler” report before adoption by IEITI –MSG.
  • Encourage the “Academia and Research entities” involvement in IEITI activities.
  • IEITI report is a “Sovereign Obligation” to be prepared in accordance with EITI Standard, and it is subject to international scrutiny!. De-politicise IEITI Reports
  • Effective use of international cooperation opportunities (EU, USAID, …) for IEITI capacity development.