May 29 ,2022

Source

-country risks suspension if recommendations not addressed

Guyana’s fairly low overall score in implementing the requirements of the Extractive Industries Transparency Initiative (EITI) is being primarily blamed on the government for its failure to enact the legislative changes for the holistic implementation of the recommendations.

The EITI’s Board 2019 validation report was released last month and indicated that Guyana received a 52 points rating which reflects an average of the three-component scores on Stakeholder engagement, Transparency and Outcomes and impact. This report was available to the government in March 2021.

The EITI Board, in its report, expressed concern over “Guyana’s low score on Outcomes and impact (42 points). This reflects the ad hoc approach to outreach and dissemination, weaknesses in follow-up on EITI recommendations to deliver reforms and insufficient attention to the annual review of outcomes and impact, with a view to informing the annual EITI work plan.”

One of the major shortcomings identified in the report is the legislative shortcomings that prevent the examination of earnings and other information from the extractive industries.

EITI is a global standard to promote open and accountable management of natural resources. It seeks to strengthen government and company systems, inform public debates, and enhance trust. In each implementing country, it is supported by a Multi-Stakeholder Group (MSG) comprising government representatives, extractive companies’ officials and civil society organisations working together.

A source who  was connected to the Guyana EITI (GYEITI) Secretariat told Stabroek News that the government is aware of what it needs to do to ensure full compliance but has opted to instead drag its feet.

“The list of recommendations was approved by the MSG [Multi-Stakeholder Group], which includes the government sector. The Government committed to implementing the EITI and therefore the recommendations of the EITI Reports and this is not the first time that the government has been called on to make the legislative changes

“We have had reports from 2017, 2018, 2019 and the 2020 report is due at the end of May and they all have highlighted that the government should implement the legislative changes that would pave the way for the better implementation of the standards. The reports are self-explanatory and one of the important things for EITI implementation is civil society participation and the government’s disclosure of the contracts and licenses and revenues. So, that has not been forthcoming because we have the law that prevents GRA [Guyana Revenue Authority] from disclosing specific taxpayers’ information. They can give us aggregated numbers but that is not enough for EITI and the government knew this when it signed on and now it is making no effort to conform to the standards,” the source explained. The source further stated that the EITI Board’s validation exercise is to see how much of each of the requirements of the standard has been implemented. Failure to address the standards results in low scores. They added that while Guyana received a fairly low score, it did make some improvements and fell above the 50 points mark.

“…the government had enough time to do so. When the second report (2018) came out nothing was done. The third report is supposed to be completed at a time now submitted by the end of May and still, nothing has been done. So the government is not showing any evidence that adequate efforts are being made to implement the standards.

“It’s up to the government to produce evidence that it is making efforts [to implement the standards]. They [government] could have said we are in the process of revising or amending the legislation to allow for this and that but they’re not doing anything. We’ve been pointing this out to them and everybody in the MSG Group has been doing so. But the government is ignoring everything and they’re not making enough efforts,” the source related.

The 2018 report identified that the Guyana Mining Act (1989) does not include any express restrictions on the public disclosure of mineral agreements and licenses by the government. It recommended that the GYEITI Secretariat maintain an archive of copies of all active mineral agreements which can subsequently be included on the GYEITI website as a means of transparency. That was also flagged in the first report.

The report also identified inconsistencies in reporting and reconciliation of revenues while calling for the government to amend Section 23 (1) of the Revenue Authority Act (1996) and Section 4 of the Income Tax Act (1929) to allow the information required for EITI reporting to be disclosed to the Independent Administrator for the purpose of compiling GYEITI reports.

For the oil and gas sector, it had recommended that the government conduct, and use recommendations emanating from a comprehensive study of the legal, regulatory and institutional framework for the sector. Additionally, the government was urged to hire consultants to conduct relevant studies on legislative reforms needed for the sector and formulate draft amendments and legislation to bring existing laws and regulations up to par with the best practices.Most of those recommendations are restated in the 2019 report.

Threat of suspension

The EITI Board commended Guyana for successfully establishing the country’s first functioning platform for multi-stakeholder discussions of the governance of the extractive industries. It also welcomed Guyana’s efforts to tailor the scope of its EITI implementation to address public demands for information beyond the extractive industries to cover forestry and fisheries.

However, the Board also warned that Guyana could face suspension if it fails to show significant progress.

“The Board has determined that Guyana will have until a next Validation commencing on 1 April 2024 to carry out corrective actions regarding government engagement (Requirement 1.1), industry engagement (Requirement 1.2), MSG governance (Requirement 1.4), work plan (Requirement 1.5), contract and license allocation (Requirement 2.2), license registers (Requirement 2.3), contracts (Requirement 2.4), beneficial ownership (Requirement 2.5), state participation (Requirement 2.6), comprehensiveness (Requirement 4.1), transactions related to SOEs (Requirement 4.5), disaggregation (Requirement 4.7), data reliability (Requirement 4.9), distribution of revenues (Requirement 5.1), social and environmental expenditures (Requirement 6.1), SOE quasi-fiscal expenditures (Requirement 6.2), public debate (Requirement 7.1), data accessibility (Requirement 7.2), follow-up on EITI recommendations (Requirement 7.3) and the MSG’s review of outcomes and impact (Requirement 7.4).

“Failure to demonstrate progress on Outcomes and impact, Stakeholder engagement and Transparency in the next Validation may result in temporary suspension in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, Guyana’s MSG may request an extension of this timeframe or request that Validation commences earlier than scheduled,” the report stated.

The EITI Board commended Guyana for its innovative efforts to undertake outreach during the pandemic, ensuring that a broad range of government, industry and civil society constituencies are consulted in developing the annual work plan would help ensure that the EITI is supporting national reform objectives.

The report pointed out that Guyana’s 53.5 points on the transparency standard is fairly low but added that it has made commendable efforts to use EITI implementation to ensure disclosures on areas of public interest, including contract transparency, and commodity sales and environmental aspects of the extractive industries. It further stated that Guyana’s EITI reporting has shed some light on the government’s revenues from the extractive industries for the first time, although weaknesses in company reporting and taxpayer confidentiality constraints mean that only a minority of the government’s revenues have been disclosed through EITI to date.

The Board urged Guyana to ensure complete and reliable revenue disclosures as a basis to support the government’s public finance management reforms.

Guyana achieved a fairly low component score also on stakeholder engagement. It identified the weaknesses in government and industry engagement in the EITI process, including in disclosures of required data. Weaknesses in the multi-stakeholder oversight of EITI implementation have led to challenges both in reporting and in ensuring that the EITI provides a meaningful forum for multi-stakeholder consensus-building, the report added.

“The Board urges the government to implement legal provisions for public participation in policy-making for extractive sector governance, including in the implementation of legal provisions related to free, prior and informed consent in the extractive licensing process, with a view to ensuring full adherence to national policies and laws. Guyana EITI is encouraged to closely monitor the implementation of these legal provisions,” the report stated.

The Board recommended that work be done to strengthen the implementation of the stakeholder engagement process and urged the civil society constituency to consider innovative ways of expanding the constituency engaged in EITI implementation. They recommended further outreach to additional civil society organisations.

The MSG has been pressed to monitor the extent to which the government enables, in policy and practice, public participation in policy-making for extractive sector governance, including in the implementation of legal provisions related to free, prior and informed consent in the extractive licensing process.

Guyana was also urged to ensure systematic disclosures of information about reserves and significant exploration activities in the mining, oil and gas sectors. Guyana is encouraged to systematically disclose any relevant national plans for artisanal and small-scale mining as well as for oil and gas, given the significant public interest in these extractive sectors.