The global transparency group, the Extractive Industries Transparency Initiative (EITI), on Thursday, announced January 1, 2021, as the deadline for compliance with contract transparency requirements by EITI implementing countries.
Under the new guidelines announced in Oslo, all 55 member countries implementing the EITI Standard would be required to publish from that deadline, details of all new and amended contracts, licenses and agreements concluded with extractive companies.
The EITI Chair, Helen Clark, who made the announcement, said EITI member countries are encouraged to publish contracts concluded before that date.
The requirement for member countries to publish new contracts and contract amendments were introduced in the 2019 EITI Standard.
The requirement represents a major step forward in extractive sector transparency.
The EITI noted that several contracts in many of its member countries remain unpublished due to confidentiality clauses, thereby increasing the opacity of the extractive sector and making it more vulnerable to corrupt practices.
Noting that large sums of money are at stake in extractive industry agreements, the global transparency group said contract transparency creates a powerful disincentive for officials to conclude extractive contracts that are partial or result in personal gain.
The EITI said subjecting contract agreements to public scrutiny was more likely to result in fairer agreements, drafted in a way consistent with each country’s legal framework.
Apart from deterring corruption, the EITI said publishing contracts would also help the extractive sector fulfil its potentials and capacity to contribute to national development.
“Communities stand to benefit from contract transparency,” the EITI Chair, Helen Clark, said.
“They (EITI implementing countries) will be able to see how much to expect as revenues from companies.
“Subsidies and tax incentives awarded to companies will be in plain view.
“Stakeholders will be able to monitor obligations placed on companies to the environment, to make social payments, and to provide local employment and use local suppliers,” she added.
To date, 37 countries that implement the EITI have disclosed some or all extractive contracts, in addition to the growing use of contract information in the extractive industries.
The EITI identified the governments in Afghanistan, Armenia, Ghana and Mongolia, among those committed to the agenda of public disclosure of contracts.
Legal framework still pending in Nigeria
In Nigeria, although there are pronouncements by the government about its commitment to public disclosure of contracts, the enabling legal framework is still pending passage at the National Assembly, which is currently debating on the approval of petroleum industry legislation to regulate the process.
Civil society groups under the aegis of Contract Advocacy Network (CONTRANET), Centre for Transparency Advocacy (CTA) and Media Initiative for Transparency in Extractive Industries (MITEI) have stepped up the sensitisation campaign to ensure Nigeria embraces contract transparency.
The executive director of CTA, Faith Nwadishi, said contract transparency must be mandatory for all operators in the oil and gas industry.
In a recent study by CTA, Ms Nwadishhi said findings included in a report showed that several contracts, particularly those awarded to service companies for the production of oil and gas from various mineral assets held by joint venture arrangements in the extractive industries, were not publicly disclosed.
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“If the PIB makes it mandatory for companies to embrace contract transparency by publicly disclosing details of their contracts, Nigeria and Nigerians will be the better for it,” Ms Nwadishi said.
For the Executive Director of Publish What You Pay, Elisa Peter, as the financial strain of the COVID-19 pandemic bites and companies and governments seek to renegotiate deals, the risk of a race to the bottom in contract terms increases.
He called for full and prompt contract disclosure as a powerful weapon against the risks, enabling the public to scrutinise the multi-billion-dollar contracts which have a profound impact on the lives of the people in the extractive industries.
Ahead of the January 1, 2021 deadline, the EITI’s #opendeals2021 campaign and contract transparency week sought to support implementing countries in achieving these objectives.