EITI Legislation?

05 Dec 2015

Introduction

Trinidad and Tobago has been a member of the Extractive Industries Transparency Initiative (EITI) since 2011 and this year was elevated to Compliant Country status. Implementation of the initiative in T&T over five years has exposed certain impediments to the EITI revenue collection and reporting processes and the question is now being asked as to whether or not T&T should follow the example of other countries and legislate the EITI into the country’s laws. Tanzania, Liberia, Nigeria and Ukraine have successfully enacted dedicated EITI legislation. Mali, Niger, Indonesia, Peru, Burkina Faso and Côte d’Ivoire have established structures by presidential or ministerial decrees to oversee implementation.

Why legislate?

A T&T government decision to approach Parliament to legislate the EITI should only be made after consultation and general agreement among all stakeholders. Such consultation should take place against the backdrop that the EITI, by promoting transparency and accountability in the monetizing of T&T’s oil, gas and mineral resources, is protecting the people’s patrimony and our children’s inheritance and everything should be done to ensure its success. Among the benefits that would justify legislation are (a) an improvement in the efficiency of the implementation process with a resultant enhancement of government’s revenue collection and (b) the bringing of stability to the EITI by insulating it from adverse political decisions whenever there is a change in government.

The essence of EITI implementation is the publication of annual EITI Reports by an Independent EITI Administrator after he has reconciled the revenues declared by government to have been received from extractive companies with the corresponding payments declared by the companies to have been made to government. The main impediment to the process found in T&T is the confidentiality requirement of Section 4 of the Income Tax Act, Chap 75.01 that prevents staff of the Board of Inland Revenue from disclosing to a third party revenue payments even if the payer agrees to such disclosure. That means that EITI implementation could be frustrated at the first hurdle. An 18 months search by the Attorney General’s Office for a solution eventually overcame the problem without having to go to Parliament to revise the Act. The AG’s advice came with a strong recommendation that EITI legislation be enacted as a matter of urgency to address that and any other implementation issues.

In furtherance of the recommendation to legislate the EITI, the Steering Committee that is overseeing EITI implementation took a decision in 2012 to have draft legislation prepared for discussion. With assistance from the Inter-American Development Bank, the Extractive Industries Transparency Initiative Agency Bill was drafted to enshrine EITI requirements into law so as to cement T&T’s participation in the initiative and facilitate full compliance with the EITI Standard Requirements. The Draft Bill is now receiving the attention of the Ministry of Energy and Energy Industries and Minister Nicole Olivierre’s decision on the way forward is awaited.

Issues to consider

Stakeholders’ consultation on the Draft Bill will have to consider many issues including:

  • Should EITI reporting remain voluntary thus allowing some companies to refuse to participate or should it be made mandatory? The latter will ensure that new entrants to the T&T extractive sectors know in advance that EITI participation is a legal requirement.
  • Should the existing Steering Committee be given a legal identity to broaden it powers in overseeing and managing EITI implementation? With what powers should it be vested to impose penalties for any non-compliance?
  • Should Steering Committee members be appointed by the President of the Republic and not the Cabinet so as to insulate the committee from political bias?
  • Should the Steering Committee members be selected by the respective stakeholder groups in a democratic process, where practicable, and recommendations made directly to the President for appointment?
  • Should the confidentiality requirement of Section 4 of the Income Tax Act, Chap 75.01 be overridden by the EITI Act with the clear understating that the information so obtained could only be used for the purposes for which it was obtained, i.e. to satisfy the EITI Standard Requirements?

EITI Agency

The EITI Bill, if enacted, would formally establish the Extractive Industries Transparency Initiative Agency as a body corporate mandated to regulate for the establishment, composition and functioning of the EITI Agency Board, its terms of service, including the appointment of new members, reappointment of existing members, composition of subcommittees and remuneration to Board members. It is proposed that the Board will consist of a chairperson and no more than twenty other members selected from Government/state agencies, extractive industries companies and civil society organisations and appointed by the President, and will be mandated to:

  1. Serve as the managing body of the EITI Agency and provide overall strategic decision making;
  2. Determine the scope of the EITI in T&T;
  3. Develop, agree to and review the EITI workplan and revise as may be necessary from time to time and monitor the progress of its implementation; and
  4. Promote or undertake activities that, in its opinion, will assist in achieving the functions of the Agency.

All stakeholders, civil society organisations in particular, are encouraged to participate in the public consultations on the EITI Bill when announced and so shape T&T’s EITI as it moves to the next phase of implementation.