The Extractive Industries Transparency Initiative (EITI) Global Conference on June 13th and 14th  in Dakar, Senegal, gathered more than 1000 stakeholders from around the world. This was under the theme “Transparency in transition”, building on the gains achieved in transparency in the extractive sector in the context of the evolving energy transition. Most importantly, the new 2023 EITI standard, which integrates energy transition into the EITI Standard for the first time, was launched as a successor to the 2019 EITI standard. The 2023 EITI Standard thus responds to the need for a higher and evolving bar for good governance in natural resources. The objective of the disclosure requirement in the standard is to ensure the public can access all licenses and contracts underpinning extractive activities (at least from 2021 onwards) to understand the contractual rights and obligations of companies operating in the country’s extractive industries. The requirement further aims to ensure that contract disclosure contributes to stakeholders’ ability to monitor compliance with contractual obligations.

Contract transparency in extractives refers to the openness of the process by which information on rights awarded is shared with stakeholders. This covers the entire value chain from planning, discovery, bidding, negotiation, contracting and implementation, including the revenues generated from extractive operations. Contract disclosure relates to the quality and detail of the information availed to stakeholders. Extractive companies that have adopted policies on contract disclosure have demonstrated that contract transparency is a sound business decision. Contract transparency is important for ensuring that governments, their citizens and companies benefit from extractive industries. Transparency of information empowers citizens and civil society groups to hold their governments accountable for responsible stewardship of national resources and reduces opportunities for corruption among public officials.

Contract transparency improves competition and the quality of procurement, allows oversight by citizen groups and assures firms of a level playing field when they bid. It provides incentives to improve the quality of contracting and improves the investment climate by sending signals to investors and international financial institutions that the costs of investment will not be inflated by bribery and corruption.

In addition, if well harnessed, contract transparency supports getting a better deal from extractive projects to benefit citizens. When contracts are made public, countries negotiate with companies on a more level playing field. The EITI Standard places emphasis not only on disclosures – transparency being necessary, but also on participation and accountability. Disclosure of contracts helps to manage expectations held by communities, governments, and companies. Community monitoring of implementation helps companies reduce local conflict with stakeholders. For example, in DRC, CSOs provided information on the use of social development funds at the Tenke Fungurume copper and cobalt mine, thus improving relations between the company and local communities. Also, awareness of the contract terms improves trust between society, government and companies around agreements. In Cambodia, civil society undertook an analysis of key terms of an oil contract and found that the government had negotiated a good deal with the oil company, which enhanced confidence.

Contract disclosure has become more common, for instance, according to a study by Oxfam, PWYP and NRGI published in June 2023, the percentage of EITI-implementing countries that have deliberately disclosed at least one contract increased from 57 percent in 2017 to 70 percent in 2020. Thirty-seven countries (65%) disclose only partially or not at all. Only 10 countries (about 18%) disclose well in both the mining sector and the oil and gas sector (though a few countries operate in only one of these sectors).

EITI-implementing countries that have succeeded in disclosing their contracts include Albania, Armenia*, Dominican Republic, Guinea, Niger, Peru, the Republic of the Congo, and Senegal, Sierra Leone. However, some countries disclose partially, such as Argentina, Burkina Faso*, Cameroon, Chad, Colombia, Côte d’Ivoire, Germany, Guatemala, Guyana, Iraq, Kyrgyz Republic, Malawi, Mali, Mauritania, Mongolia, among others. In contrast, a good number of countries including Uganda are still not able to disclose their extractive contracts.

Despite good developments on contract transparency and the benefits thereof, Uganda Extractive Industry Transparency Initiative (UGEITI) has finalised and is yet to launch its second EITI report FY2020/2021 without having contracts disclosed by both government and mining companies.  Whereas there is no law compelling the two constituencies to disclose the contracts entered into on behalf of Ugandans, the EITI guiding principles that make contract disclosure mandatory should be respected. Contracts should be disclosed without further delay. Indeed, choosing to delay the transparency and practicing opaqueness undermines the very cause as to why Uganda joined EITI in the first place and casts doubt on whether Uganda government and oil companies are committed to upholding EITI rules. This notwithstanding, the UGEITI MSG has taken a number of steps to facilitate contract disclosure, given the mandatory requirement to disclose all contracts that came into force on 1st January 2021, including the setting up of a committee comprised of MSG members to lead the work on contract disclosure. The remaining task is to have the top management of International Oil Companies, and the Government of Uganda provide guidance and concretise the roadmap for contract disclosure. This should be done sooner than later.

Finally, it is important to note that EITI is premised on four key areas, including data, disclosure, dissemination, and debate, so citizens and CSOs can ask questions on how their resources are being managed and relevant answers are sought. Therefore, failure to provide all the required data to the citizens directly impedes their participation, retards accountability and undermines the effective implementation of EITI in Uganda. Although Uganda is slowly gaining credibility through securing EITI membership by demonstrating willingness and eagerness to subscribe to the principles of transparency and accountability, if contract disclosure is not done, we risk watering down the gains from EITI implementation.

Magara Siraji Luyima - Energy and Extractives Industries Coordinator. 

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extractive industries
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Governance and Accountability