Strengthening governance along the extractive industries value chain
The EITI Standard requires countries and companies to disclose information on the key steps in the governance of oil, gas and mining revenues:
Here is a short overview what the value chain steps cover:
1.Legal framework, distribution of licenses and contracts
This section sets the stage of how the sector is governed, particularly in relation to the rights to extract.
3. Revenue collection
The major companies disclose what they pay to the government in tax, royalties, signature bonuses, etc. The government discloses what it receives. The figures are broken down by company, project and revenue stream.
4. Revenue allocation
Once revenues are collected from companies, they need to be recorded in government accounts. Usually, most of the revenue goes to the central government. Sometimes it goes straight to or is transferred to the subnational government or to special funds or projects.
5. Social and economic spending
This covers some of the ways the extractive sector is contributing to social and economic development. Companies disclose where funds have been mandated to be spent on social projects. The government is asked to publish information about the role of the extractive sector in the economy. How many people are employed in the sector? How important is the contribution of the sector to the economy? This allows citizens to understand the importance of oil, gas and mining in their country.
Outcomes and impact
The multi-stakeholder group is tasked with making sure that the information on the sector is made known to the population and fosters public debate. It also assesses the impact of the EITI and whether recommendations from the process have been implemented and transformed into reforms to improve the sector. This is covered in Requirement 7.