Ethical Performance
inside intelligence for responsible business


moves begin to turn EITI into a permanent fixture

October 2006

The Extractive Industries Transparency Initiative looks likely to be put on a more concrete footing with a board and a secretariat funded largely by its corporate and government supporters.

The initiative was established as an ad hoc organization four years ago to promote greater transparency in revenue payments made by oil, gas and mining companies to government officials in developing countries.

Now an international advisory group set up to consider its future has recommended that it should create a 23-member board supported by a secretariat of six full-time staff to manage its international operations.

The advisory group, which has outlined its proposals in a report to be discussed at an EITI conference in Oslo on 17 October, puts the cost of the new arrangements at between $5million (£2.65m) and $15m (£7.98m) for the first three years.

Supporting companies would be expected to pay 25 per cent of this. Governments would pay half, NGOs 15 per cent and investors ten per cent.

The secretariat would probably be based in Oslo, Norway and the board made up of representatives 'reflecting the multi-stakeholder nature of EITI'. An EITI conference would be held every two years.

The advisory group has recommended that participating companies and countries in future report their progress against a set of indicators at least once every three years, using independent validators approved by the EITI board.

The report also advises the initiative to pay more attention to the mining industry, which it says has lagged the oil and gas sector on revenue transparency. It says the EITI 'should be committed to improving its uptake among mining companies and mining-rich countries', partly through a separate mining sub-group with industry representation.

The advisory group has been chaired by Peter Eigen, chairman of Transparency International, and includes Graham Baxter, BP's corporate responsibility vice-president, Edward Bickham, executive vice-president of external affairs at Anglo American, and Karina Litvack, head of SRI at F&C Asset Management. Eigen, who is a leading contender to chair the new board, told EP that he did not see the board necessarily existing beyond three years, after which the initiative could run itself in other ways. He added that the EITI might eventually expand to cover other sectors such as forestry, although decisions on this were some way off.

The advisory group's brief, drawn up by the UK government, was to recommend how the initiative could be given more solid foundations to increase its influence. The group says the EITI needs to collect evidence of how countries and companies benefit from revenue transparency.

The benefits that could be expected to flow from greater transparency and bearing down on corruption were highlighted at the Emerging Markets Forum held in Jakarta, Indonesia last month, where delegates heard an estimate from the Asian Development Bank that each year $300billion of infrastructure investment in Asia is stalled by officials' reluctance to approve 'bankable projects'.

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