Companies

Country governments sign up to participate in EITI and then determine the parameters of implementation at the domestic level, including requirements for company reporting. One of the requirements of the government is the commitment to work with the private sector and civil society, and to develop a multi-stakeholder group to oversee implementation. If the country in which a company is operating has chosen to implement EITI, then the company will be expected to implement the initiative through the reporting of payments to the host government on approved templates. For EITI reporting to be effective, it is important that it is implemented by all extractive industry companies (including international, national, and state-owned companies) operating in that country. Moreover, as stakeholders in the process, companies may choose to be involved in the country's efforts by playing a supporting role in the EITI initiation, implementation and review, particularly through joining the Multi-stakeholder Group. Participation in the EITI can result in a number of potential benefits for companies.

Benefits to Participating Companies

Company Confidentiality

In Azerbaijan, concerns about company confidentiality clauses have resulted in an aggregated approach being used in the first report cycle.

In the Kyrgyz Republic, the aggregation issue is less prominent because of the dominance of the sector by a single company.

  • Investment risk mitigation;
  • Mitigating political instability;
  • Reduced operational risks;
  • More predictable operating environment;
  • Reduced cost of capital;
  • Improved access to market through the creation of a level playing field, and the prevention of corruption;
  • Improved social license to operate;
  • Improved shareholder relations and access to capital;
  • Reputational benefits - leader status, acknowledgement for transparency, demonstrated contribution to country's economy, etc.

What does EITI Mean for Supporting Companies?

Use of Audit

In some countries (e.g. Nigeria), a second audit is conducted by an independent auditor who collects and evaluates the payments and revenue data provided by companies and government.

  • Engagement with host government regarding EITI, possibly including: helping to establish the country's EITI implementation work plan, agreeing on a common reporting template, currency and reporting period;
  • Involvement in some form of stakeholder engagement;
  • Providing support to capacity building or other country suggested actions;
  • No obligation to discuss EITI but encouraged to promote the initiative;
  • Expected to disclose publicly all payments made to host government;
    • Data should be based on cash accounting as opposed to accrual;
    • Disclose cash payments already made (e.g. royalties, taxes, petroleum transportation fees, etc. - indirect economic benefits such as construction of infrastructure or employment of local personnel are not included);
    • Only disclose details that are agreed upon with implementing host country;
    • No expectation to break confidentiality;
    • No expectation to disclose payments from non-implementing countries; and
  • Ensure payment data are independently auditable (i.e. obtain an opinion from company external auditor that the information planning to be submitted for EITI is consistent with company financial statements).