Standards Help Projects Become Engines of Development

Q: How do EITI’s standards help in the development of the mining industry?
A: EITI’s principles were agreed 15 years ago and the main purpose is to ensure that projects in the extractive industry act as engines for development. This discussion started when the Millennium Development Goals (MDGs) were established. Most countries acknowledged that revenues from these projects were being misused due to a surge in corruption and mismanagement of resources. Transparency is EITI’s core activity. For this to work, you need a good legal framework that acts as the bridging point between investors and the owners of the resource. You also need good monitoring, revenue collection and its correct distribution. This monitoring needs to be present throughout the value chain. The three main actors we work with are the government, industry and society. Government has the commitment power, as it can ask companies to disclose information. When a country commits to working with EITI, it is also committing to using the best international standards, but at the same time it has to work hand in hand with the industry, civil society, parliaments, activists, think tanks and universities.
Q: What is EITI’s strategy to promote the implementation of these standards at the corporate and national levels?
A: To date, we have 52 members and these countries are very committed to the cause. We work under a validation scheme, where every three years our team reviews and ensures that the requirements are being met, as well as executing a disclosure and impact check. With new members, we are constantly working on disclosure of information. Two examples of this are beneficial ownership and the concept of transparency. Beneficial ownership was identified in 2016 and it is needed to allow society to monitor which company has been awarded projects from any auction process. At some point, we had this discussion in Mexico when the Energy Reform was established. In this context, it was very important that the government knew every detail around licensing. CNH did a good job in executing these processes with transparency; hence, we identify that Mexico is committed to beneficial ownership. This process has to be similar with contracts. These need to be public because that is the only way analysts and the public in general can check if taxes have been collected properly or even the conditions under which these contracts were awarded. Our work to expand our foothold in different countries is constant. In fact, during 3Q19, Ecuador joined the initiative and we are in ongoing negotiations with the government of Brazil.
Q: What are you doing in Mexico to ensure its participation in the initiative?
A: Mexico started to manifest its interest in participating with EITI around 2014, when the Energy Reform was established. This event also coincided with the spark of the country’s open government policies. Mexico became a candidate country in 2018. This means the country was undergoing our validation process and internal follow-up mechanisms started to take place. By the end of 2018, the country issued an assessment report and we are expecting another one by 4Q19. In addition, some information on the Ministry of Finance website needs to be updated. This ministry has produced many studies and notes in regard to environmental and social issues around awarded projects. The groundwork is done. Given the governmental transition, our work slowed in 2019 but we are looking to re-engage with the administration.
EITI already has a great deal of experience with governmental transitions through our 52 member countries. Some countries require a greater amount of time to adapt, but since we established this conversation when AMLO’s administration took office, we are pleased to note that the Mexican case is going through a normal transition. Even though we understand there are many priorities on the table and this administration has taken a radical approach toward the Energy Reform, we are looking forward to working with the authorities to ensure EITI adds value to the country.