WGEI Newsletter Issue No. 10 – February 2018

The content of this newsletter

Introduction

  • About this issue

Need to know

  • Linking Extractive Industries and the Sustainable Development Goals
  • Four Ways Supreme Audit Institutions and EITI Can Bolster Each Other
  • How Bankable is Uganda’s Energy and Extractives Sector?

Trainings and Events

  • Transfer Pricing Course held in Oslo 21st – 22nd November 2017
  • Peer Learning Event for EITI Implementing in Francophone Countries in Africa

Introduction

About this issue: 

Welcome to the tenth edition of the WGEI newsletter! In this edition of the newsletter, you can read about Linking Extractive Industries and the Sustainable Development Goals, Four Ways Supreme Audit Institutions and EITI Can Bolster Each Other, How Bankable is Uganda’s Energy and Extractives Sector?, Transfer Pricing Course held in Oslo 21st-22nd November 2017, Peer Learning Event for EITI Implementing Francophone Countries in Africa.
Have a nice read!

Need to know

Linking Extractive Industries and the Sustainable Development Goals (By Sybrand Struwig and Chrisna Botha)

Extractive industries have a vast global footprint and present a primary sector in many countries. Approximately 3,5 billion people live in countries rich in oil, gas or minerals. In 2010, it was estimated that the formal mining sector alone employed more than 3,7 million workers, with a further 25 million people working in artisanal and small-scale mining operations. Research in Peru also indicated that for each direct job in the mining industry, 14 indirect jobs are created. 

In addition to having such a widespread presence in the world, extractive industries contribute both benefits and drawbacks to countries rich in resources. These industries provide energy sources that contribute to a country’s electricity-generating capacity as well as fuel and gas sources for transportation and manufacturing purposes. They further directly and indirectly form an important part of a country’s economy; for example, governments as owners of mining resources derive revenue from these industries, while this revenue enables the functioning of the country’s economy. Extractive industries have an impact on job creation, or the lack thereof. They affect the environment, or the degradation thereof. In addition, these industries influence local content through policies requiring the procurement of goods and services from local suppliers, and employing local workers, feeding back into the country’s economy. They contribute to the development of skills, which can again be hindered by a lack of infrastructure. The industries also have a social impact as they are often associated with inequalities, conflict, and corruption – to name but a few.  Read More…

Four Ways Supreme Audit Institutions and EITI Can Bolster Each Other (By Dana Wilkins and Edna Osei, NRGI )

The board of the Extractive Industries Transparency Initiative is meeting in Oslo this week to discuss, among other issues, the mainstreaming of extractive sector reporting. As focus moves away from EITI reports to governments’ own systems, it is important to examine the initiative’s relationship with key domestic actors like supreme audit institutions.

Supreme audit institutions (SAIs) and EITI have a lot in common. Both involve reconciling extractive sector accounts. Both work across the resource governance decision chain. Both hold themselves and others to high technical and ethical standards. And both are focused on ensuring public resources are managed well and in citizens’ best interests. Read More…

How Bankable is Uganda’s Energy and Extractives Sector? (By Godwin Matte, OAG-U )

A 2015 report on Ease of Doing business by the World Bank ranked Uganda 150 out of 189 countries. Uganda ranks below its East African community neighbours except Burundi, and according to the Uganda Investment Authority (UIA), Foreign Direct Investment (FDI) in 2013 was valued at USD 1.19 Billion mainly from India and China. The country’s energy and extractive sector has seen significant investment in the electricity sub sector through the on-going Karuma and Isimba Hydro Power projects and investment in oil and gas exploration.

The Ministry of Energy Strategic Investment Plan 2014/15 to 2018/19 indicates that currently less than 7% of the rural population has access to electricity services. The government aims at increasing this figure to 24% by the year 2019. Uganda is endowed with numerous natural resources, which if efficiently utilized would broaden the diversity of the energy mix and strengthen the country’s energy security position. Resources for potential exploitation include geothermal with more than 40 geothermal sites under exploration, solar and wind energy, nuclear, oil and gas amongst others.  Read More…

Trainings and events

Transfer Pricing Course held in Oslo 21st – 22nd November 2017 (By Anders Pilskog, NAO )

WGEI held a 2-days transfer pricing course in Oslo facilitated by Anders Pilskog and August Schneider from the Office of the Auditor General of Norway. The course was well attended with participants from Uganda, Sierra Leone, South Africa, Norway and the INTOSAI Development Initiative (IDI).

The aim of the course was both to emphasise the importance of transfer pricing issues within the extractive industries, and to give sessions on how to approach questions that will inevitably arise. The course first introduced the notion of transfer pricing, its significance and incentives. Moreover, the course covered different topics on transfer pricing such as the OECD guidelines on transfer pricing, transfer pricing methods, comparability and functional analyses as well as the implications of transfer pricing to the SAIs’ audit of the extractive industries. By the end of the course, the participants discussed practices and experiences in auditing transfer pricing in the extractive industries sector in their respective SAIs. Read More…

Peer Learning Event for EITI Implementing in Francophone Countries in Africa (By Trygve Christiansen)

Extractive Industries Transparency Initiative (EITI) recently hosted a peer-learning workshop in Yaoundé, Cameroon (28-30 November) for Francophone Africa. A great number of French speaking African countries are working towards implementing the EITI standards, to demonstrate transparency in their extractive industries sectors.

Implementing the standards is challenging. The EITI Secretariat is increasingly interested in using the work of SAIs in this process. Why? Because SAIs may give assurance on the EI revenue figures presented by government. In the EITI reconciliation process the EI companies’ payments to government and government’s receipts from EI revenue shall be reconciled and compared. The companies’ payments shall be verified by their own external auditors, while the government’s reported receipts shall be verified by an independent auditor, preferably a SAI. The question is; how can EITI rely on the verification by the SAI? Read More…

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