The content of this newsletter
- About this issue
Need to know
- The Role of SAIs in the Extractive Industries and the Importance of Building Partnerships
- Many Ways to Lose a Billion: SAIs and the Protection of Government EI Revenue
- How the Resource Governance Index Can Be Used to Audit Extractives
- Public Flashlight on Extractive industries: WGEI Enters Consortium with Civil Society Organizations
Trainings and Events
- WGEI Steering Committee meeting held in Washington D.C. 25th – 28th September 2017
- Extractive Industries (EI) Training from 11th – 15th September, 2017
- Course Announcement: Reversing the Resource Curse 15 – 26 April 2018
About this issue:
Welcome to the ninth edition of the WGEI newsletter! In this edition of the newsletter, you can read about the WGEI Steering Committee meeting held in Washington on 25th – 28th September 2017, the Extractive Industries Workshop conducted in Kampala on 11th – 15thSeptember 2017 and an upcoming training on Resource Curse on 15th – 26th April 2018. You will also read about the Role of SAIs in the Extractive Industries, How the Resource Governance Index Can Be Used to Audit Extractives and Many Ways to Lose a Billion pertaining to how resource-rich countries fail to secure a fair share of natural resource wealth. Furthermore, this edition includes an article on WGEIs engagement in to a consortium seeking for funding under the Department for International Development’s (DFID) “Open Society” initiative.
Have a nice read!
Need to know
The Role of SAIs in the Extractive Industries and the Importance of Building Partnerships (By Eli Wærum Rognerud)
SAIs provide a unique check on the way governments manage a country’s natural resources. Yet it is only when the results of audit have been made public, citizens are able to hold the custodians of public resources accountable. For that, SAIs cannot rely of government process alone, but must lever the engagement of media and civil society.
ISSAI 12 defines that SAI delivers value and benefit to SAIs in a least three different ways, by:
- Strengthening the accountability, transparency and integrity of government and public sector entities
- Demonstrating ongoing relevance to citizens, Parliament and other stakeholders and
- Being a model organization through leading by example
Similarly, strong and effective Supreme Audit Institutions can contribute to better and more transparent oversight of the Extractive Industries (EI), improve governance and help to ensure that governments manage natural resources in the best interest of the public. SAIs’ mandate and contribution span the entire EI value chain, from the development of strong legal frameworks, to fair and transparent revenue collection and distribution, and the monitoring of environmental impact and sustainable policies. Read More…
Many Ways to Lose a Billion: SAIs and the Protection of Government EI Revenue (By Don Hubert )
Resource rich countries often fail to secure a fair share of their natural resource wealth. Sometimes this is the result of weak national legislation and poorly negotiated contracts. Frequently it is the result of company strategies to minimize tax payments.
A list of national-level benefits from the extractive industries includes economic growth, employment, infrastructure, corporate social investment and taxes. Of these five, taxes are the most significant. According to the Chair of Tullow Oil, “the biggest single contribution by far that we make is the tax that we pay. And it dwarfs the others.”
Supreme Audit Institutions (SAIs) have an essential role to play in ensuring that governments get a reasonable share of EI revenues through taxes and other fiscal instruments such as royalties and production sharing.
The WGEI has oriented its work around the EI value chain. The 5th step in the chain is the “Collection of Revenues.” However, the objective is not simply to collect revenues but to maximize those revenues. Securing a reasonable share requires establishing appropriate fiscal terms in the legal framework, negotiating good contracts with resource companies, and monitoring project revenues and project costs.
How the Resource Governance Index Can Be Used to Audit Extractives (Dana Wilkins )
As I have argued in a previous blog, supreme audit institutions are natural guardians of resource governance. They have both the legal mandate and the access—at least in theory—to be an independent check on the management of extractives all along the industry decision chain.
In Uganda, for example, the Office of the Auditor General has proven adept at responding to the unique challenges of resource extraction. The office’s most recent annual reports identified significant underpayment of gold royalties, disallowed more than USD 70 million in old oil company cost claims and called out dangerous weaknesses in the government’s management of oil data.
In just the last few weeks, article after article has covered the shocking findings of the most recent report by South Africa’s auditor general, including serious failings in the management of the state-owned oil company.
But supreme audit institutions, known as SAIs, aren’t always able to function so effectively in this space. They are often limited by insufficient funding and internal technical expertise, refused access to financial records and documentation, and even threatened over critical findings. It doesn’t help that audit reports can be intimidatingly long and complicated, or that SAIs tend to shy away from direct engagement with civil society and journalists. Luckily, there is a great group of SAI professionals committed to addressing these challenges: the INTOSAI Working Group on the Audit of Extractive Industries (WGEI). Read More…
Public Flashlight on Extractive industries: WGEI Enters Consortium with Civil Society Organizations (By Eli Wærum Rognerud )
Networking with non-SAI stakeholders has been a priority for WGEI since the beginning. In October this year, the WGEI entered into a consortium with a group of non-SAI stakeholders to seek donor support for extractive industry audit and civil society dialogue.
A number of multilateral organization and initiatives, government bodies as well as civil society organizations are working to promote good governance within the extractive industries.
SAI’s engagement with external stakeholders is therefor of great importance, as it allows knowledge and experience sharing across the industry. It may help SAIs identify and respond to emerging risks and challenges, and it may identify partnerships for resource mobilization. Moreover, the engagement of external stakeholders promotes awareness as well as increased understanding of SAIs within a society at large, and may enhance SAIs’ impact as their role and report findings are made available to a larger public. The WGEI has therefore made it one of its objective to promote networking and stakeholder engagement within the WGEI community. Read More…
Trainings and events
WGEI Steering Committee meeting held in Washington D.C. 25th – 28th September 2017 (By SSali Edward and Stefanie Grace G. Fernandez )
Starting from 2014 the INTOSAI Working group on Audit of Extractive Industries (WGEI) organizes a yearly meeting with its members together with regional bodies and/or external speakers in the extractive industries (EI) sector. In exception, the annual meeting held this year is a working meeting for the WGEI Steering Committee (SC) members, where regional bodies and a range of external speakers were also invited.
The main objective of the Steering Committee meeting that took place from 25th- 28th September at the U.S. Government Accountability Office (GAO) in Washington D.C., is to chart the way forward regarding the implementation of WGEI’s three-year Activity plan for 2017-2019. The SC meeting had very fruitful discussions about the activity plan and identified specific goals and tasks to be implemented under different activities. During the meeting, several presentations and papers were presented by activity leaders. The external subject matter experts were also brought in to address the steering committee members on the key topical issues facing the extractive industries.
Extractive Industries (EI) Training from 11th – 15th September, 2017 (By SSali Edward)
The Office of the Auditor General of Uganda in collaboration with the INTOSAI working group on the audit of extractive industries (WGEI) community of practice and Afrosai-e organized an extractive industries training workshop that took place in Kampala Uganda from 11th -15th September 2017.
This training helped participants to share knowledge and experiences regarding the topical issues affecting the extractive industries and the trends prevailing currently. Various papers and presentations were discussed including among others; the overview and characteristics of the extractive industries, The Petroleum and minerals value chains and key players (Industry, government), petroleum and minerals’ Regulatory frameworks, Identification of Key Risks in the extractive industries sector along the petroleum and solid mineral value chain, the fiscal regimes that are adopted in petroleum and minerals sectors and their major terms. Read More…
Course Announcement: Reversing the Resource Curse 15 – 26 April 2018 (By Dana Wilkins )
Applications are now open for the 2018 edition of NRGI’s Reversing the Resource Curse, which will be held from 15-26 April 2018 at the Central European University. Full information on the course can be found at: http://bit.ly/2jgL1VV; some highlights below.
We would love to have more SAI participants this year so please consider applying and/or sharing this notice with others who might be interested. NRGI can also offer a few country-specific scholarships for individuals from Colombia, DRC, Ghana, Guinea, Indonesia, Mexico, Mongolia, Myanmar, Nigeria, Tanzania, Tunisia, and Uganda. Read More…