Head of the Norway-based Extractive Industries Transparency Initiative (EITI) Mark Robinson has said that Guyana’s tax framework is not built to facilitate transparency – one of the major requirements of the international EITI standards – and encouraged that it be improved so that Guyana can become fully compliant.
Robinson concluded his three-day visit to Guyana yesterday. The visit was a result of Guyana’s first validation report by the International Board of the EITI. The country received a fairly low overall score in implementing the requirements of the EITI and Robinson’s visit was to meet with the government, the Guyana EITI (GYEITI), industry representatives and other stakeholders to aid in the strengthening of the system of compliance.
EITI is a global standard to promote open and accountable management of natural resources. It seeks to strengthen government and company systems, inform public debates, and enhance trust. In each implementing country, it is supported by a Multi-Stakeholder Group (MSG) comprising government representatives, extractive companies’ officials and civil society organisations working together. The MSG is really the decision-making body of the EITI.
The EITI’s Board validation report was released in April and indicated that Guyana received a 52 points rating, which reflects an average of the three component scores on Stakeholder engagement, Transparency and Outcomes and impact. The exercise was conducted by comparing Guyana’s performance against the 2019 EITI standards.
The EITI Board, in its report, expressed concern over “Guyana’s low score on Outcomes and impact (42 points). This reflects the ad hoc approach to outreach and dissemination, weaknesses in follow-up on EITI recommendations to deliver reforms and insufficient attention to the annual review of outcomes and impact, with a view to informing the annual EITI work plan.”
One of the major shortcomings identified in the report is the legislative shortcomings that prevent the examination of earnings and other information from the extractive industries.
“I am here in Guyana to follow up on the recommendations and a recent assessment on the progress that we’ve made in the recent validation report…I spent the last two days, very intensively, in meetings with all stakeholders. [I had a] meeting with the MSG, industry, government officials and ministers, [and the] Auditor General. So [I met with] a good cross-section of those involved in all aspects of extractives transparency in the country,” Robinson said during a Zoom call with civil society representatives on Friday.
Speaking about the challenges identified in the report, Robinson said that he has been repeatedly emphasizing the opportunities for Guyana to be able to step up and take advantage of those and tackle them. He added that one of the major things he emphasised during the meetings is the importance of tax transparency.
“I have emphasized repeatedly the importance of tax transparency. Companies report the amount they paid to the Guyana Revenue Authority by the company. That’s a requirement in the EITI. Ideally, they should be reported by project which means by mining or by concession but that hasn’t happened yet. Your tax framework is not built for transparency so that’s quite a fundamental area for reform,” he explained.
When asked by Stabroek News whether he was able to get a firm commitment from the government to have the tax regime changed to allow for more transparency, Robinson said that the officials are aware of what needs to be done and he noticed some “keen interest” in moving ahead.
“To be honest, I’ve been flagging it [tax transparency] with your ministers and also with the Guyana Revenue Authority. I think there’s a real recognition that this needs attention [but] I wouldn’t expect to get, in a short visit, yes we must change our tax legislation now. Of course, not in a short time but what I did get was a real sense that this is something that has to be addressed and I certainly know that those from the Guyana Revenue Authority and the Director of Budget there is some keen interest I think in seeing some movement there.
“What form it takes I can’t predict and it’s not for me to dictate terms – of course not – and this is a national process. But the fact is, we’ve put it firmly on the agenda do you’ve now got an opportunity to push on that one,” he responded.
During his engagement with the civil society faction, Robinson said that the details of contracts are incomplete, adding that annexes are absent along with a number of amendments. He noted that these are contrary to the standards of the EITI and areas for the government to improve on.
He highlighted that Guyana lacks a registry of licences in the extractive sector and that was raised with the Guyana Geology and Mines Commission during his engagement with them. He said that he underscored the importance of such a registry to facilitate the work of the EITI.
“Beneficial ownership doesn’t score well at all. Progress is very limited and there’s a commitment in principle but not very much action yet in terms of creating a register. It’s an area where we have absolutely as an International Secretariat offered technical support both to the government and key constituencies or sectors as you see here.
“Another area is that we feel that much more information could be provided on revenue sources and commodity sales as well as revenues arising from a number of different sources in the sector that are not fully recorded. Finally, some limitations around what State-owned enterprises or holding companies report, we’ve highlighted some limitations. We see a real opportunity to use data more smartly in Guyana. We’re not encouraging you just to produce long narrative reports but make better use of data,” Robinson said.
The EITI head added that there is a role for civil society to communicate the data to the wider constituencies, including the remote parts of the country since data and information are not always easy or accessible.
“So really, in short, I think we see lots of opportunities to strengthen the EITI implementation in Guyana in pursuit of the overall objective of ensuring that the country makes maximum use of the resources arising from natural resource wealth in oil and gas and mining and hopefully in due course, in the renewable sector when that really takes root here,” Robinson proffered.
Good foundations
Robinson said that with all of the recommendations out of the validation report, Guyana has established some good foundations for the implementation of the EITI standards. Robinson added that he was able to gauge, during his meetings, that there are real opportunities for change and implementation around the recommendations in the report.
He added that the fact that Guyana has an MSG that is composed equally of three constituencies that meet regularly is commendable. He also lauded Guyana for having a National Secretariat that is largely funded by the government since it is an expectation but does not always happen.
While he identified that there are staffing gaps at the Secretariat, the resources are there to fill those.
“I think this is a real strength of Guyana [as] you do see vigorous public debate, some of it focused on the EITI reporting and validation [and] good media coverage. I know this also extends to forestry and fishing apart from mining oil and gas. Thirdly, I’d have a sense that even if not perfect, there’s reasonable respect for civic space and for civil society to have its say. Civil society has a voice of presence and influence on the MSG.
“In terms of the technical aspects, we are aware that Guyana scores well in terms of getting certain data out in the public domain because the EITI is all about getting data out in the public domain to inform public debate, to promote accountability and perform governance reforms. So we know that there’s much better data now available from the EITI reporting on production of oil, gas and minerals…so foundations are there [and there] some progress on data transparency but there are a number of areas of challenges,” he said.
According to his profile on the EITI’s website, Robinson has been the Executive Director of the EITI since 2018, leading the organisation’s engagement on extractives transparency and managing the International Secretariat. He serves as Board Secretary and is responsible for managing the International Secretariat, fundraising and financial management, and oversight of implementation in EITI’s member countries.
In its validation report, the EITI Board commended Guyana for successfully establishing the country’s first functioning platform for multi-stakeholder discussions of the governance of the extractive industries. It also welcomed Guyana’s efforts to tailor the scope of its EITI implementation to address public demands for information beyond the extractive industries to cover forestry and fisheries.
However, the Board also warned that Guyana could face suspension if it fails to show significant progress.
“The Board has determined that Guyana will have until a next Validation commencing on 1 April 2024 to carry out corrective actions regarding government engagement (Requirement 1.1), industry engagement (Requirement 1.2), MSG governance (Requirement 1.4), work plan (Requirement 1.5), contract and license allocation (Requirement 2.2), license registers (Requirement 2.3), contracts (Requirement 2.4), beneficial ownership (Requirement 2.5), state participation (Requirement 2.6), comprehensiveness (Requirement 4.1), transactions related to SOEs (Requirement 4.5), disaggregation (Requirement 4.7), data reliability (Requirement 4.9), distribution of revenues (Requirement 5.1), social and environmental expenditures (Requirement 6.1), SOE quasi-fiscal expenditures (Requirement 6.2), public debate (Requirement 7.1), data accessibility (Requirement 7.2), follow-up on EITI recommendations (Requirement 7.3) and the MSG’s review of outcomes and impact (Requirement 7.4).
“Failure to demonstrate progress on Outcomes and impact, Stakeholder engagement and Transparency in the next Validation may result in temporary suspension in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, Guyana’s MSG may request an extension of this timeframe or request that Validation commences earlier than scheduled,” the report stated.
The EITI Board commended Guyana for its innovative efforts to undertake outreach during the pandemic, ensuring that a broad range of government, industry and civil society constituencies are consulted in developing the annual work plan would help ensure that the EITI is supporting national reform objectives.
