From 1 January 2021, all 55 countries implementing the EITI Standard will be required to publish new and amended contracts, licenses and agreements concluded with extractive companies. Countries are encouraged to publish contracts concluded before that date.
The requirement to publish new contracts and contract amendments was introduced in the 2019 EITI Standard and represents a major step forward in extractive sector transparency. Many contracts remain unpublished, increasing the opacity of the extractive sector and making it more vulnerable to corruption.
Large sums are at stake in extractive agreements. Contract transparency creates a powerful disincentive for officials to conclude extractive contracts that are partial or result in personal gain. Subjecting agreements to public scrutiny is more likely to result in fairer agreements, drafted in a way that is consistent with the country’s legal framework.
As well as deterring corruption, publishing contracts can help the extractive sector to fulfil its potential to contribute to development. “Communities stand to benefit from contract transparency,” said EITI Chair Helen Clark. “They will be able to see how much to expect as revenues from companies. Subsidies and tax incentives awarded to companies will be in plain view. Stakeholders will be able to monitor obligations placed on companies to the environment, to make social payments, and to provide local employment and use local suppliers.”
To date, 37 countries that implement the EITI have disclosed some or all extractive contracts. There is growing use of contract information. Governments in Afghanistan, Armenia, Ghana and Mongolia among others are committed to this agenda. In Mongolia, for example, full contract disclosure is included in a proposed law, expected to be passed next year.
Company representatives agree that contract transparency is important and timely too. Tom Butler, CEO of the International Council on Mining and Metals said: "Stakeholders rightly have high expectations of companies. Contract disclosure helps build trust, promote open and transparent engagement and contribute to the social, economic and institutional development of host countries and communities, all central tenets of ICMM’s membership commitments. ICMM welcomes the introduction of the EITI provision on contract disclosure. It levels the playing field for responsible mining companies and shows they are open about their commitments with host governments."
Many EITI supporting companies have advocated for contract transparency, including major mining, oil and gas producers. The COVID-19 pandemic has had a severe impact on the industry, impacting revenues in resource-dependent countries. “As the financial strain of the pandemic bites and companies and governments seek to renegotiate deals, the risk of a race to the bottom in contract terms increases,” said Elisa Peter, Executive Director of Publish What You Pay. “Full and prompt contract disclosure is a powerful weapon against this, enabling the public to scrutinise the multi-billion-dollar contracts which have a profound impact on their lives”.
While progress is welcome, much remains to be done to ensure that there is a comprehensive and accessible record of all extractive contracts. Beyond disclosure, efforts need to be made to ensure that contract information can be used and that it informs debate on policy options, particularly in the wake of the COVID-19 pandemic. In advance of the 1 January deadline, the EITI’s #opendeals2021 campaign and contract transparency week seek to support implementing countries in achieving these objectives.