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The UK has been admitted as a candidate country for the Extractive Industries Transparency Initiative (EITI).

Government plans for greater transparency over payments in the gas, oil and mining sector reached a significant milestone yesterday (15 October 2014), as the UK was admitted as a candidate country for the Extractive Industries Transparency Initiative (EITI).

The initiative, championed by the Prime Minister last year (2013), was set up to increase transparency in the way revenues from oil, gas and minerals are managed and to ensure people across the world share in the economic benefits of their country’s natural resources.

It provides an assurance that companies will publish what they pay for extracting natural resources and that governments will disclose the money they receive from this - so that people know how the resources of their country are being managed.

Under the EITI, extractives companies operating and paying taxes in the UK will need to report on material payments to the UK government, which in return will report the receipts it receives. These payments will then be checked by an independent administrator and form part of the UK’s EITIreports. The UK’s first report is due in April 2016, which means extractives companies will need to submit their information by mid-2015.

Business Minister Jo Swinson said:

Oil, gas and mining can, if well managed, deliver precious economic benefits to the populations of developing countries. However, far too often the assets from resource-rich countries in the developing world are not benefitting local people.

Our commitment to the EITI shows just how serious we are about transparency in business and government. We have already seen some of the biggest oil, gas and mining companies committing their support.

Now we are a candidate country, I hope they will continue to set an example and contribute to the UK’s report. This will not only help build a stronger UK economy, but will also encourage other countries to raise their own standards.

Miles Litvinoff, coordinator of the UK EITI Civil Society Network and of the Publish What You Pay UK Coalition, said:

Civil society welcomes the UK’s EITI candidacy. We especially support the UK’s commitment to project-level reporting and to the public disclosure of oil, gas and mining companies’ beneficial ownership – 2 areas where the UK government has shown strong international leadership.

Extractive industry transparency and accountability are crucial if citizens in many of the world’s poorest countries are to benefit from their countries’ finite natural resources, and will also enhance companies’ social licence to operate. By implementing the EITI, the UK is helping advance good governance of the world’s oil, gas and minerals.

Peter Mather, BP Group Regional Vice President, Europe & Head of Country, UK:

As a founding member of the EITI and member of the initiative’s board, BP has actively supported the EITI implementation process in the UK. We welcome and support efforts by countries where we operate who choose to work towards EITI implementation, increasing and improving the transparency of revenue flows.

Claire Ralph, fiscal policy manager, Oil & Gas UK commented:

We are pleased that the UK’s application to participate in the EITI has been accepted. We welcome this global scheme to improve transparency in the extractives sector given the very significant contribution our industry makes to the exchequer, and the 450,000 jobs the offshore oil and gas industry supports throughout the UK.

EITI has brought real benefits to implementing countries in increasing transparency and accountability. For example, in Nigeria, EITI reports from a 3 year period (2009 to 2011) revealed that a company owed tax payments totalling $8.3 billion. As a result of EITI shining a spotlight onto these payments, $443 million has already been recovered and further investigation is on-going.

The UK EITI Multi-Stakeholder Group, which consists of civil society, industry and government representatives, will now continue to work on implementation to ensure that the first EITI report is published by April 2016.

Last month (September 2014), the UK announced that extractives companies registered in the UK would have to start reporting on payments made to governments in all the countries they operate in from January 2015. This robust set of extractives transparency rules, advocated by the UK government, implements Chapter 10 of the EU Accounting Directive.

Notes to editors

1. The UK’s candidacy was announced at the International EITI Board meeting in Myanmar on 15 October 2014.
2. In May 2013, the PM announced that the UK intended to sign up to theEITI: go to UK raises the bar for transparency in the extractive industries
3. The UK Multi-Stakeholder Group has committed to include beneficial ownership information in the first report. This is an important step towards greater transparency as it puts who really owns and controls a company into the public domain.
4. Once accepted as a candidate, under current EITI rules, the UK will have 18 months to publish an ‘EITI report’ that reconciles what companies say that they pay in taxes, royalties, bonuses and fees, with what government has received. The UK will have 2 and half years to reach compliance. To do this it would undergo an independent validation to check that it is fully complying with EITI rules.
5. The first EITI report will cover payments made in the calendar year 2014.
6. The latest Office for National Statistics figures for oil and gas receipts for 2011 to 2012 shows total revenues of £11.2 billion.
7. Examples of the impact of the EITI:
   • in the Democratic Republic of Congo, EITI reports have generated a debate about the accountability of tax collecting agencies. One of the tax collecting agencies was unable to account for US $26 million of royalty payments which may lead to judicial action. Prior to EITI this would have been impossible as there was no vehicle to follow the money. EITI has empowered ordinary people to ask questions and follow the money related to extractive industries to hold their governments to account.
   • in Nigeria, EITI reports from a 3 year period (2009 to 2011) revealed that a company owed tax payments totalling $8.3 billion. As a result ofEITI shining a spotlight onto these payments, $443 million has already been recovered and further investigation is on-going. EITI Progress Report 2014
8. More information on the EITI can be found at the EITI website
9. In order for the UK to apply to the EITI Board and be accepted as candidate, under EITI rules, it had to:
   • issue an unequivocal public statement of its intention to implement theEITI
   • commit to work with civil society and companies on implementation
   • appoint a senior individual to lead on the implementation
   • establish a multi-stakeholder group to oversee the implementation (comprising business, civil society and government). The multi-stakeholder group has to agree and publish a fully-costed work plan, containing measurable targets, and a timetable for implementation and incorporating an assessment of capacity constraints
10. For more information on Chapter 10 of the EU Accounting Directive please go to UK raises the bar for transparency in the extractive industries