The Philippine Extractive Industries Transparency Initiative (PH-EITI) is a multi-sectoral initiative that implements the EITI, the global standard of transparency in the mining, oil and gas industries, for the open and accountable governance of natural resources. PH-EITI was formally established through Executive Order No. 147, s. 2013, pursuant to Executive Order No. 79, s. 2012. PH-EITI is administered by a Multi-Stakeholder Group (MSG) that is chaired by the Department of Finance (DOF) and composed of representatives from government agencies (DENR, DOE, DILG, ULAP), industry, and civil society.
It seeks to show the direct and indirect contribution of extractives to the economy; increase public understanding of resource management and public accessibility of data; strengthen government systems; create opportunities for dialogue and constructive engagement among stakeholders, and pursue the contribution of the extractive industries to the country’s sustainable development.
Background and Problem
The Philippines, like other resource-rich nations, is vulnerable to the paradoxical “resource curse” or the situation where countries with abundant natural resources tend to have high poverty incidence and less economic growth and development. The government, cognizant of potential revenues from resource extraction, allows the harnessing of non-renewable resources such as oil, gas, and minerals, but falls short in demonstrating how resource extraction contributes to the national economy and the development of communities that host extractive activities.
More specifically, the economic contribution of extractive industries fails to be completely accounted for, recognized, and sustainably used. The extractive activities caused negative environmental and social impacts that greatly affect host communities. In addition, the Philippines is confronted with resource governance issues such as the need for more transparency and accountability in the extractive industries; the lack of understanding of how extractive industries work; confusing policies on revenue sharing between the national and local governments; and inadequate or conflicting data on taxes and other amounts paid by extractive companies and collected by government. These are the challenges that extractives transparency aims to address hence, a systematic process that will surface and assess the benefits and impact of extractives is needed.
Solution and Impact
To help avert the resource curse, and increase transparency and accountability in the sector, the government committed to implementing EITI in the Philippines. EITI implementation has three pillars: the creation of the Multi-Stakeholder Group (MSG); regular publication of a comprehensive report on the extractives; and communication of the key findings of the report for public awareness and dialogue. The first pillar is the creation of MSG that sets the terms and scope of EITI reporting. In addition, it provides a safe space where government, industry, and civil society come together to deliberate issues related to extractives. The government is represented by the Department of Finance (DOF), Department of Environment and Natural Resources – Mines and Geosciences Bureau (DENR-MGB), Department of Energy (DOE), Department of the Interior and Local Government (DENR), and Union of Local Authorities in the Philippines (ULAP).
The industry is represented by the Chamber of Mines of the Philippines (COMP) and the Petroleum Association of the Philippines (PAP) while the civil society is represented by Bantay Kita – Publish What You Pay Philippines (BK-PWYP). The second pillar is the annual comprehensive report on the extractives that covers fiscal and financial data such as mandatory taxes, royalties, and fees paid by companies to relevant government agencies and local government units. EITI data also include material environmental and social expenditures of companies. Both companies and government offices submit data and supporting documents to PH-EITI mainly through an online reporting tool. Then, data gathered are reconciled by an Independent Administrator (IA) to surface any discrepancies or variance. The key findings are published in the country report together with contextual information covering the entire extractives value chain.
Recommendations of the IA and the MSG to improve transparency and address gaps are included in the report. The third pillar is the communication of the key findings of the report for public awareness and dialogue. It is done through regular national and subnational outreach activities to disseminate the report and solicit feedback from stakeholders. By facilitating the disclosure and publication of material information regarding the extractives and providing a platform for multi-stakeholder participation and dialogue, PH-EITI can improve public awareness on the extractive industries in terms of governance and impact in the country. The regular publication of reports enables greater public accessibility of extractives data which informs dialogues among stakeholders and promote evidence-based policymaking. The EITI process contributes to ensuring that the extraction of the country’s natural resources redounds to the benefit and sustainable development of the nation.
To date, PH-EITI has produced 5 annual country reports covering 6 fiscal years (2012 to 2017), with total reconciled revenues of PHP239.7 billion and total reconciled social and environmental expenditures of PHP13.1 billion. The report covered large-scale metallic mining, nonmetallic mining, and oil and gas companies, and it continues to expand in scope. For instance, the 2017 Report included pilot reports on small-scale mining and beneficial ownership. PH-EITI has a website where reports, studies, databases, tools, and other resources are accessible to the public. It also has an Online Contracts Portal where over 400 documents, including mining and oil and gas contracts, are published. EITI implementation has resulted in policy reforms, including the issuance of DENR Department Administrative Order (DAO) No. 2017-07, mandating all mining contractors to participate in PH-EITI which contributed to achieving a high reporting rate among mining companies.
PH-EITI has also done considerable work in stakeholder engagement by conducting yearly national conferences, countrywide roadshows, and other outreach activities such as consultative workshops with stakeholders and visits to mining LGUs and communities. During the 7th EITI Global Conference in February 2016 held in Lima, Peru, the Philippines was conferred the International EITI Chair’s Award for its “impactful implementation” of EITI. In 2017, PH-EITI went through a rigorous process of international validation. Then, it was declared the first among over 50 EITI implementing countries to have achieved “satisfactory progress” in complying with the 2016 EITI Standard on October 5, 2017. As an offshoot of its outstanding performance, PH-EITI has presented the Philippine experience as best practice abroad and provided technical assistance to fellow EITI-implementing countries such as Myanmar, Papua New Guinea, and Madagascar. EITI implementation is also a continuing commitment under the Open Government Partnership (OGP) National Action Plan and the Participatory Governance Cluster Performance and Projects Roadmap.
Institutionalization of EITI is part of the legislative agenda for the fiscal sector under the Philippine Development Plan 2017-2022. Since 17th Congress, legislative bills on EITI have been filed then, House Bill No. 1691 entitled “Open Extractives Data Act” has been proposed the institutionalization of PH-EITI in the 18th Congress. Certainly, PH-EITI achieved significant accomplishments in the last six years and it is poised to do more such as the new 2019 EITI Standard. The new standard is an expansion which includes the areas of environmental reporting, gender transparency, beneficial ownership declaration, and systematic disclosure in the extractives. With the cooperation and support of stakeholders, PH-EITI will push for greater integration, inclusivity, and innovation in extractives transparency towards better governance of the country’s natural resources.