Transparency and accountability related to revenues accruing from oil, gas, and mining sectors received a major global boost this week with the formal endorsement by the World Bank Group of the U.K.- led Extractive Industries Transparency Initiative.
The World Bank Group (WBG) pioneered revenue transparency frameworks in several high-profile extractive industries projects in recent years, including the Chad-Cameroon pipeline project and the Baku-Tbilisi-Ceyhan pipeline project. The Extractive Industries Transparency Initiative was proposed by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg in September 2002.
In many developing and transition countries, revenues from oil, gas and mining companies, in the form of taxes, royalties, signature bonuses and other payments have been an important engine for economic growth and social development. However, research has found that, in some nations with weaker institutions, the lack of accountability and transparency in these revenues can exacerbate poor governance and lead to more corruption, conflict and inequality.
Commenting on the role of the World Bank Group in furthering the transparency agenda in extractive industries, WBG Director for Oil, Gas, and Mining Rashad Kaldany said the institution would continue to work with developing nations on ways to publish revenues accruing from oil, gas, and mining sectors. He added, “This is the next evolutionary step in our role as a neutral broker on these complex issues and we are prepared to make a long-term commitment.”
The World Bank Group brings to the table extensive experience in pioneering revenue transparency frameworks in extractive industries projects. “We have gained experience working with companies and governments on these issues, most recently on the BTC pipeline,” Kaldany explains. “And the Extractive Industries Review, which is now winding down under the leadership of Dr. Emil Salim [a former Minister of Environment in Indonesia], has very clearly signaled that this is, and will be, a high priority issue for our stakeholders in civil society.”
The specifics of the WBG’s collaboration on the Extractive Industries Transparency Initiative are still to be negotiated. However, Kaldany said they could include:
- A formal initiative within the WBG, funded jointly by the Bank and a multi-donor trust fund, to promote the transparency agenda in extractive industries, compile research and lessons of experience, and disseminate best practice;
- Pilot programs with several developing nations and companies that are willing to pioneer transparency programs;
- Convening of stakeholders – including governments, industry, and civil society -- to help raise awareness and to help define and implement viable approaches.
For more information on the WBG’s work on revenue transparency,
click here.
