The Extractive Industries Transparency Initiative (EITI) is a global multi-stakeholder initiative that brings together developing country governments, donors, companies, investors, civil society organisations, and the international financial institutions to increase transparency in the extractives sector in developing countries.

Origins

1. George Soros, a radical investor-philanthropist set up a "publish-what-you-pay" NGO at the turn of the century, arguing that 'Oil and gas revenues when used appropriately can make positive contribution to economic and social development but if mismanaged can exacerbate poverty, corruption, conflict and poor governance'

2. An umbrella group of NGOs started a campaign for multinational O&G companies to declare publicly the revenues that they pay to host governments in form of taxes, signature bonuses, royalties etc.

3. But in many countries, companies are in Joint Ventures arrangements, such that governments receive monies from both multinational and the state companies. Payments from multinationals generally represent less than half of total receipts.

4. Many JVs' agreements have confidentiality clauses forbidding any unauthorised disclosure of information.

5. The British Prime Minister, Tony Blair launched the Extractive Industries Transparency Initiative in 2002 as a way of providing a practical solution to the Issues surrounding the PWYP campaign.

6. The Voluntary (but peer-pressure) approach advocates transparency in the amounts host governments receive from natural resources, both from state and private companies, leaving the details of its operation to the DFID, the World Bank and the countries that adhere to EITI principles etc to work out appropriate details of implementing the principles.

7. The Tony Blair approach won support from many NGOs and International Institutions.

8. The thrust of the initiative is transparency in the receipt of incomes by Governments and how such monies are spent in the interest of their populations.

Nigeria's Entry into EITI

1. In February 2004, President Obasanjo at an International Workshop, signed Nigeria up as the first country to voluntarily and formally subscribe to the principles of the EITI (many other countries have since followed suit).

2. President Obasanjo sought to institutionalize this adoption by setting up in February 2004, a body called the National Stakeholder Working Group, (NSWG).

3. Nigeria's declaration of adherence to EITI principles obtained public support (some with conditions) from oil and gas multinationals including Shell, ChevronTexaco, Total and others.

4. NSWG comprises 27 members with three representing the Oil and Gas Industry (Shell, ChevTex, Dubri).

5. Since 2004, the NSWG has created structures, procedures and programmes to carry out its functions - NIGERIA EXTRACTIVE INDUSTRY INITIATIVE (NEITI) is birthed!

NEITI's Perception of What the Problem is

1. Oil Industry processes are not transparent leading to projects in Nigeria costing more than similar projects elsewhere in the world.

2. Opaqueness of revenue inflows clouds the real extent of Nigeria's "wealth" (in fact is no more than 50cents per person per year) creating problems with debt rescheduling/forgiveness.

3. Suspicion among citizenry and restiveness in communities based on perceptions of limitless monies to be had for the asking.

4. Lack of capacity in government institutions create problems of monitoring and capturing all possible revenue flows.

Government's Position

1. NEITI is one of the tripods of government's anti corruption mechanism:

2. Monitoring of Income from the Oil and Gas Industry through NEITI to be institutionalized by the proposed NEITI Bill.

3. Monitoring of Costs in the Industry through a physical, process and financial audit of the Industry by a consultant to start from March 2005.

4. Monitoring of Government expenditures by various tiers of government through the proposed Fiscal Responsibility Bill.

5. Declarations by President, Minister of Finance and NEITI Coordinator emphasize that Industry co-operation with the forthcoming audit will be a test of their public declarations of support for Nigeria's adherence to EITI principles.

Current Issues and Challenges

1. Redirection of the thrust of EITI from the monitoring of spending of incomes by Governments to payments by companies and audit of industry costs, processes and practices.

2. Aggregated vs Disaggregated reporting of payments.

3. Confidentiality clauses in oil and gas contracts are antithetical to disaggregated declaration of payments to governments.

4. Conflicting produres of several oil companies vis-à-vis issues, e.g. nature of reporting of payments

Total Group's Position

Total accepts that its responsibilities which extend to the non-business society and the communities where we work, are piloted by universally-recognised ethical standards.

The group applies these responsibilities in practice by promoting respect for Human Rights and the fight against corruption where this exists.

Total pays particular attention to ensuring that its operations have a positive impact on host countries in terms of jobs, training and local sourcing. We work hand-in-hand with public authorities sustainable development issues, making sure that we do not interfere with their responsibilities...in initiatives to enhance local health care, education, enterprise.

Although such support measures are important, they do not address the fundamental question of how the host governments use their il and gas resources. That's what makes the EITI very important.

Transparent revenue streams are the cornerstone of genuine debate on development policy priorities. Total has supported EITI from its outset and is ready to help producing countries move forward to implement it as vigorously as Nigeria, for example.