What does the latest EITI report tell us?

Source: Diana Kaissy & Ali Neemah
Date: 20 Feb 2022

The latest Iraq EITI report (published December 2013 covering data from 2011) included lots of crucial information about the extractive sector in the country that had hitherto never been published. However, the report also highlighted a worrying trend: that the Kurdish Regional Government was reluctant to share data on oil extraction in its region. Here, our MENA regional coordinator and the head of the coalition in Iraq explore the EITI report and what it revealed about Iraq’s extractive sector. 

While the world was busy preparing to say goodbye to 2013, the 2011 Iraqi EITI report was born.

All 132 pages of Iraq’s third EITI report contain data that shed important light on the natural resource management of the country – some of the information in the report had never been previously shared with the public.

As in previous iterations, the report included the reconciliation of oil export revenues, corporate income tax and signature bonuses. It also covered payments made by the government of Iraq as internal service payments to national oil companies and payments made to IOCs for cost recovery and remuneration fees.

Also revealed in the report were the quantities of oil produced in the country and the quantities of oil exported. The latter amounted to US$ 80,796,735,000 in export sales. The Iraqi coalition has been campaigning for these to be published so that civil society can have a meaningful estimate of the total number of revenues that have been pouring into the Iraqi treasury. The Iraqi coalition has become actively involved in monitoring of the Iraqi budget planning and will use EITI data to advocate for these revenues to be used towards sustainable development.

For the first time, the report also included the amount of crude oil consumed internally and supplied to refineries, electricity generation directorates and national gas companies.  The PWYP coalition in Iraq wanted this information included in order to explore why, despite close to 25 % of crude oil production being consumed internally, the country still suffers from poor energy services and power cuts.

Nevertheless, the report had several shortcomings. Several IOCs companies did not submit their financial information while other companies submitted financial information that had not been audited, and was therefore less reliable. The report did not include an explanation as to why no follow up had been made to obtain the full information from the companies. Furthermore, while the report did include the quantities of oil and gas consumed internally, it did not include the monetary value of these amounts.

If we are to truly follow the money and ensure that Iraqi citizens are benefiting from their oil, we need more information about what happens once companies have made their initial payment. How is the central government disbursing the petrodollars to the provinces? Are they reaching their destination? It would also be useful to know what kind of social projects are being carried out by extractive companies. Finally, including contracts within EITI would enable civil society to ascertain whether what is being paid matches up with what should be paid.

We also need to ensure that the content in these reports reaches citizens – unfortunately, there is currently a time lag between the EITI report being published in English and it then  being released in Arabic and Kurdish. The IETI should play a stronger role in the dissemination of EITI reports and organising public debates around their content.

However, the main gap in this report is the data from the Kurdistan Regional Government. The Kurdish government did not share the EITI reporting templates with the international oil companies operating in its region. Instead, the KRG sent its own figures to the EITI MSG. As this goes against the EITI requirements that data come from three sources (national oil companies, international oil companies and the ministry of oil) the data from KRG was not included in this report.

This reluctance by the KRG to follow the EITI requirement 4.2, which clearly defines which companies and government entities are supposed to report, comes at a time when the KRG is requesting to establish its own, separate, EITI process. This would entail the formation of its own EITI multi stakeholder group and the publication of its own EITI report. So far, the EITI international secretariat has not accepted this request and is urging the KRG to share its data with Iraq’s central government.

In the face of this potentially divisive situation, the Iraqi Transparency Alliance for Extractive Industries coalition (ITAEI), a Publish What You Pay affiliated coalition made up of 81 Iraqi civil society organizations, finds itself confronting a situation where the disclosure of natural resource revenue is becoming politicised. If transparency becomes too politicised, it is unlikely to deliver in its aim of helping improve natural resource management.

The consensus within the coalition in Iraq is that the KRG data must be included in the EITI report issued by the central government. As several ITAEI coalition members are from the KRG, it is in a legitimate position to act as mediator. ITAEI has made the resolving of this issue a part of its 2014 strategy – it will soon be meeting with the advisor to the Prime Minister of the KRG government to discuss ways forward.

There is potentially an international solution to this issue. With the advent of mandatory disclosure legislation, extractive companies in Kurdistan will soon have to publish their payments on a project level regardless of the stance of the KRG. Therefore, the PWYP affiliated coalition has decided to pre-empt the coming into force of these laws and will call on international companies to publish what they have been paying to the KRG before the issuing of the 2012 Iraqi EITI report which is due by the end of March 2014. This example illustrates how international regulation can support civil society in their campaign when groups are domestically hindering transparency.

Across the world, the resource curse has manifested itself through conflict and division. Iraqi civil society has a crucial role to play to ensure that the country’s oil proves a blessing to all citizens.