Are you for Big Oil or Big Data?
By David Garcia & Jana Morgan on March 16, 2022
CSOs Put Limited Data to Good Use, Call for Project-Level Reporting
What most profoundly distinguishes American Petroleum Institute (API) from civil society organizations in resource-rich countries working to make a more transparent and accountable extractives sector?
(Hint: the answer we’re looking for is not “the ability to pay for an army of high-priced lawyers” – although that works too.)
Put bluntly, one sees the tragic human consequences of mismanaged natural resource wealth up-close, every day, and is in a position to speak credibly about solutions to the problem. The other, far-removed, is API.
In a series of letters recently submitted to the Securities and Exchange Commission, leaders of civil society organizations from Angola, Indonesia, Sierra Leone, and Zimbabwe speak to the intricacies of their countries’ extractives sectors, lay out precisely why API’s “good enough” approach to payment disclosure is anything but, and urge the SEC to release a rule for Section 1504 of Dodd-Frank that requires project-level reporting by contract, license, or lease.
Take as one example the letter submitted by Cecilia Mattia of National Advocacy Coalition on Extractives (NACE) in Sierra Leone. As Ms. Mattia explains, her country has a revenue-sharing agreement in place that ensures residents of diamond-producing neighborhoods (in Sierra Leone, a chiefdom) a share of the mining proceeds. The revenue sharing agreement stipulates that a diamond-producing chiefdom is entitled to a distribution of money from the national government, the value of which is determined in part by the number of licenses in the chiefdom. In Sierra Leone, chiefdom represents the third administrative tier below national level, preceded by province and district. Yet, as Ms. Mattia explains, API’s “compromise” on project-level reporting is to report at the first tier below national level – or, in the case of Sierra Leone, at the province level. As chiefdom represents the third tier below national level, API’s proposal would say nothing about the number of licenses in each chiefdom. Thus, residents of diamond-producing neighborhoods would not receive the necessary information to ensure they are receiving their correct share from the national government.
Although letters from Angola, Sierra Leone, and Zimbabwe poignantly reflect on opportunities lost to natural resource wealth mismanagement and lament the dearth of high-quality data needed to make a truly transparent and accountable extractives sector, each nevertheless left us feeling hopeful.
It was inspiring to read about how members of Publish What You Pay – Zimbabwe have worked with limited data to uncover revenue leakages to the tune of hundreds of millions of dollars. And how NACE, in Sierra Leone, used EITI data to discover that the government received just $10 million for mineral exports valued at $145 million in 2007 – a much lower return than in comparable countries. Or how in Angola, Open Society Initiative of Southern Africa (OSISA-A) drew on limited data released by the Ministry of Petroleum, Ministry of Finance, and state-owned oil giant Sonangol to reveal staggering discrepancies: an $8.55 billion gap in the value of oil said to be sold by Sonangol compared to what was reported by the ministries; a discrepancy of 87 million barrels of oil claimed to be exported by the Petroleum Ministry versus what was reported by the Finance Ministry; and enormous divergence between what the media claimed was paid to the government in signature bonuses in 2006 ($3.2 billion) and what was reported by the Finance Ministry ($998 million). In a small victory, Angola’s president made changes to top-level management at Sonangol after OSISA-A went public with its findings.
While letters from Angola, Sierra Leone, and Zimbabwe shed light on the game-changing work CSOs could perform if project-level data were made available, Maryati Abdullah of Publish What You Pay – Indonesia highlights how her organization has already put project-level data to good use. Companies operating in Indonesia are required to report their payments by project, as mandated by the country’s EITI framework. Indonesia is one of just a handful of countries where project-level data is available. Made available less than two years ago, PWYP – Indonesia has already used project-level data to identify a company operating outside its licensed territory (at a cost of $1.5 million to the treasury), confirm that the country is receiving the in-kind oil and gas payments it is due, and shed light on two resource-rich district governments that had failed to invest adequately in their populations’ social development.
We hope you will take a few minutes to read each letter in its entirety, and get a sense of what meaningful transparency looks like according to those who know best. In submissions to the SEC, the American Petroleum Institute routinely claims that granular project level data – by contract, license, or lease – would provide citizens of resource-rich countries with too much information, overwhelming them and making it more difficult to hold their governments accountable. While we appreciate API’s concern, we can’t help but wonder: who have they talked to? Not Maryati Abdullah, Cecilia Mattia, Gilbert Makore, or Elias Isaac. Nor any of the 544 civil society organizations that wrote to the SEC last April. Truth be told, we’re confident most would find API’s diagram of its own reporting proposal, with all the arrows and boxes, far more disorienting.
Jana Morgan is Director of Publish What You Pay – United States
David Garcia is Policy Advisor at Publish What You Pay – United States