9 May 2008
Maputo — Mozambique's Deputy Minister of Mineral Resources, Abdul Razak, on Friday reiterated the government's commitment to join the Extractive Industries Transparency Initiative (EITI), and outlined the steps it will take during the rest of this year to set up its EITI participation.
The Oslo-based EITI describes itself as "a coalition of governments, companies, civil society groups, investors and international organizations", the purpose of which is to improve transparency and accountability in the oil, gas and mining sectors.
The basic principle is very simple: all payments to governments (royalties, licence and concession fees, and all other taxes) by mining, petroleum and gas companies must be made public. All revenue that governments receive from these companies must also be declared.
This involves two sets of figures - one from the government and one from the companies - which must then be compared to see if they are the same, and to explain any discrepancies. Independent auditors are asked to inspect the figures, and an oversight committee, consisting of government, company and civil society representatives, then writes a report (preferably once a year).
EITI is a recent initiative, set up in 2003, and as of March 2008 there were 22 candidates for EITI membership, 14 of them African countries. Although all are still regarded as candidates, several (including Nigeria and Ghana) have already submitted reports.
At a Maputo seminar on EITI, organised by the anti-corruption NGO, the Centre for Public Integrity (CIP), Razak stressed that the EITI provides a "global standard" of transparency, and helps countries endowed with mineral resources to avoid mismanagement of the revenue they should earn.
He thought EITI was also useful for companies since it "reduces the risk of operating in an environment connoted with corruption".
Razak said that, although Mozambique is not yet a member of EITI, it has taken several steps towards greater transparency. Thus all contracts for mining concessions must contain anti-corruption clauses, and must be approved, not only by the government, but also by the Administrative Tribunal (the body that oversees public expenditure, and checks the legality of administrative acts).
The granting of concessions for petroleum exploration, he added, is based on public tenders, and laws passed in 2007 already make it obligatory to publish fiscal revenue from petroleum operations. These laws also ensure that part of the tax revenue from mining and petroleum operations must be earmarked for local community development.
The implementation of EITI in Mozambique, said Razak, would ensure transparency in the management of mineral resources through national monitoring forums whose tasks would include regular publication of the mining and petroleum concessions awarded, and reconciling the financial data from the companies with that provided by the state.
Razak believed most of this could be done within existing mechanisms and procedures, and warned against setting up parallel accounting systems. Auditing should use the same principles already applied to the state budget, he said, and the existing "Development Observatory" (originally set up as the "Poverty Observatory", under the government's poverty reduction strategy) could be used for the public monitoring of revenue from extractive industries.
Razak announced that a Mozambican delegation will visit Ghana in July to learn from its EITI experience. The delegation will include parliamentarians, government officials, and representatives of the judiciary, private business and civil society.
In August the government will hold its own seminar on EITI, and will send an official note to the EITI board in Oslo expressing its intention to join the initiative. In September, Razak continued, a government member would be appointed to coordinate Mozambique's EITI application, and a support Secretariat would be set up.
EITI requires that each member state set up a tripartite committee with representatives of government, industry and civil society. Razak said Mozambique's committee will have between 10 and 20 members, and will be set up in October or November. Its first task will be to approve a plan of activities and budget for the next two years.
Extractive industries in Mozambique have been growing in importance, and currently account for four per cent of total exports, and 4.8 per cent of total fiscal revenue. This will certainly increase in 2008, which will be the first full year of production of titanium ores from the heavy mineral sands at Moma on the coast of the northern province of Nampula.
In the near future, exploitation of the huge deposits of heavy mineral sands at Chibuto, in Gaza province, and of coal at Moatize, in Tete, will begin. And if oil is indeed discovered in the Rovuma basin, in the far north, where several companies plan to drill exploratory wells, this could transform the Mozambican economy dramatically.
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