EITI in Azerbaijan

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Overview

According to Ingilab Ahmadov of Azerbaijan's Public Finance Monitoring Centre (PFMC), Azerbaijan has always attracted interest as one of the first countries to sign up to EITI in 2003 and as the first to pass validation in 2009 to become an EITI Compliant country.[1] The country has even been referred to by the Publish What You Pay (PWYP) coalition as the EITI 'poster child' and one of the initiative's brightest success stories, while noting however that it has missed out on the chance to shine brighter still and become a pioneer in pushing the boundaries and impact of the standard.[2]

Sabit Bagirov, of the country's Center for Economic and Political Research, comments that the EITI is a particularly important mechanism for Azerbaijan due to the following factors:

  • Azerbaijan's inexperience in managing large financial resources.
  • Problems with good governance (insufficient transparency and accountability)
  • Shortcomings in legislation.
  • Conflicts of interest in SOCAR's participation in production sharing agreements (PSAs).[3]

Reporting

As of July 2012 Azerbaijan had published 15 EITI reports, covering 8 fiscal periods between 2003-10.[4]

According to analysis by Revenue Watch Insititute, Azerbaijan 'leads the pack' of EITI implementing countries in terms of regularity and timeliness of reporting, noting that reporting had improved over the years. The 2009 and 2010 reports cover the mining sector as well as the oil and gas sector.[4]

Azerbaijan's Reporting History

I think we need links in each of these to the underlying reports!

Period covered Publication date Sectors covered Government revenues (US$m) Company payments (US$m) No. of companies reporting Reconciler
2010 June 2011 Oil, gas and mining 1 992.17 1 987.91 31 Moore Stephens
2009 May 2010 Oil, gas and mining 1 712.40 2 300.56 30 Moore Stephens
2008 June 2009 Oil and gas 3 821.57 3 808.90 26 Deloitte
2007 June 2008 Oil and gas 2 818.32 2 876.31 25 Moore Stephens
2006 August 2007 Oil and gas 1 642.97 1 720.26 25 Moore Stephens
2005 July 2006 Oil and gas 490.53 482.44 22 Deloitte
2004 July 2005 Oil and gas 650.01 645.28 21 Deloitte
2003 March 2005 Oil and gas 258.99 261.74 21 Deloitte
[4]

Civil Society Participation

One of the core principles of the EITI is that the initiative is a participative process with an integral role for civil society alongside governments and industry. However civil society organisations (CSOs) can face problems in some cases in fulfilling their EITI role at country level.[5]

On the 13 May 2004 a coalition of non-governmental organisations (NGOs) was established in Azerbaijan with the aim of overseeing the EITI process.[3]

A 2009 report by Princeton University highlighted that there were serious challenges to civil society engagement in Azerbaijan, as the country did not enjoy a political environment that is conducive to a free civil society. The report found that intimidation and suppression had led to media self-censorship, inhibiting the ability to engage properly in EITI, and called for more formal and meaningful stakeholder engagement.[6] In May 2012 coordinator of pressure group Kura Civil Society Headquarters and member of the Coalition for Improving Transparency in the Extractive Industires Ogtay Gulaliyev, for example, was arrested by local policemen while participating in a public meeting in the village of Minbashy. PWYP called for Azerbaijan to refrain from any attempts to harass or intimidate civil society activists.[3]

The Princeton report also found that the EITI in Azerbaijan remained a very centralized process within the Azerbaijani government, with only a handful of employees engaged in the process, and recommended that wider participation outside of SOFAZ would strengthen the process.[6]

The Future of the EITI in Azerbaijan

At a March 2012 workshop in Baku with participants from local NGOs, government departments and companies, a key issue identified was that of disaggregated reporting, breaking the reported figures down both company-by-company and project-by-project, which would enable members of the public to see what each company operating in Azerbaijan is paying the government in taxes, royalties and license fees. The prospect of introducing partial disaggregated reporting, for example relating only to social investment and environmental spending, was discussed as a possible first step.

A further issue highlighted was that of increasing accountability in public expenditure, a step in the chain not addressed by the EITI mechanism as of 2012. It was noted that while information dissemination in Azerbaijan was improving, with the website of the civil society platform being viewed with increasing frequency, those living outside Baku saw little relevance in the EITI agenda.[1]

In July 2012 the country's EITI coalition of NGOs released a statement pointing to the 'stagnation of EITI implementation in the country', drawing attention to the lack of progress in revising the original 2003 Memorandum of Understanding to better reflect the 2010 creation of the multi-stakeholder group (MSG).

In their statement the groups also expressed frustration that the production sharing agreements (PSAs) made between companies and the Azerbaijani government had not yet been posted on the country's EITI website, despite a commitment made a year ago. Concern was also expressed that the data submitted by companies and the government for EITI reconciliation for the 2011 report had not been audited in accordance with international accounting standards.[7]

Azerbaijan's EITI Journey

See below for a timeline of the history of the EITI in Azerbaijan:

Azeitijourney.jpg

External Links

EITI: Country page for Azerbaijan

EITI: Azerbaijan Validation Report 2009

Coalition 'For Improving Transparency in Extractive Industries': Official website

SOFAZ: 2010 Agreement on formation of MSG

RWI: EITI Reports: Results and Analysis

References

  1. 1.0 1.1 EITI in Azerbaijan: don't stop pedalling" EITI', 30 Marchc 2012.
  2. EITI and Beyond: View from Azerbaijan" PWYP', 30 March 2012.
  3. 3.0 3.1 3.2 Panel 6: EITI Azerbaijan Experience" Carnegie Endowment for International Peace', 22 October 2007.
  4. 4.0 4.1 4.2 Extracting Data" EITI, retrieved 23 July 2012.
  5. Engagement with Civil Society: An EITI implementation case study " World Bank', June 2009.
  6. 6.0 6.1 Fighting corruption, strengthening governance: the role of civil society in the Extractive Industries Transparency Initiative" Woodrow Wilson School of Public and International Affairs', February 2009.
  7. Azerbaijan: Publish What You Pay calls for the immediate release of transparency activist Mr. Ogtay Gulaliyev" PWYP', !( May 2012.