Tanzania Extractive Industry Transparency Initiatives (TEITI)

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Background

Natural resources—oil, gas and mining—belong to a country’s current citizens and posterity. Extraction and utilisation of these valuable resources can lead to economic growth, prosperity and social development. However, for that to happen, these resources have to be harnessed and managed in a proper manner that guarantees transparency and accountability on the part of the government and companies.[1] To ensure this becomes a reality and does not remain a pipe-dream in resource-rich countries, the Extractive Industries Transparency Initiative (EITI) was officially established on 17th June 2003 in London, UK.[2] The EITI is a global coalition of governments, extractive companies and civil society organisations working jointly to enhance openness and accountability in the management of revenues stemming from natural resources.[3]

EITI in Tanzania

Tanzania became a member of the EITI on 16th February 2009. The Tanzania Extractive Industry Transparency Initiatives (TEITI), a local replica of EITI, is a local multi-stakeholder initiative whose primary objective is to oversee the implementation of EITI in the country. TEITI has 16 representatives drawn from the government, companies and the civil society.[4]

How TEITI Works

TEITI works in a co-ordinated way. Oil, gas and mining companies disclose payments made by them to the government, and then the government discloses receipts of revenues. Afterwards, an independent consultant is hired to reconcile payments and revenues using a specific EITI reporting standard guideline, which leads to the publication of TEITI Report.[5]

Reconciliatory Reports

The main objective of TEITI’s reconciliatory report is to perform a reconciliation of material payments and receipts provided by relevant extractive companies and governmental agencies. Since 2011, Tanzania has published four reconciliatory reports.

First Reconciliatory Report

The first report was published in February 2011. The report was prepared by Hart Nurse Limited in association with BDO East Africa. These were appointed by the Ministry of Energy and Minerals to prepare the 1st EITI Reconciliation Report for Tanzania for the 1st July 2008 to 30th June 2009 period in the mineral and gas sector. The report covers reconciliation from nine (9) mining operations: Bulyanhulu Gold Mine Limited (Bulyanhulu), Pangea Minerals Limited (Buzwagi), Pangea Minerals Limited (Tuluwaka), North Mara Gold Mine Limited (North Mara), Geita Gold Mine (Geita), Resolute Tanzania Limited (Golden Pride), Williamson Diamonds Limited (Mwadui), El-Hillal Minerals Limited (Mwadui), and Tanzanite One Mining Limited (Mererani). Only three gas companies— Pan African Energy Tanzania Ltd, Artumas Group & Partners (Gas) Ltd, and Songas (including the TPDC)—were involved in this exercise. The report indicates that the reconciliation did not include all the payments, such as import duties. Later amends were made by including the capture of such data in the data collection instrument. Generally, the report highlighted unresolved differences of Tsh 23.4 billion and USD 18 million. Consequently, the TEITI Multi-Stakeholder Group (MSG) resolved to engage the Controller and Auditor General (CAG) to investigate the above discrepancies. By May 2012, the MSG was implementing recommendations from the CAG’s report which resulted in final unresolved differences of Tsh 2.1 billion and USD 328,865, respectively. The report provides several recommendations ranging from improving data collection; training TEITI and government staff on technical issues, objectives and requirements of EITI; inclusion of more mining, gas and oil companies in the reconciliation exercise.

Second Reconciliation Report

The second report covered the 1st July 2009 to 30th June 2010 period. It was carried out by BDO East Africa, Tanzania in collaboration with Paulsam Geo-Engineering Limited. Unlike the first report, which surveyed nine mining companies and three oil and gas companies, the second report covered 23 companies made up of 15 mining companies and eight oil and gas companies (including the TPDC). The oil and gas companies surveyed are Maurel et Prom, Tanzania Limited, Pan African Energy Tanzania Limited, Petrobras Tanzania Limited, Songas, Statoil Tanzania, Tullow Tanzania, B.V, Wentworth Gas Limited and the TPDC. The report indicates that the 23 companies represented more than 99% of the total revenue collected by Tanzania Revenue Authority (TRA), the Ministry of Energy and Minerals (MEM) and the Tanzania Petroleum Development Corporation (TPDC) during the period under review. Generally, the report indentifies a net difference of Tsh 5.0 billion with the government reporting less than the companies had reported to have paid. The government reported to have received total revenue of Tsh 419 billion (USD 305.36 million).[6]

Third Reconciliation Report

The third report covered the period from 1st July 2010 to 30th June 2011, and was carried out by BDO East Africa, Tanzania in collaboration with Paulsam Geo-Engineering Limited. This third report involved 30 companies made up of 18 mining and 12 oil and gas companies, an increase of 30% over the coverage of the second report. On the revenue collected by the government, the report indicates that the government received a total of Tsh 497 billion (USD 329.64 million), an increase of 19% from the figure of Tsh 419 billion (USD 305.36 million) reported in the previous year. Generally, a net difference of Tsh 11 billion remained unresolved at the end of the reconciliation as the government reported to have received less than what the companies had reported to have paid.[7]

Fourth Reconciliation Report

The fourth report covered 26 mining companies and 20 oil and gas companies. The report indicates a net difference of Tsh 2 billion declared by the government. This means that the Tanzania Government reported receipts of Tsh 2 billion less than the companies had reported to have paid. The net difference in the mineral sector was Tsh 3 billion, whereas in the oil and gas sector it was pegged at Tsh 1 Billion.[8]

Gap Assessment

In May 2013, the International EITI board approved new reporting guidelines by EITI implementing countries. The guidelines which move beyond disclosure of revenue data, demands that EITI reports also include critical information such as disclosure of data on the value and volume of production and export of commodities; allocation of licences and beneficial ownership; social expenditures; revenue collection; revenue management; government transfers by state-owned enterprises (SOEs); sub-national payments; social impact and revenue management. In June 2014, NRGI published a report titled "Implementing the 2013 EITI Standard in Tanzania: Gap analysis and recommendations for mining and petroleum sectors", which stresses the need for TEITI’s reports to adhere to the new standard. The report, among others, recommends the following:[9]

  • MSG decides on a definition of beneficial ownership which would then be included in the Terms of Reference (ToR) for the consultant. The information to be captured, according to the report, include “company’s full name; legal form and status; year of incorporation; a full list of directors and senior officers; all individuals or entities holding more than 5 percent of total shares in the company, including their full names, addresses, numbers and categories of shares held.”;
  • The TEITI report should also document the nation’s policy on disclosure of contracts;
  • The report should capture information on the economic contribution of the extractive industries divided by region/area where relevant;
  • The report should include export figures for the reporting year and at least a year ago;
  • The report should ensure a better understanding of the relationship between production and revenue, and should include information on production volumes and value of different commodities at various stages of production;
  • The report should include the methodology and prices used to compute the value of volumes of commodities produced and exported;
  • The report should include reforms or proposed reforms which featured in the reporting year;
  • The report should collect data on the contribution of the gas sector to the national economy;
  • The report should disclose revenue accrued from bonuses from each extractive industry, company and project; and
  • Local content information should be included in the TEITI report.

Multi-stakeholders Group

A Multi-Stakeholder Group (MSG), which has three-year tenure, is currently composed of the following members:[10]

  • Hon. Mark Bomani - Chairperson
  • Mr. Paul Masanja - Commissioner for Minerals (MEM-Government)
  • Mr. Alfred Missana - MFEA (Government)
  • Mr. Alfred Mregi - Commissioner for Taxpayers (TRA)
  • Mr. Yona Killagane - Managing Director (TPDC)
  • Mr. Kharist M. Luanda - Ass. Director (Local Government)
  • Rev. Dr. Steven Munga - Faith Based Organisations (Civil Society)
  • Arch. Mbaraka H. Igangula - Trade Unions (Civil Society)
  • Mr. Amani Mhinda - HakiMadini (Civil Society)
  • Ms. Blandina Sembu - Disabled (Civil Society)
  • Mr. Bubelwa Kaiza - Research and Development Centre (ForDIA - Civil Society)
  • Mr. Alfred Mwaswenya - Small Scale Mines (Companies)
  • Ms. Kate Methley - OGAT (Companies)
  • Mr. Gerald Mturi - Tanzania Chamber of Minerals and Energy - TCME (Companies)
  • Mr. Godvictor Lyimo - Tanzania Chamber of Minerals and Energy - TCME (Companies)
  • Eng. Emmanuel Jengo - Tanzania Chamber of Minerals and Energy - TCME (Companies)

Main article: Extractive Industries Transparency Initiative (EITI)

References

  1. What is the EITI?”, “EITI”, retrieved 10th October 2014.
  2. EITI: Statement of Principles and Agreed Actions”, “DFID”, retrieved 11th October 2014.
  3. What is the EITI?”, “EITI”, retrieved 10th October 2014.
  4. What is the EITI?”, “EITI”, retrieved 10th October 2014.
  5. Working Group”, “TEITI”, retrieved 10th October 2014.
  6. Second Reconciliation Report for Tanzania Extractive Industries Transparency Initiative (TEITI) for the year ending June 30, 2010”, “TEITI” retrieved 10th October 2014.
  7. Third TEITI Reconciliation Report”, “TEITI”, retrieved 10th October 2014.
  8. ”[ http://www.teiti.or.tz/fourth-teiti-reconciliation-report/ Fourth TEITI Reconciliation Report]”, “TEITI”, retrieved 10th October 2014.
  9. Implementing the 2013 EITI Standard in Tanzania: Gap analysis and recommendations for mining and petroleum sectors June 2014”, “TEITI”, retrieved 10th October 2014.
  10. Working Group”, “TEITI”, retrieved 10th October 2014.