IMPACT N E W S L E T T E R

PAPUA NEW GUINEA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE

July to December 2019 Promoting Transparency and Accountability of Revenue from the PNG Mining and Petroleum Value Chain

W ork has begun on the corrective actions for the second Validation. A Technical Working

Group (TWG) set-up to spearhead the preparation, held its first meeting in October. Head of PNGEITI National Secretariat Lucas Alkan said the group would continue to meet and report to the Multi-Stakeholder Group. “Our intention of setting up the com-mittee is to engage the responsible entities to work on the corrective actions leading up to April 2020,” said Alkan. Following conclusion of the first country validation, where PNG was awarded ‘Meaningful Progress’ over-all in implementing the EITI Stand-ard, the EITI Board put forward 14 corrective actions to be undertaken. The progress in addressing these corrective actions will be assessed in the second Validation commencing April 30, 2020. “The TWG will continue to have regu-lar meetings to progress the correc-tive actions, and to develop possible steps in achieving the goals,” Alkan

said. The TWG reviewed 14 validation action areas, provided updates on the items and put forward resolu-tions in addressing the areas where possible. A resolution was put forward to meet the requirement of public disclosure for areas under license allocation and register. Mineral Resources Authority (MRA) pledged to support Department of Petroleum (DoP) disclose its data on their online portal while waiting the set-up of DoP’s electronic database and website. MRA said to work with DoP in getting their data file uploaded onto the MRA cadastre online register. Currently, DoP data are separately managed by respective branches under the department, in stand-alone databases. Representatives of both entities agreed to continue the discussion in the coming months. Meanwhile, JICA is working with DoP to establish a network (a central database) where all relevant data-sets will be stored and accessed

under one central point. Once a website is up and running, the stand-alone registers will be uploaded onto the central database, which can then be publicly accessi-ble. Another resolution was also put for-ward to address the requirement for Data Quality. It was put forward that an Independ-ent Administrator (IA) would be en-gaged to undertake verification for certain government entities while waiting formal audits to be complet-ed. “This is to ensure the data they pro-vide are reliable to be included in the PNGEITI Report 2018 leading up to the second validation. “For EITI reporting purposes, PNGEITI and the IA will explore possibilities of engaging reporting government enti-ties and the Auditor General’s Office (AGO) to ensure timely audits. “The TWG will work towards engag-ing an independent consultant to carry out a feasibility study on how to assist AGO update audit reports for government departments and state-owned entities, ”Alkan added.

I N S I D E T H I S I S S U E

Welcome note from Head of PNGEITI

National Secretariat

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PNGEITI MSG Prepares for

2018 FY Report 3

Wok Wantaim EITI

Seminar

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PNGEITI Targets

Accountants

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EITI focuses on reforms 4

Open, Transparent and

Accountable Reporting 5

The Role of Youth in Upholding

Good Governance

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PNGEITI calls for greater coop-eration from companies

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Exhibition booth at the CPAPNG CPA Australia Joint Conference

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Scoping Study to be conducted on extractive SOEs

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KPMG Delivers Second Phase of BO project

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Activity Pictorial 8

2019 PNG Mining & Petroleum Conference Pictorial

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National Secretariat Circular 10

EITI’s role in addressing Corruption

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The 2019 EITI Standard 11

PNGEITI PREPARES FOR VALIDATION

The Validation Technical Working Group, Alotau- Front row, left to right: Tim Baiyo-KPHL, Channau Kumalau-DoP, Arnold Laka-manga-MRA, Lucas Alkan-PNGEITI, Debra Lessi-OTML, Christy Tende-DoT, Mai Kuraya-DoF. Back row, left to right: Toyohiko Yogo-JICA, Leonard Catalon-EY, Yoshio Chikamatsu-JICA, Swartz Buf-PNGEITI, Albert Kenny-IRC, Francis Diakon-PNGEITI, Louie Kawale-

MRA.

WELCOME ME

2 PNGEITI Newsletter JULY TO DECEMBER 2019 I M P A C T

O n behalf of the PNGEITI National Secretariat and the Multi Stakeholder Group (MSG), I warmly welcome all our readers to this FINAL edition of the PNGEITI Impact Newsletter 2019.

This year has been a great year for PNGEITI, we’ve achieved some of our goals, and we’re still to achieve more. We continue to implement our programs and activities with the support of our partners and stakeholders. Some of the key activities include preparation of Commission Bill for NEC submission in November, preparation of the PNGEITI 2018 Fis-cal Year Report and its publication in December, Completion of Phase 2 for the BO Roadmap Implementation Project by KPMG, Technical Working Group working on Validation action areas, and preparation for the SOE scoping study (ToR) among others. The Secretariat had new staff join the team in July, they are the Stakeholder Engagement & Outreach Coordinator, Research and Data Analysis Officer and the Media Content Writer, after these posi-tions were advertised beginning of the year. The Commission Bill is in final form, it is going through the State So-licitor for drafting, before it is presented to the cabinet. We anticipate that the Bill will be presented together with the budget in November. The State Solicitor has been involved since the initial stage, up to date, they are well versed with the contents of the draft Bill, and hopefully it won’t take long for them to clear it so it can be presented to the cabinet. The PNGEITI 2018 Fiscal Year Report is being undertaken by Ernst & Young (EY). In late August, EY and JICA co-organised a seminar for the Multi-Stakeholder Group, focused on the 2018 EITI Reporting tem-plates. The main points discussed were importance of accurate data,

reporting template to include cash-base date, and Ernst & Young to clearly indicate in the template other necessary reporting items. The templates were distributed to the reporting entities by late August. The reporting entities submitted the reporting templates with data and information back to Ernst & Young by mid September, a few sub-mitted later in early October. Generally, a good number of reporting entities responded in good time, as well as those reporting entities that did not provide infor-mation last year, provided for this year. Only a few delayed in submit-ting the reporting templates but with constant follow up, they submit-ted. KPMG has completed Phase Two (2) of the Beneficial Ownership (BO) Roadmap Implementation in July and have provided a comple-tion report. KPMG is in discussion with the National Secretariat to extend the contract for the next phase of the project. The secretariat has taken back one of the aspects of the project, which is Public Awareness, we will be conducting the public awareness for Beneficial Ownership. The MSG in the third quarter meeting, agreed to have a Technical Working Group (TWG) or committee comprising of representatives from the respective stakeholders to undertake the validation correc-tive actions. The first meeting was held in October, from 24th to 25th, in Alotau, Milne Bay. The discussions and resolutions were docu-mented as per the Validation Matrix. The TWG will meet regularly as a lead up to the second validation that will commence in April 2020. The National Secretariat through its multi-stakeholder group plans to scope out the operations of State-Owned Entities (SOEs) involved in the extractive sector or have an equity share (either on behalf of the government or provincial governments). The Scoping study will also include Trustees established by the government for managing busi-ness arms established by provincial, local level governments and landowners using revenue flows from extractive activities in the coun-try. The study is intended to understand the relations between all SOEs and trustees and the transactions between extractive SOEs (and their subsidiaries) and to recommend possible policy and legis-lative reforms to improve transparency and accountability for EITI reporting requirements and most importantly, to enable the govern-ment to have a clear visibility and oversight on the operations of these entities. The scoping study is planned to commence in January 2020 and is anticipated to take about three to four months to com-plete. With the new staff on board, we we’ll continue with our communica-tion, stakeholder engagement and outreach activities in the following year. We will work on improving collaboration and dialogue between various stakeholders. One way to improve is to conduct one-on-one meetings with stakeholders on how to address pertinent issues relat-ing to the country’s various extractive project value chains. The National Secretariat continues to consult and follow up with de-velopment partners to ensure their promised technical and funding support materialize to implement the activities as outlined in the PNGEITI Annual Workplan. The EITI process will continue to provide a platform for dialogue relat-ing to the Extractive Industries. It is considered a valuable mecha-nism by which gaps in existing government systems can be identified, recommendations made by the stakeholders can be elevated by poli-cy makers to improve the governance of the sector in the country. The Secretariat and the Multi-Stakeholder Group look forward to fur-ther progress its plans and activities in the new year. As we end of a great year, from the Secretariat, we wish you all a very Merry Christmas and a Prosperous New Year 2020!

LUCAS ALKAN, Head of PNGEITI National Secretariat

PNGEITI Newsletter JULY TO DECEMBER 2019 3 I M P A C T

WOK WANTAIM EITI A seminar was held in August for the PNGE-ITI Multi-Stakeholder Group (MSG) in prepa-ration for the PNGEITI Report 2018. The seminar was co-facilitated by Independ-ent Administrator Ernst & Young (EY) and JICA project consultant expert team. The seminar was held as a capacity devel-opment activity, a learning session for the MSG on the reporting template. EY highlighted three main benefits of EITI for the country in terms of participation of the three constituents namely the government, the extractive industry and the civil society. First, as a country, Papua New Guinea’s participation and implementation of EITI provides a clear signal to investors and in-ternational financial institutions that the government is committed to greater trans-parency. Second, companies and investors participa-tion reduces reputation risk and conflict as companies are able to demonstrate pay-ments are made according to project agree-ments and how they contribute to national economy, as well as establish a clean and predictable process of payments disclosure and reporting. Third, civil society groups playing their role in informing and educating the public do-main about those revenues that govern-ments manage on behalf of citizens, thereby making governments more accountable. EY told the MSG participants they would build on existing work undertaken by the MSG and the previous reports. “We’ll continue to engage with reporting entities and incorporate feedback to im-prove reporting process. Also, we will contin-ue to map out realistic pathway to full trans-parency and disclosure over the coming years. And focus on closing the gaps in EITI reporting to meet expectations of the 2016 EITI Standard.” JICA team on the other hand highlighted the importance of accurate data, and cash-base date to be included in the reporting tem-plate. It was also announced that the 2018 report would be produced by the 2016 EITI Standard.

EY distributed the reporting templates to all

reporting entities at the end of August and

received the templates back in September

and early October 2019.

‘Wok Wantaim EITI’ Seminar, Port Moresby—The participants (Multi-Stakeholder Group) are reminded of the importance of data quality—provision of accurate date is

crucial, in reporting and upholding of the EITI Standards.

PNGEITI MSG PREPARES FOR 2018 FISCAL YEAR REPORT

C ompilation of the 6th PNGEITI Re-port 2018 gained momentum in late August soon after a training session was co-facilitated by pro-

gram partner Ernst & Young (EY). The PNGEITI Report 2018 aims to highlight various revenue payments to the govern-ment (PNG) from the mining, oil and gas sector. The National Secretariat made this an-nouncement in a press statement published by the media in early October. Head of National Secretariat Lucas Alkan said the PNGEITI Multi-Stakeholder Group was working closely with the Independent Administrator (EY) to compile a comprehen-sive report. “As part of the process to collect information from the EITI reporting entities, EY sent out data reporting templates at the end of Au-gust, while compiling appropriate back-ground information and reconciliation parts of the report,” said Alkan. He added that the 2018 Report seeks to address some of the recommendations and issues that were highlighted from the 2017 Report. “We welcome and we acknowledge Kumul Petroleum Holdings Limited (KPHL), and all reporting entities for engaging with the PNGEITI on the upcoming 2018 report. “We’re continuously improving the report (s) and addressing the various recommenda-tions and issues that arise from previous

reports including the latest 2017 Report,” said Alkan. PNGEITI has published five (5) EITI country reports from 2013 to 2017 that focused on payments made by the extractive companies to the government and the government’s receipts of those payments. “The reporting entities qualify to report based on the PNGEITI Materiality Threshold comprising of their assessment to contribute 2% or more to total known revenue from the sector,” said Alkan. It was anticipated that the preliminary re-sults of the reconciliation would be present-ed to the PNGEITI Multi-Stakeholder Group (MSG) in October. EY would continue to provide support and check in with each reporting entity to under-stand progress of reporting. During the period, the reporting entities are contacted to provide clarification of discrep-ancies and be given an opportunity to resub-mit data. The initial draft of the report was released in mid November for the Multi-Stakeholder Group to review before it would be finalised by EY. The Multi-Stakeholder Group is expected to endorse the final report in December during the final quarter meeting.

As a requirement by the EITI International

Secretariat, the Report will be published by

December, 2019.

YEAR ACTIVITY

2016 Former Treasurer Hon. Patrick Pruaitch directed the National Secretariat to develop the PNGEITI National Policy and Legislation during Meeting 05/2016 and an-nounced the decision to ensure a TWG is established.

2017 PNGEITI Policy and Legislative TWG Formalised in meeting 2/2017. The TWG held meetings and various online forums to develop a preliminary scope which led to a draft policy framework. TWG was compelled to proceed– recommendations were made for MSG to engage legal expert to proceed with the next phase of the develop-ment. MSG developed terms of reference to engage legal expert.

2018 TWG formalised the Policy and Legal Consultant ToR. Bid announced. MSG approved the successful bidder Adam Smith International to take up the project.

2019 NEC endorsed the EITI establishment policy. The National Secretariat and the MSG are now progressing to the legislative process to formulate the draft Legislative Bill.

SUMMARY ACTIVITY AND MILESTONES OF THE PNGEITI POLICY AND LEGISLATION

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I M P A C T 4 PNGEITI Newsletter JULY TO DECEMBER 2019

The PNGCC Conference—Port Moresby, August, 2019.

EITI FOCUSES ON REFORMS The Extractive Industries Transparency Initi-ative is just a process that strives to pro-mote transparency and accountability in the mining, oil and gas sector. Deputy Head of PNGEITI National Secretari-at Christopher Tabel made this remarks at a conference held by the PNG Council of Churches in August this year. There were about 50 church leaders from mainline churches, both in PNG and the Pacific, community leaders, politicians, aca-demics, youth leaders and various non-government organisations (NGOs) and rep-resentatives who gathered to discuss the churches’ role in rethinking development, focusing on the theme “Reweaving the PNG Household towards a PNG Ecological Frame-work for Development”. Some of the ques-tions raised were: Who makes up the EITI International? If it’s a PNG government initiative, can EITI make decisions that will benefit the people? How is the information from the PNGEITI reports disseminated to the public? Tabel told the conference that EITI is a pro-cess to strengthen system of governance and management of a member country and is governed by a tripartite arrangement whereby one is not powerful than the other. “PNGEITI is moving towards establishing itself as a commission with its policy already approved by the National Executive Coun-cil,” he said. “Due to PNG’s unique environment and governance in the resource sector, this ap-proach is taken to make EITI implementa-tion more workable and robust. “It is also to ensure that EITI is firmly grounded in the long term to ensure trans-parency and accountability in the extractive industry,” Tabel said. Stakeholder Engagement & Outreach Coor-dinator Oliver Maingu added that PNGEITI is conducting outreach programs, at seminars and conferences to disseminate PNGEITI information. He emphasised that the EITI process wishes to see the ultimate result of the value chain and that is the benefit to the people. “PNGEITI is a neutral body and does not make decisions on its own but with the ap-

proval of the PNGMSG,” Maingu said.

PNGEITI TARGETS PNG ACCOUNTANTS

The CPA conference - Lae, Morobe, August, 2019. Deputy Head of Secretariat Christopher Tabel talks about PNGEITI’s future plans to develop online portal for reporting, something that will enhance stakeholder reporting processes to be more efficient and timely.

T here is a need for more awareness on EITI and its role specially to pro-fessional groups, such as account-ants.

PNGEITI’s participation in the recent Certi-fied Practicing Accountants (CPA) annual conference displayed the need for increased awareness. The CPAPNG Annual Conference 2019 was held in August with the theme “Organizational Culture in a Digital Age.” The National Secretariat has been actively engaged with CPA and participating in their conferences to promote PNGEITI. The objective of the Secretariat’s participa-tion in this conference was to talk about the future of digital online reporting for EITI in PNG to ensure greater efficiency in reporting from stakeholders. Deputy Head of National Secretariat Christo-pher Tabel gave a background information on EITI and its implementation in the coun-try. He also talked about the PNGEITI 2017 Fis-cal Year Report and the data collected for the year. He told the conference that currently data is collected manually through reporting tem-plates. PNGEITI is working towards develop-ing a digital online reporting portal to en-hance the reporting processes, as well as enhance report completion, to be more effi-cient and effective. “PNGEITI is hoping to develop a digital dash-board to enable digital reporting,” Tabel said. Apart from the presentation the team had an exhibition booth for information awareness and promotion of EITI. The various PNGEITI reports were distributed to interested participants. Some of the par-ticipants displayed an interest in knowing more, they had questions like: Can PNGEITI change the mining and gas laws to allow for more transparency? Can PNGEITI demand

extractive companies to reveal revenue col-lected? How is the government sure that it is getting the maximum revenue from industry as per the respective project agreements? The team explained that the EITI Standards and the PNGEITI is a platform for stronger governance, transparency and accountability in the mining, oil and gas sectors, it does not make changes to laws and policies but make recommendations for the relevant govern-ment bodies to approve for reforms and im-plementation. The team further explained that the over-sight body for EITI implementation is called the Multi-Stakeholder Group (MSG) which comprise of representatives from the respec-tive government departments, state-owned entities, extractive companies, and the civil society groups. The information and data collected from extractive industries are on voluntary basis through consensus with PNGMSG in imple-menting the EITI standards. Moreover, PNG does not have an independ-ent government monitoring and reporting system as all data are supplied by the com-pany or the resource developer. Stakeholder Engagement & Outreach Coordi-nator Oliver Maingu said that the conference was a good avenue to conduct further aware-ness and promotion of EITI as most were accountants and have a greater understand-ing of data collection, reconciliation and other methods used in accounting. “By participating in such professional gather-ings and from getting questions and views from participants, we can measure how PNGEITI is progressing and improve in areas that we can do more in. And also, we can utilise their wider network to promote the work of EITI in the country and,” he said. The National Secretariat is an affiliated member of CPA and also a sponsor of the event.

PNGEITI Newsletter JULY TO DECEMBER 2019 5 I M P A C T

T he PNGEITI and its Multi-Stakeholder Group have been supportive to open, transparent and accountable report-ing in the PNG mining, oil and gas

sector. Head of National Secretariat Lucas Alkan highlighted this during discussions of a Re-port launch in late September by the Trans-parency International PNG Inc (TIPNG). The TIPNG ‘Right to Information (RTI) Report’ found that over 90% of State agencies sur-veyed were unable to give public documents when requested over the counter, yet 54% of these agencies already had these same doc-uments available online. The report also found that accessibility to public documents over the counter and through online platforms ranged from poor to moderate across agencies surveyed with the most accessible being corporate plans and the least being audited financial statements. The report recommended that PNG govern-ment develop a ‘Right to Information Policy’ outlining the process by which a citizen can expect to obtain information, and to prioritise the draft and review of an RTI Legislation Bill. Alkan acknowledged the efforts of TIPNG and its partners in producing the report and

hopes that the relevant government agencies could use it to address existing gaps. Alkan also acknowledged the efforts of PNGE-ITI Multi-Stakeholder Group that have played a consolidated effort to informing the public and various stakeholders through the EITI Reporting Process. “The PNGEITI Multi-Stakeholder Group have been committed to open data reporting through the EITI process and such has result-ed in the production of five (5) PNGEITI Fiscal Year Reports from 2013 to 2017. “The reports focus on the payments made by extractive companies to the government and the government’s receipt of those payments, and it provides an independent audit into the mining, oil and gas revenue streams in which the revenue is generated. “The reports are published and are available online, the findings and recommendations are further disseminated through the mem-bers of the multi-stakeholder group,” said Alkan. Other issues raised by the audience included the legal gaps associated with accessing information and suggested the implementa-tion of the Integrated Government Infor-mation System.

OPEN, TRANSPARENT AND ACCOUNTABLE REPORTING

Our Right to Know, Their Duty to Tell—The TIPNG ‘Right to Information’ (RTI) Report. TIPNG Launched the Report in Septem-ber, 2019.

THE ROLE OF YOUTH IN UPHOLDING GOOD GOVERNANCE

“A well informed, educated youth with skills and knowledge will make better decisions, advocate for good governance, transparency and accountability”. This was the message delivered to youth members of the Youth Against Corruption Association (YACA) during their annual Mike Man-ning Youth Democracy Camp, held in Port Moresby, in September. Youth are an important group PNGEITI stems to inform and educate on the work it does in promoting transparency and accountability in the mining, oil and gas sector. PNGEITI’s partnership with Transparency International PNG Inc

(TIPNG) has over the few years formed a stronger avenue for contin-ued public awareness and community outreach. In a presentation to about over 50 youth from around the country, Stakeholder Engagement and Outreach Coordinator Oliver Maingu introduced the EITI concept and its implementation in the country through support of different entities and stakeholders in the mining, oil and gas sector. “PNG Government signed up to implement EITI Standards, to date, the PNGEITI coordinates among the stakeholders to provide infor-mation and data to form fiscal year reports. “The information and data collected from the participating stakehold-ers are especially from the EITI Value Chain capturing agreements and contracts, production data, revenue collection, revenue alloca-tion, social and community benefits,” Maingu added. A youth raised the following question; “Does the PNGEITI Report (s) show exact figures for production volume from mining, oil and gas sectors?” Another youth asked; “On an individual level, how can I or my family sign up to be a member of EITI?” YACA is a registered youth organisation affiliated to TIPNG. It is a membership-based youth organisation, run by young people who are interested and committed to fight corruption in the country. The association also provides opportunity for the youth to develop leadership skills and bring positive influence to their peers in their communities. YACA was established in 2002 by Fr John Glyn, he was then School Chaplain of Jubilee Secondary School in Port Moresby.

The PNG Extractive Industries Transparency Initiative (PNGEITI) is an independent body established by the PNG Government to promote transparency and accountability of revenue it receives from the mining, oil & gas sectors and how it spends these funds. PNGEITI is part of a global best practice standard known as the Extractive Industries Transparency Initiative (EITI) that promotes good governance in the extractive sector. In EITI implementing countries, companies involved in the extractive natural wealth (oil, gas and minerals) industries are required to report on what they pay to the governments and gov-ernments are required to publish what they receive from these companies in a given financial year. These financial data are then reconciled by an inde-pendent administrator and are published in the annual EITI Reports for public information.

Oliver Maingu, Stakeholder Engagement & Outreach Coordinator speaking to over 50 youths during the Mike Manning Democracy Camp in Port Moresby.

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I M P A C T 6 PNGEITI Newsletter JULY TO DECEMBER 2019

P NG Extractive Industries Transparen-cy Initiative (PNGEITI) called on com-panies and resource developers in the mining, oil and gas sector to

cooperate by providing relevant data when submitting for EITI reporting purposes. Head of PNGEITI National Secretariat Lucas Alkan told the 2019 PNG Mining and Petrole-um conference that PNGEITI has published five EITI country reports so far, covering fiscal years 2013 to 2017, while the sixth report covering fiscal year 2018 is due for publica-tion. The 2019 PNG Mining and Petroleum was held in Port Moresby, from December 03rd to the 5th. Alkan was on panel discussion held on the last day of the conference, discussing busi-ness perspective on shared value for PNG. “Providing relevant data for EITI reporting, we promote transparency and accountability in the industry, which is good of all the stake-holders, partners and developers,” Alkan said. He said the reports produced focused on payments made by the extractive companies to the government and the receipts of those payments. Alkan said that those payments needed to be

reported well in terms of figures so it can be captured well in the reports. “The value chain that we report on, starts from the exploration stage,” he said. “EITI brings out transparency in the process of issuing license, and contracts, and how the government’s tax equity is captured in those processes. “The EITI report also captures information on the volumes and values of exports when de-velopers start extracting resources and ex-porting. “We also try to capture information on the total government revenue collected from the

mining, oil and gas sector. “There are various revenue streams which we try to collect information and report on such as the corporate income tax, salary & wages tax, royalty payments, development levies among others that are paid to different state-owned entities like the Mineral Resources Development Company (MRDC), Kumul Petro-leum Holdings Ltd and others,” he said. “However, some of the payments made by the companies are not captured well. There’s still some information that needed to be pro-vided so it can be captured in the reports. Alkan added that there were two types of expenditures captured in the EITI report: Mandatory: those that were captured by law to pay taxes, and or captured under memo-randum of agreements and memorandum of understandings; and Social: community obligation or social respon-sibility that most of the companies contribut-ed to, needed to be reflected well in the re-ports. “If the information is not well represented or submitted for reporting, then you don’t see the total impact the companies are contrib-uting to the development in our communi-ties,” he said.

PNGEITI CALLS FOR GREATER COOPERATION FROM COMPANIES

EXHIBITION BOOTH AT THE CPAPNG-CPAAUSTRALIA JOINT CONFERENCE 2019

Second from left: Mr. Lucas Alkan among other panel-ists during the final session of the 2019 PNG Mining & Petroleum Conference and Exhibition.

PNGEITI’s participation in the November CPAPNG (Certified Practising Accountants) and CPA Australia joint conference generated positive feedback from participants. It was a great opportunity to promote EITI and its implementation in the country, to especial-ly accountants and accounting firms. The PNGEITI banner display, attracted people to the exhibition booth, we had people asking what EITI meant, what it was doing, how long has it been operating and so on. Most people were eager to read more, they picked up at least most of the reading materi-als, pamphlets, previous fiscal year reports, executive summaries, annual progress re-ports, scoping study report on subnational payments, and the recent newsletter. We had great feedback from the participants. A male participant picked up a report from the table and said; “oh great, so this is the report? We’ve been contributing to this re-port, it’s great to finally get a copy of the final thing”. Two females from a resource project in New Ireland Province came by to the booth. They had questions on their faces, you could clearly see. When asked if they know about PNGEITI or if they were contributing to the PNGEITI reports, they answered no. Cer-tainly, they had just learnt about PNGEITI from visiting the booth. A staff of the CPAPNG office assumed that PNGEITI was a private entity set up by individuals from Treasury Department with a shared interest. A few Teachers from technical schools picked up a

few reports, and said they would display them in the classroom for their students to read. From the team’s observation, the conference provided the venue at a greater scale. Infor-mation about PNGEITI and EITI was dissemi-nated through reports, pamphlets and news-letters, and participants were also informed to access the website to find out more. Apart from creating awareness, such events also allow us to engage and network with stakeholders in the industry, government and civil society which includes landowner groups, women groups and others from the informal sector. The team also learnt from participating. We were reminded that many people still prefer physical, hard copy reports, information books, etc. We may inform them about the

website or Facebook, but not everyone will have access to internet. In other words, infor-mation we put on the website is not free, one has to purchase credits for data bundle. Think about the simple landowner, or a sub-sistence farmer, what if he or she cannot afford internet at a day’s cost. Reports and other communication materials when printed or produced, try to at least distribute to not only stakeholders but also to other govern-ment departments, agencies, private offices, public libraries, school libraries etc. Going forward the team will coordinate with stakeholders and other business communi-ties for PNGEITI’s participation in conferences and other calendar activities to have more engagement with various sectors and profes-sions. One of such is to have booths at the festivals and cultural shows, like the Mask Festival, Goroka Show, Mt. Hagen show among others.

Many people were eager to know more about EITI and its implementation in the country.

Participants stopped by at the booth and collected reports, pamphlets and other materials to read.

PNGEITI Newsletter JULY TO DECEMBER 2019 7 I M P A C T

The implementation of Beneficial Owner-ship (BO) Roadmap phase two (2) ended in July, 2019. The project was implemented by KPMG. Cayllan Boeha of KPMG said one of the main activities carried out was the develop-ment of a BO pilot disclosure form. They had a pilot exercise conducted with ten (10) reporting entities, in which they were able to capture some disclosure infor-mation. “Apart from that we also conducted public awareness with the recent one held in Mt Hagen, Western Highlands,” Boeha said. “During the development of the form, we consolidated information on the current company registration form with the infor-mation that should capture beneficial own-ership.” He said they were not able to circulate the form because it was still deemed illegal until legislative changes are done to the IPA company act. “KPMG has had consultations with Invest-ment Promotion Authority (IPA) and PNGE-ITI including Asian Development Bank (ADB) who are currently working with IPA to do the particular legislative changes and amendments.” Head of PNGEITI Lucas Alkan said the form has been piloted, KPMG has used the form on a couple of the reporting entities or companies that provide data for the EITI reporting. “The first layer of information capturing shareholder information, and where the sources of these companies are, will be used to form part of the PNGEITI Report 2018 which will be published end of the year,” Alkan said. Boeha said during the implementation of the project, KPMG encountered a few chal-lenges with entities; He said accessing and obtaining infor-mation regarding beneficial ownership from extractive entities was quite hard because there are confidentiality clauses in place; “There was poor data record keeping; and landowners lack of financial skill and ca-pacity to provide information. KPMG is in discussion with PNGEITI to ex-tend the contract for the next phase of the project.” “PNGEITI would be taking back the Public Awareness for BO for the next phase of the project, they would be doing their own pub-lic awareness,” Boeha said.

KPMG DELIVERS SECOND PHASE OF BO PROJECT

SCOPING STUDY TO BE CONDUCTED ON EXTRACTIVE STATE-OWNED ENTITIES

T he PNGEITI National Secretariat through its Multi-stakeholders Group (MSG) plans to scope out the opera-tions of State-Owned Entities (SOEs)

involved in the extractive sector or those that have an equity share (either on behalf of the Government or provincial govern-ments). The Scoping study will also include Trustees established by the Government for manag-ing businesses arms established by provin-cial, local level governments and landowners using revenue flows from extractive activi-ties in the country. The study is intended to understand the relations between all SOEs and trustees and the transactions between extractive SOEs (and their subsidiaries) and to recommend possible policy and legislative reforms to improve transparency and accountability for EITI reporting requirements. Most importantly, to enable the Government to have a clear visibility and oversight on the operations of these entities. A Technical Working Group (Validation) is working to engage a consultant to execute the study on SOEs early next year as one of the validation corrective actions. EITI implementation in PNG was validated against the EITI Standard by an independent validator in early 2018. The outcome from this validation resulted in PNG scoring “Meaningful Progress”. This means that PNG has met some of the key requirements of the EITI global Standard in improving governance in the extractive sec-tor but there is still a number of critical are-as the Government needed to address to fully meet the requirements of the EITI glob-al standard and achieve EITI compliant sta-tus. The EITI Validation Committee recommend-ed the Government of PNG to undertake

corrective actions on a number of areas until a second validation is conducted in the first quarter of 2020. One of such recommendations is that PNG should clearly establish its definition of SOEs to delineate the SOEs within the scope of EITI reporting to ensure that a comprehen-sive list of State participation in the extrac-tive industries, including terms associated with State equity and any changes in the year under review be publicly accessible. It was also recommended that PNG must clarify the rules and practices governing financial relations between all SOEs, includ-ing their subsidiaries, and the State, includ-ing the existence of any loans or guarantees extended by the State, or SOEs, to extractive companies or projects. It was recommended that PNG should un-dertake a comprehensive assessment of transactions between extractives SOEs (and their subsidiaries) and mining, oil and gas companies, as well as between the extrac-tive SOEs (including their subsidiaries) and government in its scoping for future EITI Reports. All SOEs collecting material revenues or making material payments to government should be included in future EITI reporting. Furthermore, it was recommended that PNG should undertake a comprehensive review of all expenditures undertaken by extractive SOEs (and their subsidiaries) that could be considered quasi-fiscal. It was recommended through the validation process that PNG should develop a reporting process with a view to achieving a level of transparency commensurate with other pay-ments and revenue streams, and should include SOE subsidiaries and joint ventures and their financing and equity arrangements in extractive projects.

October 2019 PNGEITI Team and Mr. Paul Barker Executive Director Institute of National Affairs had an hour session with NBC’s Morning Tru Show. It was an introductory session. The team intro-duced EITI, its implemen-tation in the country and the governing body, the Multi-Stakeholder Group. PNGEITI Team are hope-ful to continue this with having regular aware-ness sessions with the radio station in the com-ing years.

RADIO AWARENESS — LIVE ON NBC ‘MORNING TRU SHOW’

8 PNGEITI Newsletter JULY TO DECEMBER 2019 I M P A C T

SOME OF THE ACTIVITIES IN PICTURES

3rd Joint Coordinating Committee Meeting for The Project for Improving Resource Related Revenue Management. JICA Experts are the im-plementers of The Project for Improving Resource Related Revenue Management. The Project Director is the Department of Treasury, the project manager is the Head of PNGEITI. Members of the joint committee include Departments of: National Planning and Monitoring, Petro-leum, Finance, and Mineral Resources Authority, Internal Revenue Commission including the JICA PNG office. Observers of this project in-clude; Kumul Petroleum Holdings Ltd, Mineral Resources Development Company, Auditor General’s Office, and the World Bank.

Department of Treasury staff induction: PNGEITI National Secretariat gave an Introductory presentation on EITI. PNGEITI team further dis-cussed the EITI reports. Mr. Christopher Tabel talks about the group tax (salary & wages) being the highest tax revenue generated from the extractive industry, including the EITI Reports and what is being captured or reported on.

PNGEITI in it’s role to promote transparency and accountability in the mining, oil and gas sector, participates in discussions on research analysis and measures to combat corruption. PNGEITI was present to witness ACT NOW PNG launch its publication of an analysis into the PNG economic costs of corruption and the measures needed to ensure an open and transparent government.

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Left & right: The Technical Working Group (TWG) for the Validation had their second meeting in Madang Province. Some of the results from the discussions were submitted to Ernst & Young to include in the PNGEITI Report 2018. The Report is being finalised and is expected to be published on the 20th of December, or before the end of 2019.

I M P A C T PNGEITI Newsletter JULY TO DECEMBER 2019 9

THE 2019 PNG MINING & PETROLEUM CONFERENCE & EXHIBITION—DECEMBER

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EITI INTERNATIONAL NEWS

NATIONAL SECRETARIAT NOVEMBER CIRCULAR

E ITI’s role in addressing corruption is not a new subject of, it has been the subject of much debate in the past years.

It was one of the key topics discussed by the International Board in Addis Ababa in Octo-ber. The Board agreed on initial steps to further strengthen the EITI’s role in combating cor-ruption. It is an ongoing discussion that the Board will continue to pursue at its strategy retreat in Oslo in February. Please take time to consider how the initial steps agreed by the Board and discussed in this circular could be implemented in your respective countries. We also hope you will actively engage in the consultations that we are planning for the coming months. Congratulations to the following four coun-

tries for having achieved meaningful pro-gress in implementing the EITI through the latest round of validations – Democratic Re-public of Congo (DRC), Iraq, Mozambique and Myanmar. Drawing from lessons learned from previous Validations and from feedback from imple-menting countries, the Board is currently undertaking a review of Validation proce-dures and the existing Validation model. A working group has been created to lead the review. Issues for consideration include how Validation takes impact into account, who should undertake Validation and how it is resourced, the structure, timing and conse-quences of Validation, as well as assessing the civil society protocol. This is an ongoing discussion that implementing countries are highly encouraged to follow. Further details on how you may be involved are discussed in this circular. Your inputs to these ongoing important dis-cussions are very important. As the Board prepares for its strategy retreat in February and as the Validation review takes shape, the need to strengthen your voice as a con-stituency is becoming more urgent. Your colleagues from other implementing coun-tries met in Addis to explore how you can best communicate your suggestions and concerns to the EITI Board. Discussions are underway to formalise a regular coordination mechanism between Board members and the countries they represent. We would like to hear your thoughts and we encourage you to be involved in the various consultations

that are planned ahead of the next Board meeting. On the policy front, we are delighted with the progress we have seen in many EITI coun-tries on beneficial ownership as we draw near the January 2020 deadline. The EITI is also stepping up its engagement with Su-preme Audit Institutions (SAIs). Together with the Office of the Auditor General of Norway we hosted a workshop in Addis on strength-ening collaboration with SAIs. The workshop brought together EITI and SAI representatives from Ethiopia, Ghana, Malawi, Mozambique, South Africa, Sierra Leone, Tanzania, Ugan-da, Zambia and Zimbabwe. This is an initial but important step towards defining how the EITI and SAIs can work together. Please take time to read the highlights of this meeting from our website. Lastly, I want to draw your attention to some important reminders in this circular. You will recall that MSGs are expected to publish plans for contract disclosure and main-streaming which should be integrated in work plans for 2020. The Secretariat will provide detailed guidance for how this can be done in the next national secretariat circu-lar, but we hope MSGs are already keeping this in mind as they draft their new work plans. Our best regards, Mark Robinson Executive Director EITI International Secretariat

Message from Mark Robinson

One of the highlights of the Board meeting in Addis was the Board’s discussion on the role that EITI plays in addressing corruption. Drawing from the discussion paper prepared by an independent consultant Alexandra Gil-lies, the Board examined the EITI’s actual and potential contribution to corruption mitigation in EITI countries. The paper explains that as the EITI provides information on licensing, contracts, revenue collection, beneficial ownership, and com-modity trading, it sheds light on transactions that are vulnerable to corruption. However, the paper argues that more could be done beyond disclosing information. It identifies some challenges and provides recommendations to the Board on how the EITI could further its work on anti-corruption. Moving forward, the Board decided to priori tise the following action points: Clearly articu-

lating EITI’s role in fighting corruption through EITI’s communication strategy and making stakeholders aware of the Code of Conduct; Exposing corrupt practices that are vulnera-ble to abuse by developing practical guidance on how EITI reporting could inform discus-sions on anti-corruption at the country level; Together with partners, facilitate transparen-cy and multi-stakeholder engagement around known areas of risk and share good disclo-sure practices related to subcontracting; Con-tinue work with supporting companies to showcase good company approaches in fighting corruption. The implementing country sub-constituency has agreed to establish a working group to provide inputs to a Board discussion on EITI’s anti-corruption efforts in February 2020.

The discussion paper: EITI’s Role in Address-ing Corruption. It can be accessed: https://eiti.org.document/eitis -role-in-addressing-corruption

THE EITI’S ROLE IN ADDRESSING CORRUPTION — AN UPDATE FROM A RECENT EITI BOARD MEETING

10 PNGEITI Newsletter JULY TO DECEMBER 2019 I M P A C T

THE 2019 EITI STANDARD

An Article from the EITI International Secretariat

T he 2019 EITI Standard was launched on 18 June at the Global Conference in Paris. At the opening of the 8th EITI Global

Conference, outgoing EITI Chair Fredrik Rein-feldt formally launched the 2019 EITI Stand-ard: This is one of the most significant achieve-ments of the outgoing EITI Board. It has in-volved a huge consultative exercise and, as with previous versions, in line with the EITI way, it draws on practice in the implementing countries. As such it is a reaffirmation of the commit-ment of the 52 countries. It focuses more on systematic disclosure of extractives data as a default rather than EITI reports. It also contains new requirements on con-tract transparency, the environment and gender. This topic will be covered in more detail in some of the other sessions of this Confer-ence. The 2019 EITI Standard represents a further evolution in transparency. The focus is on making disclosure and open data a routine part of government and corpo-rate reporting, providing information to stake-holders in a timeframe and format that can support its widespread use in analysis and decision making. It now requires contract transparency for new contracts from 2021 plus new require-ments on environmental reporting and gen-der.

An Overview of the 2019 Standard The most significant changes include: Contract transparency In many EITI implementing countries, con-tracts signed by the state and by companies establish the fiscal terms that determine how much tax is paid for resource extraction. These contracts are often confidential, hin-dering informed public debate on whether the country is receiving a fair return. The 2013 Standard was a landmark in encouraging contract transparency and requiring a clear policy on contract dis-closure, and was effective in putting the is-sue on the table for discussion at the nation-al level. The majority of EITI implementing countries have taken steps to publish con-tracts and promote public debate. The 2019 Standard requires disclosure of contracts signed after 1 January 2021. Multi-stakeholder groups (MSGs) will be expected to integrate contract disclosure into their EITI work plan.

State participation and commodity trading Of the USD 2.5 trillion dollars in oil, gas and mining payments covered in the EITI published to date, around half flows through national oil companies. The EITI Board agreed to strengthen the disclosure require-ments regarding state participation, transac-tions related to state-owned enterprises and quasi-fiscal expenditures. Working together with commodity traders, the EITI also im-proved its requirements regarding the disclo-sure of “first trades”, i.e. the sale of the state’s share of production or other revenues collected in-kind. Environment The environmental impact of the extractive industries is a focal point of public debate. The 2019 EITI Standard has reiterated that the EITI should cover material environmental payments by companies to governments, and encourage disclosures of contextual infor-mation related to environmental monitoring. Gender The 2019 Standard requires MSGs to consid-er gender balance in their representation and disclose employment data by company, gen-der and occupational level. It also addresses gender considerations in the dissemination of EITI data, and encourages MSGs to docu-ment how they have taken gender considera-tions and inclusiveness into account. Mainstreaming transparency The 2019 EITI Standard continues to shift the focus from publishing EITI Reports toward encouraging systematic disclosure, opening up new oppor-tunities for MSG discussion and oversight. The Global Conference is showcasing pro-

gress in this area. It can be accessed: https://eiti.org/document/overview -of-proposed-changes-to-eiti-requirements

Background and development of the global EITI Standard Since its inception, the EITI Standard has evolved to meet the needs of stakeholders and to further the realisation of the EITI Prin-ciples. In the lead up to the EITI’s previous global conferences (held every three years), the EITI Board has considered opportunities to strengthen EITI implementation and to improve the governance of the EITI Associa-tion. The most ambitious step was the agreement of the 2013 EITI Standard ahead of the 6th Global Conference in Sydney, Australia. In its early years, the EITI focused almost exclusive-ly on reconciling company disclosures on tax payments and government disclosures on revenues. The 2013 EITI Standard introduced a wide array of new reporting requirements regarding laws, contracts, license allocation, state participation, trading of commodities on behalf of the state, social payments and transfers. The 2016 EITI Standard focused on clarifica-tions and improvements, and was adopted by the EITI Board ahead of the 7th Global Con-ference in Lima, Peru. It reflected three im-portant changes: (1) a new requirement on beneficial ownership reporting, (2) changes to allow for “mainstreamed” EITI implementa-tion, and (3) the introduction of an improved Validation system for measuring implement-ing country performance. Since its implemen-tation, the majority of EITI countries have completed Validation against the 2016 Standard. Most are addressing corrective actions needed to meet the EITI’s require-ments and wider recommendations aimed at making the EITI’s work more meaningful and effective. The lessons from Validation led the Board to focus again on clarifications and improve-ments. At the 41st Board Meeting in Dakar, the EITI Board agreed to clarify requirements that had already been under discussion since Lima, to address precedents established in Board decisions, and to further reflect the EITI’s focus on encouraging systematic dis-closure. A working group mandated by the EITI Board developed 13 proposals for con-sideration. The Board in their 42nd meeting in Kyviv, Ukraine, agreed to the changes Prin-ciple and later affirmed the changes at the 43rd EITI Board Meeting in Paris.

The 2019 EITI Standard

I M P A C T PNGEITI Newsletter JULY TO DECEMBER 2019 11

CONTACT US

www.pngeiti.org.pg

info@pngeiti.org.pg

KEY DATES PNGEITI MSG has produced six (6) EITI Country Fiscal Year Reports from years 2013- 2018.

Covered 20 Mining Companies, 5 Oil and Gas companies, 5 state-owned entities and 9 Government Departments

The PNGEITI Reports cover over 24 Revenue streams. 9 of which were reconciled. 14 Unilaterally De-clared, and One partially Reconciled in the 2017 Report.

Increased participation by key stakeholders in the PNGEITI Multi-Stakeholder Group with over 36 meet-ings since signing of the PNGEITI MSG MoU in 2013.

Current MSG members is at over 30 since 2013 and includes voting members from Government Indus-try, CSOs, SoEs and non voting observers such as Development Partners, Academics and other interest groups.

Conducted over 35 roadshows and regional/provincial presentations since 2015 to promote the PNGE-ITI Reports.

Became affiliated members of the PNG Chamber of Mines and Petroleum as well as Transparency Inter-national as well as active participants in various political, academic, development forums.

Consistent engagement with media stakeholders since 2016.

Conducting studies into Beneficial ownership and Sub-national payments reporting in future EITI re-ports. Developing PNGEITI National Policy and Legislation since 2018.

Currently undergoing Validation by the EITI International Secretariat to become a fully compliant EITI country.

Technical Working Group working on correction action areas leading up to second validation April 2020.

Produced 2018 EITI Country Report.

PNGEITI PROGRESS TO DATE

PNGEITI MILESTONES

2013 - NEC Decision 90/2013 endorsed the implementation of the EITI Standard. MSG signs PNGEITI MoU.

2014 - PNG applied and was accepted as an EITI candidate country.

2015 - PNGEITI National Secretariat Office established under Treasury Department.

2015 - First PNG EITI Report for FY 2013 published.

2016 - Second PNG EITI Report for FY 2014 published.

2017– Third and fourth PNG EITI Reports for FYs 2015 and 2016 published.

2017– NEC Policy Decision 91/2017 called for implementation of 2013 Report Recommendation by the

responsible entities.

2018 - Fifth PNG EITI Report for FY 2017 published.

2018 - PNGEITI validated by EITI International and awarded Meaningful Progress in EITI implementation.

2019—Sixth PNG EITI Report for FY 2018 published.

PNG Extractive Industries Transparency Initiative, Treasury Building, Waigani, PO Box 1907,Port Moresby, National Capital District, Papua New Guinea

December 3—5: PNGEITI took part in the 2019 PNG Mining and Petroleum Conference and Exhi-bition

December 20: PNGEITI Report 2018 published

December 20: Final 2019 MSG Meeting

December 23 to January 06: Shut down period for Public Offices

Starting year 2020 Newsletter will be published biannually

NOTICE FOR THE FESTIVE PERIOD:

The office of the PNGEITI National Secretariat will be closed for the festive period and will open for business in the new year 2020.

We wish to inform our readers to access the 2018 Report and other information from the web-site: www.pngeiti.org.pg

Season’s Greetings to you all

May your Christmas be full of Joy & Thanksgiving. From the Secretariat, we wish you a safe festive season. “Peace, Goodwill and Happiness for you during this Season & Always”. Wishes for a Prosperous Year 2020!

2013 PNGEITI office established under Department of Treasury

2015 PNG produced its first EITI Report for Fiscal Year 2013

2016 PNG produced its EITI Report for Fiscal Year 2014

2017 PNG produced its EITI Reports for Fiscal Years 2015 and 2016

2018 PNG Validated PNG made ’Meaningful Progress’ in Implementing the EITI Standard

2019 PNG produced its 6th EITI Report for fiscal year 2018