Implementing the 2013 EITI Standard in Tanzania
Gap analysis and recommendations for mining and petroleum sectors
June 2014
INTRODUCTION
The International EITI board approved a new Standard for reporting by EITI implementing
countries at its annual board meeting held in Sydney in May 2013. Moving beyond disclosure of
revenue data, the new requirements includes disclosure of data on the value and volume of
production and export of commodities, allocation of licenses and beneficial ownership, social
expenditures, revenue collection, revenue management, government transfers by state owned
enterprises (SOEs), sub-national payments, social impact and revenue management. The new
EITI Standard are intended to contribute to promoting effective governance of natural
resources amongst EITI implementing countries.
Tanzania was admitted as an EITI candidate country in 2009 and became an EITI compliant
country on 12 December 2012. In implementing the EITI principles, Tanzania has to date
produced reconciliation reports covering the periods from July 1 2008 to June 30, 2011. The
current report is fourth and it covers the period from July 1, 2011 to June 30, 2012. According
to the EITI Secretariat, TEITI is required to publish its next report covering the year 2012/13 in
accordance with the new Standard by 30 June 2014.
Purpose and Organization of this Document
The document provides TEITI with two things. First, it makes an assessment of the extent to
which the new EITI Standard have been met in the 2011-2012 Tanzania EITI report. The
document highlights critical gaps in the report and, where relevant, the existing legal and policy
framework. The focus of the analysis here lies on the selected topics (listed below) which
represent the most pressing challenges – and the greatest opportunities for progress – as TEITI
begins to implement the new EITI Standard. There are other, smaller, requirements which TEITI
does not currently meet. These are more straightforward, and indicated in the attached Excel
file which lists the gap analysis findings.
Second, the report makes recommendations on how TEITI can address the reporting gaps
identified. In some cases, more detailed planning will be required and could constitute the next
steps in our collaboration.
The seven priority components covered by this narrative report are:
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1. ALLOCATION OF RIGHTS
• Register of Licenses §3.9
• License Allocation §3.10
• Beneficial Ownership § 3.11& 3.6(c)
• Contracts Disclosure § 3.12
2. PRODUCTION
• Total Production Volumes § 3.5(a)
• Total export volumes § 3.5(b)
3. REVENUE COLLECTION
• Legal Framework & Fiscal Regime §3.2
• Economic Contribution §3.4(a)-(c)
• Taxes & Primary Revenues § 4.1(a)-(f)
4. STATE-OWNED ENTERPRISES
• Government Transfers by SOEs §3.6(a) &§4.2(c)
• SOEs’ Quasi-Fiscal Expenditures§ 3.6(b)
• SOEs Level of Beneficial Ownership §3.6(c) &3.11(c)
5. SUB-NATIONAL PAYMENTS AND TRANSFERS
• Sub-national Payments §4.2(d).
• Sub-national Transfers §4.2(e)
6. SOCIAL IMPACT
• Employment §3.4(d)
• Social Expenditures §4.1(e)
7. REVENUE MANAGEMENT
• Distribution of Revenues §3.7
• Revenue Management and Expenditures §3.8
2
Allocation of Rights LICENSE REGISTRY §3.9
LICENSE ALLOCATION §3.10
BENEFICIAL OWNERSHIP §3.11 &
§3.6(c)
CONTRACT DISCLOSURE §3.12
LICENSE REGISTRY §3.9
Most countries publish a list of licenses and license holders or a detailed cadastral map that
makes it possible for affected communities, potential investors, and other audiences to see
which companies hold which extractive rights.
From the 2013 EITI Standard:
LICENSE REGISTRY §3.9(a)/(b)/(c)
“Implementing countries are required to maintain a publicly available register or cadastre system(s) with the
following timely and comprehensive information regarding each of the licenses pertaining to companies
covered in the EITI Report:
i.
License holder(s).
ii.
Coordinates of the license area.
iii.
Date of application, date of award and duration of the license.
iv.
In the case of production licenses, the commodity being produced.”
“It is expected that the license register or cadaster includes information about licenses held by all entities,
including companies and individuals or groups that are not included in the EITI Report, i.e. where their
payments fall below the agreed materiality threshold.”
“Where the information set out in 3.9(b) is already publicly available, it is sufficient to include a reference or
link in the EITI Report. Where such registers or cadastres do not exist or are incomplete, the EITI Report should
disclose any gaps in the publicly available information and document efforts to strengthen these systems. In
the interim, the EITI Report itself should include the information set out in 3.9(b) above.”
LICENSE ALLOCATIONS §3.10(a)-(c)
“Implementing countries are required to disclose information related to the award or transfer of licenses
pertaining to the companies covered in the EITI Report, including: a description of the process for transferring
Assessment
or awarding the license; the technical and financial criteria used; information about the recipient(s) of the
license that
has been transferred
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mineral rights registry maintained by the Ministry of Energy and Minerals which includes a GIS
Where licenses are awarded through a bidding process during the accounting period covered by the EITI
map
with mineral licenses. The cadaster include licenses which are below the materiality
Report, the government is required to disclose the list of applicants and the bid criteria.
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ENCOURAGED
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(https://www.flexicadastre.com/tanzania/).
Whilst
the cadaster
does provide the level of
ownership where a license is held by a consortium, it does not indicate which member is the
operator. It also doesn’t provide the coordinates of the license.
There is no similar license registry for the petroleum sector.
3
Recommendations
To meet the basic EITI requirements:
a) For mining, if the government updates the license registry to include the coordinates of
the licenses, the report need only include a link to the registry. However, if not, the EITI
report can include a link to the cadaster and provide the coordinates itself within the
report.
b) A cadaster information management system needs to be developed for the petroleum
sector including the following information:
a.
b.
c.
d.
the name of the license holder;
the coordinates of the license area;
the dates of application, award, and duration;
the commodity/ties being produced.
In order for the license registry to be comprehensive and useful, NRGI recommends that it
should also contain:
a) The operator of each license.
b) The registry should display other related information about each license, including:
a. The beneficial ownership of each license-holding company (see next section on
beneficial ownership)
b. The contract associated with the license,
c. Production levels,
d. Reserves
e. Project-level payments made by the companies.
OTHER COUNTRY ILLUSTRATIONS


The Norwegian Petroleum Directorate provides online and through a user-friendly app
detailed and regularly updated information about each license, including a narrative on its
status and future outlook, identifying all partner companies including the operator,
reserves, production levels over time, and its location on an interactive map.
Mozambique’s Ministry of Mineral Resources has a mining cadastre portal that allows users
to click on a tenement or contract in the map to view detailed information or search by
tenement code, company name or contract name. However, contracts are not disclosed.
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LICENSE ALLOCATION 3.10
The EITI Standard requires the disclosure of basic information about how extractive rights are
allocated.
From the 2013 EITI Standard:
LICENSE ALLOCATIONS §3.10(a)-(c)
“Implementing countries are required to disclose information related to the award or transfer of licenses
pertaining to the companies covered in the EITI Report, including: a description of the process for transferring
or awarding the license; the technical and financial criteria used; information about the recipient(s) of the
license that has been transferred or awarded, including consortium members where applicable; and any nontrivial deviations from the applicable legal and regulatory framework governing license transfers and awards.
Where licenses are awarded through a bidding process during the accounting period covered by the EITI
Report, the government is required to disclose the list of applicants and the bid criteria.
Where the requisite information set out in 3.10(a) and 3.10(b) is already publicly available, it is sufficient to
include a reference or link in the EITI Report.”
ENCOURAGED DISCLOSURES §3.10(d)
“The multi-stakeholder group may wish to include additional information on the allocation of licenses in the
EITI Report, including commentary on the efficiency and effectiveness of these systems.”
Regarding the allocation of licenses, the TEITI report provides a description of mandates of
agencies involved in the process of awarding licenses as provided under the Mining Act, 2010
and the Petroleum Act, 1980 for mining and petroleum resources respectively. The report
provides links to information on petroleum bidding.
It is unclear whether licenses were allocated during the reporting period.
The following gaps are notable in the report:
The report does not disclose the process involved in awarding and transferring of mineral
licenses. The content of the licenses is inaccessible to the public.
Recommendations
a) If any bidding rounds have taken place or licenses were transferred, during the period
covered by the reconciliation, the TEITI report should disclose and describe the process
of transferring and allocating licenses, including;
a) Detailed information on how bidding rounds are conducted, including technical and
financial bid criteria.
b) Any deviations from the official licensing process.
c) Information on the transfer of mining or petroleum licenses.
d) List of applicants and bid criteria.
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a) Related to above, the TEITI report should report upon the discretionary powers of the
Minister of Energy and Minerals regarding licensing and contract negotiations with the
view of highlighting potential dangers for abuse.
In addition to the required elements, NRGI recommends TEITI to consider including:
a) The TEITI report should include a commentary on the efficacy of the existing system of
allocating licenses. The report should comment on opaqueness in the negotiations and
awarding or transfer of mining rights.
b) Information on any other factor(s) which affect licensing in oil, gas and mining industries
(as encouraged by EITI under §3.10(d)).
c) Additional disclosures of information such as the reasons for refusal for unsuccessful
awards, conflicts which emerges out of bidding process, and the key terms of a winning
bid.
d) The structure and composition of the technical negotiation team and existing checks
and balances
e) Any conditions attached to extractive rights, such as partial government ownership,
local employment requirements, etc.
OTHER COUNTRY ILLUSTRATIONS

The Land, Mines and Energy Ministry in Liberia publishes information on the number of bids
received, bidding requirements, and winning bids, but only after licenses have been awarded. The
Liberia EITI has conducted a post-award process audit comparing whether each concession,
contract, license, and similar right was awarded in compliance with applicable Liberian laws.
BENEFICIAL OWNERSHIP §3.11
Disclosing the beneficial owner of companies active in the extractive sector can guard against
the allocation of licenses to politically-exposed persons, and also reveal the extent to which
companies are utilizing shell companies to potential lessen their tax burden in the producing
country. The beneficial owner refers to the natural person(s) who directly or indirectly controls
the corporate entity.
6
From the 2013 EITI Standard:
ENCOURAGED DISCLOSURES §3.11(a) §3.11(b) §3.11(d)
“It is recommended that implementing countries maintain a publicly available register of the beneficial owners
of the corporate entity(ies) that bid for, operate or invest in extractive assets, including the identity(ies) of their
beneficial owner(s) and the level of ownership. Where this information is already publicly available, e.g.,
through filing to corporate regulators and stock exchanges, the EITI Report should include guidance on how to
access this information.”
“Where such registers do not exist or are incomplete, it is recommended that implementing countries request
companies participating in the EITI process to provide this information for inclusion in the EITI Report.”
“…it was agreed that the EITI will in the future require disclosure of beneficial ownership. Subject to successful
piloting, the EITI Board will develop detailed provisions with a view to make this a requirement from 1 January
2016.”
“Definition of beneficial ownership:
i. A beneficial owner in respect of a company means the natural person(s) who directly or indirectly ultimately
owns or controls the corporate entity.
ii. Where the MSG addresses beneficial ownership, the MSG should agree an appropriate definition of the term
beneficial owner. The definition should be aligned with 3.11(d)(i) above and take international norms and
relevant national laws into account.
iii. Publicly listed companies, including wholly-owned subsidiaries, are not required to disclose information on
their beneficial owner(s).
iv. In the case of joint ventures, each entity within the venture should disclose its beneficial owner(s), unless it
is publicly listed or is a wholly-owned subsidiary as per 3.11(d)iii. Each entity is responsible for the accuracy of
the information provided.
Assessment
TEITI is a participant in the beneficial ownership pilot project1. The TEITI report currently does
not have an explanation of disclosure of beneficial owners of the companies that bid for,
operate or invest in extractive industry in Tanzania. There is no publicly available register of the
beneficial owners of corporate entities in line with the new EITI Standard.
The country does maintain a publicly available register with basic information on corporate
entities at the Business Registration and Licensing Authority (BRELA). Information which may be
accessed at BRELA includes the corporate entities full names, legal status, and year of
incorporation and list of directors, but not beneficial owners. The information is accessible at
BRELA upon application. Moreover, the EITI report does not disclose the government and/or
state-owned enterprises level of beneficial ownership in oil, gas and mining companies
operating within the country as required by EITI Standard (requirement 3.11(c).
1
see http://eiti.org/pilot-project-beneficial-ownership
7
Recommendations
a) As per 3.11(d)ii above, the MSG needs to decide on a definition of beneficial
ownership which would be included in a revised version of the TOR. Definitional
issues to consider include whether to cover of ownership chains and what ownership
threshold to pursue. Further guidance is available from international organizations,
like NRGI and Global Witness, on the options that TEITI could pursue.
b) In the absence of adequate information from the publicly available register, the TEITI
independent administrator should request corporate entities to disclose information
on their beneficial ownership. BRELA’s companies’ registry could be improved to
provide such beneficial ownership information.
c) A reporting template could be constructed to collect the following information:





The 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.
d) Each company (no matter where on the ownership chain) will need to be tagged
with a unique corporate identifier based on its official registration in jurisdiction. This
is essential given the widespread use of subsidiaries by multi-national companies;
Anglogold Ashanti for example has over a dozen subsidiaries located in the Isle of
Man alone.
e) Once data has been collected, the independent administrator could work with the
government, for instance, BRELA, to validate the beneficial ownership data reported
by companies.
OTHER COUNTRY ILLUSTRATIONS


In South Sudan, the Petroleum Act requires the publication of beneficial ownership data
for companies holding exploration and production sharing agreements.
The Financial Action Task Force (FATF) is an inter-governmental body established in
1989. The FATF has developed a series of recommendations, including on disclosing
beneficial ownership information to law enforcement agencies. The FATF
Recommendations are applied by over 180 countries, including 29 countries
implementing EITI, through a global network of regional affiliated bodies.
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CONTRACT DISCLOSURE §3.12
An increasing number of countries are disclosing the text of the contracts and associated
agreements (e.g. MOUs) that govern petroleum and mineral production. Contracts are the
fundamental agreements that set out a company’s fiscal, environmental, social and operational
obligations.
From the 2013 EITI Standard:
REQUIRED DISCLOSURES §3.12(b)
“It is a requirement that the EITI Report documents the government’s policy on disclosure of contracts and
licenses that govern the exploration and exploitation of oil, gas and minerals. This should include relevant legal
provisions, actual disclosure practices and any reforms that are planned or underway.”
“Where applicable, the EITI Report should provide an overview of the contracts and licenses that are publicly
available, and include a reference or link to the location where these are published.”
ENCOURAGED DISCLOSURES §3.12(a)
“Implementing countries are encouraged to publicly disclose any contracts and licenses that provide the terms
attached to the exploitation of oil, gas and minerals.”
Assessment
The government of Tanzania does not publish its mining and petroleum contracts.
The report does not document Tanzania’s policy on disclosure of contracts. The Ministry of
Energy and Minerals declared that new mining and exploration contracts as well as oil and gas
production sharing agreements between the government and multinational corporations will
be made public in line with the EITI Standard.2 However, contracts and licenses that govern oil,
gas and minerals exploration and exploitation in Tanzania are still held as classified documents,
accessible only to a few government officials and the respective companies.
During the development of the 2013 EITI Standard, the TEITI MSG expressed its support for
requiring the public disclosure of contracts, with exceptions including limiting disclosure to
future contracts, and/or contracts which give rise to material oil, gas and mining payments by
companies to governments, and/or allowing for redaction of commercially sensitive
information3.
2
http://www.ippmedia.com/frontend/?l=59853
3
http://eiti.org/files/Consultation%20on%20contract%20transparency.pdf
9
The draft EITI bill includes a provision for TEITI to ensure public accessibility of contracts, which
would require copies of concessions, contracts, licenses, similar agreements and rights granted
by the Government to individuals and companies engaged in extractive industries to be made
available on the websites of the government and commission.
Recommendations
a) The TEITI report should document Tanzania’s policy on disclosure of contracts that
provide terms for exploration and exploitation activities in oil, gas and mining industries.
This would include any legal provisions that are relevant, actual disclosure practices and
any reforms planned or underway.
b) The MSG should ensure that future TEITI reports provide an overview of the contracts
and licenses that are publicly available, and include a reference or link to the location
where these are published
For contract disclosure to have the most benefit, NRGI recommends for TEITI to go beyond the
minimum requirements:
a) Where contracts and licenses are not made public or are incomplete, the MSG should
task the independent administrator to collect copies of any contracts and licenses,
governing exploration and production of gas, oil and mining.
b) Disclose the documents on a stable website (once collected) and allow anonymous
access. In particular, the portal should contain the full texts of all contracts, MoUs and
other agreements establishing the terms under which exploration and production will
take place, together with any related addendum, annex, rider, amendment, alteration,
executive directive or other supporting document that clarified or altered terms.
Support would be available from NRGI for the Government of Tanzania / TEITI to set up
such a portal, including the display of contract summaries about the key terms so as to
improve user-friendliness.
OTHER COUNTRY ILLUSTRATIONS



Contracts from 11 countries are available at www.resourcecontracts.org.
The government of Guinea has an excellent website with summaries and full digital
documents of contracts, conventions, annexes and amendments related to the extractive
industries. Although access to information is included in the Constitution, the new Mining
Code will require further transparency.
Open Contracting Global Principles: The Open Contracting Partnership has facilitated a
global consultation process to create a set of global principles that can serve as a guide for
all of those seeking to advance open contracting around the world. The principles reflect
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norms and best practices from around the world related to disclosure and participation in
public contracting.
11
Production Data TOTAL PRODUCTION §3.5(a) &
§3.4(b)
TOTAL EXPORTS §3.5(b)
TOTAL PRODUCTION §3.5(a) & §3.4(e), TOTAL EXPORTS §3.5(b)
Production volumes and values can be an important factor in determining how much the
government should receive in revenues from extractive companies. A lack of accurate
production data can result in underpayment.
From the 2013 EITI Standard:
TOTAL PRODUCTON: REQUIRED DISCLOSURE §3.5(a) & §3.4(e)
§3.5(a) “The EITI Report must disclose production data for the fiscal year covered by the EITI Report, including
total production volumes and the value of production by commodity, and, when relevant, by state/region.”
§3.4(e) “The EITI Report must disclose, when available, information about the contribution of the extractive
industries to the economy for the fiscal year covered by the EITI Report. This information is expected to
include…key regions/areas where production is concentrated.”
TOTAL EXPORTS: REQUIRED DISCLOSURE §3.5(b)
The EITI Report is required to disclose “total export volumes and the value of exports by commodity, and,
when relevant, by state/region of origin.”
Assessment
The TEITI report provides total production volumes and value of production by commodity and
company. Export volumes and the value of exports by commodity, company and project (pp.
55-56). Production data for major mines and a summary of statistics for selected minerals
produced by medium and small scale miners is indicated (p.26), along with gold and gas
production data on p.11. However, production figures and export figures broken down by
individual company are incomplete with significant companies not reporting, which suggest
aggregated figures may not be comprehensive.
For values of commodities produced and exported, the report does not provide the formula
used to compute the value.
Recommendations
a) The EITI report should include information on the contribution of the extractive
industries to the economy for the reporting period and broken down by region/area
where relevant.
12
b) The independent administrator should collect production data for gas and mining by the
areas/regions where production is concentrated.
To go beyond the minimum requirements:
a) The independent administrator should collect export figures for the reporting year and
at least one prior year.
b) The TEITI should include information on production volumes and value of different
commodities at various stages of production to allow for better informed understanding
of the relationship between production and revenue levels.
c) The TEITI report should also include the methodology and prices used to compute the
value of volumes of commodities produced and exported.
d) For export figures, the independent administrator could collect information on the
destination market for export and detail the purpose and buyer for non-exported
commodities as well.
OTHER COUNTRY ILLUSTRATIONS
Production data:
 In Chile, the Ministry of Finance regularly publishes information on production volumes,
prices and mineral export values. The Mining Ministry publishes information on mineral
reserves, production volumes, prices and mineral export values. The Chilean Copper
Commission publishes information on reserves, production volumes, prices, value of
mineral exports, production costs, companies operating in the country, production data
by company and production stream values.
 In Mongolia, the Ministry of Mineral Resources and Energy discloses mineral production
data on a monthly basis. The Ministry of Finance publishes annual information on
mineral production data by company.
Export data:
 The Ministry of Mineral Resources and Energy and the Customs Office of Mongolia (agency
reporting to the Ministry of Finance) disclose monthly statistics on the aggregate value of
minerals exports. The Ministry of Finance publishes annual data on export quantities, taxes and
fees paid by resource companies.

The U.S. Energy Information Administration provides extensive United States and foreign export
data.
13
14
Revenue Collection LEGAL FRAMEWORK & FISCAL REGIME §3.2
ECONOMIC CONTRIBUTION §3.4(a)-(c)
TAXES AND PRIMARY REVENUES §4.1(a)&(b)
LEGAL FRAMEWORK AND FISCAL REGIME §3.2
The new EITI Standard requires EITI reports to give an overview of fiscal regime governing the
extractive industries in the country. The report should also provide information on the roles
and responsibilities of various government agencies. In addition, the EITI report should
document the reforms undertaken by government in the legal and fiscal regime.
From the 2013 EITI Standard:
3.2 The EITI Report must describe the legal framework and fiscal regime governing the extractive
industries.
a) This information must include a summary description of the fiscal regime, including the level of
fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and
responsibilities of the relevant government agencies.
b) Where the government is undertaking reforms, the multi stakeholder group is encouraged to
ensure that these are documented in the EITI Report.
Assessment
The TEITI report described the Taxation laws applicable to petroleum industry, the fiscal regime
applicable for the mining industry (p. 18. 20, 21) and information on revenue collection by local
government (p.21, 48). The report also describes the roles of Tanzania Petroleum Development
Corporation (TPDC), the Energy and Water Utilities Regulatory Authority (EWURA) and the
Ministry of Energy and Minerals (MEM) which are key government agencies in the petroleum
industry (p.17). The report has indicated the development of the gas policy in 2013.
However, the report does not describe the role and responsibilities of key government agencies
in the mining sector. Information on the roles of such agencies such the MEM and the Tanzania
Minerals Audit Agency (TMAA) needed to feature in the report.
The report mentioned but did not describe major features of MPSAs and MDAs. The report did
not explicitly describe divisions of roles amongst government entities in policy making, licensing
and regulatory functions.
Furthermore, the TEITI report did not comment on the draft local content policy as one of the
reforms being undertaken by the government.
Lastly, the report did not explain that, apart from monies which may be derived from licenses,
permits, dues, charges or fees specified by local government by-laws, there is no fiscal
devolution in Tanzania.
15
Recommendations
a) TEITI should document reforms or proposed reforms which featured in the accounting
year. For instance, the independent administrator should describe the main features of
the new MPSAs, MDAs and the draft local content policy. The MPSA is accessible at
http://www.tpdc-tz.com/tpdc/.
b) The report should describe divisions of roles amongst government entities in policy
making, licensing, revenue collection and regulatory functions.
To further improve its reporting:
a) The report should indicate whether the fiscal regime is found in the
mineral/hydrocarbon legislation and regulations or negotiated in individual agreements,
and describe its core elements.
ECONOMIC CONTRIBUTION §3.4(a)-(c)
The EITI report is expected to include information about the contribution of the extractive
industries to the economy in absolute terms but also as a percentage of total figures in the
economy.
From the 2013 EITI Standard:
3.4 The EITI Report must disclose, when available, information about the contribution of the
extractive industries to the economy for the fiscal year covered by the EITI Report.
This information is expected to include:
a) Size of the extractive industries in absolute terms and as a percentage of GDP, including an
estimate of informal sector activity.
b) Total government revenues generated by the extractive industries (including taxes,
royalties, bonuses, fees, and other payments) in absolute terms and as a percentage of total
government revenues.
c) Exports from the extractive industries in absolute terms and as a percentage of total
exports.
Assessment
The TEITI report has disclosed information on the contribution of the mining sector to the
national economy (p. 27). The report also provides total government revenue generated by
extractive industries (pp. 12, 38-39). Export values from mining companies are included in the
16
report but not as a percentage of total exports (p. 27). Gas exports are not included and neither
is an explanation as to why.
The report does not provide information on contribution of the gas sector to the economy.
There is also no information on estimation of informal sector activities generated by the
extractive industries.
In addition, the report does not provide information on total government revenue generated
from extractive industry as a percentage of total government revenues. Moreover, the report
lacks information on revenue generated from bonuses. The report only mentions bonuses as
part of the fiscal regime for the petroleum sector on p.18.
Recommendations
a) Provide export values from mining as a percentage of total exports and provide an
explanation why no gas exports are disclosed.
b) Gather data on the contribution of the gas sector to the economy.
c) Collect information on total government revenue from extractives as a percentage of
total government revenues.
d) Include within reporting templates a section on bonuses.
In order to improve the comprehensiveness of the information and go beyond the basic
requirements:
a) The TEITI report should include data on local content for extractive industries. The
government should be able to audit and gather data on the linkages between extractive
industries and local businesses. Such data can also be obtained from individual
extractive companies.
b) Information about economic contributions should be disaggregated enough to address
issues related to regional economic activity and individual revenue streams and
commodities.
TAXES AND PRIMARY REVENUES § 4.1(a) & (b)
The MSG is required to provide materiality definitions and thresholds. Material payments and
revenues are those when they are not reported properly or omitted could affect the
comprehensiveness of the EITI report. The MSG is required to consider the size of revenue
streams relative to total revenues.
17
The EITI requirement provides that all revenue streams which are significant for the
comprehensiveness of the EITI report materially should be included. This includes government
production entitlement, taxes, SOEs production entitlement and various fees and or
concessions.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §4.1(a)/(b)
(a) A description of each revenue stream, related materiality definitions and thresholds should be
included in the EITI Report. The multi-stakeholder group should document the options considered and
the rationale for establishing the definitions and thresholds. Payments and revenues are considered
material if their omission or misstatement could significantly affect the comprehensiveness of the EITI
Report. In establishing materiality definitions and thresholds, the multi-stakeholder group should
consider the size of the revenue streams relative to total revenues.
b) The following revenue streams should be included:
i. The host government’s production entitlement (such as profit oil).
ii. National state-owned enterprise production entitlement.
iii. Profits taxes.
iv. Royalties.
v. Dividends.
vi. Bonuses, such as signature, discovery and production bonuses.
vii. License fees, rental fees, entry fees and other considerations for licenses and/or concessions.
viii. Any other significant payments and material benefit to government.
Any revenue streams or benefits should only be excluded where they are not applicable or where the
multi-stakeholder group agrees that their omission will not materially affect the comprehensiveness
of the EITI Report.
Assessment
The TEITI report defines the materiality threshold on p. 30 (companies paying taxes of more
than TzS 0.15 billion) and it defines taxes and revenues covered on pp.32-33. The threshold
adopted in the EITI report covers 99.79% of reported payments.
The total basic payments reported by extractive companies and Government entities are given
on pp.38-39. Such payments include Profit per Production Sharing Agreements, Corporation
Tax, royalties, dividends, license fees, charges and levies. However, the report only mentions
bonus as part of the fiscal regime for the petroleum sector in p.18. The report does note that
the 2013 PSA includes a signature bonus of 2.5million USD. These should be considered for
future reporting.
Recommendations
a) The MSG should regularly review the materiality threshold to ensure that all significant
payments including those from new corporate entities are included in the process.
18
b) The TEITI report should disclose revenue accrued from bonuses. The disclosed data
should be disclosed for each extractive industry, company and project.
19
State-owned Enterprises SOE LEVEL OF OWNERSHIP §3.6(c)
SOE TRANSFERS AND PAYMENTS §3.6(a) & §4.2(c)
SOE EXPENDITURES §3.6(b)
SOE LEVEL OF OWNERSHIP §3.6(c)
Provisions 3.6(c) of the EITI Standard requires the government and SOEs to disclose their level
of beneficial ownership in oil, gas and mining companies operating in the country. The EITI
report should provide information on such disclosures and any changes in the SOE ownership
during the accounting period.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §3.6(c)
“Where state participation in the extractive industries gives rise to material revenue payments, the EITI Report
must include disclosures from the government and SOE(s) of their level of beneficial ownership in mining, oil
and gas companies operating within the country’s oil, gas and mining sector, including those held by SOE
subsidiaries and joint ventures, and any changes in the level of ownership during the reporting period. This
information should include details regarding the terms attached to their equity stake, including their level of
responsibility to cover expenses at various phases of the project cycle, e.g., full-paid equity, free equity, carried
interest. Where there have been changes in the level of government and SOE(s) ownership during the EITI
reporting period, the government and SOE(s) are expected to disclose the terms of the transaction, including
details regarding valuation and revenues. Where the government and SOE(s) have provided loans or loan
guarantees to mining, oil and gas companies operating within the country, details on these transactions should
be disclosed in the EITI Report.”
Assessment
There is no explanation on the level of ownership by the government and SOEs in mining, oil
and gas companies operating in the country. The report does not reveal corporate entities
where the state has partial ownership.
Recommendations
a) The TEITI report should disclose companies where the government has full or partial
ownership in line with requirement §3.6(c).
In order to improve the comprehensiveness of reporting:
b) The report should disclose information on the activities of such companies, shares held by
the government, earnings of such companies, identity of other shareholders and the shares
they hold as well as their ownership. The report should explain the sharing of revenue
formula between the government and other shareholders such as the retention of revenue,
payments of dividends, payment of investment and operating costs, etc.
20
c) The report should disclose payments on the sale of SOEs equity, if any, their prices, the
process of selecting the buyer and the use of the revenue generated.
OTHER COUNTRY ILLUSTRATIONS
 According to the 2013 Resource Governance Index (RGI)4, SOEs issue full financial reports that
include information on subsidiaries in countries including Trinidad and Tobago, India, Indonesia,
Brazil, Kuwait, Morocco, Norway, Russia, Chile, China and Mexico.
SOE PAYMENTS AND TRANSFERS §3.6 (a) & 4.2(c)
Provisions 3.6(a) and 4.2(c) provide that the EITI report should disclose financial relationships
between the government and SOEs. In that regard, the EITI report is required to disclose rules
and practices governing financial relations between the government in its various agencies and
SOEs on various aspects including transfer of funds, retentions and reinvestment of funds and
financing of third parties.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE
§3.6(a)
“Where state participation in the extractive industries gives rise to material revenue payments, the EITI Report
must include: a) An explanation of the prevailing rules and practices regarding the financial relationship
between the government and state-owned enterprises (SOEs), e.g. the rules and practices governing transfers
of funds between the SOE(s) and the state, retained earnings, reinvestment and third-party financing.”
§4.2(c)
“The multi-stakeholder group must ensure that the reporting process comprehensively addresses the role of
SOEs, including material payments to SOEs from oil, gas and mining companies, and transfers between SOEs
and other government agencies.”
Assessment
The TEITI report described the establishment of Tanzania Petroleum Development Corporation
(TPDC) and its roles (p. 17), but there is no similar description for the State Mining Corporation
(STAMICO). Total material payments to SOEs and other government agencies are reported on
p.53. Payments and transfers by every company to SOEs and other government agencies are
4
http://www.resourcegovernance.org/rgi
21
covered in Annex 5. In addition, transfers between SOEs (TPDC) and the government appear on
pp. 51, 52. However, the report does not provide explanation for the prevailing rules and
practices on the financial relationship between the government and SOEs and the report does
not provide explanation on corporate governance rules for SOEs.
Recommendations
a) Provide an overview of the roles and responsibilities of STAMICO.
To further improve the comprehensiveness of reporting, NRGI recommends:
a) In addition to explaining the financial relationship between SOE and the state, the
explanation called for in §3.6(a) should include the rules and practices related to:
corporate governance including the members of the board and their appointment
procedure; the identity of the company’s shareholders and their rights; and oversight
mechanisms (including parliament) and auditing procedures.
b) Transfers from the SOE and the government must also be reported, so that the public
can understand the share of revenues that the SOE retains. These can include those
payments that the SOE makes similar to any other company operating in the sector
(e.g., profit taxes, royalties, etc.) and those transfers it makes because it collects
revenues on behalf of the government as detailed above, for example; royalties,
income/profit taxes.
c) The independent administrator should cover any transfers from government to the SOE,
such as contributions to operating and capital expenses, loans, in-kind transfers and
funds to pay for fuel subsidies.
d) The TEITI report should include the reference or link to publicly available annual reports
and independent audit statements. TPDC annual reports can be accessed at
http://www.tpdc-tz.com/tpdc/,
and
audit
reports
can
be
accessed
at
http://nao.go.tz/?page_id=51.
22
SOE EXPENDITURES §3.6(b)
The EITI requires disclosures from SOE(s) on their quasi-fiscal expenditures, such as payments
for social services, public infrastructure, fuel subsidies and national debt servicing.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §3.6(b)
SOE(s) are required to report “their quasi-fiscal expenditures such as payments for social services, public
infrastructure, fuel subsidies and national debt servicing. The multi-stakeholder group is required to develop a
reporting process with a view to achieving a level of transparency commensurate with other payments and
revenue streams, and should include SOE subsidiaries and joint ventures.”
Quasi-fiscal expenditures include payments for “social services, public infrastructure, fuel subsidies and
national debt servicing.”
Assessment
The report does not provide explanations on the SOEs quasi-fiscal expenditures as described in
the new EITI Standard. It is unclear whether TPDC or STAMICO have any quasi-fiscal
expenditure.
Recommendations
a) The TEITI reports should disclose and explain information on SOEs’ quasi-fiscal
expenditures in line with requirement 3.6(b).
In order to further improve the comprehensiveness of reporting:
a) The concept of quasi-fiscal expenditures should be defined to include any major
transactions carried out by SOEs to perform a governmental role outside the core
function of an oil, gas or mining company.
b) The TEITI report should reconcile information on SOEs’ quasi-fiscal expenditures.
OTHER COUNTRY ILLUSTRATIONS

Eight of the state-owned companies assessed by the Resource Governance Index publish
information about their quasi-fiscal expenditures including Kazakhstan, Yemen, Morocco,
Chile and Mexico.
23

A report by the International Budget Partnership explains why QFEs require public scrutiny
and explain good practices in how they should be reported.

The IMF’s Guide on Resource Revenue Transparency identifies several common kinds of
QFEs and identifies the associated economic and governance risks.
24
Subnational Revenues SUB-NATIONAL TRANSFERS §4.2(e)
SUB-NATIONAL PAYMENTS §4.2(d)
SUB-NATIONAL TRANSFERS §4.2(e) AND SUB-NATIONAL PAYMENTS §4.2(d)
The EITI reports are required to disclose company payments made to sub-national
governments.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §4.2(d)
It is required that the multi-stakeholder group establish whether direct payments, within the scope of the
agreed benefit streams, from companies to sub-national government entities are material.
Where material, the multi-stakeholder group is required to ensure that company payments to sub-national
government entities and the receipt of these payments are disclosed and reconciled in the EITI Report.
REQUIRED DISCLOSURE §4.2(e)
“Where transfers between national and sub-national government entities are related to revenues generated
by the extractive industries and are mandated by a national constitution, statute or other revenue sharing
mechanism, the multi-stakeholder group is required to ensure that material transfers are disclosed in the EITI
Reports. The EITI Report should disclose the revenue sharing formula, if any, as well as any discrepancies
between the transfer amount calculated in accordance with the relevant revenue sharing formula and the
actual amount that was transferred between the central government and each relevant sub-national entity.”
ENCOURAGED DISCLOSURES §4.2(e)
“The multi-stakeholder group is encouraged to reconcile these transfers. The multi-stakeholder group is
encouraged to ensure that any material discretionary or ad-hoc transfers are also disclosed and where
possible reconciled in the EITI Report.”
Assessment
Company payments to local authorities are disclosed in p. 39. Payments made to local
authorities are local levies, service levy and other local taxes, fees and levies as indicated p. 28
of the report. Total revenue received by local authorities is shown in p. 53. Also, payments to
local authorities by every company are shown in Annex 5. The report does not show any
transfers between national government and local authorities of revenue related to revenue
generated by extractive industries.
Recommendations
a) Where extractive revenues are transferred from local to national government, and these
are material, they should be disclosed in the EITI report.
25
To go beyond the basic requirements and provide comprehensive information:
a) The MSG should establish sub-national direct payments materiality threshold taking into
account proceeds sharing (share of equity, royalties, signature or bonus payments, etc.)
between the national government and local government authorities, sub-national tax
raising powers and non-tax charges such as fees, levies etc. The local level should be kept in
mind, as a payment which is immaterial at national level may have significant impacts for a
local government.
OTHER COUNTRY ILLUSTRATIONS

The Timor-Leste Ministry of Finance publishes extensive information on the size of oil
revenues deposited into the Petroleum Fund, withdrawals, and investments, including
disaggregation by geographic region and asset class, and a list of specific investments. The
roles and responsibilities of different governing bodies and staff in the operational manager
are clearly stated in legislation and regulation, as well as in the annual report. The report of
the Consultative Council is also publicly available.
26
Social EMPLOYMENT §3.4(d)
Impact SOCIAL EXPENDITURES §4.1(e)
EMPLOYMENT §3.4(d)
This EITI Standard holds that there should be disclosure on the ‘employment in the extractive
industries in absolute terms and as a percentage of the total employment.’
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §3.4(d)
“The EITI Report must disclose, when available, information about the contribution of the extractive industries
to the economy for the fiscal year covered by the EITI Report. This information is expected to include…
employment in the extractive industries in absolute terms and as a percentage of the total employment.”
Assessment
No information on employment in the extractive industries, both in absolute terms and as a
percentage of the total employment, is included in the TEITI report.
Recommendation
a) The TEITI report should include employment data in line with requirement 3.4(d).
To improve the comprehensiveness of the report:
a) The reporting template should require each company to state the number of expatriates
and the number of nationals employed by industry and in each extractive company. The
government was recently quoted saying that mining industry contributed 8,800 permanent
jobs in the country and EITI data could help substantiate that figure.5
b) Local content information should be included in the TEITI report along with employment:
a. Along with the prevailing local content policy and/or targets, the EITI Report should
include disaggregated information on company spend, as well as indirect and
induced employment. Consider reporting on different categories of suppliers and on
supplier development efforts.
b. Local content information should be disclosed by companies and government
entities, and should be reconciled by the independent administrator.
5
http://dailynews.co.tz/index.php/local-news/32120-mining-adds-financial-sparkle-to-state-house-told
27
OTHER COUNTRY ILLUSTRATIONS

South Africa’s Mineral and Petroleum Resources Development Regulation requires all oil,
gas and mining companies to submit an annual plan to the regional manager, who is a
member of the Regional Mining Development and Environment Committee (RMDEC). The
human resources development plan not only requires identifying, but also reporting on the
number and education levels of the employees and the number of vacancies that the
mining operation has been unable to fill for more than 12 months despite concerted efforts
to recruit suitable candidates. Additionally, companies must submit a report on the
implementation of a career progression plan, a mentorship plan and an internship and
scholarship plan in line with the skills development plan and the needs for the specified
groups of workers.
SOCIAL EXPENDITURES §4.1(e)
The EITI Standard requires disclosure of social expenditures by companies mandated by law or
extractive contract.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §4.1(e)
“Where material social expenditures by companies are mandated by law or the contract with the government
that governs the extractive investment, the EITI Report must disclose and, where possible, reconcile these
transactions.
i.
Where such benefits are provided in-kind, it is required that the EITI Report discloses the nature and
the deemed value of the in-kind transaction. Where the beneficiary of the mandated social
expenditure is a third party, i.e. not a government agency, it is required that the name and function of
the beneficiary be disclosed.
ii.
Where reconciliation is not feasible, the EITI Report should include unilateral company and/or
government disclosures of these transactions.
iii.
Where the multi-stakeholder group agrees that discretionary social expenditures and transfers are
material, the multi-stakeholder group is encouraged to develop a reporting process with a view to
achieving transparency commensurate with the disclosure of other payments and revenue streams to
government entities. Where reconciliation of key transactions is not possible, e.g., where company
payments are in-kind or to a non-governmental third party, the multi-stakeholder group may wish to
agree an approach for voluntary unilateral company and/or government disclosures to be included in
the EITI Report.”
Assessment
28
Social expenditures, unilaterally declared by companies, are provided both as cash contribution
and in-kind contribution. Annex 5 shows social expenditures by company both in cash and inkind. The report notes in p. 29 that the contributions could be voluntary or compulsory and 'can
be made in cash or in-kind depending on individual contracts or agreements.' Payments were
made to various sectors including health, education, and road infrastructure. There have also
been several other projects and donations for local communities. Moreover, the report shows
that donations and Corporate Social Responsibility (CSR) payments are reported by companies
but not reconciled. However, the report does not disaggregate data on social payments
between payments which were mandated by law and those which were voluntary. The report
does not disclose the name and function of beneficiaries.
Recommendations
a) The TEITI report should disaggregate social payments which were made as a requirement of
law and contracts and those which were made voluntarily. The report should also disclose
the nature and value of in-kind transaction in line with this EITI Standard [requirement
§4.1(e)].
In order to improve the comprehensiveness of reporting:
b) The TEITI report should disclose disaggregated data on social expenditures by company,
recipient, type and project.
c) The company should disclose the actual cost of in-kind contributions, such as the amount
paid to contractors who built a road for a community. When actual amounts are not
available, the methodology for assigning values to in-kind contributions should be fully
explained.
d) It is important that companies disclose the objective of each project. This information is
essential to measure outcomes and also impact.
OTHER COUNTRY ILLUSTRATIONS


Mongolia’s 2010 EITI Report lists the value of company donations to nongovernmental
organizations. The report discloses donations disbursed in cash and in-kind, their purpose
and the funds devoted to environmental protection.
In view of rising mining prices, the Peruvian government signed a 5-year agreement with 30
mining companies to attract voluntary contributions aimed at mitigating poverty in
communities adjacent to mining extraction sites. In 2006, companies participating in the
Solidarity with the People Mining Program (PMSP) agreed to devote a part of their direct
social expenditures to voluntary funds. The agreement was chosen over a competing
proposal to introduce a windfall profit tax on mining companies. Peru’s 2008-10 EITI
Reports contain information on PMSP, participating companies, resources invested in
29
regional and local funds and resources allocated for the Truth and Reconciliation
Commission.
30
Revenue Allocation DISTRIBUTION OF REVENUES §3.7 &
§3.8
DISTRIBUTION OF REVENUES §3.7 and §3.8
The EITI Standard encourages reports to include information on revenue management and
expenditures. Disclosure of such information will be useful in promoting public understanding
and debate on the benefits and challenges of extractive industries.
From the 2013 EITI Standard:
REQUIRED DISCLOSURE §3.7(a)
“The EITI Report must describe the distribution of revenues from the extractive industries. The EITI Report
should indicate which extractive industry revenues, whether cash or in-kind, are recorded in the national
budget. Where revenues are not recorded in the national budget, the allocation of these revenues must be
explained, with links provided to relevant financial reports as applicable, e.g., sovereign wealth and
development funds, sub-national governments, state-owned enterprises, and other extra-budgetary entities.”
ENCOURAGED DISCLOSURES §3.7(b) and §3.8
“Multi-stakeholder groups are encouraged to reference national revenue classification systems, and
international standards such as the IMF Government Finance Statistics Manual.”
“Multi-stakeholder groups are encouraged to include further information on revenue management and
expenditures in the EITI Report, including:
 A description of any extractive revenues earmarked for specific programmes or geographic regions.
This should include a description of the methods for ensuring accountability and efficiency in their use.

A description of the country’s budget and audit processes and links to the publicly available
information on budgeting, expenditures and audit reports.

Timely information from the government that will further public understanding and debate around
issues of revenue sustainability and resource dependence. This may include the assumptions
underpinning forthcoming years in the budget cycle and relating to projected production, commodity
prices and revenue forecasts arising from the extractive industries and the proportion of future fiscal
revenues expected to come from the extractive sector.”
Assessment
Extractive industry revenues in the budget are captured in p.27 as an aggregate figure. There is
no information about allocation of such revenues. The report does not provide link to relevant
financial reports on such entities.
31
The report did not disclose extractive resources earmarked for specific programs and regions.
Government practice has been that extractive resources are not specifically allocated to
particular regions, but there is no legislation outlining this.
Furthermore, the report does not have a description of the country budget and audit processes.
Such processes are publicly available. No links provided to the sites where information on
budgeting, expenditures and audit report can be accessed provided. Budgeting and audit
reports
can
be
accessed
at
the
following
links.
http://www.mof.go.tz/index.php?option=com_content&view=article&id=22&Itemid=452;
http://nao.go.tz/?cat=17
Also, there is no information on how people can access timely information from the
government that will promote debate around fiscal contribution from the extractive sector to
the national budget. BOT annual and quarterly economic reports which include export data of
major commodities and forecasts might be useful in projecting the proportion of future fiscal
revenues expected to come from extractive sector.
Recommendations
Regarding revenue distribution:
a) The TEITI report should indicate and explain which extractive industry revenues are
recorded in the national budget and or in other extra-budgetary entities.
Regarding revenue management and expenditure:
a) The TEITI report should describe main features of a legislations and institutional
frameworks related with extractive revenue allocations and expenditures. A link or
reference to such legislation and institutions should also be disclosed.
b) The TEITI report should provide detailed explanation on the off-budget expenditures
due to their vulnerability to abuse.
c) The MSG should encourage disclosure of revenue forecasts in order to promote
informed debate on sustainable expenditure policies.
d) The report should include disclosures encouraged in §3.8, particularly,
a. Timely information from the government that will further public understanding
and debate around issues of revenue sustainability and resource dependence.
This may include the assumptions underpinning forthcoming years in the budget
cycle and relating to projected production, commodity prices and revenue
forecasts arising from the extractive industries and the proportion of future fiscal
revenues expected to come from the extractive sector,
32