Friday, 10 September 2010

Go further with disclosure and embrace ETIT

via CAAI

Friday, 10 September 2010 15:01 Steve Finch

THE Ministry of Economy and Finance at the end of August again published data on extractive industry revenues – a sign the government is committed to at least a low level of transparency in this sector.

But this is just the first step. Just how far will Cambodia go in terms of full disclosure, and when?

Figures released in a national budget overview on August 23 showed the government needs to improve transparency as soon as possible, not least because oil, gas and mining revenues are increasing dramatically meaning more money is at stake.

In the first half of 2009, the Kingdom generated just 6 billion riels (US$1.45 million) in extractive industry revenues, a figure that multiplied 20 times in the same period this year to 118.49 billion riels, or $28.56 million.

We only know that because the government started to publish oil, gas and mining revenues for the first time last year.

When Finance Ministry Secretary General Hang Chuon Naron disclosed a $26 million payment by French energy company Total at a presentation in March, a snapshot of the government budget showed the same payment allocated for January.

But in the latest budget disclosure, there are no extractive industry revenue payments listed for January 2010, only a $27 million payment made in March.

Is this the same payment? Hang Chuon Naron and Finance Minister Keat Chhon were both unavailable for comment yesterday.

Although Cambodia has made an important first step towards transparency, the government should go further by embracing the industry standard – the Extractive Industries Transparency Initiative.

By only going a certain distance, although the budget is less opaque, in many ways the current level of disclosure simply raises more questions that it gives answers.

In May, Cambodia received 6.28 billion riels from the sector according to the published version of the state budget, more than was generated for the whole of the first half of 2009.

Where did this payment come from?

The first step for the government in becoming an EITI candidate country would be to disclose oil, gas and mining revenues in full and allow private companies to do the same.

The EITI itself, along with a multi-stakeholder group, would then oversee this budgeting process – the idea is that the possibility for discrepancies between the two accounts dissuades graft.

Again, Cambodia has already gone halfway towards this standard. The government has permitted civil society groups including NGO Forum to act as observers on an inter-ministerial extractive industries working group that considers revenue transparency.

Crucially, civil society groups say they have previously applied for permanent member dialogue status but were denied.

Although there is understood to be differing opinions on EITI compliance within the government, it should be noted that countries with a far worse reputation on corruption than Cambodia have gone a great deal further on disclosure.

Chad, which lies 17 places lower than the Kingdom on Transparency International’s corruption perception index, in April became an EITI candidate, meaning it will now begin “double disclosure” of all sector payments – the state and private companies will publish payments

Iraq and Afghanistan, which between them occupy two of the bottom five positions on the corruption index, committed to the same EITI process in February. Now it should be Cambodia’s turn.

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