Transparency in the Extractives Sector (GE0097)

Description of the current state and the challenge

Georgia is rich in various types of minerals. The mineral sector plays an important role in the country's economic development. To enhance the development and effective management of the mineral sector, a series of structural changes were implemented in December 2017, resulting in the transfer of powers for managing minerals and monitoring compliance with license conditions to the LEPL – National Minerals Agency under the Ministry of Economy and Sustainable Development of Georgia, now operating under the name LEPL – National Agency of Mineral Resources. In December 2019, the Government of Georgia approved the “Georgian Subsoil Sector Strategy”, focusing on priority areas such as: strengthening transparency and accountability in the subsoil sector, updating databases to ensure access to public information, and implementing revenue management principles aligned with the Extractive Industry Transparency Initiative (EITI) to optimize revenues. In 2019, Georgia also joined the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF). By joining the IGF, the country demonstrated its readiness to improve governance in the mining sector. The National Agency of Mineral Resources initiated efforts to update the regulatory framework of the industry, including the development of a working version of the Subsoil Code. Upon the implementation of the Code, a new legal system for mining will be adopted, reflecting the best global practices aligned with international environmental principles and standards, and ensuring the rational and sustainable use of mineral resources.

Brief description of the commitment

The Extractive Industries Transparency Initiative (EITI) serves as a global standard for promoting good governance in the extraction of natural resources, including gas, oil, metals, and other minerals. The EITI supports the development of transparency and accountability mechanisms within the extractive sector and examines the economic impact of natural resource extraction at both central and local levels. The implementation of the EITI standard in Georgia starts with a comprehensive study of the current situation. This includes an assessment of the capabilities of government agencies and an evaluation of the existing conditions. Subsequently, the second stage entails the development of an action plan, defining strategies to address identified issues and outlining the necessary activities and measures for aligning with the EITI standard. Moreover, the commitment extends to ensuring transparency in the ongoing reform at the National Agency of Mineral Resources, specifically in the process of updating the regulatory framework of the sector. This involves, among other things, establishing a well-defined mechanism for consulting with stakeholders during the review of draft normative acts and their subsequent implementation.

Milestones | Expected Output

4.1 Assessing institutional and legal readiness and developing an action plan for joining the EITI, to implement the EITI standard in Georgia | A study for the implementation of the EITI standard in Georgia is completed. An action plan to join the EITI is developed

4.2 Discussion of the Mining Code with Stakeholders | Meetings are held with stakeholders to discuss the Mining Code

Indicator

1. A study of Georgia's institutional and legal readiness to implement EITI standards is conducted and made available to stakeholders.
2. An action plan to join the EITI is developed.
3. Meetings are held with stakeholders to discuss the draft Mining Code.

Action Plan Review

Commitment 4 envisages an assessment of Georgia’s institutional and legal readiness for joining the Extractive Industries Transparency Initiative (EITI) and developing an action plan for membership. Additionally, consultations with stakeholders are planned for the draft Mining Code. During the co-creation process, CSOs proposed Georgia commit to joining EITI. Interviewed civil society stakeholders reconfirmed the importance of joining EITI to enhance transparency and inclusiveness in the extractives sector. [20] However, they criticized the commitment for only committing to a readiness assessment and for lacking a clear timeline and steps for joining EITI. [21] The Ministry of Economy and Sustainable Development noted the aim of the legal readiness assessment is to identify potential barriers and opportunities in the preparation process. [22] Based on the findings of this assessment, the ministry will outline the next steps to help Georgia move forward in its application for EITI membership. The IRM recommends that the next OGP action plan includes steps to adopt the EITI Standard and pursue membership. [23]