Join EITI (NL0030)

Joining the Extractive Industries Transparency Initiative (EITI)
July 2018 - July 2020
Main action owner (organisation) Dutch Ministry of Foreign Affairs
Dutch Ministry of Economic Affairs and Climate Policy.

Description of the action point
Which social issue does the action point seek to address? The EITI standard is a voluntary international standard to promote accountable and transparent extraction of natural resources. If this is implemented in the Netherlands, information about the entire resource extraction chain will become public, from the moment a resource is extracted until the payments to the government, enabling a better assessment of social costs and benefits.
Much data on resource extraction is already available, but there is a lack of knowledge about the aggregate financial contributions (payments and taxes) from resource extraction. More transparency through better information about specific financial data could make a positive contribution to the public debate about resource extraction and the private and public costs and benefits of resource extraction. The implementation of NL-EITI will make data on tax income, royalties and other payments publicly available. The first report will be on oil and gas extraction. Attention may also be paid to salt extraction. The analysis of the context of energy generation and resource extraction in the Netherlands will also address wind and geothermal energy.
What is the action point? Joining the Extractive Industries Transparency Initiative (EITI) and implementing the EITI Standard in the Netherlands.
How will the action point contribute to remedying the social issue? Currently, the Netherlands is still the second largest producer of natural gas in Europe and is considered to be an OECD country that is relatively rich in natural resources. Extraction of oil and particularly gas still contributes to the Dutch economy and to the State budget, although lower prices and the reduction of gas production have made this contribution less than it used to be some years ago. It is clear that the extraction has resulted in problems of increasing intensity, particularly in the province of Groningen. EITI will supply information for the debate on the societal side of resource extraction.

The accession of the Netherlands to EITI is currently being prepared. The Netherlands will register with EITI in early 2018. The international board of EITI will meet in the summer of 2018 to decide on whether to approve this candidacy. Once the Netherlands has become a candidate member, an EITI report will be prepared within 18 months – by late 2019 – in which the Netherlands will demonstrate how the country satisfies the requirements of the EITI standard. This will contribute to the transparency of costs and benefits of Dutch oil and gas extraction. In the spring of 2021, the international EITI board will decide whether, based on the report submitted, the Netherlands satisfies all requirements and is a fully fledged EITI member.
Why is this action point relevant to OGP values? By publishing data not only on oil and gas extraction, but also on salt extraction in the Netherlands, any lack of clarity among the public about financial payments to the government in these sectors can be removed. Citizens who live in areas that are negatively affected by resource extraction certainly need more transparency. By adding information based on the EITI standard to the existing information about resource extraction, the government will increase its openness about the proceeds of resource extraction.

There has been an increased call for more transparency in resource extraction all over the world since 2010. This has resulted in legislation, including the EU directive on annual financial statements and increasing participation in voluntary transparency initiatives such as EITI.
The discussion about income generated by natural gas extraction and the distribution of funds from such extraction has become a hot topic in Netherlands due to the increased problems caused by earthquakes in the province of Groningen.

Data on natural gas extraction is now available in various locations, e.g. via the website http://www.nlog.nl. Data on income, tax payments, payments for concessions, etc., is much harder to find. NL-EITI will ensure that all the data is made available according to a standard that enables international comparisons and that preferably, it is available at a single location. This transparently available information will help to make the public debate on resource extraction better informed.

Additional information Implementation of the EITI standard in the Netherlands will be consistent with company reports in line with EU directives on annual financial statements and on transparency.

The Dutch Ministry of Foreign Affairs has made available the budget needed for the implementation of NL-EITI until the moment when the first Dutch EITI report will be issued in November 2019.
Milestone with a verifiable result (please note: SMART) Start date: End date:
Registration as a candidate member of EITI April 2018
Approval of registration and obtaining the status of candidate member June 2018 June 2018
Publication of EITI Report November 2019
Publication of progress reports
(annual reports for international EITI board on EITI progress) 1 July 2019, 1 July 2020
Ratification of membership (will not be within the period of the Action Plan for Open Government) Within 30 months of becoming a candidate member By April 2021 at the latest
Contact information
Name of the responsible person representing the main action owner Omer van Renterghem, member of the NL-EITI multi-stakeholder group, Dutch Ministry of Foreign Affairs
Bert Roukens, member of the NL-EITI multi-stakeholder group, Dutch Ministry of Economic Affairs and Climate Policy
Geesje van Niejenhuis NL-EITI coordinator, RVO-Nederland
Dirk-Jan Koch, NL-EITI chairman, Ministry of Foreign Affairs

Position, organisational unit
Email and phone number
Other actors involved Authorities involved Netherlands Enterprise Agency (RVO)
Dutch Tax and Customs Administration

Other organisations or bodies (such as community organisations or the private sector) NL-EITI multi-stakeholder group consisting of:
Community organisations:
PublishWhatYouPay, Transparency International, FNV, Open State Foundation
Private sector:
NAM BV, Shell International BV, Dyas BV, Vermillion Energy Netherlands BV, Nogepa

9. Joining the Extractive Industries Transparency Initiative (EITI)

Language of the commitment as it appears in the action plan:

Joining the Extractive Industries Transparency Initiative (EITI) and implementing the EITI Standard in the Netherlands. [35]

Milestones

3.1 Registration as a candidate member of EITI

3.2 Approval of registration and obtaining the status of candidate member

3.3 Publication of EITI Report

3.4 Publication of progress reports (annual reports for international EITI board on EITI progress)

3.5 Ratification of membership (will not be within the period of the Action Plan for Open Government)

Start Date: April 2018      

End Date: April 2021

Context and Objectives

Since the discovery of a gas field near Slochteren, in the Dutch province of Groningen, the Netherlands has been one of Europe’s largest producers of natural gas. Natural gas is of vital importance in the Netherlands’ national energy supply and gas sales have contributed approximately EUR 417 billion to the Dutch economy over the past 60 years. [36] In recent years, however, geohazard conditions in the area have deteriorated and induced earthquakes and land subsidence are more frequent. The Dutch government has therefore decided to cut the annual output of the Groningen gas fields and plans a complete decommissioning by 2022.

Information on Dutch gas extraction and its revenue has generally been transparent, given that state revenues are included in the national executive budget. However, the exact profits made by extractive companies have remained largely unclear, with revenues prior to 2006 being unknown. [37] Additionally, detailed financial reports are available only from 2016 onward following the entering into force of the EU Accounting Directive [38] in the Netherlands.

This commitment calls on the Netherlands to formally join the Extractive Industries Transparency Initiative (EITI), a multi-stakeholder initiative that promotes a global standard for the good governance of oil, gas, and mineral resources. The Netherlands has supported EITI since its inception in 2003 and has provided significant financial support to the initiative and/or its subsidiaries since 2007. Despite supporting EITI, however, the Netherlands is not actually a member itself. In 2011, the government indicated that it would implement the EITI standard (or a similar transparency initiative) and in late 2015 eventually committed to implement the EITI standard. [39]

This commitment’s activities focus on the technical process of EITI membership, as well as publishing an EITI report and the annual reports on the country’s progress in implementing EITI. The milestones are specific and verifiable, but it should be noted that the ratification of EITI membership (the final milestone) is expected to occur outside the period of this action plan (by April 2021). The publication of extractive sector information in the EITI report makes the commitment relevant to the OGP value of access to information. Also, EITI membership will require the Netherlands to create a multi-stakeholder group consisting of government and civil society stakeholders, thus making the commitment relevant to civic participation.

Overall, joining EITI could lead to positive but minor improvements to transparency in the Dutch extractive sector. In interviews, government officials noted that much of the relevant data on the country’s extractives sector is already public but scattered in different locations and not necessarily published in open data format. [40] EITI implementation could help improve that situation by consolidating and publishing extractives sector data in one central place. In addition, it also appears that existing EU legal frameworks (EU Disclosure Directive) provided an important push for reform, as opposed to EITI alone.

Next steps

The IRM researcher recommends that involved ministries make a clearer division of labor for the EITI implementation. Currently, domestic extractives and their governance fall under the Ministry of Economic Affairs and Climate Policy, whereas the Netherlands’ international EITI efforts fall under the purview of the Ministry of Foreign Affairs. Furthermore, if carried forward to future action plans, the government could improve the ambition of EITI commitments by creating a link between NL-EITI, and the “Nationaal Programma Groningen”, a government program meant to bring relief and economic stimulation for the affected region.

[35] The complete text of this commitment, https://www.opengovpartnership.org/wp-content/uploads/2018/11/Netherlands_Action-Plan_2018-2020_EN.pdf

[36] https://www.cbs.nl/en-gb/news/2019/22/natural-gas-revenues-almost-417-billion-euros

[37] https://zoek.officielebekendmakingen.nl/kst-33529-31.html

[38] Official Journal of the European Union, Directive 2013/34/EU, eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013L0034&from=EN

[39] https://www.tweedekamer.nl/kamerstukken/brieven_regering/detail?id=2015Z20448&did=2015D41564

[40] Interview with Martijn Reubzaet (Ministry of Foreign Affairs), 4 October 2019.

Commitment 9. Joining the Extractive Industries Transparency Initiative (EITI)

Substantial

The commitment resulted in the successful implementation of the EITI Standard in the Netherlands. EITI accepted the Netherlands’ candidature application in June 2018 and the country published its first EITI report in December 2019 (covering the 2017 fiscal year). [20] The Netherlands also published annual progress reports for 2018 [21] and 2019 [22] during the action plan period. However, this commitment also included a milestone to ratify the Netherlands’ membership in EITI, a process that is scheduled to begin in July 2021 (after the end of the action plan period). [23] Therefore, the IRM considers this commitment substantially, rather than fully, completed.

The EITI reports provide enhanced transparency of the Dutch extractives sector, particularly concerning payment flows between oil and gas companies and the Dutch government, ranging from tax payments to exploitation fees, and others. This is an improvement to the situation prior to joining the EITI, as such information was previously unavailable. Given that Dutch extractives companies have played an important role in various political discussions, such transparency is a positive development. Interested citizens, journalists, or other stakeholders now have a valuable report available that can help them better understand the sector and raise concerns, if necessary, based on reported facts.

As part of the implementation of the EITI Standard, the Netherlands also established a multi-stakeholder group (MSG). The MSG is comprised of representatives from government, extractives industries, labor unions, the tax authority, and civil society. [24] It has formal rules of procedures and publishes its meeting minutes online. In addition, it has published mid- and end-term reports and an annual workplan. [25]