Implement EITI (PH0061)

What is the problem the commitment addresses?

EITI implementation in the Philippines has contributed to efforts to avert the “resource curse” from afflicting the country. The “resource curse” refers to the paradoxical situation where countries, despite having abundant natural resources, manifest increased poverty and less economic growth and development.

More specifically, PH-EITI has sought to address the following issues in natural resource management, among others:
● Need for more transparency and accountability in the extractive industries;
● Lack of understanding on how the extractive industries work;
● Lack of or conflicting data on the taxes and other amounts paid or contributed by extractive companies and collected by the government (both national and local) as well as on the benefits received by communities from extractive activities; and
● Conflict/tension between and among stakeholders

Through EITI, the global standard for the open and accountable governance of oil, gas, and mineral resources, significant gains have been achieved in the areas of public availability of extractives data and information, stakeholder engagement, and policy reform in the extractives. Six years since its inception, EITI implementation in the Philippines continues to expand coverage of data disclosure, broaden stakeholder engagement, and encourage data utilization for the creation of policy recommendations and development plans ultimately aimed at pursuing sustainable development, not only at the national level but more so at the level of communities.

EITI implementation has, however, entailed spending considerable resources particularly in the production of annual comprehensive reports, which require, among other costs, the services of an independent administrator, and the printing of copies of the voluminous report. In addition, challenges in funding and procurement have undermined report production and its potential benefits and impact. These have called for measures and mechanisms to ensure the sustainability of extractives transparency. Without sustainability, both the gains and potential of EITI would be stunted, reversed, or otherwise wasted. This problem, although not unique, presents an opportunity to generate sustainability approaches and models that better secure the attainment of long-term objectives.

What is the commitment?

The DOF commits to institutionalize transparency and accountability in the extractive industries by mainstreaming implementation of EITI in the Philippines.

Mainstreaming EITI entails the creation and issuance of policies, and development of web-based systems that will effect systematic disclosure (to replace traditional publication) of data and information about the extractive industries in the country (mining and oil and gas). Extractives data include requirements under the 2019 EITI Standard such as contract transparency, company payments to government, beneficial ownership, and data on environment and gender, among others.

In addition, mainstreaming seeks to enhance the role and sustain the operations and activities (data analyses, research, creation of policy recommendations, outreach, and communications) of the Multi-stakeholder Group.

On Systematic disclosure and mainstreaming:
It must be noted that the EITI has a robust yet flexible methodology for disclosing company payments and government revenues from oil, gas and mining as well as other information about the extractive sector such as information about the legal framework and fiscal regime, licensing practices, state-owned companies, production, exports, etc. Each implementing country creates its own EITI process adapted to the specific needs of the country. This involves defining the scope of information to be published and exploring how disclosure of information about the extractive sector can be integrated into government and company portals to complement and strengthen wider efforts to improve extractive sector governance.

To date, most of the information required by the EITI Standard to be disclosed has been collected and made public through EITI Reports. At the EITI Board meeting in February 2018, the EITI Board agreed on a set of recommendations regarding encouraging systematic disclosure. The EITI Standard enables implementing countries to disclose the information required by the EITI Standard through routine government and corporate reporting systems such as websites, annual reports, etc. The EITI Board agreed that “systematic disclosure should be firmly established as the default expectation, with EITI Reports used to address any gaps and concerns about data quality. Implementing countries could still continue to publish annual EITI reports collating and analyzing information from primary sources in order to make this information more accessible and comprehensible, especially for stakeholders that do not have access to online information”.

Systematic disclosure means that EITI’s disclosure requirements are met through routine and publicly available company and government reporting. This could include enabling access to EITI data through public financial reporting, annual company or government agency reports, information portals, and other open data and freedom of information initiatives. A key concern will be ensuring that the published data is comprehensive and reliable.

This should include an explanation of the underlying audit and assurance procedures that the data has been subject to, with public access to the supporting documentation. Mainstreaming refers to the process for realizing this goal, which may include interim measures, pilots, and other capacity building activities.

See Action Plan for milestone acitivities

5. Extractive Sector Transparency and Accountability

"The DOF commits to institutionalize transparency and accountability in the extractive industries by mainstreaming of EITI in the Philippines. Mainstreaming EITI entails the creation and issuance of policies, and development of web-based systems that will effective systematic disclosure (to replace traditional publication) of data and information about the extractive industries in the country (mining, oil, and gas). Extractives['] data include requirements under the 2019 EITI Standard such as contract transparency, company payments to government, beneficial ownership, and data on environment and gender, among others.

In addition, mainstreaming seeks to enhance the role and sustain the operations and activities (data analyses, research, creation of policy recommendations, outreach, and communications) of the Multistakeholder Group."

Main Objective

"The commitment will reduce the cost of EITI reporting while strengthening the role of the MSG in the public discourse on and development of policies pertaining to extractives. With reduced cost, systematic disclosure, and strengthened multi-stakeholder participation, transparency and accountability in the extractives will be more sustainable."

Milestones

1. Systematic disclosure of extractives information through an integrated (centralized) network of independent databases and web portals.
2. Public register of beneficial owners of extractive companies.
3. Standardized gender audit tool for extractive companies.
4. Establishment of a local multistakeholder forum or council for data disclosure and analysis.
5. Community-based training on PH-EITI vis-à-vis natural resource governance.
6. Enhancement of local, provincial extractives data including social and environmental payments.

Editorial Note: For the complete text of this commitment, along with the updated version submitted in the revised action plan, please see the Philippine action plan at https://www.opengovpartnership.org/documents/philippines-action-plan-2019-2022/.

Commitment analysis

This commitment will mainstream the Extractive Industries Transparency Initiative (EITI) in a key province in the Philippines. By following standards and protocols set by the EITI, the Philippine government, and the local provincial government in particular, will be able to ensure transparency and accountability through systematic disclosure of information, promote community participation through dialogues via the multistakeholder forum, and encourage adoption of sustainable practices among mining companies.

This commitment builds on extractive-sector transparency reforms in previous action plans. Commitment 4 in the 2015–2017 action plan and commitment 8 in the 2017–2019 action plan resulted in the creation of an active EITI multistakeholder group, annual EITI country reports, and online and in-person efforts to connect affected communities with extractive-sector data. ^[55]

Mining is a priority sector for the Philippine government. As enshrined in the medium- and long-term development visions of the country, the extractive sector is expected to bring in revenue and employment needed to drive continuous growth and development. ^[56] It is governed by laws in compliance with the mandate of the Philippine constitution, Republic Act No. 7942 (the “1995 Mining Act”), and Administrative Order (AO) No. 2010-21 of the Department of Environment and Natural Resources (DENR).

Participation in the Extractive Industries Transparency Initiative (EITI) was first initiated through Executive Order (EO) No. 79, s. 2012, to commit to international standards of transparency and accountability in the extractive sector and in the government. Through EO No. 147, s. 2013, the government then instituted the Philippine Extractive Industries Transparency Initiative (PH-EITI). The Mining Industry Coordinating Council (MICC) established a multistakeholder group (MSG) as required by EITI guidelines and EO 147. The MSG is composed of representatives from government (DOF, DENR, DOE, DILG, and ULAP), industry (Chamber of Mines of the Philippines, and Petroleum Association of the Philippines), and civil society (Bantay Kita of Publish What You Pay Philippines). The Department of Finance chairs the MSG. [57]

Considered as the third pillar of EITI implementation in the Philippines, the MSG regularly conducts training orientation and roadshows for their stakeholders. ^[58] As a result, CSOs and communities are more aware of and capable to participate in the natural resource governance process. The PH-EITI has also been able to conduct outreach to target and assist specific stakeholders with a focus on informing and building capacity regarding the EITI process. ^[59] Through this commitment, the awareness-raising and capacity-building initiatives will be continued and expanded to include stakeholders at the local level, whereas the MSG will continue as a forum for cross-sectoral representatives to negotiate and discuss plans for extractive sector transparency moving forward.

The Sixth PH-EITI Report (FY 2018), published in December 2020 and updated in March 2021, has a chapter devoted to the discussion of beneficial ownership transparency in the extractives sector. The report also published beneficial ownership information of 29 companies and projects. PH-EITI requested that companies voluntarily consent to beneficial ownership disclosure. [60] The information is also accessible in open format online. [61]

This commitment is relevant to all four OGP values. In regard to access to information, the extractive sector must report on their operations in a more systematic manner in order to comply with EITI standards. Through systematic and regular disclosure, civil society can monitor mining operations, while affected communities can track and secure access to information, which can be used to demand accountability from regulatory agencies for any environmental or social wrongdoings. Further enhancements integration of the websites, in particular the addition of a portal for stakeholders to raise concerns and for the government to publish action taken in response to such concerns make this commitment relevant to the values of public accountability as well as technology and innovation for transparency and accountability.

This commitment has a moderate potential impact. Several milestones are a continuation of ongoing resource governance reforms in the Philippines. At the time of writing in 2021, the PH-EITI website provided centralized extractive economic, environmental, operational, payment, and social data through the Extractives Data Generator (EDGe) (Milestone 1). ^[62] PH-EITI also already undertakes community-based training on natural resource governance (Milestone 5). ^[63] Similarly, some non-fiscal data on social and environmental payments are available online. ^[64] According to Dr. Glenn Pajares, Chair of Sectoral Transparency Alliance on Natural Resource Governance in Cebu (STANCe), the scope of fiscal and non-fiscal reports has expanded over recent years to cover close to 90% of extractive data. However, some notable companies continue to resist disclosure. ^[65]

The remaining milestones represent new steps toward extractive sector transparency. A public register of beneficial owners (Milestone 2) could integrate extractive sector beneficial ownership information, contracts, and extractives information into a publicly available portal for the first time. This milestone builds on SEC Memorandum Circular Number 15, which established the requirement for SEC-registered corporations to disclose beneficial ownership information in 2019. According to PH-EITI, progress on disclosure of beneficial ownership information could decrease tax evasion and money laundering within the extractives sector. ^[66]

The efforts to further localize EITI (Milestones 4 and 6), especially in areas most affected by extractive activities, could also offer an important model for extractive- sector transparency. Establishment of a local multistakeholder forum for data disclosure and analysis, capacity building, and enhancement of local and provincial extractives data in Cebu could complement previous efforts. Dr. Glenn Pajares also notes that gender reporting (Milestone 3) is another important frontier for comprehensive extractive sector transparency in the Philippines.

Next Steps

Localizing EITI in provinces where mining operations actually occur brings the issue closer to where people and communities can actually participate, air their aspirations and concerns, and monitor compliance to existing regulations. The experience in the province of Cebu could pave the way for talks on developing a new national policy or encourage the DENR to revisit relevant, existing rules and regulations. ^[67] PH-EITI websites and reports disclose important extractive information. However, the next challenge is to ensure the reports inform government and community decision making. ^[68] Creating local natural resource governance could help close this gap.

Even as the Philippine government continues to maintain compliance to the EITI standards, participation at the national level is still mostly represented by organized business and civil society groups. As such, this commitment could actually establish a new model for how citizens can directly participate in safeguarding extractive sector transparency. However, this will require the government to create strong legal frameworks and extensive assistance to ensure that local communities are aware of their rights and can engage the different parties within the industry.

Importantly, restricted civic space in the Philippines threatens to undermine commitments that rely on civic engagement. CIVICUS’ civic space monitor currently rates the Philippines as “repressed.” ^[69] Government crackdowns on free speech and the media inhibits journalists and communities’ ability to use extractive data to hold the government accountable. The IRM recommends that the Philippines consider how to continue to address these cross-cutting issues in the next action plan. ^[70]

Commitment 5. Extractive Sector Transparency and Accountability

Verifiable: Yes

Does it have an open government lens?

Yes

Potential for results: Moderate

● Completion: Substantial

● Did it open government? Marginal

This commitment was substantially completed, although the bill to institutionalize EITI was not passed (two House and two Senate bills were filed) and the contracts portal did not integrate beneficial ownership. [60] Beyond the intended milestone, in 2021, PH-EITI launched a beneficial ownership registry on its website. [61] While 39 companies partially or fully disclosed beneficial ownership information, the registry is not yet comprehensive – For instance, this offered disclosures from 36 of the Philippines’ 278 mining companies (13%). [62] In terms of the commitment’s other milestones, the Department of Finance (DOF) centralized publicly available extractives information, linking EITI databases to the portal [63] and sharing EITI-related datasets in the old, deactivated Open Data PH portal. It also added a public feedback form to the PH-EITI portal, [64] although this was not widely used. [65] To support uptake, the DOF conducted awareness-raising efforts with national government agencies, private companies, and CSOs. However, in terms of usability, the reports and data in the EITI portal were not available in forms interpretable to local stakeholders or small mining industry players. [66] The Department also added gender and employment data fields to the company reporting template for the 7th PH-EITI reporting cycle and published studies on women employed in large-scale mining companies [67] and the feasibility of mainstreaming EITI data. [68] However, there was no evidence of action taken in response to these data and studies during the implementation period. Additionally, the Sectoral Transparency Alliance on Natural Resource Governance in Cebu, Inc. (STANCE) convened an Extractive Industries Transparency Forum for Cebu (one of the Philippines’ 81 provinces). The local government of the municipality of San Fernando made verbal commitments for a municipal-level extractives transparency initiative, which did not move beyond the initial stage during the implementation period. STANCE also conducted community-based trainings on EITI and natural resource governance as well as a scoping study of small-scale extractives in Cebu. STANCE lobbied for a relevant ordinance, which reached a second reading, but had not passed by April 2023. [69] Civil society organizations reported that a restrictive operating environment and red-tagging impacted their wider work on extractives and human rights, and the resulting reputational damage was an obstacle to engaging with local stakeholders. They also reported a need for greater financial support and capacity building. [70] In terms of overall engagement with EITI, the Philippines had a hiatus from the initiative in early 2022. [71]