• What is the purpose of the Revenue Transparency Project?
• From ‘resource curse’ to resource blessing?
• What are the planned products for the project in 2008?
• Who are the partners?
• Who is funding the project?
• Timeline of activities
• How can companies and governments give input or get involved?
• What is the role of TI Chapters, PWYP partners and national coalitions?
• Project history - 2005 'Beyond the Rhetoric' reports

For further information or questions contact: Juanita Olaya – Revenue Transparency Programme Manager
revenuetransparency@transparency.org.

The Project aims at making extractive industries’ revenues of most benefit to society by increasing the transparency and accountability of extractive industry revenues.

To achieve this purpose, the project will provide robust standards for revenue transparency and tools to measure progress in this field, encouraging companies and governments engaged in the extractive industries to improve transparency and accountability to citizens and investors. This accountability should in turn support good practice and, more specifically, limit bad practices that can foster conflict, poverty, poor development and corporate risk.

The main output of the Project will be a set of reports that Transparency International (TI) will produce that measure revenue transparency policies and performance in the oil, gas and mining industries. These will look at companies, host governments, where extraction takes place, and home governments, where companies are registered and/or raising funds.

The Promoting Revenue Transparency Project has three specific objectives which add value to existing revenue transparency initiatives and particularly to EITI:

• To measure revenue transparency performance and diagnose areas for improvement.
• To develop broad standards for revenue transparency.
• To support the use of the revenue transparency standards and measures of performance by companies, rating agencies, investors, government regulators and civil society.

While much of this wealth comes from countries with high levels of poverty, such funds have the potential to drive social and economic development if they are well used.

In a perverse phenomenon that has been dubbed “paradox of plenty or ”resource curse”, the great wealth generated by extractive revenues can undermine economic growth as huge windfalls fuel grand-scale corruption and attracts rent-seekers in the public and private sectors. In addition to the ‘Dutch disease’ other consequences include conflict over the revenues or fueled with arms paid for from extractive industries’ profits, and a deepening of poverty that worsens as social investments are misappropriated or mismanaged. This in turn, can weaken political cohesion and the rule of law. Such unstable environments can damage company reputations and lower investor returns.

Insisting on transparent resource governance is necessary to transform this curse into a blessing. Greater public knowledge of the scale of extractive industry revenues, how these flow from oil producers to governments, as well as greater understanding of the oversight systems that are in place, can potentially place pressures on governments to use these revenues in the public interest in support of social and infrastructure programs that can boost economic growth and reduce poverty. Absent such transparency, governments and companies may behave in ways that will enhance the wealth of the few and yield no benefit to the many.

A vital approach to improving transparency lies in strengthening the accountability of decision-makers – of host governments and companies to citizens and of companies to investors. This requires civil society roles in monitoring processes and in constructive partnerships with companies and governments. To secure meaningful accountability there has to be adequate information about the resources being extracted and the flow of revenues to public authorities. There has been increasing recognition by many actors in the international community in recent years of the need for greater transparency in this area [3].

Four principal stakeholders can improve the transparency of such financial information in the context of the extractive sector: companies can publish what and who they are paying; host governments can publish what they are receiving from companies; home governments of the companies can regulate and enforce the disclosure of such information; and civil society in the host and home countries can act to monitor the payments from companies to public authorities to ensure that information is fully provided to the public at large. The ability of civil society to perform this role rests to no small degree on the actions in this context of the other three stakeholders.

Corruption Perceptions and Extractive Resources Dependency Map (Hydrocarbons)
(click to enlarge)

In 2005, Save the Children UK produced the first reports relating to companies and home governments [4]. The next phase of the Project is under the management of Transparency International and will produce the following publications:

• A new iteration of the companies report, planned for the beginning of 2008, including aproximately 42 oil and gas companies and their operations in about 21 countries.
• A first iteration of host countries report, planned for the beginning of 2009, covering approximately 10 countries.
• The extension of these reports to evaluate the mining industry.
• A new and greater focus on State Owned Enterprises.

Each report will be supported by preparatory work and consultation with various stakeholders and, once published, media, outreach and other promotional work will raise and sustain awareness of the reports and the findings on performance.

In addition to the reports this initiative will promote the development of an increased network of organisations working together on this issue, the development of encompassing standards that facilitate benchmarking and the substantive information and knowledge contributions that should make further work on this area, like for example revenue expenditure monitoring, possible.

It is envisaged that production of these reports will continue to be undertaken on a regular basis in future years.

Transparency International (TI) manages the Promoting Revenue Transparency Project and is the author of its reports.[1] TI is a global civil society organisation whose aim is creating change towards a world free of corruption. TI favours a collaborative approach to fighting corruption, where the public sector, the private sector and civil society work together. TI’s network includes close to a 100 Chapters all over the World. One of TI’s most renowned areas of activity is the area of corruption and transparency measurement. This includes the production of reliable indexes, surveys, reports and analyses of different kinds and depths that contribute to our understanding of the trends, dynamics and characteristics of transparency and corruption from different angles. TI uses the findings of these quantitative and qualitative tools as a basis for advocacy and reform.

For the purposes of this Project, TI has established a Working Group. The Working Group provides guidance to the Project and includes representatives from the project partner organisations, in addition to research and industry relevant experts, representatives of the industry associations, of investors and of rating agencies for the companies report; and representatives of governments in the case of reports related to governments. In addition, a broader Reference Group with a large, wide-ranging membership. Its members will be tasked with providing input and advice and will be also undertaking promotional activities.

The Project will also benefit from the advice of TI’s Index Advisory Committee, an interdisciplinary group of experts that oversees the production of all TI’s measurement tools.

Other participants in the Project include CAFOD, CARE UK, Global Witness, Save the Children UK, Secours Catholique and other members of the Publish What You Pay global coalition. TI Chapters and members of these organisations and coalitions in key countries will also contribute to the Project by participating actively in its in-country implementation process, by fostering multi-stakeholder dialogue and using the reports to promote revenue transparency in their countries.

We hope that more organisations and institutions with similar aims and aspirations will join our efforts in the area of revenue transparency.

The Revenue Watch Institute works to ensure that the revenues generated by the extractive industries contribute to sustainable development and poverty reduction, through the promotion of public finance transparency in resource-dependent countries.

The project is funded in part by the Revenue Watch Institute (RWI) and the Ministry of Foreign Affairs of Finland.

Supporting partners of the project include the Catholic Agency for Overseas Development (CAFOD), CARE International UK, Global Witness, Save the Children UK, Secours Catholique and other members of the Publish What You Pay global coalition.

Participatory engagement of all key stakeholders is one of the most essential elements of the PRT’s approach and methodology. Engaging and consulting stakeholders is crucial to the production of the reports and the advocacy efforts they entail. In order to facilitate this, different avenues and channels of involvement have been incorporated into the Project’s activities.

• Get involved in the Companies Report
• Get involved in Host or Home Governments Report

Companies and governments are welcome to send their comments and suggestions to revenuetransparency@transparency.org at any time.

The PRT project’s Working Group and a broader Reference Group provide guidance to the project. Their diverse participants include representatives of civil society, oil and gas companies, industry associations, governments, measurement and industry experts, investors, rating agencies, International Financial Institutions and the Extractive Industries Transparency Initiative (EITI) Secretariat.

There are many ways in which TI’s national chapters, PWYP partners and national coalitions can get involved in the project. They include using the tools and reports this project will produce to drive national and local-based advocacy and monitoring efforts.

• USE AND DISSEMINATION. The reports will allow us to support good practice, to monitor progress and to raise awareness on areas of improvement.
• DRIVERS OF PARTICIPATION. Civil society organizations will be key in implementing the participatory scheme of the project by engaging with governments and companies operating locally and by promoting local NGO coalitions to bring strengths together.
• EXPERTISE PROVIDERS.
• COUNTRY IMPLEMENTORS. Host government reports production will rely on in-country implementers to perform the data collection and analysis.

The project welcomes other ideas on how PWYP partners and national coalitions can get involved. Please contact: revenuetransparency@transparency.org.