The Extractive Industry Transparency

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Extractive Industries Transparency Initiative (EITI)

EITI has been implemented in Kazakhstan since 2005 by the initiative of the Head of the State N.A. Nazarbayev. This project has a high status of international, political and anti-corruption nature and is aimed at transparency of revenues of the companies and government in the extractive sector.

The obligation of subsoil users to comply with the terms of EITI Memorandum of Understanding and to provide reporting on taxes and other payments to the country's budget, confirmed by an audit in accordance with international standards, is formalized at the legislative level. In addition, annually funds are allocated from the republican budget for the production of the National EITI Reports carried out by an independent audit company in accordance with the law on public procurement. Also, EITI funding is actively supported by international and domestic organizations, development institutions such as the World Bank, and others.

To coordinate the EITI implementation, there is a National Council of Stakeholders (the Council), which includes the representatives of field ministries, associations of oil producers, mining enterprises and non-governmental sector, deputies of the Mazhilis of Parliament. KAZENERGY Association is one of the participants in the work of the Council and represents oil and gas sector companies. Within the framework of the Association, there is a Working Group that discusses the corporate policy of the companies, approves the terms of reference for companies to reconcile tax revenues to the budget, as well as final reports and other relevant issues. Annual EITI conferences are held annually. Thus, on September 29, 2015, for the first time during the X KAZENERGY Eurasian Forum an International EITI conference was held with the participation of representatives of multilateral groups of Ukraine, Azerbaijan, Tajikistan.

One of the main topics of the conference was the forthcoming next year validation procedure to confirm compliance with EITI standards, as well as discussion of the popular version of the National report.

For reference: For the second year, the National report includes, as much as possible, the information required to be disclosed under the 2013 Standard approved by the International Board, namely: contextual information on the extractive industry, information on revenues to the budget, dividends on state shares in ownership, on production and export volumes, transportation data, data on the contribution of extractive industries to the country’s economy, social investments, etc.

Another significant theme of the past Conference is the EITI implementation at the subnational level. Thus, the conference was attended by representatives of state bodies from the regions of Kazakhstan, where, together with civil society and extractive companies, they undertake to promote the EITI principles in the regions, including accountability to the public and informing the public about funding of the social sphere in the regions of Kazakhstan.

The Government of RK ensures a great degree of transparency in the management field, as a result of which the investment climate improves and the inflow of investments into the country increases, which in turn entails the development of business and the creation of new jobs.

Supporting the EITI development, companies also protect their interests. EITI implementation in the country leads to a reduction of political risks, helps to prevent social tensions in the regions of their activities, which is a positive moment for business.

In general, for the 10-year work performed on EITI implementation, Kazakhstan has been recognized as compliant with EITI requirements and the highest status of the "Follower Country" has been obtained.

Reference: Currently, the number of countries – EITI participants - is 48, 31 of them meet the EITI standards (www.eiti.org.). They include such major developed countries as France, Germany, USA, Great Britain, Japan, Australia, Canada.

Priority for the future reports is the production of popular versions, which will be of a graphic and analytical nature, discussion of publication of beneficial right and disclosure of information on social and environmental payments of companies. Member companies of the Association can participate in the activities of the Working Group, as well as in the National Council, and thus express the opinion not only of the company, but of the entire oil and gas sector.