How the EITI works

Becoming an EITI member
Before a country can become an EITI member, it must apply for a candidacy. Several steps are necessary in order to obtain candidate status, two of which are the appointment of a senior government person as an EITI Special Representative and the creation of a work plan. Once the International EITI Board appoints a country as a candidate, it has one year to publish its first EITI report,
which must provide information for the general public about payments and financial flows within that country’s natural resources sector. The report deals with topics ranging from the extraction of natural resources to the benefits such resources bring to the general public. In addition, the country has two years to meet eight requirements of the EITI standard that relate to the entire value chain of the oil, gas and mining industries.
An independent body then examines the EITI candidate’s achievements (validation). If the country has fulfilled the EITI requirements for the transparent handling of natural resources, it is considered to be EITI-compliant and becomes a full member. From this point on, that country must publish an annual EITI report. The new member is also revalidated every three years. Member status can be withdrawn if the standard is disregarded at any time.
Multi-Stakeholder Group (MSG)
­During its candidacy, each country establishes a national MSG. Each stakeholder group (private sector, government, civil society) selects its own representatives. In Germany, each group appoints five representatives and acting representatives, plus a coordinator. Due to the federal structure in Germany, the government representatives also include individual federal state representatives. Each of the three groups has equal voting rights.
Decisions are made by consensus or by a qualified majority where no stakeholder group can be outvoted. The MSG oversees the implementation of the EITI in Germany and is responsible for developing the national EITI process. It also adapts the national conditions of the natural resources sector to the international standard: e.g. in an oil-rich country, the focus can be placed on that natural resource, while in another country, the transportation of raw materials may be of special economic importance.
The federal structure in Germany, however, is especially significant for the shaping of the EITI process. The MSG is also responsible for the annual EITI report together with the national EITI secretariat. The MSG meets three to four times a year in regular meetings to negotiate the implementation of the EITI. Should complex issues arise, external experts may also be invited and working groups used to help with the decision-making process.
The EITI report
EITI countries must publish a report once a year.

The report is comprised of two main parts:
• The Context Report contains information that gives the general public an overview of the extractive sector’s operations. The report answers questions like ‘What quantities of which natural resources are extracted? What are the relevant legal regulations?
How much does the state earn in revenues? How many natural resources are exported?’ or ‘How much does the extractive sector contribute to the national economy?’ • In the second part of the report, an Independent Administrator matches the main financial payment flows between the extractive companies and government agencies (reconciliation). Companies publish their payments and the responsible financial authorities disclose their associated revenues to this end.
The contract for the Independent Administrator is tendered for in accordance with appropriate public procurement legislation. The Independent Administrator can thus change from year to year. He has two tasks: 1) To collect the financial data of the companies and government agencies in question, and 2). To find the cause(s) for any discrepancies. The Independent Administrator includes discrepancies and their causes in the report. He also helps the MSG to clarify technical issues.
How are licenses and contracts awarded and recorded in registers? Who are the beneficial owners of extractive companies? Which tax and legal arrangements apply for the extractive sector?
Value chain
Public dialogue
Why is it important to inform the public about cash flows in the extractive sector? Because by doing so, the EITI aims to encourage an informed global debate on natural resources and on how the natural resources of a country are used.
A transparent approach can avoid conflicts – and money can be used for the economic and social development of a country. To enlighten the public as fully as possible about this complex topic, the EITI report is published in Germany on the www.rohstofftransparenz.de portal – in a visually appealing, easily understandable and interactive style.
This portal will launch in September 2017. All the information is also provided in open data format, enabling the published information to be used without any restrictions. This increases transparency and makes the results internationally comparable.
  • Becoming an EITI member
    Before a country can become an EITI member, it must apply for a candidacy. Several steps are necessary in order to obtain candidate status, two of which are the appointment of a senior government person as an EITI Special Representative and the creation of a work plan. Once the International EITI Board appoints a country as a candidate, it has one year to publish its first EITI report,
    which must provide information for the general public about payments and financial flows within that country’s natural resources sector. The report deals with topics ranging from the extraction of natural resources to the benefits such resources bring to the general public. In addition, the country has two years to meet eight requirements of the EITI standard that relate to the entire value chain of the oil, gas and mining industries.
    An independent body then examines the EITI candidate’s achievements (validation). If the country has fulfilled the EITI requirements for the transparent handling of natural resources, it is considered to be EITI-compliant and becomes a full member. From this point on, that country must publish an annual EITI report. The new member is also revalidated every three years. Member status can be withdrawn if the standard is disregarded at any time.
  • Multi-Stakeholder Group (MSG)
    ­During its candidacy, each country establishes a national MSG. Each stakeholder group (private sector, government, civil society) selects its own representatives. In Germany, each group appoints five representatives and acting representatives, plus a coordinator. Due to the federal structure in Germany, the government representatives also include individual federal state representatives. Each of the three groups has equal voting rights.
    Decisions are made by consensus or by a qualified majority where no stakeholder group can be outvoted. The MSG oversees the implementation of the EITI in Germany and is responsible for developing the national EITI process. It also adapts the national conditions of the natural resources sector to the international standard: e.g. in an oil-rich country, the focus can be placed on that natural resource, while in another country, the transportation of raw materials may be of special economic importance.
    The federal structure in Germany, however, is especially significant for the shaping of the EITI process. The MSG is also responsible for the annual EITI report together with the national EITI secretariat. The MSG meets three to four times a year in regular meetings to negotiate the implementation of the EITI. Should complex issues arise, external experts may also be invited and working groups used to help with the decision-making process.
  • The EITI report
    EITI countries must publish a report once a year.

    The report is comprised of two main parts:
    • The Context Report contains information that gives the general public an overview of the extractive sector’s operations. The report answers questions like ‘What quantities of which natural resources are extracted? What are the relevant legal regulations?
    How much does the state earn in revenues? How many natural resources are exported?’ or ‘How much does the extractive sector contribute to the national economy?’ • In the second part of the report, an Independent Administrator matches the main financial payment flows between the extractive companies and government agencies (reconciliation). Companies publish their payments and the responsible financial authorities disclose their associated revenues to this end.
    The contract for the Independent Administrator is tendered for in accordance with appropriate public procurement legislation. The Independent Administrator can thus change from year to year. He has two tasks: 1) To collect the financial data of the companies and government agencies in question, and 2). To find the cause(s) for any discrepancies. The Independent Administrator includes discrepancies and their causes in the report. He also helps the MSG to clarify technical issues.
    Wertschöpfungskette
    • Contracts and
      licences
      Wie werden Lizenzen und Verträge vergeben und in Registern erfasst? Wer sind die wirtschaftlichen Eigentümer der rohstofffördernden Unternehmen? Welche steuerlichen und rechtlichen Vereinbarungen bestehen?
    • Produktion
      Welche Rohstoffe werden gefördert? Wie groß sind die Fördermengen?
    • Einnahmen-
      generierung
      Wie viel wird gezahlt (z.B. Steuern, Abgaben)?
    • Einnahmen-
      verwendung
      Wohin fließen die Einnahmen?
    • Sozialer und
      wirtschaftlicher
      Beitrag
      Welchen Beitrag leisten die Rohstoffwirtschaft zur Volkswirtschaft, insbesondere zur Beschäftigung?
  • Public dialogue
    Why is it important to inform the public about cash flows in the extractive sector? Because by doing so, the EITI aims to encourage an informed global debate on natural resources and on how the natural resources of a country are used.
    A transparent approach can avoid conflicts – and money can be used for the economic and social development of a country. To enlighten the public as fully as possible about this complex topic, the EITI report is published in Germany on the www.rohstofftransparenz.de portal – in a visually appealing,
    easily understandable and interactive style. All the information is also provided in open data format, enabling the published information to be used without any restrictions. This increases transparency and makes the results internationally comparable.