Disclosure laws underway as Guyana moves ahead with EITI process

Foreign firms and the Guyana Government will be required to make full disclosures on revenue distribution and collection respectively in relation to the extractive sectors once the Extractive Industries Transparency Initiative (EITI) is successful.
This is according to Guyana’s EITI National Secretariat Coordinator, Dr Rudy Jadoopat, who was at the time updating the media on the country’s progress towards becoming a member of the EITI.

Guyana’s EITI National Secretariat Coordinator, Dr Rudy Jadoopat

He was engaging the media during an event hosted by Policy Forum Guyana (PFC) at Cara Lodge on Wednesday.
Dr Jadoopat explained that legislation would be eventually introduced to ensure international companies working in the extractive industries in Guyana would be required to declare the net figure given to Government.
This policy will be applicable to US firms despite US President Donald Trump’s recent repeal of a key piece of disclosure law, which strong-armed American companies in the extractive sector to divulge what they were paying to foreign Governments.
Additionally, the Guyana Government will be required to disclose the net total received from the companies operating in the extractive sectors.
If the two declared figures do not correspond, then the EITI international body will have to intervene and advise on a process for reconciliation. Also, if the numbers cannot be matched, then it means something is not right and Guyana becomes at risk of being suspended from the EITI.
This requirement of public disclosure is meant to foster public scrutiny and greater accountability over natural resource profits earned by Governments. Additionally, if the foreign company refuses to make full disclosures, then that firm will be rendered noncompliant by the EITI International Body.
Dr Jadoopat explained that until Guyana’s legal framework has improved in alignment with EITI standards, there were currently no penalties for noncompliant companies.
“The ultimate objective of the EITI is to have the laws of the countries incorporating the standards so legislative changes and amendments will have to be made to become aligned with the EITI standards. There may be no penalties right now, but in due course when laws are introduced, then there will be penalties,” he stated.
Notably also, not all companies operating in the various extractive sectors will be required to make public disclosures.
The Multi-Stakeholders Group (MSG), which was established in February 2017 to identify national priorities for the extractive sectors, would be tasked with determining which companies would be obligated to make public declarations.
Dr Jadoopat explained that the MSG would design internationally acceptable criteria, which have to be sanctioned and approved by the EITI International Secretariat to be used in determining which entities must make disclosures.
He said some of the criteria could include the size of concession the company was operating on, the volume of production, the amount of money given to Government, and its turnover capital.
Dr Jadoopat noted that small companies whose contributions were generally negligible may not be required to make disclosures.
However, he said the criteria which will be determined by the MSG will eventually identify which companies must make disclosures.
The EITI is a global organisation of 51 member countries, which have subscribed to establishing, upholding and promoting the standards and tenets of good governance, transparency and accountability in the management of extractive industries.
Guyana is in the process of submitting its application to become a candidate of the EITI. Provided that the application is successful, Guyana can become a candidate before the end of the year.
After 18 months of becoming a candidate, Guyana would have to submit its first report about its laws, fiscal management, production data, money the Government receives, where the money goes, etc.
Guyana then has two and a half years to go through validation where an independent validator certifies that it meets the EITI standards, principles and requirements.
Once the country becomes a member, it will have to submit annual reports and be revalidated every three years.
With Guyana on the verge of becoming a major oil-producing nation, the EITI is intended to offer the country protection from the “resource curse” – a paradoxical situation where a country with massive resource wealth is pillaged and left for broke by bad management and predatory colonial practices.
This curse occurs when the Government which received wealth earned from the extractive industries frequently and deliberately hide or mismanage those funds. This phenomenon fuels suspicions that funds could easily be stolen or squandered rather than being used wisely for public benefit.
Guyana’s membership to the EITI will result in an improved investment climate, and signal to international investors that the Government has a clear commitment to transparency and good governance, and strengthened accountability vis-à-vis the Guyanese people.