The Department of Environment and Natural Resources (DENR) is hoping for a more transparent and fair mining sector following a presidential directive creating the Philippine Extractive Industries Transparency Initiative (PH-EITI).
“We expect extractive companies to be as open, fair and uphold best practices in the country just as they do in other places,” Environment Secretary Ramon Paje said in a statement.
Paje said that Executive Order (EO) 147 issued by President Benigno Aquino 3rd has opened very wide avenues for the mining sector to prove that mining can promote genuine development of developing countries possessing mineral wealth like the Philippines.
EO 147 is a requisite to complete the EITI process to make the Philippines a “compliant country” in the international undertaking to bring about transparency and accountability in the extractive industries and in government.
The DENR chief said the presidential fiat was also among the reforms being introduced by the Aquino administration to ensure that the mining sector revenues are utilized in the most efficient and effective manner with accountability being the guiding principle.
EITI is a global standard for transparency in the mining sector that involves the reconciliation of company payments with government receipts by an independent administrator and disclosure of that information to the public. The process is managed by the government with the active involvement of partners from industry and wider society.
Under EITI, all companies engaged in a country’s mineral sector report what they have paid to the government, and then the government reports what it has received. The reports from the companies and the government are compared by an independent auditor and make up what is called the country’s “EITI report.”
Initiated in 2002 by then-British Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg, South Africa, EITI is recognized as a useful tool for resource-rich countries like the Philippines to better manage their natural resources and ensure that the extractive industries make positive contributions to the improvement of economies of host communities during the development process.
There are currently 25 EITI-compliant countries in the world and 16 EITI candidate countries, or those that are working to reach compliant status like the Philippines.
Paje said the country’s EITI application has been in the works since 2005, but it was only accepted as a candidate country last June or a year after President Aquino issued EO 79, which lays down the roadmap on mining sector reforms, including guidelines on environmental protection and responsible mining.
EO 79 seeks to balance important concerns on mining development in reinforcing environmental protection measures, promoting responsible mining, providing a more equitable revenue-sharing scheme and providing coordinative mechanisms among stakeholders including local governments.
“Having a mining policy that mandates proper disclosure of mining revenues is the first step to becoming EITI compliant. This helps in the creation of a multi-sectoral group, the center of EITI processes, before the country vies for EITI compliance,” he said.
Based on EO 147, the PH-EITI will be implemented and operational through a multi-stakeholder group (MSG) and decision-making body referred as PH-EITI-MSG, which will be headed by the Department of Finance secretary and will have, as members, the following: five government representatives chosen by the Mining Industry Coordinating Council, five business group representatives and five Civil Society Organization representatives. All members will serve for a term of three years.
The PH-EITI-MSG is tasked, among others, to ensure commitment of all stakeholders to the PH-EITI, set and define strategic direction and scope required to effectively implement the EITI in the Philippines, produce regular reports with contextual information about the extractive industries, and ensure that the PH-EITI is effectively integrated in the reform process outlined under EO 79, which provides the guidelines to warrant environmental protection and responsible mining in the country.
EO 147 also necessitates the creation of the PH-EITI secretariat as well as directs all other government agencies and government-owned and -controlled corporations to assist the multi-stakeholder group and decision-making body in carrying out its mandate and functions.