DRC's Request for EITI Compliance Review

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DRC's Request for EITI Compliance Review Kinshasa, April 11, 2014 Attn: Mr. Jonas Moberg Head of EITI International Secretariat Ruseløkkveien 26, 0251 Oslo, Norway DRC’s Request for EITI Compliance Review ______________________________________________ Dear Sir, I refer to the letter of April 23, 2013 of Mrs. Clare Short, EITI International Chairperson regarding the temporary suspension of the Democratic Republic of the Congo from EITI and hereby request from you to carry out a review of the DRC status and determine if the country has reached EITI Compliance. We dare believe, following the release of 2011 EITI-DRC Report within the indicated timeframe and the addendum of information to the same report, as provided in Requirement 1.6 of the EITI Norm, that the International Secretariat would undertake this review. You will find hereto attached the timeline adopted by the Multipartite Group as well as the list of documents to be submitted, which will arrive to you through D.H.L on the 15 April inst. Moreover, we consider it possible that the review for our country can be carried out within nine weeks instead of fifteen as is indicated in the related TORs. You may understand that our entire Nation is looking forward to this review and that therefore, coming to know earlier the Board’s conclusion is a wish of all. We would be grateful if you would let us know of any information you may require. Sincerely yours, For the Chairperson of the Executive Committee, Crispin Atama Tabe Mogoli Deputy Chairperson of EITI-DRC Executive Committee Minister of Hydrocarbons Certified copies: Matata Ponyo, Prime Minister Daniel Mukoko, Deputy Prime Minister, Minister of Budget Célestin Vunabandi, Minister of Planning, Chair of EITI-DRC Executive Committee Martin Kabwelulu, 1st Deputy Chair of EITI-DRC Executive Committee Bavon N’Sa Mputu Elima, Minister of Environment, Nature Conservation and Tourism, 2nd Deputy Chair of EITI-DRC Executive Committee Professor Jérémy Mack Dumba, EITI-DRC Country Coordinator DEMOCRATIC REPUBLIC OF THE CONGO Executive Committee of the Extractive Industries Transparency Initiative VALIDATION REPORT This Validation report has been translated from French Should any doubt arise, the French version prevails February 2013 © CAC 75 EITI Democratic Republic of the Congo ABSTRACT Since the Democratic Republic of the Congo joined the EITI in 2005, the implementation of the Initiative has undergone 3 distinct phases: - Phase I: a disrupted launch of the Initiative, with very limited progress (2005 – June 2009) - Phase II: a revival of the Initiative, with significant progress (July 2009 – December 2010) - Phase III: the reinforcement of the Initiative (January 2011 – December 2012) This last phase has enabled the National Initiative to reach a certain maturity, characterised by: - A clear political commitment, conveyed through key actions1 - The highly active involvement of civil society - A strengthened and continuous involvement of extractive companies - Regular activity of the Steering Committee, which now benefits from an enlarged Technical Secretariat2 and a provincial office in Katanga - Numerous awareness campaigns, training seminars and dissemination operations throughout the country, as well as devoted members of the National Assembly, the Senate and the Provincial Assemblies - The elaboration of the 3 new EITI reports covering the 2008-2010 period The last EITI report, reconciling payments and revenues for the year 2010, which we consider to be of high quality3, presents very limited discrepancies (< 1%) for the oil sector and reasonable discrepancies (< 5%) for the mining sector. Nevertheless, and despite important progress made in defining the scope of the EITI reports4, uncertainties remain regarding the evidence supporting its exhaustiveness, specifically in the absence: - For the oil sector, of the State-owned company COHYDRO - For the mining sector, of the provincial taxes, the revenues yielded by the disposal of assets for State-owned companies and the costs for services rendered This difficulty in defining the scope of the DRC most surely finds its source in the complexity of the mining sector, characterised by diverse levels of taxation (national and provincial), numerous collecting entities throughout the country, various types of fiscal regimes (common law coexists with manifold specific contracts and agreements), profuse taxes and fees and partial computerisation of the collecting State agencies. Thus, despite the meaningful efforts made by the Executive Committee, the significant progress made by the National Initiative, as presented above, and the qualitative reconciliation process for 2010, the uncertainties relative to the absence of some benefit streams and extractive companies impede us from confirming the exhaustiveness of the scope as well as that of the payments and revenues included in the 2010 EITI report (Requirements No.9, 14 and 15). On these bases, the EITI in the Democratic Republic of the Congo does not seem to be fully compliant with the EITI Rules, 2011 edition. 1 Regular involvement of the highest State authorities within the multi-stakeholder group, publication of various mining contracts, adoption of a decree bonding the extractive companies to participate in the EITI reconciliation processes, computerisation of 2 State agencies facilitating the production of qualitative data 2 Composed of 10 individuals 3 Use of appropriate reporting templates, of disaggregated data, declared on cash basis and according to the currency of payments and receipts 4 Notably through a study defining the scope of the EITI 2010, conducted previously the launch of the reconciliation process February 2013 © CAC 75 2 | Page EITI Democratic Republic of the Congo - 41, rue Guérin 77300 Fontainebleau - France Tél : +33 (0)1 64 22 22 70 Fax : +33 (0)1 64 22 49 20 [email protected] Mr. Minister of the Plan Chairman of the Executive Committee of the EITI Kinshasa DEMOCRATIC REPUBLIC OF THE CONGO Paris, February 27, 2013 PRESENTATION LETTER Mr. Chairman, Context The Extractive Industries Transparency Initiative (EITI) aims to improve the transparency of revenues yielded from extractive activities within countries rich in oil, gas and mining resources. The Democratic Republic of the Congo (DRC) joined the EITI in 2005 and is a candidate country since February 2008. Following the publication of the first Validation report in December 2010, the Democratic Republic of the Congo remained a candidate country "having made significant progress”. To assess the compliance of the country against the EITI Requirements, it was decided that the DRC was to provide an independent assessment of progress made in the implementation of the EITI Rules 2011 edition, to the EITI International Board before 1 March 2013. The period subject to this validation begins on the date the country joined the EITI, and ends on January 20135. As a certified validator from the EITI International Board, CAC 75 has been selected to conduct the Validation of the Initiative in the DRC, in accordance with the procedures agreed upon with you, and in compliance with the EITI Rules, 2011 edition. Work performed We commenced our work in December 2012, with the analysis of the documents supporting the EITI process in the DRC6. We have reviewed the 2011-2013 EITI work plan, the decrees, the minutes of meetings of the Executive Committee, the 2008-2009 EITI reports as well as 5 So as to enable the elaboration of the Validation report, its translation and its review by the EITI Validation Committee 6 The list of documents used is available in Appendix I February 2013 © CAC 75 3 | Page EITI Democratic Republic of the Congo the draft 2010 EITI report. We have also distributed the self-assessment forms to the extractive companies. Furthermore, we have conducted, from 7 January 2013, a series of interviews in Kinshasa and Lubumbashi, with representatives of the various stakeholders including Mr. Célestin Vunabandi Kanyamihigo, Minister of the Plan and Chairman of the Executive Committee, Mr. Albert Kabuya, representing the PCQVP coalition and also Mrs. Cyril Kamonda Litata, representing State-owned companies. The full list of interviewees is presented in Section 1.1. The draft Validation report was presented and discussed with the Executive Committee on 13 February 2013 in Kinshasa. The Validation report This Validation report has 5 sections and Appendices. The first part briefly presents the Validation process, the Congolese mining sector, the progress made by the EITI in the Democratic Republic of the Congo (the EITI-DRC), as well as the involvement of civil society and extractive companies in the national process. The second part is dedicated to the overall assessment of the EITI implementation in the DRC. The third part analyses in detail each of the Requirements of the EITI. The fourth part addresses the impact and sustainability of the EITI process in the DRC, as well as the prospects for the National Initiative. The fifth and final section offers recommendations to foster the development of the Initiative. The Appendices contain the list of references used in this Validation report, the 2011-2013 EITI work plan, the self-assessment forms completed by the extractive companies and the payment certificate. Judgment of the validator Based on the work performed, we believe that the EITI in the Democratic Republic of the Congo has achieved compliance for the following Requirements: Requirement No.1 Requirement No.6 Requirement No.12 Requirement No.2 Requirement No.7 Requirement No.13 Requirement No.3 Requirement No.8 Requirement No.16 Requirement No.4 Requirement No.10 Requirement No.17 Requirement No.5 Requirement No.11 Requirement No.18 We however consider that the EITI in the Democratic Republic of the Congo has not achieved compliance for the Requirements No.9, No.14 and No.15. Suggested recommendations Particular attention should be given to the progress made in some Requirements, for which recommendations are proposed in the final part of this report. Yours sincerely Hugues Renaux Partner February 2013 © CAC 75 4 | Page EITI Democratic Republic of the Congo 0. 1. SUMMARY ABSTRACT PRESENTATION LETTER 1.
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