TABLE OF CONTENT LIST OF ACRONYMS AND ABBREVIATIONS ............................................................................ 3 1. BACKGROUND ......................................................................................................... 4 1.1. EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI)........................................ 4 1.2. THE EITI IN THE REPUBLIC OF TAJIKISTAN ........................................................ 4 2. CONTEXT OF EXTRACTIVE INDUSTRY OF TAJIKISTAN ....................................................... 7 2.1. LEGAL AND FISCAL FRAMEWORK OF EXTRACTIVE INDUSTRY ........................................ 7 2.2. LICENSES AND CONTRACTS ...................................................................... 32 2.3. LICENCE REGISTERS ............................................................................. 38 2.4. INFORMATION ON CONTRACTS, AGREEMENTS AND CONCESSIONS ................................. 41 2.5. BENEFICIARY OWNERSHIP ....................................................................... 44 2.6. EXTRACTIVE INDUSTRIES REVIEW ................................................................. 49 2.7. CONTRIBUTION OF EXTRACTIVE INDUSTRY INTO COUNTRY ECONOMY .............................. 69 2.8. PRODUCTION (PRODUCTION VOLUMES) ........................................................... 82 2.9. EXPORTS OF PRODUCTS OF MINING SECTOR (EXPORTS VOLUME) .................................. 87 2.10. STATE PARTICIPATION IN EXTRACTIVE INDUSTRIES ................................................ 91 2.11. QUASI-FISCAL EXPENDITURES OF STATE COMPANIES ............................................. 104 2.12. SOCIAL EXPENDITURES BY EXTRACTIVE COMPANIES ............................................... 106 2.13. DISTRIBUTION OF EXTRACTIVE INDUSTRY REVENUES .............................................. 113 2.14. REVENUE AND EXPENDITURE MANAGEMENT ...................................................... 115 3. REPORT ON ACTUAL PAYMENT RECONCILIATION ........................................... 124 3.1. DESCRIPTION OF ASSIGNMENT ................................................................... 124 3.1.1 PURPOSE OF THE ASSIGNMENT .................................................................. 124 3.1.2 SCOPE OF THE ASSIGNMENT ..................................................................... 124 3.1.3 DESCRIPTION OF APPROCACH AND DETAILED PROCEDURES FOR DATA VERIFICATION ............... 127 3.2. PAYMENT RECONCILIATION RESULTS ............................................................. 137 3.2.1 TOTAL AGGREGATE CASH FLOWS BY TYPE OF PAYMENTS ......................................... 137 3.2.2 UNRESOLVED DISCRAPENCIES AND NON-REPORTED COMPANIES ................................... 141 3.2.3 AGGREGATED CASH FLOWS ON TAX PAYMENTS ................................................... 151 3.2.4 AGGREGATED CASH FLOWS ON CUSTOM PAYMENTS .............................................. 155 3.2.5 THE AGGREGATE CASH FLOWS OF OTHER SUBSTANTIAL PAYMENTS ............................... 156 3.2.6 AGGREGATE CASH FLOWS FOR ADDITIONAL COSTS ............................................... 160 3.2.7 AGGREGATE CASH FLOWS BY TYPE OF COMPANIES’ ACTIVITY (OIL AND GAS AND MINING SECTOR) 163 3.2.8 AGGREGATED CASH FLOWS FOR INDIVIDUAL COMPANIES .......................................... 167 3.3. GENERAL COMMENTS ON UNCLARIFIED DISCREPANCIES ........................................... 174 3.3.1 GENERAL UNCLARIFIED DISCREPANCIES BY TYPE OF PAYMENTS ................................... 174 3.4. INFORMATION ON THE AUDIT OF COMPANIES’ FINANCIAL STATEMENTS ............................ 174 3.5. RECOMMENDATIONS ............................................................................. 179 3.5.1 IMPLEMENTATION OF RECOMMENDATIONS WHICH WERE GIVEN IN THE FIRST NATIONAL EITI REPORT FOR 2014. ......................................................................................... 179 Page | 2 LIST OF ACRONYMS AND ABBREVIATIONS EITI EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE LLC Limited liability company UE Unitary enterprise SUE State-owned Unitary Enterprise OJSC Open Joint Stock Company CJSC Close Joint Stock Company JV Joint Venture GDP Gross Domestic Product RT The Republic of Tajikistan GEA Geological and Economic Area t Tonne mln Million LoRT Law of the Republic of Tajikistan GoRT The Government of the Republic of Tajikistan TC Tax Code LC Labour Code FEZ Free Economic Zone VAT The value added tax PSA Production-sharing agreement MSG Multi-stakeholder group EITI IS International Secretariat of Extractive Industries Transparency Initiative FDI Foreign direct investments EI Extractive industry SC Subsidiary company MN of MO Majlisi Namoyandagon of Majlisi Oli Coalition of Coalition of civil society organizations of RT "Transparency for development" CSOs MoF Ministry of finance QFA Quasi-fiscal activities QFA Quasi-fiscal assessment Page | 3 1. Background 1.1. Extractive Industries Transparency Initiative (EITI) The EITI- is an international standard to assure transparency of revenues from extraction of natural resources. The Initiative allows to track exploration and extraction, as well as to standardize the revenues from this sector with the help of the Multi-stakeholder group. The EITI presents a comprehensive and at the same time flexible methodology that provides compliance with the international standard in all countries, implementing EITI. The board and EITI International secretariat controls the compliance with the methodology. But every country takes individual responsibility for its implementation. Briefly, the EITI is an international standard that aimed to assure transparency of revenues on local level. The EITI rules define the methodology that countries have to adhere to in order to meet the EITI requirements. The EITI is a coalition of government, extracting companies, civil society, investors and international organizations. It is reflected not only in the EITI processes on local and country levels, but at an international scale: The EITI Board has 20 members who present governments, companies, civil society organizations, and it is appointed every three years at the EITI Global Conference. 1.2. The EITI in the Republic of Tajikistan The EITI sign up process of the Republic of Tajikistan has been started in June 2011 after the EITI Global Conference. In August 2011, 21 civil society organizations signed the Memorandum of Understanding where they committed to join EITI, which resulted in establishment of a Coalition of civil society organizations of the Republic of Tajikistan "Transparency for development" (hereinafter - Coalition of SCOs). One of the main objectives of the SCOs coalition is to support implementation of the EITI standards on RT and active participation in realization of the Initiative. With the purpose of preparation of the country to sign up to the Initiative, an inter-agency working group (hereinafter IWA), representing relevant ministries, civil society organisations and companies, was established. The IWA has elaborated a set of documents, including the Candidature Application of the GoRT to sign up to EITI. With objectives to improve the management methods in extracting sectors, to develop investment climate in the country, to strengthen fighting corruption, to assure civil society participation to control flows of resource production revenues into the state budget, on the 31st of August 2012, the President of the Republic of Tajikistan, the Chairman of the Government of the Republic of Tajikistan, Mr. Emomali Rahmon signed a Governmental Provision No 449 "About signing up of the Republic of Tajikistan to the Extractive Industries Transparency Initiative". By this act RT expressed its commitments to join EITI and to follow the Standard. For the execution of the Provision of GoRT No 449 the EITI Council of RT was organized, involving Page | 4 representatives of state bodies, production companies and civil society organizations, interested in implementation of EITI. By the provision of the Minister of finance of RT no 100 dated 14 November 2013, the EITI Secretariat has been approved that functions as an executive body of the EITI Council of RT. By the provision the members of Secretariat are approved, including a national coordinator, a technical specialist and a PR specialist. The EITI Candidature Application of the Republic of Tajikistan was approved at the 22nd EITI Board Meeting on 26-27th of February 2013 in Oslo, the Kingdom of Norway. The first National EITI Report of Tajikistan (hereinafter National EITI Report) was issued in October 2015, it covered 14 extracting companies and their payments in 2014. In period of 2011-2014 a range of activities were implemented, aiming at strengthening stakeholders capacities by exchange of emerging international best practices in field of EITI, trainings and public awareness-raising campaigns were arranged. Three parties - Government, CSOs and companies - put efforts to make EITI information available to broader public, which is accessible on the following websites: - The website of the Ministry of finance of RT: www.minfin.tj - The website of the EITI Council of RT: www.eiti.tj - The website of SCOs Coalition of RT "Transparency for development": www.tfd.tj - The page in Facebook: www.facebook.com/eiti.tajikistan In October 2014, World Bank granted funds for support implementation of EITI in RT, actual disbursements taken place in May 2015. In frames of this grant, the Secretariat of the EITI Council of RT started its operations. Due to delay