6 AUGUST 2004
World Bank Backs More Transparency for Oil Revenues

While deciding to continue investing in oil, gas and mining ventures, against the advice of an internal report, the World Bank Board of Directors Aug. 3 said it would insist on greater transparency about the revenues from such projects (http://www.worldbank.org/ogmc/).

The Bank "will begin requiring disclosure of revenue figures for new major extractive industries projects immediately, and for all projects within two years," according to the Bank press release. "We believe increased transparency to be absolutely essential to improving poverty impact," stated Bank President John Wolfensohn in the same release.

The three-page release further noted, "The World Bank has endorsed the Extractive Industries Transparency Initiative and is actively engaged with several developing countries - Nigeria, Azerbaijan, and Kyrgyzstan - to develop a more systematic approach to disclosure of revenues from extractive industries." This is a reference to an ongoing multinational initiative championed by the United Kingdom and the G-8.

In another reference to the transparency agenda, the Bank announced that it "is committed to use explicit governance indicators - such as quality of fiscal management, transparency, and anti-corruption policies - in determining whether to engage in extractive industries projects and how such projects should be structured."

The Bank said further that "in project documents disclosed to the public, the Bank Group will describe its governance assessment of the project."

The Bank further pledged "to strengthen its procedures for local community participation with respect to extractive industries projects."

Essentially, the board accepted all of the transparency recommendations in the "Draft World Bank Group Management Response" that was before them, according to a Bank official. A final management response document is being prepared, as is a chairman's summary of the board discussion.

Later, a Bank official said, there may be guidelines issued to deal more specifically with the details of revenue disclosure.

U.S. Hints More Could Be Done on Transparency

A generally supportive statement issued by the U.S. Treasury Department discusses a number of additional transparency steps that might be taken.

The unusual two-page U.S. statement, issued slightly before the Bank's own announcement, says the Bank should ensure the establishment of mechanisms to monitor revenues "and to take appropriate (and timely) actions if the mechanism is not being fully implemented."

"In fact, we believe financial assistance should be predicated upon the government of a country where a project is located having in place, or committing to establish, a functioning system for revenues and expenditures." This should include independent auditing and public disclosure of the results, the U.S. statement asserts.

A Bank official said the Bank policy would not go into that level of specificity, noting that these types of controls are being stressed in the context of the EITI. Under the EITI, a handful of countries have volunteered to participate in a pilot program in which more information is disclosed.

"Furthermore, we would like there to be an ex ante presumption of disclosure of such documents as Host Government Agreements, Concession Agreements, and bidding documents, allowing for redaction of, or exceptions for, commercially proprietary information."

These disclosures, except for bidding documents in private sector projects, were recommended in the Draft World Bank Group Management Response, and apparently approved by the board, although they were not explicitly cited in the Bank's Aug. 3 summary announcement.

By Toby McIntosh

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