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Read our op-ed: clear progress
We actively participate in the dialogue with international financial institutions and donor governments to help host governments become more transparent regarding financial information. Pictured here is Norwegian Foreign Affairs Minister Jonas Gahr Store, host of the 2006 EITI Summit in Oslo.
international transparency initiatives
Our involvement with transparency initiatives is an extension of our commitment to ethical behavior. Transparency initiatives are designed to increase disclosure of financial information and are fundamental to good governance. They can result in greater accountability by government leaders on how they spend their country´s revenues. This helps stabilize the investment climate of a country, which is critical for attracting the large-scale investments necessary for meeting the world´s growing energy demands.
Some of the challenges of improving transparency include building the institutional capacity and management systems needed to collect, account for, manage, and distribute resource revenues. This includes workable fiscal regimes, revenue modeling tools, accounting practices and standards, reporting guidelines and templates, and effective budget systems for public expenditures. International financial institutions such as the World Bank and International Monetary Fund are playing a prominent role in helping host governments develop the necessary tools to become more transparent.
Transparency initiatives should apply to all companies–publicly traded, private, and state-owned–that want to do business in a country. These initiatives must protect truly proprietary information, and disclosure requirements should not violate the laws of a host government or a company´s contractual obligations. Sovereign host governments have the right to set rules for the disclosure of taxes and other financial obligations paid to them by companies. Participation of sovereign host governments in greater disclosure of financial information is enhanced through government-to-government dialogue with the assistance of international financial institutions. ExxonMobil has been actively involved in this dialogue and is ready to further this process among governments and international financial institutions.
Extractive Industries Transparency Initiative. The Extractive Industries Transparency Initiative (EITI) has been at the forefront of encouraging governments to disclose the revenue they receive from oil, gas, and mining operations. We constructively participate in transparency and other anticorruption programs, and offer our assistance to countries seeking to implement greater transparency. We support initiatives such as EITI and the Group of Eight (G-8) transparency agenda because they support our commitment to sound corporate governance and high ethical standards wherever we conduct business. ExxonMobil has played a key role in assisting countries such as Azerbaijan, Kazakhstan, and Nigeria in their efforts to implement EITI. We have also offered our support to the government of Equatorial Guinea as it considers how best to implement EITI. We have engaged in dialogue with the Angolan government to encourage them to move toward more open and transparent processes in managing their oil and gas interests.
As a result of our involvement with EITI since 2002, we have engaged with multiple interested parties who have also been involved in this process. Our ongoing support for transparency in general, and EITI in particular, is both encouraged and acknowledged in our engagement with external audiences. It is one of the most prominent issues raised in our dialogue sessions with nongovernmental organizations (NGOs) and other opinion leaders around the world. In 2006, we participated in various dialogues on transparency and ethical behavior, including World Bank workshops, discussions sponsored by the Royal Institute for International Affairs (also known as Chatham House) in London, and the delivery of a keynote address at the EITI Summit in Oslo. Given the breadth and depth of our experience with EITI and commitment to support its implementation, ExxonMobil was elected to the EITI Board in 2006 to help represent other international oil companies.
Chad Revenue Management Plan. In 1999, the government of Chad and the World Bank put in place an unprecedented Revenue Management Plan (RMP) for the allocation of oil royalties. A key element was for 72 percent of the oil royalties to be allocated to priority poverty reduction sectors of education, health, infrastructure, and agriculture. The plan includes monitoring of revenues and decisions on projects to be funded, which is done by the College of Monitoring and Surveillance–a commission of Chadian citizens, including representatives from the National Assembly, the judiciary, civil society, the religious community, and labor.
Throughout the life of this project, the consortium of energy companies involved has issued regular update reports on the social, economic, and environmental performance of the project in Chad and Cameroon. These reports are distributed to interested parties semiannually and are posted on the project Web site.
In late 2005, Chad announced its intent to change the RMP to address significant financial difficulties, and the challenges to security and territorial administration arising from the Darfur refugee crisis. After six months of discussion, the World Bank and government of Chad agreed on a new protocol for managing Chad´s petroleum revenues. Specifics of this protocol are provided in Project Update Report #20 available on the project Web site.
As indicated in Project Update Report #21, Chad´s revenue from the oil project reached and surpassed a major milestone in 2006, generating $1.3 billion in total revenue since the project began. This exceeded original project expectations due to higher-than-forecasted crude oil prices and included the payment of the first consortium income tax.
This revenue is being put to use in constructive ways in the priority sectors as illustrated by the following examples:
• In the town of Bébédjia, construction of one of the largest town markets in all of Chad was nearly completed in 2006;
• In the town of Moundou, the first three buildings of the 14-building campus of the Institut Universitaire des Techniques d´Entreprise de Moundou, the local technical university, were constructed; and,
• Construction of a new higher-education school complex in Doba was completed; water towers providing chlorinated potable water for the town were provided as part of the school project.
As prescribed in the project plan, a land use study was performed to monitor the impact of the project on the surrounding communities. The study determined that the affected villages in the oil field development area "…are materially and significantly better off than the control groups who were not affected." The study went on to say that the "socioeconomic index shows that individual compensation has been very effective in restoring (and in most cases enhancing) project-affected households´ standard of housing, and ownership of certain household goods and productive assets, as well as in increasing their utilization of community services."
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