Upload
others
View
7
Download
0
Embed Size (px)
Citation preview
ExtractiveIndustriesTransparencyInitiative(EITI)
ValidationofMongolia
ReportoninitialdatacollectionandstakeholderconsultationbytheEITIInternationalSecretariat
3September2016
2ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Abbreviations
ADB AsianDevelopmentBankASM Artisanalandsmall-scaleminingBO BeneficialownershipBOM BankofMongoliaCBL ConsolidatedBudgetLawCIT CorporateIncomeTaxCSO CivilSocietyOrganisationEBRD EuropeanBankforReconstructionandDevelopmentEGPS ExtractivesGlobalProgrammaticSupportEITI ExtractiveIndustriesTransparencyInitiativeEITIM EITIMongoliaETT ErdenesTavanTolgoiFDI ForeigndirectinvestmentGDT GeneralDepartmentofTaxationGFS GovernmentFinanceStatisticsGLDF GeneralLocalDevelopmentFundGoM GovernmentofMongoliaGTL GeneralTaxLawIA IndependentAdministratorIFC InternationalFinanceCorporationIFRS InternationalFinancialReportingStandardMDTF Multi-DonorTrustFundMECC MongolianEnvironmentalCivilCouncilMNAO MongolianNationalAuditOfficeMNMA MongolianNationalMiningAssociationMNT MongolianTugrikMoF MinistryofFinanceMRAM MineralResourcesAuthorityofMongoliaMSG Multi-StakeholderGroupMSWG Multi-StakeholderWorkingGroupNC NationalCouncilNDC MongoliaNationalDataCentreNGO Non-GovernmentalOrganisationNRGI NaturalResourceGovernanceInstituteNSO NationalStatisticsOfficeOSF OpenSocietyForumOT OyuTolgoiPAM PetroleumAuthorityofMongoliaPEP PoliticallyExposedPersonPSA Production-SharingAgreementPSFML PublicSectorFinanceandManagementLawPWYP PublishWhatYouPaySOE State-OwnedEnterpriseSPC StatePropertyCommitteeSPIA StateProfessionalInspectionAgencyToR TermsofReferenceUBTZ UlaanbaatarRailwayMongolian-RussianJointVentureUSD UnitedStatesDollarVAT ValueAddedTax
3ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
TableofContents
Abbreviations.................................................................................................................................................2
ExecutiveSummary........................................................................................................................................5Overallconclusions....................................................................................................................................5Recommendations.....................................................................................................................................7
Introduction.................................................................................................................................................10Briefrecapofthesign-upphase..............................................................................................................10Objectivesforimplementationandoverallworkplanprogress...............................................................10HistoryofEITIReporting..........................................................................................................................11Summaryofengagementbygovernment,civilsocietyandindustry......................................................11Keyfeaturesoftheextractiveindustry....................................................................................................12Explanationofthevalidationprocess......................................................................................................13
PartI–MSGOversight.................................................................................................................................171. OversightbytheMSG......................................................................................................................171.1 Overview......................................................................................................................................171.2 Assessment...................................................................................................................................17GovernmentoversightoftheEITIprocess(#1.1).....................................................................................17CompanyengagementintheEITIprocess(#1.2).....................................................................................21CivilsocietyengagementintheEITIprocess(#1.3).................................................................................24MSGgovernanceandfunctioning(#1.4)..................................................................................................27Workplan(#1.5).......................................................................................................................................37
PartII–EITIDisclosures...............................................................................................................................422. Awardofcontractsandlicenses.......................................................................................................422.1 Overview......................................................................................................................................422.2 Assessment...................................................................................................................................42Legalframework(#2.1)............................................................................................................................42Licenseallocations(#2.2).........................................................................................................................43Licenseregisters(#2.3).............................................................................................................................45Contractdisclosure(#2.4)........................................................................................................................47Beneficialownershipdisclosure(#2.5).....................................................................................................49Stateparticipation(#2.6).........................................................................................................................513. Monitoringandproduction..............................................................................................................563.1 Overview......................................................................................................................................563.2 Assessment...................................................................................................................................56Overviewoftheextractivesector,includingexplorationactivities(#3.1)...............................................56Productiondata(#3.2).............................................................................................................................56Exportdata(#3.3).....................................................................................................................................574. Revenuecollection...........................................................................................................................594.1 Overview......................................................................................................................................594.2 Assessment...................................................................................................................................59Comprehensiveness(#4.1).......................................................................................................................59In-kindrevenues(#4.2)............................................................................................................................64Barterandinfrastructuretransactions(#4.3)..........................................................................................65
4ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Transportrevenues(#4.4)........................................................................................................................65TransactionsbetweenSOEsandgovernment(#4.5)...............................................................................66Subnationaldirectpayments(#4.6).........................................................................................................67Levelofdisaggregation(#4.7)..................................................................................................................68Datatimeliness(#4.8)..............................................................................................................................69Dataquality(#4.9)....................................................................................................................................705. Revenuemanagementanddistribution...........................................................................................815.1 Overview......................................................................................................................................815.2 Assessment...................................................................................................................................81Distributionofrevenues(#5.1)................................................................................................................81Subnationaltransfers(#5.2).....................................................................................................................81Additionalinformationonrevenuemanagementandexpenditures(#5.3)............................................836. Socialandeconomicspending.........................................................................................................856.1 Overview......................................................................................................................................856.2 Assessment...................................................................................................................................85Socialexpenditures(#6.1)........................................................................................................................85SOEquasifiscalexpenditures(#6.2)........................................................................................................87Contributionoftheextractivesectortotheeconomy(#6.3)..................................................................89
PartIII–OutcomesandImpact....................................................................................................................927. OutcomesandImpact......................................................................................................................927.1 Publicdebate(#7.1).....................................................................................................................927.2 DataAccessibility(#7.2)...............................................................................................................977.3 LessonsLearnedandfollow-uponrecommendations(#7.3)....................................................1007.4 Outcomesandimpactofimplementation(#7.4).......................................................................1037.5 Impactanalysis(nottobeconsideredinassessingcompliancewiththeEITIprovisions).........106
Annexes......................................................................................................................................................108
AnnexA-ListofMSGmembersandcontactdetails.................................................................................108ListofNationalCouncilmembersandcontactdetails(asof11July2016)...........................................108ListofMSWGmembersandcontactdetails(asof11July2016)..........................................................110
AnnexB-Listofstakeholdersconsulted(96)............................................................................................114
AnnexC-Listofreferencedocuments......................................................................................................118
AnnexD-DetailsofMongolia’sEITIandValidationReports.....................................................................125
AnnexE–Resultsofthe2013-2015IndependentAdministratortenders................................................128
AnnexF–GeneralLocalDevelopmentFundtransfers,2013-H1-2016....................................................129
5ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
ExecutiveSummary
ThegovernmentofMongoliacommittedtoimplementtheEITIinJanuary2006byissuingGovernmentResolution1of2006ontheEITI.AMulti-StakeholderWorkingGroup(MSWG)wasformedin2006,andthecountrywasacceptedasanEITICandidateinSeptember2007.FollowingtheirfirstValidationtheEITIBoarddesignatedMongoliaEITICompliantinOctober2010,makingitthefourthcountrytobecomecompliantwiththeEITIRules.
On2June2016,theBoardagreedthatMongolia’sValidationunderthe2016EITIStandardwouldcommenceon1July2016.ThisreportpresentsthefindingsandinitialassessmentoftheInternationalSecretariat’sdatagatheringandstakeholderconsultations.TheInternationalSecretariathasfollowedtheValidationProcedures1andappliedtheValidationGuide2inassessingMongolia’sprogresswiththeEITIStandard.WhiletheassessmenthasnotyetbeenreviewedbytheMSWGorbeenqualityassured,theSecretariat’spreliminaryassessmentisthatrequirements2.2,2.3,2.5,2.6,4.5,4.6,4.9,5.2,6.1,6.2and7.4areunmet.Oneofthese(Requirement6.2)isassessedas“unmetwithlimitedprogress”.
Themajorareasofconcernrelatetodataqualityassuranceandcomprehensivenessofreportingbybothgovernmentandindustryaswellasstate-ownedenterprises,includingquasi-fiscalexpenditures,financialrelationswithgovernmentandthird-partyfinancing.Correctiveactionsforeachsub-requirementaresuggestedbelow.
Overallconclusions
MongoliahasbeenapioneerinEITIimplementation,bothintermsofbeingoneofthefirstcountriestoimplementtheEITIaswellasinexpandingthescopeofreportingtoincludealargenumberofcompanies.Mongolia’sEITIReportscoverindustrycontributionstoenvironmentalfundsandreportingbysubnationalgovernments.MongoliahasestablishedsubnationalEITIcouncilsandmadesignificantstridesinmakingEITIdatamoreaccessiblethroughanewonlinedataportal.
SincethecountrybecameanEITIcandidatein2007,thegovernmenthassupportedtheEITIthroughpublicstatements,enablinglegislationandfundingforEITIreportingsince2010.RepresentativesfromagenciessuchastheMineralResourcesAuthorityandGeneralDepartmentofTaxationhaveactivelycontributedtodrivetheworkoftheMongolia’smulti-stakeholderworkinggroup(MSWG),provideddataforEITIReportsandsupportedembeddingEITIreportingingovernmentsystems.
AnotherkeystrengthofEITIimplementationinMongoliahasbeentheextensionofEITIreportingtoissuesnotrequiredbytheEITIStandard,butthathavebeenconsideredmeaningfultolocalstakeholders.Evenbeforetheenactmentofthe2013EITIStandard,theMSWGhasincludedinformationoncompanies’socialexpendituresandcontributionstoenvironmentalrehabilitationfunds.Ithasalsoconductedworkonbeneficialownershipandcontractdisclosure.
TheMSWGhasgraduallybuilttrustamongstthethreestakeholdergroups,butitprovidesmoreofanoversightfunctionthanadriverofimplementation.ThislatterroleisfulfilledbytheEITIMongolia(EITIM)Secretariat,whichcoordinatestheworkofadhocworkinggroupsestablishedbytheMSWG.WhiletheseinformalworkinggroupsperformkeytaskslikefollowinguponEITIReportrecommendationsand 1https://beta.eiti.org/document/validation-procedures2https://beta.eiti.org/document/validation-guide
6ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
updatingreportingtemplates,thelackofformalmandatesandtheonlyrecentintroductionofrecordkeeping3placesahighdegreeofresponsibilityontheEITIMSecretariat.TheNationalCouncilprovideshigh-leveloversighttheMSWG,butitsfunctioninghasoftenbeenaffectedbyfrequentpoliticalchangeandpoorattendance.ItwouldnowseemtimelytorevisittheinstitutionalstructureofEITIimplementationinMongoliatoimproveformalMSWGoversightandreducetheburdenontheEITIMSecretariat.
MongoliapresentsacomplexcasefortheEITI,givenitsfrequentlychangingminingtaxes,thepresenceofover1500companiesofwhichover400areproducing,andtheimpactofasharpeconomicslowdownsincemid-2012.Withdiligentattentiontorecord-keeping,theMSWGhasextendedthescopeofreportingtoover1100companiesinrecentyearsandmovedtoanonlinereportingsystem(eReporting),evenifonlyafifthofthecompanieshavetheirdatareconciledwithgovernmentdatabytheIndependentAdministrator(IA).
Thisattentiontodetailedreconciliationhasnotalwaysbeenmatchedwithconsiderationofthenon-revenueinformationnowrequiredundertheEITIStandard.TheMSWGappearsnottohaveconsideredindepththefullscopeofcontextualinformationrequiredundertheEITIStandard,thoughsuchissuesasSOEs,ifproperlyaddressed,wouldlikelybeofgreatinteresttoawiderangeofstakeholders.ThemaingapsinEITIreportinghighlightedinthisreportrelatetothequalityofdataanddisclosuresaroundstate-ownedenterprises(SOEs).TheMSWG’sengagementindraftingtheEITIReportappearstohavebeenlimited,withlittlereferencetotherequirementsoftheEITIStandard.
GivenMongolia’shighdependencyonmining,thereisavibrantnationaldebateaboutsectormanagement,stateparticipationandthefutureprospectsforthesector.TheEITI’scontributiontothisdebatehasmainlybeenthroughdisseminationeventsandworkshops,inparticularatdistrict(soum)andprovince(aimag)levels.ThenumberofEITIreportingcompanieshassteadilyincreased,buttheMSWGhassoughttocaterthisoftenoverwhelmingamountofinformationtoparticulargroups.SummaryEITIReportsfor12soumsandfouraimagswereproducedforeachofthelasttwoEITIReports(covering2013and2014),andtheEITIMSecretariathasalsomappedcompanies’licensesonaninteractivedataportal,allowinguserstoquerycompanypaymentsbasedonlocation.Civilsocietyorganisationsparticipateactivelyinthepublicdebateabouttheminingsector.WhileearlyEITIReportsexposedsignificantdiscrepanciesandledtoprosecutionofcorrupttaxcollectors4,thelevelofnetdiscrepancieshassteadilydeclinedovertime–fromMNT4billion(USD3.52million5)in2006toMNT581million(USD322,0006)in2014.
Duringpublicoutreachandconsultationevents,thereisparticularpublicinterestindirectpaymentstolocalgovernments,licenseallocationsandprovisioningforenvironmentalrehabilitation.FollowingaGovernmentResolutionin2012,allaimagsandsoumshostingextractiveindustriesarerequiredtoestablishMSGsalthoughtherehasbeennostatutoryfundingallocatedforthesecouncils.ThesesubnationalEITIcouncils,whileonlyroughlydefinedandnotyetestablishedineverysoum,haveinmanycasesbecomevenuesfortripartitediscussionsontheuseofthesoum’srevenues.TheEITIhasprovideda
3Since2016,withminutesofmeetingsrecordedbutnotpublished.4http://ph-eiti.org/document/nw-day-1/Philippines-Manila-Mongolia-EITI-2006-2013.pdf5UsingtheUSD1:MNT1134averageexchangeratefor2006providedonoanda.com6UsingtheUSD1:MNT1802averageexchangeratefor2014providedonoanda.com
7ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
tripartiteplatformfordiscussionsanddebatesaboutminingsectormanagement.Thishasenabledthepublictoraiseconcernsinparticulararoundtheidentityoflicense-holdersandhowtheminingrevenuesarespentaswellasprovidingachanneloffeedbacktogovernmentrepresentatives.
Vibrantdebatesatthesubnationallevelhavenotbeenreplicatedatthenationallevel,inUlaanbaatar.ThereappeartobefewlinksbetweenEITIdiscussionsandpolicy-making,despitethemembershipofhigh-leveldecision-makersontheNationalCouncil.Equally,industryandcivilsocietyseemtohavefocusedonreconciliationofcompanypaymentsandgovernmentrevenues,ratherthanotheraspectsoftheEITIStandardrelevanttokeypublicpolicychallenges.WhileEITIimplementationinMongoliaisameaningfulprocessinacountrywhereextractiveindustrygovernanceisatopicofhighinterestamongstthegeneralpublic,ithasnotyetrealiseditsfullpotentialinsupportinganevidence-baseddebateonextractiveindustrygovernance.
Lookingahead,thereissignificantscopeforentrenchingEITIreportingingovernmentandcompanysystems.WhilethesecondphaseofMongolia’seReportingsystemismeanttoautomateinformationsystemsbetweenEITIandkeygovernmentdepartments(coveringtaxationandmininginparticular),theMSWGandstakeholders,especiallyfromgovernment,shouldfocusonopportunitiestoensuringrobustqualityassuranceprocedures.ThereisalsoscopeforindustrytoconsideropportunitiestointegrateassuranceofEITIdisclosuresintheroutineauditandpublicfinancialreporting.
Recommendations
WhilethefollowingreportincludesrecommendationsforspecificreformstheMSWGmaywishtoconsiderimplementing,thefollowingisalistofstrategicrecommendationsthatcouldhelpMongoliamakegreateruseoftheEITI.
1. ThecompositionandstructureoftheEITIgovernanceinstitutionsshouldberevisited,withconsiderationgiventoreducingthenumberofrepresentativesontheworking-levelbody,increasingthefrequencyofworking-levelmeetingsandimprovingreportingonthesediscussions(includingthoseofadhocworkinggroups).
2. ThethreestakeholdergroupsshouldconsiderwhatissuesintheextractivesectortheEITIcanhelpaddressandhow.TheobjectivesofEITIimplementationcouldthenbemoreclearlyarticulated,andtheworkplanrevisedtoaddresstheseobjectives.
3. OutreachandstakeholderconsultationmechanismsshouldbereviewedandformalisedtoimprovetherelevanceofMSWGdiscussionstonationaldebatesandkeydemandsofstakeholdersnotdirectlyparticipatingintheMSWG.
4. TheMSWGisurgedtoconsiderrevisitingthematerialitythresholdforpayments(Includingin-kindrevenues,transportrevenuesandbarterandinfrastructuretransactions)tostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSWGshouldagreewiththeNationalStatisticsOfficetheproceduresforupdatingreportingtemplatesinconjunctionwiththeIA,andmaketheseprocedurespublic.TheMSWGshouldalsoensurethattheIAincludesaclearassessmentofthecomprehensivenessofthenextEITIReport.
5. InpreparingthenextEITIReport,coveringFY2016,theMSWGandIndependentAdministrator(IA)shoulddeveloparobustandpragmaticapproachforaddressingthequalityassuranceofEITIdisclosuresfrombothgovernmentandcompanies.TheMSWGshouldworkwiththeMongolianNationalAuditOffice(MNAO),theStateProfessionalInspectionAgency(SPIA),theIAandindustry
8ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
MSWGmembersinparticulartoestablisharobustqualityassuranceframework.TheMSWGshouldconsiderprocuringitsnextIAearlierintheyeartoallowforsufficienttimetoconsidertheseissuesbeforedatacollection.
6. InpreparingthenextEITIReport,theMSWGshouldclarifythenumberofmining,oilandgaslicensesawardedandtransferredintheyearunderreview,highlightinganynon-trivialdeviationsfromstatutoryprocedures.TheMSWGshouldalsoensurethatthedatesofapplicationforalllicensesheldbymaterialcompaniesarepubliclyavailableaheadofpublicationofthenextEITIReport.Thegovernmentmaywishtoconsidermakingthisdatapartoftheonlinelicensesystem.
7. InpreparingthenextEITIReport,theMSWGshouldensurethegovernment’spolicyonbeneficialownershipisclearlystatedandincludeinformationonthelegalownership.
8. InpreparingthenextEITIReport,theMSWGshouldclarifythepracticesrelatedtoSOEs’retainedearningsandreinvestment,anychangesingovernmentownershipinSOEsortheirsubsidiariesduringtheyearunderreview,andprovideacomprehensiveaccountofanyloansorloanguaranteesextendedbythestateorSOEstomining,oilandgascompanies.TheMSWGshouldconsidertheexistenceofsubsidiesintheminingsectorandofotherquasi-fiscalexpendituresundertakenbySOEsintheextractiveindustries.
9. InpreparingthenextEITIReport,theMSWGshouldensurethattheIAprovidesanassessmentofcomprehensivenessandreliabilityofthe(financial)datapresented,includinganinformativesummaryoftheworkperformedbytheIndependentAdministratorandthelimitationsoftheassessmentprovided.
10. InpreparingthenextEITIReport,theMSWGshouldclarifythedistinctionbetweenSOEs’directsubnationalpaymentsandsubnationaltransferspriortodatacollection.TheMSWGshouldensurethattheReportincludestherevenuesharingformulausedtocalculatetransferstoindividualaimagsandsoums,tosupportanassessmentofdiscrepanciesbetweenbudgetedandexecutedsubnationaltransfers.
11. InpreparingthenextEITIReport,theMSWGshouldagreeacleardistinctionbetweenmandatoryandvoluntarysocialexpenditurespriortodatacollection.Itshouldalsoclarifythetreatmentofanynon-governmentalbeneficiariesofmandatorysocialexpendituresasreportingofin-kindmandatorysocialexpenditures.
12. GiventheprevalenceofsocialmediausersinMongolia,theMSWGcouldconsideralternativemeansofengagingalargersectionofthepopulationinitsdebates.MoreoutreachonlinethroughsocialnetworkingtoolscouldfacilitategreaterpublicparticipationinEITI-relateddebates,swifterdisseminationofEITIinformationandinputtokeyMSWGdocumentssuchastheworkplanandannualprogressreport.
13. Inpreparingthenextannualprogressreport,theMSWGshouldconductanassessmentoffollow-uponEITIrecommendationsandimpactofimplementationbasedonconsultationswithabroadrangeofstakeholders.
14. TheMSWGshouldconsiderwhethertotakeamoreactiveroleindevelopingrecommendationsfromEITIReports,andmonitoringimplementationoftheserecommendations.
15. TheMSWGisencouragedtofurtherentrenchextractivesectortransparencyingovernmentsystems,andtakestepstomovetowardsmorefrequentpublicationofEITIinformationonaroutinebasis.As
9ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
partofthesecondphaseoftheeReportingproject,theMSWGshouldconsiderundertakingastudytoidentifywhatinformationrequiredtobedisclosedundertheEITIStandardisalreadypubliclyavailableandwhatinformationisnotyetroutinelydisclosed.OpportunitiesforprovidingmoreEITIdatainopendataformatsshouldalsobeexplored.
Figure1–assessmentcard
10ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Introduction
Briefrecapofthesign-upphase
InOctober2005,ajointsessionofstandingcommitteesoftheStateGreatHural(theMongolianParliament)onthebudgetandeconomysupportedMongoliainsigninguptotheExtractiveIndustriesTransparencyInitiative(EITI),andinstructedtheGovernmentofMongolia(GoM)tojointheinitiative.TheGoMapprovedMongoliasigninguptotheEITIataCabinetmeetingon4January2006andissuedaresolutioninwhichtheGoMofficiallycommittedtoimplementtheEITIandsetoutthebasicinstitutionalframeworktodoso.ResolutionNo.1(2006)stipulatesthataNationalCouncilforEITIshouldbeestablishedastheoversightbodyfortheEITIandindicatesitscomposition.TheformerPrimeMinister,SanjaagiinBayar,alsomentionedtheEITIinvariousspeechesandinterviews,andResolutionNo.1hasbeenpublishedinvariousnewspapers.
ResolutionNo.1fromthePrimeMinister’sofficeindicatedthatcivilsocietyshouldberepresentedontheEITIMNationalCouncil.TheTermsofReferenceoftheNationalCouncilstatesthatthereshouldbe“equalrepresentationofGovernment,extractiveindustriesandcivilsociety”.Furthermore,theMemorandumofUnderstanding(MoU)betweentheGoM,companiesandcivilsocietyfirmlyestablishesthegovernment’scommitmenttocooperation,listingninesharedresponsibilitiesofallthreestakeholdergroupsinEITIimplementationandfourresponsibilitiesspecifictoeachstakeholdergroup(government,civilsocietyandcompanies).
Article4oftheTermsofReferenceoftheNationalCouncilstatesthattheChairmanoftheNationalCouncilshallbethePrimeMinisterofMongolia.TheSeniorAdvisorofthePrimeMinister,Mr.B.Erdenesuren,wasappointedastheSecretaryoftheNationalCouncil.Article10oftheMoUalsoestablishesanindependentsecretariattosupportEITIimplementationandtheMSWG.TheSecretariatwasestablishedin2007.AcostedworkplanwithmeasurabletargetsandatimetableforimplementationwassubmittedandapprovedattheNationalCouncilmeetingon30January2008.Theworkplanwasplacedonthewebsitesofsixorganisations,includingministries,agenciesandNGOs.
Objectivesforimplementationandoverallworkplanprogress
Thefourobjectivesofthe2016workplan7arealignedwiththeEITIRequirements,whilethoseofthe20158and20149workplanswereidenticaltothesevenEITIRequirements.The2016objectivesalsoappeartobealignedwithnationalpriorities,includingintegratingextractiveindustryinformationacrossgovernmententities,contributingtonationaldebateandimprovingtrustbetweenstakeholders.ItincludesactivitiesaimedataddressingspecificcapacityconstraintsidentifiedintheEITIReportsandotherassessments,suchastheMongolia’sNovember2015pilotValidationandtheMonitoringReportontheImplementationofEITIRecommendations.10Thisincludestrainingactivitiesforvariousstakeholders,auditingofgovernmentEITIdisclosuresandintegratingtheEITIdataportalwithothergovernment
7EITIMongolia2016workplan,http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf8EITIMongolia2015workplan,http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf9EITIMongolia2014workplan,http://www.eitimongolia.mn/sites/default/files/uploads/en/EITIM_POA_2014en.pdf10Unpublished,providedbytheEITIMSecretariat.
11ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
databases.11The2016workplanalsocontainsactivitiesrelatedtothescopeofEITIreporting,includingexpandingthenumberofreportingcompanies,auditinggovernmentEITIdisclosures,sourcingdatesofapplicationformininglicensesandundertakingstudiesofstate-ownedenterprisesintheextractiveindustries.Section10.2ofthe2016workplanfocusesonenactingthedraftLawonTransparencyintheMineralResourcesSector,whichaimstoovercomeregulatoryobstaclestofullEITIreporting.
The2013,2014,2015and2016workplansincludecleartimeframesforcompletionofeachactivity.In2013,theNationalSecretariatreportedthat33ofthe42activitiesplanned(80%ofthetotal)werecompleted,withthemainactivitiesnotcompletedbeingthepassageofthedraft“EITILaw”andthedevelopmentoftelevisionserials.12In2014,theNationalSecretariatreportedthat42ofthe65plannedactivities(65%ofthetotal)werecompleted,withthemainshortfallsbeingenactmentofthedraft“EITILaw”,theorganisationofregionalconferencesandthebroadcastingoftelevisionprogrammes.13In2015,47ofthe50activitiesplannedinthe2015workplanwerecompleted.14TheactivitiesnotyetcompletedincludedValidationundertheEITIStandard,activitiesplannedtofollowtheenactmentofthedraft“EITILaw”anddiscussionsofdonationsandinvestments.
HistoryofEITIReporting
MongoliahasproducednineEITIreportscoveringthefiscalyears2006-2014andiscurrentlypreparingits10threportcoveringfiscalyear2015.Whilethe2006EITIReportcovereddatafrom35miningcompanies,1198oil,gas,coalandminingcompaniesreportedinFY2013.Between2008and2011,MongoliaproducedEITIReportswithatwo-yearlag(e.g.2009EITIReportin2011).However,in2012theMSWGproducedtwoEITIReports,covering2010and2011,andhassinceproducedEITIReportswithaone-yeartimelag(the2014EITIReportwaspublishedinDecember2015).AdditionaldetailonthesereportsisprovidedinAnnexD.
TheoriginalfourEITIreportingtemplateswereendorsedbyjointorderoftheChairmanoftheNationalStatisticalCommitteeandtheMinisterofFinanceinApril2007,reviewedinMarch2008andsubsequentlyupdatedandexpandedtoseventemplatesinJanuary2011,andagainrevisedinJanuary2014andDecember2015inordertocoverallmaterialpaymentsandrevenuesfromtheextractiveindustriesinMongolia.
Summaryofengagementbygovernment,civilsocietyandindustry
ThecurrentMSWGandNationalCounciloperateunderTermsofReferencethatwereinitiallyapprovedinMay2006,andwhichhavesubsequentlybeenupdated(lastversionisdated28November201215).MembersoftheMSWGmeettwotothreetimesannuallyandthoseoftheNationalCouncilmeetoncea
15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)
12ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
year.MinutesofthesemeetingsarepublishedontheEITIMongolia(EITIM)website.TheMSWGhasconstitutedseveraladhocworkinggroups,althoughthesedonothaveTermsofReferenceandminutesoftheirmeetingsarenotpublished.AlistofcurrentMSWGandNationalCouncilmembersisincludedinAnnexA.16
TheearlystagesoftheEITIinMongoliawerecharacterisedbymomentumandinclusiveness.Morerecently,particularlysince2012,attendancebydesignatedMSWGandNationalCouncilmembershasbeenlessconsistent.Inparticular,civilsocietyandgovernmentrepresentativeshavetendedtodesignatealternatestoattendmeetings,withlittleconsistencyintheadhocnominationofalternates.FrequentpoliticalchangehasalsoimpactedtheholdingofNationalCouncilmeetings:successivePrimeMinistersandMinistersofFinancehavenotattendedaNationalCouncilmeetingsince2011.TheNationalCouncildidnotmeetin2014(althoughitmadeupforthisbymeetingtwicein2015)becausetheChairoftheMSWGwasleftvacantforsixmonths.Nonethelessthemaingovernmentagencies,(mostlylarge)companies,andcivilsocietygroupsworkingonextractiveissuesareengagedintheworkofEITIM.
Keyfeaturesoftheextractiveindustry
AccordingtotheWorldBank17,Mongoliahostsover6000depositsofroughly80minerals.Thisincludestheworld’ssecondlargestcopperreservesandfourth-largestcoaldeposits.Mongoliaalsoholdslargereservesofgold,ironore,zinc,uranium,fluorsparandoil.Thecountryremainsunder-exploredwithonly400depositsdefined,ofwhich160areinproduction.Theminingsectorisamajorcontributortothenationaleconomy:in2014itrepresented17.1%ofGDP,25.8%ofbudgetrevenueand89%ofexportearnings.19Majorexportsincludecopper,gold,molybdenum,coal,ironore,fluorsparconcentratesandcrudeoil.
Burgeoningcoking-coalexportstoChinafrom2009exposedMongoliatovolatilecommoditypricesatthesuper-cycle’speak.CopperhadlongbeenMongolia’smainexport,withtheRusso-MongolianErdenetcopper-mineopenedin1974accountingforroughly40%ofGDPuntil2006.Whileoutputofthermalcoalfrompart-state-ownedminesatBaganuurandShiveeOvoosupplyfourmajorpowerplants,andover100,000informal‘ninja’(informalsmall-scale)minerssupplylow-incomeger-dwellers,fromthemid-2000sMongolianminerslikeMongolynAlt(MAK)andMCSstartedexportingunprocessedcokingcoaltoChina,andironorefollowedin2009.Copperexportsslippedtosecondplaceasoutput,mainlyfromtheageingErdenetmine,declinedslightlyto517,000tonsin2012whilegoldproductiondeclinedto5703kgbetween2009and2011,constrainedbylawsbanningalluvialanddecliningoutputatthesolematuringBoroomine.
Coalproductiontripledfrom2008to2011,withmostexportedtoChina.This,combinedwiththeUSD6.2billiondevelopmentoftheRioTinto-backedOyuTolgoicopperandgoldminefrom2009,droveworld-leadingeconomicgrowthto17.3%in2011and12.3%in2012.Newlawsdeemedtobeanti-foreigndirect
17Seefootnote34(p.20)inWorldBank(November2007),GrowthDiagnosticsforaResource-RichTransitionEconomy:TheCaseofMongolia-http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1206974166266/4833916-1206974192224/IanchovichinaGooptuwps4396.pdf17Seefootnote34(p.20)inWorldBank(November2007),GrowthDiagnosticsforaResource-RichTransitionEconomy:TheCaseofMongolia-http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1206974166266/4833916-1206974192224/IanchovichinaGooptuwps4396.pdf19Mongolia2014EITIReport.
13ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
investment(FDI)inMay2012coincidedwithcrashingcommoditypricesandslowingChinesedemand,leadingfallingFDIandslowinggrowth.MongoliahassentmixedmessagesovercoalminingpolicyinitstreatmentofthemassiveTavanTolgoideposit,oneoftheworld’slastuntappedcoalreserveswith7.42bntonsofcoaland1.4bntonsofcokingcoalaccordingtostate-ownedErdenesTavanTolgoi(ETT).Attheheightofcoking-coalexportstoChinain2011-2012thegovernmentmadekeypolicyreversalsthatrattledinvestorsentiment.Inlate2011itcancelledtherecentconcessiontodeveloptheWestTsankhipartofTT,awardedtoaconsortiumoftheUS’sPeabody,ShenhuaandRussianRailways,followingJapaneseandKoreancriticismsatbeingexcluded.Thishasleftthestate-ownedETTasthesoleoperatoronmostofEastandWestTsankhiusingcontract-miners.Farlessinfrastructure-constrainedexportsofcopperaregrowingroughly30%annually,asOTovertakesErdenet’straditionaldominance.Explorationactivityismostlyfocussedoncopperlicenses.Despitedepressedprices,exportsofmetallurgicalmineralslikeironoretoChinahavesurged.
Thegovernmentsustainedgrowththroughgovernmentspendingbutwithonly2.3%GDPgrowthandtightbudgetconstraintsin2015(andlessthan1%GDPgrowthin2016)20,Mongolia’seconomyfacesstrongheadwinds.InJanuary2014,theStatePolicyonMiningwasagreed,aswerecertainamendmentstotheMineralsLawandtothePetroleumLawinJune-July2014.Theseregulationsfocuson,forexample,awardinglicencesandenvironmentalaspectsofmining.IntheJanuary2014amendmenttothe2006MineralsLawParliamentreplacedthe5%royaltyongoldandtheslidingscaleof0%-5%surtaxdependingonpriceswithaflat2.5%-royaltyongoldsoldtoBankofMongolia(BOM),inabidtobolsterreserves.LegislativeelectionsinJune2016broughtalandslidevictoryfortheMongolianPeople’sParty(MPP)(formerMongolianPeople’sRevolutionaryParty),whohadheldpoweruntil2012.21
Explanationofthevalidationprocess
TheEITIInternationalBoardagreedatits33rdBoardmeetinginOslo,Norwaythatfifteencountries,includingMongoliawillundergoValidationsstarting1July2016.
1.ValidationisanessentialfeatureoftheEITIprocess.ItisintendedtoprovideallstakeholderswithanimpartialassessmentofwhetherEITIimplementationinacountryisconsistentwiththeprovisionsoftheEITIStandard.TheValidationreportwill,inaddition,addresstheimpactoftheEITIinthecountrybeingvalidated,theimplementationofactivitiesencouragedbytheEITIStandard,lessonslearntinEITIimplementation,aswellasanyconcernsstakeholdershaveexpressedandrecommendationsforfutureimplementationoftheEITI.
TheValidationprocessisoutlinedinchapter4oftheEITIStandard22.Validation
2.Validationprocedure.InFebruary2016theEITIBoardapprovedarevisedValidationsystem.Thenewsystemhasthreephases:
1. DatacollectionundertakenbytheInternationalSecretariat
2. IndependentqualityassurancebyanindependentValidatorwhoreportsdirectlytheEITIBoard
20http://www.adb.org/countries/mongolia/economy21FT(30June2016),“Mongoliaoppositionscoreslandslideelectionvictory”,http://www.ft.com/cms/s/0/fc03c8c8-3e66-11e6-8716-a4a71e8140b0.html#axzz4DRX5OA7M22Seealsohttps://eiti.org/validation
14ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
3. Boardreview.
InMay2016,theBoardagreedtheValidationGuide,whichprovidesdetailedguidanceonassessingEITIRequirements.TheBoardalsoestablisheddetailedValidationprocedures,includingastandardisedprocedurefordatacollectionandstakeholderconsultationbytheEITIInternationalSecretariatandstandardisedtermsofreferencefortheValidator.Aspreviously,thereareextensiveopportunitiesforstakeholderparticipation,assetoutbelow.
TheValidationGuideincludesaprovisionthat:“WheretheMSGwishesthatValidationpaysparticularattentiontoassessingcertainobjectivesoractivitiesinaccordancewiththeMSGworkplan,theseshouldbeoutlinedupontherequestoftheMSG”.TheEITIMMSWGrequestedthatparticularconsiderationbegiventoitsworkoneReportingandsubnationalimplementation.
3.DatacollectionbytheInternationalSecretariat.InaccordancewiththeValidationprocedures,InternationalSecretariat’sworkwasconductedinthreephases:
1.DeskReview.Intheperiod4to17June2016andinearlyJulytheSecretariatconductedadetaileddeskreviewoftheavailabledocumentationrelatingtothecountry’scompliancewiththeEITIStandard,including:
• TheEITIworkplanandotherplanningdocumentssuchasbudgetsandcommunicationplans;
• Themulti-stakeholdergroup’sTermsofReference,andminutesfrommulti-stakeholdergroupmeetings;
• EITIReports,andsupplementaryinformationsuchassummaryreportsandscopingstudies;
• Communicationmaterials;
• Annualprogressreports;and
• OtherinformationofrelevancetoEITIimplementationandValidation.
Thisworkincludedinitialconsultationswithstakeholders,whowereinvitedtosubmitanydocumentationtheyconsideredrelevant.InaccordancewiththeValidationprocedures,theSecretariatdidnottakeintoaccountanyactionsundertakenafterthecommencementofValidationon1July2016.
2.Countryvisit.Thecountryvisittookplacefrom6-8July2016.ThevisitcoincidedwiththeAsiaEuropePeople’sForum23,theCSOmeetingaheadofthe11thAsia-EuropeMeeting(ASEM)on15-16July2016inUlaanbaatar.24Whilethisaffecteddevelopmentpartners’abilitytoparticipateinstakeholderconsultationsinperson,itwasalsoanopportunitytoengagewithabroaderrangeofMongoliancivilsocietyorganisations.Thevisitalsofollowedthelegislativeelectionson29June2016.AllmeetingstookplaceinUlaanbaatar.Thesecretariatmetwiththemulti-stakeholdergroupanditsmembers,theIndependentAdministratorandotherkeystakeholders,includingstakeholdergroupsthatarerepresentedon,butnotdirectlyparticipatingin,themulti-
23http://www.aepf.info/24http://www.aseminfoboard.org/events/11th-asem-summit-asem11
15ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
stakeholdergroup.
InadditiontomeetingwiththeMSGasagroup,theSecretariatmetwithitsconstituentmembers(government,companiesandcivilsociety)eitherindividuallyorinconstituencygroups,withappropriateprotocolstoensurethatstakeholderswereabletofreelyexpresstheirviews.Requestsforconfidentiallyhavebeenrespected.
ThelistofstakeholderstoconsultwaspreparedbyEITIM,withinputsandsuggestionsfromtheInternationalSecretariat.TheInternationalSecretariatattemptedtomeetwithallrelevantstakeholders,howeversomegovernmentandcompanyrepresentativeswhoaremembersoftheEITIMMSWGdidnotattendthemeetings.Inaddition,theInternationalSecretariat’srequesttomeetwiththeEITIChampionwasnotgranted.Nevertheless,theInternationalSecretariat’sviewisthatthereportcoversviewsofthekeystakeholdersengagedintheEITIprocess.
Atranslator,MrsNurgulAldanish26,wasengagedforthevisitinJuly.TheuseoftranslatorsappearstohavebeenapprovedbyallthreestakeholdergroupsrepresentedontheNationalCouncilandMSWG.
3.Reportingonprogressagainstrequirements.Basedontheseconsultations,theInternationalSecretariathaspreparedthisreport-makinganinitialevaluationofprogressagainstrequirementsinaccordancewiththeValidationGuide.InaccordancewiththeValidationproceduresthereportwilldoesnotincludeanoverallassessmentofcompliance.Thereportwillbemadeavailabletomulti-stakeholdergroupforcommentpriortoqualityassurancebytheIndependentValidator.
TheInternationalSecretariat’steamcomprised:SamBartlett,DyvekeRogan,TatianaSedovaandAlexGordy.
4.IndependentValidation.InaccordancewiththeEITIStandard,theEITIBoardwillappointaValidator27,whowillreporttotheBoardviatheValidationCommittee.TheValidatorwillassesswhethertheSecretariat'sinitialdatagatheringhasbeencarriedoutinaccordancewiththeValidationGuide.Thiswillinclude:adetaileddeskreviewoftherelevantdocumentationforeachrequirementandtheSecretariat’sinitialevaluationforeachrequirement,andarisk-basedapproachforspotchecks,andfurtherconsultationswithstakeholders.TheBoardmayrequestthattheValidatorundertakespotchecksonspecificrequirements.TheValidatorwillamendorcommentontheSecretariat’sreportasneeded.TheValidatorthenpreparesashortsummary(theValidationReport)forsubmissiontotheBoard.ThiswillincludetheValidator’sassessmentofcompliancewitheachprovision,butnotanoverallassessmentofcompliance.Themulti-stakeholdergroupwillbeinvitedtocommentontheValidationReport.
5.BoardReviewanddecision.ThefinalstageintheprocessisthereviewbytheEITIBoard.TheValidationCommitteewillreviewtheValidator’sassessmentandanyfeedbackfromthemulti-stakeholdergroup.TheValidationCommitteewillthenmakearecommendationtotheEITIBoardonthecountry’scompliancewiththeEITIRequirements.TheEITIBoardwillmakethefinaldeterminationofwhethertherequirementsaremetorunmet,andonthecountry’soverallcomplianceinaccordancewithprovision8.3.a.iioftheEITIStandard.Thereisanappealprocess,asperrequirement8.8.
26Contactdetails:M:+97699187463,E:[email protected],theprocurementprocesswasongoing,seehttps://eiti.org/node/7118
16ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
17ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
PartI–MSGOversight
1. OversightbytheMSG
1.1 Overview
ThissectionrelatestogovernmentoversightoftheEITIprocess,stakeholderengagementandtheenvironmentforimplementationofEITIincountry,thegovernanceandfunctioningofthemulti-stakeholdergroup(MSG),andtheEITIworkplan.
1.2 Assessment
GovernmentoversightoftheEITIprocess(#1.1)
Documentationofprogress
Mongoliawasoneofthefirst15countriestobeacceptedasEITICandidatesatthe3rdEITIBoardmeetinginOsloon27September2007.32TheGovernmentofMongoliahasbeensupportiveofEITIsinceitannounceditsintentiontoimplementtheEITIinResolution1on3January2006.ThegovernmenthaspubliclyreiterateditscommitmenttoimplementtheEITIonseveraloccasions,mostrecentlyattheEITINationalForumon3November2015whenMinisterofMiningRentsendooJigjidstated:“MongoliaiscommittedtotheEITIasitisimportanttoensuringthesustainabilityofthesectorandattractinginvestment.”33ThePrimeMinisterofMongolia,HEChinediinSaikhanbileg,wroteintheNationalForumbrochure:“MongoliahasrecognisedtheEITI’svalueandbenefits,andgovernmenthasdraftedalaw,withfulllegalmandates,whichwassubmittedtotheStateGreatKhural.”34ThenewSpeakeroftheGreatKhural(Parliament)appointedon8July2016,MiyegombynEnkhbold(whoisalsoChairmanoftheMPP35),chairedtheEITIMNationalCouncilin2006-2007whenhewasPrimeMinisterandisseenasakeysupporterofEITI,particularlybycivilsociety.
TheMemorandumofTripartitecooperationforEITIinMongolia,signedon25April2006,providesguidelinesforallstakeholderstocooperatefortheimplementationofEITIinMongolia.36In2006thePrimeMinisterofMongolia,MiyeegombynEnkhboldatthetime,wasappointedChairoftheEITINationalCouncilandoverallleadofEITIimplementation.HistwodeputychairsontheNationalCouncilaretheMinisterofFinanceandtheMinisterofMining,whilethesenioradvisortothePrimeMinister,D.Batbayar,wasnamedsecretaryoftheNationalCouncilandchairoftheMSWG.
SeniorgovernmentofficialsarerepresentedontheNationalCouncil,ahigh-levelsteeringgroupinchargeofoverallgovernanceoftheEITIprocess,andontheMSWG,aconsultativebodyinchargeof
32https://eiti.org/node/717133TheminutesoftheEITIMNationalForum,3November2015,http://www.eitimongolia.mn/en/node/4879.34SeebrochureforEITIMNationalForum,3November2015.35LeeCashell(6July2016),‘Mongolia’selection–aprotestvoteforgood’,http://blogs.ft.com/beyond-brics/2016/07/06/mongolias-election-a-protest-vote-for-the-good/36TheMoUisavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/MoU_Mongolia_EITI.pdf).
18ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
implementationoftheEITIStandardandthehighestcoordinatingbodywithdecision-makingpowers.GovernmentmembersoftheNationalCouncilincludethePrimeMinister,theMinisterofMining,theMinisterforFinance,theMinisterforTourism,EnvironmentandGreenDevelopment,theChairmanofStandingCommitteeonStateBudgetofParliament,theGeneralAuditorofMongolia,theChairmanofNationalStatisticalCommittee,theChairmanofIndependentAuthorityAgainstCorruptionandtheGovernorofTuvaimag.37GovernmentmembersoftheMSWGincludetheSenioradvisortothePrimeMinisterofMongolia,theChiefofGeneralDepartmentofTaxation,theChairmanofGeneralAgencyforSpecializedInspection,theChairmanofMineralResourcesAuthority,theChairmanofPetroleumAuthorityofMongolia,theSeniorOfficerofCabinetSecretariatofGovernmentofMongolia,theHeadofEnlightenmentandPreventionDepartmentoftheIndependentAuthorityAgainstCorruption,theHeadofAccountingPolicyDepartmentattheMinistryofFinance(MoF),theHeadofStrategicPolicyandPlanningDepartmentoftheMinistryofMining,theHeadofNaturalResourcesDepartmentoftheMinistryofTourism,EnvironmentandGreenDevelopmentandtheDeputyGovernorofSelengeaimag.38
TheearlystagesoftheEITIinMongoliawerecharacterisedbymomentumandinclusiveness.Morerecently,particularlysince2012,attendancebydesignatedMSWGandNationalCouncilmembershasbeenlessconsistent.Inparticular,civilsocietyandgovernmentrepresentativeshavetendedtodesignatealternatestoattendmeetings,withlittleconsistencyintheadhocnominationofalternates.Althoughdecision-makingandoversightremaintheresponsibilityoftheMSWG,frequentpoliticalchangehasalsoimpactedtheholdingofNationalCouncilmeetings:successivePrimeMinistersandMinistersofFinancehavenotattendedaNationalCouncilmeetingsince2012.TheNationalCouncildidnotmeetin2014(althoughitmadeupforthisbymeetingtwicein2015)becausetheChairoftheMSWGwasleftvacantforfivemonthsduetodelaysintheformationofanewgovernment(inNovember2014)andappointmentofanewMSWGChair.NonethelessthemaingovernmentagenciesareengagedintheworkofEITIM.
ThegovernmenthascomealongwayinembeddingthetransparencyadvocatedbytheEITIingovernmentsystems.Governmentresolution80,28March2007clarifiesthefunctionsofgovernmententitiesintheimplementationoftheEITI.ThisresolutionwasupdatedinaccordancewithEITIRules,2011editionandreplacedbyGovernmentResolution222on4July2012,whichclearlyspecifiedgovernmentbodies’functionsandtasks.KeylegalreformsincludetheLawonTransparencyofInformationandFreedomtoObtainInformation,enactedon16June201139,theLawonGlassAccounts,on1July201440,andtheLawonSupportingEconomicTransparency,on7August2015.41
CertaingovernmentagenciesdiscloseinformationrequiredundertheEITIStandardonaroutinebasis.Forexample,theMinistryofFinance(MoF)BudgetDepartmentmaintainsastandalonewebsite42that 37SeefulllistofNationalCouncilmembersandcontactdetailsinAnnexA.38SeefulllistofMSWGmembersandcontactdetailsinAnnexA.39http://unpan1.un.org/intradoc/groups/public/documents/un-dpadm/unpan047231.pdf40http://www.iaac.mn/pdf/law_en/8_on_glass_accounts.pdf41Summaryofthelawavailableonhttp://www.ashidadvocates.mn/files/publications/tranparency%20law%20implementation%20rules.pdfandhttp://www.ey.com/Publication/vwLUAssets/EY-mongolia-tax-amnesty-law-alert-2015003/$FILE/EY-mongolia-tax-amnesty-law-alert-2015003.pdf42http://www.iltod.gov.mn/,availableonlyinMongolian.
19ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
publishesinformationonaggregatecorporateincometaxandroyaltyrevenuesonaquarterlybasis.TheMoFalsomaintainsane-reportwebsite43aswellasatransparencysectiononitswebsite44.SinceQ22013,theMineralResourcesAuthorityofMongolia(MRAM)haspublishedmonthlyreportsonaggregateproductionpercommodity,exportsandrevenues.In2014theymovedtoreportingonaweeklybasiswithregularpressbriefings.TheGeneralDepartmentofTaxationnotedthatthemajorityofEITIdisclosureshadneverbeenpublishedpriortotheEITI.
From2007to2010,EITIimplementationinMongoliawasentirelyfundedthroughagrantfromtheWorldBankMulti-DonorTrustFund(MDTF),coveringtheEITIReportsforfiscalyears2006-2009.From2010onwards,theMongoliangovernmentallocatedarelativelyconstantamounttofundingtheEITIReport:MNT201.1millionin2012,MNT183millionin2013,MNT220.1millionin2014andMNT260millionin2015.InpracticeonlyMNT169million,theallocationtotheIA,wasdisbursedin2015however,duetorevenueconstraints.MDTFfundswereusedtocovernon-reconciliationoperatingexpenses,withthe2015grantofUSD280,000disbursedinFebruary201545.AbridgegrantofUSD46,450wasdisbursedinAugust2014fromtheAustraliangovernment.ThiswasnecessarybecausetheMDTFgrantofUSD250,000wasusedbyFebruary2014,whilethenextMDTFgrantwasonlydisbursedinFebruary2015.Morerecently,followingtheclosureoftheMDTFgloballyinDecember2015,EITIimplementationhasfacedafundinggapuntilJuly2016duetodelaysinfinalisationofanewgrantagreementofUSD450,000(to31December2018)undertheWorldBank’sExtractivesGovernanceProgrammaticSupport(EGPS).Asaresultofthisfundinggap,EITIMSecretariatstaffsalarieswereunpaidforsevenmonths,untilAugust2016.
TheIAfoundthatthemajorityofthegovernmententitiesprovideddataforreconciliation,buttwocentralandlocalgovernmententitieseitherdidnotrespondtorequestsforinformationinthereconciliationphase,ordeclinedtoprovideinputtothe2014EITIReport,includingtheStateProfessionalInspectionAgency(SPIA)andKhovdAimag.Inthe2013EITIReport,sixgovernmententitiesdidnotprovidetherequestedinformation,includingtheMongolianCustomsAuthorities,thetaxationdepartmentsofSukhbaatarandBayangoldistricts,thedepartmentsofsocialinsuranceofChingelteiandSukhbaatardistrictsandthedepartmentofpropertyandlandrelationsofSonginohairhandistrict.
TheMinistryofMiningandMRAMarethemaingovernmententitiesengagedinoutreachanddisseminationactivitiesandregularlyparticipateinEITIOpenDaysatbothcentralandprovinciallevels.
Stakeholderviews
Severalgovernmentrepresentativesnotedthatthegovernment’simplementationoftheEITIwas“brave”givenCSOdemandsfordisclosureofinformationthatwasconsideredsensitivefornationalsecuritypurposes.AlthoughthegovernmenthasmadeseveralpublicstatementsofsupportfortheEITI,afewindustryrepresentativesquestionedthelevelofgovernmentcommitmenttotheEITIgivenofficialsreferredtotheEITIasa“project”.SeveraldonorsnotedthattheEITIwasnevermentionedintheirinteractionswithgovernmentrepresentatives,includingintheMinistryofMining.TheirperceptionwasthatMongolianauthoritiesviewedtheprocessasabox-tickingexercise,althoughCSOstooktheprocess
43http://119.40.100.204/EReport/,onlyinMongolian.44https://www.mof.gov.mn/%D1%88%D0%B8%D0%BB%D1%8D%D0%BD-%D0%B4%D0%B0%D0%BD%D1%81%D1%88%D0%B8%D0%BD%D1%8D/?lang=en452014annualactivityreport
20ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
seriously.OnedonornotedhisimpressiongovernmentcommitmentwasstrongerundertheMongolianPeople’sParty(MPP)administrationin2008-2012thanundertheDemocratPartyin2012-2016.TheEITIMSecretariatnotedthefive-monthgapinthegovernment’snominationofanewMSWGChair,butexplainedthiswasduetothegovernment’sfallinAugust2014.GiventhatnonewgovernmentwasformeduntilNovember2014,thesecretariatsawtheAugust-DecemberdelayasreasonableanddidnotseeinthisanyreasontodoubtgovernmentcommitmenttoEITIimplementation.
ACSOMSWGmembernotedthatthefactthattheEITIMSecretariatwasreferredtoasaprojectimplementationunit,combinedwiththeword‘initiative’inEITI,contributedtoanoverallimpressionthatthegovernmentdidnotconsidertheEITItobeformalorpermanent.AllCSOrepresentativesconsultedexpressedconcernsabouttheattitudeandcommentsoftheMSWGChair,MrBat-ErdiinBatbayar(Baabar),atthe4May2016workinggroupmeeting.46Minutesofthe22April2016MSWGmeetingshowthatMrBaabarcalledCSOs“thevillain”andnottransparent,whileannouncingthathispostassenioradvisortothePrimeMinisterwouldonlylastuntiltheendofASEMandthathewasthusnotinterestedinengagingfurtherwiththeEITI.47
AgovernmentrepresentativeontheMSWGnotedthatfundingforEITIimplementationhadbeenarecurringchallengeinrecentyears.NonethelesshenotedthatthegovernmentremainedfullycommittedtoEITIimplementationandthatMongoliawasdeterminedtobeopen.Politicalchangewasnotseenasachallengeaccordingtothegovernmentrepresentative,giventhattherealdecision-makingpowerrestedwiththeGreatKhural,whichensuredstability.
TheimpactoffrequentpoliticalchangeongovernmentengagementinEITIwasnotedbyseveralCSOs,whonotedthatthefrequentchangesinPrimeMinistersimpactedthechairingofNationalCouncilandMSWGmeetings,sincethesenioradvisortothePrimeMinisterselectedtochairtheMSWGchangedasfrequently.TheCSOsalsoemphasisedthattheyconsideredtheMSWGChairfromJanuarytoJuly2016,MrBaabar,asbeinghostiletoCSOparticipationandreferredtominutesoftheMSWG’s22April2016meetingasevidence.OneCSOalsoraisedconcernsoverthefactthatPrimeMinisterJ.ErdenebatwasknowntoownagoldmineinSelengeaimagandquestionedwhetherthiswouldcreatedaconflictofinterestinhischairingoftheNationalCouncil.
MostgovernmentrepresentativesconsultedconceivedoftheirparticipationintheEITIprocessintermsofsubmittingreportingtemplates,ratherthanshapingtheEITIprocess.HoweveronegovernmentMSWGmembernotedthat,giventhatthePrimeMinisterofMongoliachairedtheNationalCouncilandhissenioradvisorchairedtheMSWG,theymadesurethatEITIoutreachtoallrelevantgovernmententitieswasundertaken.
SomegovernmentmembersoftheMSWGnotedtheydidnotparticipateinoutreachanddisseminationeventsorconferences,althoughtheyhadattendedtheNationalForumon3-4November2015.HowevertheEITIMSecretariatnotedthatwhiletherewasatendencytodelegateparticipationinoutreachanddisseminationevents(particularlyoutsideUlaanbaatargiventhelengthoftrips)tootherrepresentativesthanMSWGmembers,allstakeholdergroupswerealwaysinvolved.LineagencieslikeMRAMandGDTwereparticularlyinvolved,whileministrieswerelessinvolvedaccordingtothesecretariatandseveralgovernmentrepresentatives.OneCSOrepresentativestatedthatwhilecertaingovernment
46Unpublished,providedbytheEITIMSecretariat.47Unpublished,providedbytheEITIMSecretariat.
21ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
representativesparticipatedinoutreachanddissemination,theirparticipationtendedtobepassiveandappearedtobeaconsequenceoftheirobligationtoparticipate.AnotherCSOMSWGrepresentativearguedthatthegovernmentcouldprovidemoresupportforoutreachanddissemination,forinstancethroughthestate-ownedMongolianNationalBroadcaster(MNB).
SeveralgovernmentrepresentativesnotedthatwhiletheMoFplayedacentralroleincollating(mostlypaperbased)EITIreportingfromthe35governmententitiesparticipatingintheEITI,thelaunchoftheeReportingsystemin2015meantallreportingentitiesenteredtheirinformationonthesystemdirectly.AfewgovernmentrepresentativesrecommendedthateachgovernmentdepartmentshouldnominateanofficertaskedwithEITIReportingandthatsinglecompanyidentificationnumbersshouldberolledoutacrossallgovernmentagenciestofacilitatereporting.OneindustryrepresentativenotedrepresentativesfromCustomshadneverattendedameetingofeitherMSWGorNationalCouncil.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Thegovernmentisactivelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Stakeholdersaretakingpartinsomeoutreachandeffortstopromotepublicdebate.Governmenthasprovidedfundingtoimplementation.However,thelackoffullgovernmentparticipationinoutreachanddisseminationeventsandtherecurrentgapsinfundingforEITIimplementationareaconcern.GovernmentrepresentativesontheMSWGshouldconsiderenhancingtheirparticipationinthedisseminationofEITIinformationandoutreachevents.ThegovernmentisencouragedreviewthefinancingoftheEITIimplementationtoensuresustainabilityoverthelongerterm.
CompanyengagementintheEITIprocess(#1.2)
Documentationofprogress
AnumberoflegalprovisionshavebeenpassedtounderpinEITIreporting,requiringcompaniestoreporttogovernmentthetaxesandfeestheypaytocentralandlocalgovernmentsaswellastheirproductionbytheendofthefirstquarterfollowingtheendofthefiscalyear.Theseinclude:
- Article48.10ofthe2006MineralLaw48requiresalicenseholderonextractiveindustriestopublishtheamountofsalesofproductsandtaxesandfeespaidtostateandlocalgovernmentsonanannualbasisbeforetheendofthefirstquarterofthefollowingyear.
- Article48.9ofthe2006MineralLaw49requireslicenseholderstosubmitareportonroyaltiestothetaxofficeonthe20thofthecalendarmonthfollowingtheendofthequarter.
- Article28.6.4ofthe2009NuclearEnergyLaw50requiresuraniumlicenseholderstopublicallydiscloseproductsales,taxesandpaymentspaidtotheStateandlocalbudgetsannually.
- Article36.1ofthe2014PetroleumLaw51requirescontractorstosubmitinformationontheamountofinvestment,incurredcosts,paidroyalties,theamountofextractedandsold
48http://www.charltonsmining.com/images/stories/Overseas_Law/Mongolia/minerallawsofmongolia.pdf49http://www.charltonsmining.com/images/stories/Overseas_Law/Mongolia/minerallawsofmongolia.pdf50http://legal-policy.mn/uploads/files/1437032892-85658440.pdf51http://english.pam.gov.mn/content/11370.shtml
22ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
petroleum,taxespaidintotheStateandlocalbudgets,andthefees,bonuses,andservicefeestotherespectivestateagenciesandthePetroleumAuthoritybythefirstquarterofthesucceedingyear.Contractorsarealsorequiredtonotifythepublicofthisinformationthroughmassmedia.
- Article66.1.2oftheamendedMiningLaw(passedinJuly2014)providesforsanctionsforcompaniesthatdonotreportaccordingtoArticles48.1-48.10thereof.Thefinesare20timestheannualminimumwageforindividualsandbetween30and50timesforcompanies.
- TheStatePolicyfortheMineralResourcessector2014-202552,passedinJanuary2014,encouragestransparentandresponsiblemining.
- TheInvestmentLaw53,enactedon3October2013,requirescompaniestomakepublictheirregistrationswithMongolianInvestmentAgency.
ThegovernmenthasalsoinitiatedthedraftingofaTransparencyLawtogivetheEITIlegalbackingandtoensuretransparencyprovisionsrelatedtootherprocessesinthemanagementoftheextractivesectorsuchaslicensing,contracts,procurementetc.AdraftlawwasapprovedbytheMinistryofJusticeinMay2014andsubmittedtoParliamentinOctober2014,buttheCitizens’RepresentativeKhuralhasnotpassedthebillasofJuly2016.
Companieshaveplayedanactiveroleinthedesign,implementation,monitoringandevaluationoftheEITIprocessoftheEITIthroughtheMSWG,withtheMongolianNationalMiningAssociation(MNMA)playingakeyrole.AdditionalinformationonindustryengagementontheMSWGisprovidedintheassessmentofMSGgovernanceandfunctioning(Requirement#1.4),below.
Themajorityofcompaniesholdingmining,oilandgaslicensesinMongoliaparticipateinEITIreporting.Althoughonly236companieswereincludedinthescopeofreconciliationinthe2014EITIReport,988ofthe1573companiesthatheldlicensesin2014reportedtheirmaterialpaymentstogovernment.54Allbutsevenofthecompaniesincludedinthescopeofreconciliationfor2014submittedtheirreportingtemplates.Thesignificanceofthisnon-participationonthecomprehensivenessofEITIreportingisaddressedinPartIIofthisreport.
Article66.1.2oftheamendedMiningLaw(2014)providesforsanctionsforcompaniesthatdonotreportaccordingtoArticles48.1-48.10oftheMiningLaw.HoweverthelegalprinciplethatacompanycanonlybefinedonceforlackofcompliancewithanyoftheArticles48.1-48.10hasmeantthatcompanieshaveoftennotbeenfinedfornon-reportingunderEITI,astheyhavealreadybeenfinedforanotherreason.HoweversomecompanieshadbeenfinedforfailuretoreportintheEITIprocess.Forthe2014EITIReport,theEITIMSecretariatalsopublishedthenamesofreportingandnon-reportingcompaniesindailynewspapers.
Stakeholderviews
SeveralindustryrepresentativesnotedtheydidnothavethepowertoforcecompaniestoreportbutwereendeavouringtoworkwithcompaniesthatwerenotmembersoftheMNMAtofullparticipation.TheEITIMSecretariatnotedthattheMSWGhaddecidedtopublishthenamesofnon-reporting
52http://en.mongolianminingjournal.com/content/54797.shtml53http://www.mram.gov.mn/pdac/law/en/2.pdf54SeeSection2.3.1.2(p.18)ofthe2014EITIReport.
23ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
companiesandthatthishadhadsomeeffect.Followingpublicationofthecompanies’names,severalcompaniescompliedwithEITIreportingrequirements.Theynotedthechallengethatmanysmallercompaniesacquiredmininglicensesinapassivemanner,toholduntiltheycouldfindlargercompaniestopartnerwith.Assuch,accordingtothesecretariat,thesecompaniestypicallywerenotawareoftheneedtoparticipateinEITIreporting,norwiththeMineralsLawitself.SeveralindustrymembersnotedthatenforcementofArticle48ofthe2006MineralsLawrequiringcompaniestopubliclydisclosepaymentstogovernmentwasnoteffective,althoughthenumberofreportingcompanieshadincreasedovertheyears.SeveralCSOrepresentativesnotedthiswasduetothefactthatcompaniescouldnotbefinedtwiceforbreachingprovisionsoftheMineralsLaw,whichmeantthatcompanieshadneverbeenfinedfornon-reportingintheEITI.AlloilandgascompaniesconsultednotedthattheirEITIreportinghadbeenpurelyvoluntaryuntil2015giventhattheMineralsLawonlycoveredminingcompanies,butthatthe2014PetroleumLawhadintroducedrequirementsforoilandgascompaniestopubliclydisclosepaymentstogovernment.Allindustryrepresentativesconsultednotedtherewerenolegalbarrierstocompanies’EITIreporting.
AnumberofindustryrepresentativesrecommendedthattheMNMAconsiderestablishingaworkinggrouponEITItoensuregreaterconsultationwithcompaniesnotontheMSWGorNationalCouncil.AconcernfromUlaanbaatar-basedcivilsocietywasovertheperceivedlackofcompanyengagementintheEITIprocessbeyondprovidingdataforEITIreporting.SeveralminingindustryrepresentativesnotedthatcompaniesconsideredtheirEITIengagementfulfilledoncetheyhadreportedtheirpaymentstogovernment.However,largercompaniessuchasOyuTolgoiandCenterraGoldtendedtoparticipateinoutreachdependingonthelocationofactivities,accordingtotheserepresentatives,whiletheMNMAdidnotgivencapacityconstraints.SeveralCSOsnotedtheydidnotconsiderindustryMSWGmemberstoactasrepresentativesoftheirconstituency,whichwaslargelyconstitutedofsmallerminingcompanies.TheEITIMSecretariatnotedthatwhiletherewasatendencytodelegateparticipationinoutreachanddisseminationevents,particularlyoutsideUlaanbaatar,tootherrepresentativesthanMSWGmembers,industrystakeholderswerealwaysrepresentedatoutreachanddisseminationevents.Bothmining,oilandgascompanieswereengagedinsuchevents,althoughparticipationdependedonwhichcompaniesheldlicensesintheareahostingtheoutreachevents.SeveraloilandgascompanyrepresentativesnotedthattheypreferredtoleaveoutreachanddisseminationactivitiestotheEITIMSecretariat,particularlygivencompanyofficials’needformanagementclearancetoparticipate.Therewasalsoareputationalriskforoilcompaniestobeassociatedwiththenegativepopularviewofminingcompaniesbyparticipatinginsuchevents,accordingtotheserepresentatives.However,therehadbeeninstancesofoilandgascompanyparticipationinsuchevents,whentheywereheldinareaswhereoilcompaniesheldPSAs,accordingtotheEITIMSecretariat.
ACSOrepresentativenotedthatcompaniestendedtofollowgovernment’slead,whichmeantthattheyonlytendedtoparticipateonaparwiththeirgovernmentcounterpartsontheMSWG.AllCSOsconsultedarguedthatEITIreportingshouldbemadecompulsoryandautomatic,asaregularelementofgovernmentreporting.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Companiesareactivelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Industryrepresentativesaretakingpartinoutreachandeffortstopromotepublicdebateespeciallyonregionallevel.Theredonotappeartobeanylegal
24ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
obstaclespreventingcompanyparticipationintheEITI.
CivilsocietyengagementintheEITIprocess(#1.3)
Documentationofprogress
ThereisavibrantandactivenetworkofNGOsworkingonminingissuesinMongolia,including:
- theOpenSocietyForum55,anassociationsupportedbytheNewYork-basedOpenSocietyFoundation;
- StepsWithoutBordersNGO56,agrassrootsorganisationfocusingonlocalcommunities’engagementinMongolia’sdemocraticdevelopment;
- theNaturalResourceGovernanceInstituteofficeinMongolia,aninternationalnon-profitinstitute(NRGIprovidedsupportthroughitsUlaanbaatarofficefocusingin2015onprovidingtraininganddevelopinganopencontractsportal);
- Khongornutgiinduudlagamovement,agrassrootsNGO;
- theResponsibleMiningInitiativeforSustainableDevelopment,aMongoliannon-profitinstitute;
- theMongolianEnvironmentalCivilCouncil,acoalitionofoverMongolian700NGOsfocusingonenvironmentalissues;
- theTransparencyFoundation57,aMongolianNGOfocusingonbudgetmonitoring;
- theZorigFoundation58,aMongoliannon-profitinstitute;
- thePublishWhatYouPay(PWYP)Mongolia59coalition,whichcounts29NGOsasmembersincludingallentitieslistedabove.
Expression:Thereisnoevidenceofself-censorshiporself-imposedrestrictionsrelatedtofreedomofexpressiononEITIissues.Mongoliaishighlyrankedintermsoffreedomofexpressionintheregion.Ithasconsistentlybeenranked“free”byFreedomHouse’sFreedomintheWorldrankings:itwasranked1.5foroverallfreedom,2forcivillibertiesand1forpoliticalrightsin2015(with1beingthebestand7theworstrankings),asitwasinthetwopreviousyears60.WhiletheUnitedStates’StateDepartmentnoteshumanrightsproblemsinits2014HumanRightsReportonMongolia61,includingcorruption,externalinfluenceoverthejudiciaryanddomesticviolence,itappearsfromstakeholderconsultationsthatthesehavenotinterferedinCSOs’abilitytoopenlydiscussextractiveindustrygovernanceissues.IndiscussionswiththePWYPcoalition,anumberofinstancesofpubliccriticismsrelatedtoEITIwerenoted.Forinstance,duringthespringof2015,thePWYPmadeapublicannouncementcriticisingthegovernment’sattempttoconcludeanagreementoverTavanTolgoiwithChineseandJapaneseinvestors(ShenhuaandSumitomo)
55http://www.forum.mn/56https://swbm.wordpress.com/57http://www.ilzasag.mn/58http://zorigfoundation.org/59http://www.publishwhatyoupay.org/members/mongolia/60https://freedomhouse.org/report/freedom-world/2015/mongolia61http://www.state.gov/j/drl/rls/hrrpt/2014/eap/236460.htm
25ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
justbeforepublicholidays62,arguingthatundertheEITIthegovernmentwasrequiredtoconcludesuchnegotiationsinatransparentmanner(althoughthisisnotarequirementoftheEITIStandard).Partlyasaresultofthiscampaign,thegovernmentdidnotproceedwiththeagreement.Ingeneral,itwasnotedthatcriticismsoftheEITIprocessitselfweremadeatMSWGandNationalCouncilmeetings.WhiledefamationisacriminaloffenceinMongolia,evenincaseswherestatementsaretrue,wewerenotprovidedanyconcreteexamplesof(successfulorunsuccessful)defamationchargesagainstNGOsfortheirparticipationintheEITI.SeveralPWYPmembersnotedthatmediatendedtobehighlycriticalofCSOsandthatCSOsoftensuffered“defamation”,butitwasadmittedthatsuchpublicdebatedidnothinderCSOs’freedomofexpression.
Operation:Therearenoindicationsoflegal,regulatory,administrativeandactualbarrierstocivilsocietyoperationpreventingparticipationinEITI,noranyrestrictionsoffundamentalrights.TheFreedomHouserankingnotesthatfreedomsofassemblyandassociationareobservedinlawandinpracticeandthatNGOsoperatewithoutgovernmentinterference.ConsultationswiththePWYPcoalitionnotedthattherewerenothreatstofundamentalhumanrightsandthatMongoliahadarobusttraditionofdemocraticliberties.TheCSOProtocol,theValidationGuideandproceduresandtheconstituencyguidelinesweretranslatedintoMongolianin2016,followingarequestfromCSOsinNovember2015.
Association:CivilsocietygroupsengagedintheEITIprocessarefreelycollaboratingwitheachotheraswellaswithotherlocalNGOsnotdirectlyrepresentedontheMSWGorNationalCouncil,andwithinternationalgroups.Launchedin2006andcounting29membersasofNovember2015,thePWYPCoalitioninMongoliamovedfromablog63toawebsite64(inMongolianonly)in2013andcommunicatestoitsmembersmainlyviaemail.Itsboardiscomprisedofsevenmembers,ofwhichonethirdrotateeveryyear.Thecoalitionnormallyholdsfourmeetingsayear.Launchedin2008andcountingroughly700members,theMongolianEnvironmentalCivilCouncil(MECC)65movedfrombeinganNGOnetworktoafee-basedmembershipstructurein2015.WhiletheMECCmaintainsawebsite66itsmaincommunicationschannelwithmembersisviaemail.RelationsbetweenPWYPandMECCarecloseandthereareseveralinstancesofdual-membership.PWYPprovidescapacitybuildingtoMECCmembersatthesubnationallevel.PWYPhasconductedoutreachtoNGOsnotpartofeither(PWYPorMECC)coalitiontoencouragesuchNGOstoseekmembershipoftheNationalCouncilorMSWG,althoughthishasnotledtonominationsofNGOsoutsidethetwoorganisations.
Engagement:Civilsocietyisinvolvedinthedesign,implementation,monitoringandevaluationoftheEITIthroughparticipationinMSWGmeeting,CSOforums,disseminationeventsetc.TheminutesfromMSWGandNationalCouncilmeetings67pointtoactiveengagementovertheyearsanditisclearthatthereiscapacityamongstwidercivilsocietytoengageinquestionsrelatedtotheextractivesector.
62CSOscomplainedthatParliamenttypicallyattemptstopasslegislationrightbeforepublicholidaystominimizepublicscrutinyofthebills.63https://sites.google.com/a/eiti.mn/tan-evsel/info-in-english-1/info-in-english64http://pwyp.mn/65TheMECCwebsiteishttp://www.mecc.mn/buthasnotbeenoperationalsinceOctober2015,duetoDNSlookupfailure.66http://www.mecc.mn/67Seeforinstancethediscussionofthecommunicationsstrategyandworkplanon11March2014anddebatesoverthe2013EITIReporton10October2014.
26ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
ThePWYPcoalitionhighlighteditsoutreacheffortsforNGOsthatarenotmembersofeitherPWYPorMECCcoalitions.ItwasnotedthatinrecentyearsthePWYPcoalitionhadinvitedotherNGOs(likewomens’NGOs,democracyNGOsandothers)totakeseatsontheMSWGandNationalCouncil,whichwasseenasnecessarygiventhebreadthofdisclosuresundertheEITIStandard.HoweveritappearsthattheseNGOswerenotinterestedandthatthiswasthereasonwhyPWYPcontinuedtoholdeightseatsontheNationalCouncilsandnineontheMSWG.
Accesstopublicdecision-making:Despitethefactthatsomecivilsocietyrepresentativescomplainedthatnotalloftheirrecommendationswerefullyacceptedbylegislators,theyhavetheabilitytoensurethattheEITIprocesscontributestopublicdebateandtoinfluencepublicdecision-making.ThePWYPcoalitionnotedthattheydidhaveaccesstoinfluencedecision-makingandthattheirfocuswasparticularlyonthekeyareasoflicenseallocationandthenegotiationsofproductioncontracts.Specificexampleswerecited,suchasPWYP’scontributiontosuccessfullyhaltingtheTavanTolgoidealinearly2015(seeabove).CSOsalsomentionedtheirroleinlobbyingfortheinclusionofArticle48.10inthe2006MineralsLawasanexampleofsuccessfulinputtodecision-making.TheJuly2015LawonPublicHearingswasseenasenhancingaccesstodecision-makingbyCSOs,givenitsrequirementsforpublicconsultationsonalldecisionstakenbypublicadministrationentitiesatbothcentralandsubnationallevels.TheyalsoactivelyparticipatedindevelopingthemodelToRforthesubnationalcouncils(seebelow),.Morerecently,CSOsprovidedinputtothemodelCommunityDevelopmentAgreements(CDAs).WhilethesewerenotinitiallyincludedinreviseddraftsofthemodelCDA,ajointcomplaintwiththeMNMAtotheMinistryofJusticeledtotheinclusionofsomeoftheircommentsinthefinalversionapprovedbythegovernment.TheMECCalsooperatesashadow“green”parliamentthatprovidespublicinputtoparliamentarydiscussions.
Stakeholderviews
AlthoughseveralindustryrepresentativesnotedthattheMECChadconductedpaidworkforgovernmentministriesinthepast(around5yearsago),PWYPrepresentativesnotedthishadnotinterferedinCSOs’sindependencefromotherstakeholdersontheMSWG.ManyCSOsarguedthattheproposedNGOTransparencyLawunderdiscussionintheGreatKhuralin2015representedadoublestandardcomparedtothetaxamnestyprovidedtonon-compliantcompaniesundertheEconomicTransparencyLawenactedinAugust2015.TheproposedNGOlawwoulddissolveanyNGOthatdidnotprovidefinancialstatementstotheGeneralDepartmentofTaxation(GDT)annuallytojustifytheirtax-exemptstatus.ThiswascriticisedasadoublestandardcomparedtotheEconomicTransparencyLaw,whichprovidedamnestytocompaniesthatcameforwardtotheGDTforfailureofpayingtaxes.However,itcouldbearguedthatsuchcompanieswouldonlyreceiveretroactiveamnestyfromprosecutionandwouldberequiredtopaytaxesinfuture,whileitwouldseemnormalthatNGOsberequiredtojustifytheirtax-exemptstatus,asseveraldonorsnotedinourconsultations.AnotherprovisionofthedraftNGOlawwouldrequireCSOstogathersignaturesfromallfoundingmemberstoavoiddissolution,whichwouldposechallengesforolderNGOswhosefoundingmembersmaynotallstillbereachable.Somestakeholdersconsultedestimatedthatsome50%oftheestimated11,000NGOsinMongoliariskeddissolutionifthedraftlawispassed.OtherestimatesofthenumberofNGOsinMongoliaareashighas27,000.68NonethelessmostdonorsnotedthatthespaceforCSOexpressionwasgood,butthatanumberofCSOsandmostmedia
68AccordingtoMrBat-ErdiinBatbayar(‘Baabar’),MSWGChair,atthe22April2016MSWGmeeting.Seeminutesof40thMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup22April2016,unpublished(asof9July2016).
27ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
organisationswerelinkedtopoliticiansandbusinessmen.TheonecaveatwasthatdefamationwasconsideredacriminaloffenceinMongolia,evenincasesoftruestatements,andthatthiscouldhaveanimpactonself-censorship.Itwasnotedthatthereweremanydefamationcases,butnospecificcaseswerehighlightedasbeingrelatedtotheEITI.
ArepresentativefromapastEITIMIAnotedthatCSOsappearedabletoinfluencedecision-makingrelatedtoEITIimplementationinparticular,giventhattheyhadsucceededinrequestingthedisclosureof120ofanestimated250environmentalspecialpermitsbytheMinistryofEnvironmentandGreenDevelopmentaspartofpreparationsforthe2014EITIReport.
TheEITIMSecretariatnotedthatwhiletherewasatendencytodelegateparticipationinoutreachanddisseminationevents,particularlyoutsideUlaanbaatar,tootherrepresentativesthanMSWGmembers,CSOstakeholderswerealwaysrepresentedandwereamongstthemostactiveparticipants.However,severalPWYPmemberslamentedthelackofinvolvementoftheMECCinoutreachanddisseminationactivities.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Civilsocietyarefully,activelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Stakeholdersaretakingpartinoutreachandeffortstopromotepublicdebateespeciallyonregionallevel.ThereisanenablingenvironmentforcivilsocietyparticipationintheEITI.ThetwoCSOcoalitionsactivelyengagedinEITIimplementationmaywishtoconsidermeansofstrengtheningtheiroutreachonEITIissuestoenhancetheinclusivenessoftheEITIprocess.ThePWYPCoalition’snewwebsite69(inMongolianonly)waslastupdatedinMay2016andcontainsthe2013,2014and2015PWYPworkplans.WhileitwasreportedthattheMECChadconductedpaidworkonbehalfofthegovernment(MinistriesofMiningandofEnvironment)inthepast,thisdoesnotappeartohaveinterferedwithCSOs'independence.
MSGgovernanceandfunctioning(#1.4)
Documentationofprogress
MSWGcompositionandmembership:Mongolia’sEITIimplementationisgovernedbytwobodies,theNationalCouncilandtheMSWG.Mostoftheday-todayworkisundertakenbytheNationalSecretariatandapprovedbytheMSWG,whiletheNationalCouncilplaysmoreofapoliticalsupportandgeneraloversightrole.AnalysisofmeetingminutesforbothbodiesandconsultationswithstakeholdersshowthattheMSWGisinchargeofreachingdecisions,whicharethenapprovedbytheNationalCouncil.ThefollowingassessmentofMSGgovernanceisthusfocusedontheMSWG.
TheEITIMNationalCouncilwasestablishedon4January2006andcomprises30membersasofJuly2016,listedinAnnexA70.ItincludestengovernmentmembersincludingPrimeMinisterHEChinediinSaikhanbileg,whoisalsoitsChair,andrepresentativesfromtheMinistriesofMining,Finance,Tourism,EnvironmentandGreenDevelopment,theStandingCommitteeonStateBudgetofParliament,theGeneralAuditorofMongolia,theNationalStatisticalCommittee,theIndependentAuthorityAgainstCorruptionandtheGovernorofTuvaimag.
69http://pwyp.mn/70TheInternationalSecretariatunderstandsthatgovernmentrepresentativesarelikelytobereshuffledinSeptember2016.
28ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
TheEITIMMSWGwasestablishedon31March2006andcomprises33membersasofJuly2016,listedinAnnexA.71Itincludes11governmentmembersincludingSeniorAdvisertothePrimeMinisterMr.Bat-ErdeniinBatbayar(knownas‘Baabar’),whoisitschairandSecretarytotheNationalCouncil,andworking-levelrepresentativesfromallgovernmentdepartmentssittingontheNationalCouncil.Article25oftheNationalCouncil’sToR,originallypublishedon12May2006,establishestheNationalCouncilundertheauthorityoftheCabinetandCabinetSecretaryoftheMinistryofMining.72
ThecompositionoftheMSWGissetoutintheTermsofReference(ToR)fortheEITIMMSWG,approvedbytheNationalCouncilon12May2006,amendedmostrecentlyon9November2012.73GovernmentResolution80enactedon28March2007establishesthefunctionsandresponsibilitiesofgovernmentrepresentativesinvolvedinEITI.74TheTripartiteMemorandumofUnderstandingoneffectiveimplementationofExtractiveIndustriesTransparencyInitiativeandpartnershipbetweentheGovernmentofMongolia,companiesandNGOcoalitionissuedinApril2007alsosetsouttheparticipatingpartiesinvolvedintheEITI.75WhilethemembersofbothbodieswereinitiallynominatedbyorderofthePrimeMinisteruntil201276,GovernmentResolution222allowedthePrimeMinistertonominatethegovernmentrepresentativesbuttransferredauthorityfornominationstotheMNMAforindustryandthePWYPandtheMongolianEnvironmentalCivilCouncilforcivilsociety.Article4oftheMSWG’sToRrequiresequal“tri-partied”representationofthethreeconstituenciesconfirmedbygovernmentresolution.77ThegovernmentconstituencyincludestheChair,DeputyChair,andSecretaryoftheEITIMNationalCouncil.TherearenoclausesintheMSWG’sToRcoveringcriteriaforNGOmembership,orofseniorityofrepresentationbygovernmentorcompanies.WhileArticle7oftheNationalCouncil’sToRspecificallyrequirescivilsocietyrepresentativestocomefromthemeetingofthePWYPcoalitionortheMongolianEnvironmentalCivilCouncil,andforindustryrepresentativestocomefromminingandoilcompaniesortheirsubcontractors,theMSWG’sToRonlynamestheseniorrepresentativesfromeachstakeholdergroupasthechairoftheNationalTaxationAuthority,theexecutivedirectoroftheMNMAandthe“CoordinatorofCoalitionofNGOs”.EachoftheseseniorrepresentativesisresponsibleforthenominationofMSWGmembers.
Forthegovernment,GovernmentResolution222onlynamestheagenciesandpositionsof
71ThenamesandcontactdetailsofallmembersoftheNationalCouncilandtheMulti-StakeholderWorkingGroupareavailableontheEITIMongoliawebsite(http://www.eitimongolia.mn/en/national-councilandhttp://www.eitimongolia.mn/en/working-group).TheyarealsoavailableinAnnexA.72TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf).73TheToRfortheMSWGareavailableontheEITIMongoliawebsite(http://www.eitimongolia.mn/sites/default/files/uploads/en/ToR_of_MSWG_Mongolia_EITI.pdf)74AvailableinMongolianlanguageontheEITIMongoliawebsite(http://www.eitimongolia.mn/sites/default/files/uploads/80%20-%202007.03.28.pdf).75TheMoUisavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/MoU_Mongolia_EITI.pdf)76Forfurtherinformationontheinitialnominationsprocess,seeSections3-7(pp.6-10)ofMongolia2010ValidationReport-https://eiti.org/files/Mongolia%20Final%20Validation%20Report.pdf77http://www.eitimongolia.mn/sites/default/files/uploads/en/ToR_of_MSWG_Mongolia_EITI.pdf
29ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
representativesonthetwoEITIbodies.Article5ofResolution222,whichisavailableonline78,definesthePrimeMinisterofMongolia’sresponsibilitiestoappointrepresentativesfromgovernmentandtheGreatKhural(Parliament)onboththeNationalCouncilandtheMSWG.Thustheindividualrepresentativeschangewhennewappointmentsaremadetothesepositions,withouttheneedtoformallynotifytheEITIMSecretariat(incontrasttoagreedproceduresforindustryandcivilsocietyrepresentatives).
ThepresidentoftheMNMA,anassociationwitharound120membersofexploration,productionandcontractingcompanies,isresponsibleforindustrynominationsontheMSWG.Whilethismembership,ofwhichroughlyhalfarecontractingcompanies,issmallerthantheroughly1000companiesholdingactivelicensesinMongolia,theMNMAhasconductedoutreachtocompaniesbeyonditsmembershiptoimproveparticipationinEITIreportingbynon-membercompanies.Until2012theMNMAretainedfullauthorityfornominatingindustryrepresentativesontheNationalCouncilandMSWG,butthereaftertheSecretariat,inconsultationwiththePetroleumAuthorityofMongolia(PAM)invitedtwooilandgascompanies(PetroChinaDaqingTamsagandPetromatad)tobecomemembersoftheNationalCouncilandMSWGrespectively.TherearenowrittenrulesgoverningthenominationsprocessbyindustrybeyondArticle6ofDecree22279thatdefinestheroleofthepresidentofMNMAinappointingrepresentativesfromcompaniesandprofessionalassociationsintheminingandoilandgassectors.AtitsannualgeneralmeetingonthelastWednesdayofJanuary,theMNMAsolicitsexpressionsofinterestfrommembers.Duetolackofsufficientsubmissionshowever,theMNMAtypicallyselectspotentialcandidatesandseekstostrikeabalancebetweenlargeandmedium-sizedcompaniesandacrossdifferentminerals.However,itdoesnotappearthatMNMAundertakesoutreacheffortstocompaniespriortonominations,accordingtoconsultationswithindustrystakeholders.WhentheMNMA,togetherwiththeEITIMSecretariat,witnessrepeatedlackofattendanceatmeetingsbyspecificmembers,theymovetoreplacethem.Themostrecentrefreshofminingindustryrepresentativeswereasfollows(theoilandgasrepresentativeshavenotchangedsince2012):
- September2012:allnineminingcompaniesonbothNationalCouncilandMSWGwerereplaced.
- February2014:allnineminingcompaniesonbothNationalCouncilandMSWGwerereplaced.
- June2014:onechangeeachontheNationalCouncilandMSWG,whenMrN.AlgaawaspromotedfromexecutivedirectoroftheMNMAtopresidentandthusmovedfromtheMSWGtotheNationalCouncil.
- December2014:onememberchangedontheNationalCouncil.
TheMSWGrepresentativefromtheMongolianGoldProducersAssociation,Mr.S.Burentogtoh,lefthisassociationpositionin2015butremainsontheMSWGuntilhisreplacementisappointedinJanuary2016.
Withrespecttocivilsocietyparticipation,thePWYPandMECCcoalitionsareresponsiblefornominatingCSOrepresentativesontheMSWG.ThereisnoclauseintheToRprovidingformaximumduration,ortermlimits.GovernmentResolution222issuedbyPrimeMinisterSükhbaatarynBatbold’sofficestatesthata“civilsocietycoalition”(whichhasalwaysbeenPWYPinpracticeevenifitisnotnamedintheDecree)controlseightseatsontheNationalCouncilandnineontheMSWG,whilean“environmentNGO
78http://www.eitimongolia.mn/sites/default/files/uploads/en/Government_Resolution_222_English.pdf79http://www.eitimongolia.mn/sites/default/files/uploads/en/Government_Resolution_222_English.pdf
30ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
coalition”(MECCinpractice,evenifnotnamedintheDecree)controlstwooneach.TherearenowrittenruleswithinMECCforselectionofCSOrepresentativestotheNationalCouncilortheMSWG.ThePWYPcoalitionboardcharterstatesthatnominationstoEITIbodiesmustbediscussedatthemembers’meetingandthatthePWYPMongoliaBoardmustberevisedeverytwoyears,witharequirementthatthreeofthesevenPWYPmemberschangeeverytwoyears.80ThenominationofnewMSWGandNationalCouncilwaslastagreedbyanonymousvoteatthePWYPMongoliaCoordinatingCommitteemeetingon31March2015.81ThediscussioncoveredthedesiredskillsofEITIrepresentativesfromtheCSOconstituency(includingobjectivity,researchandanalysiscapacity,debatingskillsandabilitytoexpresstheiropinions).HoweveritdoesnotappearthatMECChasundertakenoutreachtoNGOsbeyondtheirownmembersaheadofthenominationsprocess.PWYP’soutreachtoNGOsaheadofnominationsappearstobefocusedoninvitingthemtojointhePWYPcoalition,inlinewiththePWYPworkplan’saimtoexpandthecoalition’smembership,ratherthanparticipatinginEITIassuch.
PWYPoperatesadoubleselectionprocess:thecoalitionappointscertain“peopleknowledgeableabouttheextractiveindustries”82inparalleltoaninformalelectionprocess,withnosetsplitbetweenthetwotypesofmembers.TheMECCnominationsproceduresaredecidedbydiscretionoftheCEOoftheMECC,outoftheNetworkBoardmembers,electedeverythreeyears,buttherearenoformalnominationsproceduresbeyondArticle6ofDecree22283specifyingtheresponsibilitiesofthePWYPMongoliaandMECCBoardsfornominationsoftheirrespectiveMSWGandNationalCouncilmembers.WhilePWYPfieldsdifferentmembersontheNationalCouncilandontheMSWG,thetwoMECCrepresentativesoneachbodyarealwaysinthesamepositionsontheMECC,althoughtheindividualshavechangedfrequently.ThePWYPcoalitionhaschangeditsrepresentationonthetwobodiesroughlyeverytwoyears:
- May2013:alleightmembersontheNationalCouncilwerereplaced,allnineontheMSWGaswell.
- July2015:threememberswerereplacedoneachthetwobodies.
TheMECCrepresentativesonbothEITIMbodieshavechangedmorefrequently.WhiletheCEOisrequiredtoformallynotifytheEITIMSecretariatofchangeinrepresentatives,theletterannouncingthelatestchange(inNovember2015)wassignedbythePresident(adifferentpositionthantheCEO),whichrepresentsaminordeviationfromagreedprocedures.Thelatestchangeswere:
- November2014:changeinbothmembers.
- December2014:changeinbothmembers.
- January2015:changeinbothmembers.
- November2015:changeinonememberonMSWGandNationalCouncil.
- April2016:changeinonememberonMSWGandNationalCouncil.
80https://drive.google.com/file/d/0B-z15B6VRn2jQk5EX3RJVjFqVFU/viewandminutesfromtheMarch2016PWYPgeneralassembly(unpublished).81PWYPMongoliaCoordinatingCommittee,31March2015,providedbythePWYPcoalition.82FromourmeetingwiththePWYPcoalition.83http://www.eitimongolia.mn/sites/default/files/uploads/en/Government_Resolution_222_English.pdf
31ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Thetwocoalitionsappeartohaveconsultedonlytheirownmembersviaemailaheadofthenominationsprocess.
Termsofreference:TheMSWG’sToRwerelastreviewedinQ42012andapprovedbytheMSWGon9November2012.84ThekeyrevisiontotheToRwastheprovisionforrotationinthechairingofMSWGmeetingsandforMSWGmeetingstobeheldelectronicallyifrequired.Whilethechairrotationcontinuedin2014,whentheMSWGwaschairedbyMrN.AlgaafromtheMNMAinMarchandbyMr.D.Nergui,thenchiefoftheminingdepartmentoftheStrategyPlanningandPolicyDivisionoftheMinistryofMininginOctober.FollowingMrsB.Delgermaa’sappointmentasadvisertothePrimeMinisterandChairoftheMSWGinDecember2014however,therotationstoppedatsubsequentMSWGmeetings(inMayandOctober2015),allchairedbyMrsDelgermaa,followingherdecisiontostopthispracticeuponassumingtheposition.OnlyoneMSWGmeetingtookplaceunderMrsDelgermaa’sreplacementasMSWGChair,MrBaabar,inApril2016,whichhechaired.
Article8-44oftheMSWG’sToRprovidedetailsoftheinternalgovernancerulesandprocedures.Article9oftheMSWG’sToRstatesthatmeetingsareconvenedupontheconsentoftheChair,butthereisnoprovisionrelatedtothefrequencyofmeetings,ortominimumadvancenoticeperiodsofmeetings.MeetingsareconvenedupontheChair’sconsentand,intheirabsence,adesignatedpersonwhoismemberofboththeMSWGandtheNationalCouncil.TheSecretaryoftheNationalCouncilprovidesforpreparationofthemeeting.NeithertheMSWG’snortheNationalCouncil’sToRspecifythefrequencyofmeetings,asbothrefertomeetingsbeingheld“whenrequired”.
Article13oftheMSWG’sToRrequiresthattheagendaandrequiredmaterialsbecirculatedatleastfourdayspriortothemeeting.Article16oftheMSWG’sToRincludesquorumrequirements.Meetingscanonlystartwhenthemajorityofmembersareinattendance.Article18oftheMSWG’sToRrequiresthatthemeetingminutesbepreparedandvalidatedwiththesignatureoftheMWSGSecretaryoramemberoftheEITIMSecretariat.Articles3and8.4oftheMSWG’sToRprovidesforinclusivedecision-making:itprovidesforthewaysinwhichtheMSWGmayconsenttodecisions,includingagreementbetweentheheadsoftherepresentatives,orrequiringissuestobestudiedfurtherbyexpertadhocworkinggroups.Thereisnoclauseallowingfordecisionsbyvotewhererequiredduetolackofconsensus,whichimpliesunanimityisrequiredforalldecisions.Article8.4oftheMSWG’sToRstatesMSWGmemberscanmakeproposalsforadditionaltopicsfordiscussioninadvanceofmeetingsinwritingandmustcanvasstheirconstituenciesforviews.
Articles12and25to28oftheMSWG’sToRdetailtherole,responsibilitiesandrightsofthemulti-stakeholdergroupandincludesrequirementsfortheMSWGtooverseethereportingprocess,whichincludesagreeingtheTermsofReferencefortheIndependentAdministrator,overseeingtheappointmentoftheIndependentAdministratoranddraftingannualworkplans.ThereisnoclauseintheMSWG’sToRrequiringthattheMSWGundertakeoutreachactivitieswithcivilsocietygroupsandcompanies.However,theEITIMwebsiteindicatesthatoutreachisaregularpartofEITIMactivities.TheToRdoesnotcontainanyexplicitsafeguardstoensurethatthenominationprocessforrepresentativesofeachstakeholdergroupbeindependentandfreefromanysuggestionofcoercion.Thereisnoprovisionforensuringapluralityofrepresentation.
84TopicV(pp.15-17)MinutesofEITIMongolia10thNationalCouncilMeeting(28November2012),http://eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf
32ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
ThereisnospecificmentionofanyclausetoensurethatMSWGmembershavethecapacitytocarryouttheirduties.
AlthoughitisnotarequirementoftheEITIStandard,theMSWG’sToRdoesnotincludeacodeofconduct,orreferencetoone,orclausesrelatedtoconflictofinterest,inanyofthegovernancedocuments.Finally,thereisnoclausegoverningthetreatmentofconfidentialinformationbygroupmembers.
WhiletheMSWG’sToRdoesnotspecificallymentiontheexistenceofadhocworkinggroupsthatreportbacktotheMSWGonspecifictopics,minutesfromthe13January2015NationalCouncilmeetingindicatethatfiveworkinggroupsdedicatedtospecificrecommendationsofthe2013EITIReportoperatedin2015.TherearehowevernoToRforthesead-hocworkinggroups,norpublicallyavailablelistoftheirmembers.Inpractice,minutesfortheseworkinggroupsareonlyavailableonrequestfromtheEITIMSecretariat,andtheInternationalsecretariatunderstandsthattheyhaveneverbeenrequested.
TheMSWGhastakenstepstodisclosethepolicygoverningpaymentofperdiemstocoverMSWGmembers’travel.InApril,itpublishedtheMoFguidelinesonperdiempayments,whichalsogovernsEITIMofficialtravel,ontheEITIMwebsite.85Theseappeartobefollowedinpractice.TherearenoothertypesofpaymentstoMSWGmembers.
Attendance:TheNationalCouncilhasmet14timesbetween2006andJuly2016andtheMSWGhasmet40timesinthesameperiod,includingthreetimesin2013,twicein2014,threetimesin2015andonceinthefirsthalfof2016.86TheMSWGmeetingswereinitiallyheldattheMNMAofficethefirstyearofimplementation,butfollowingCSOs’reluctancetoattendmeetingshostedbyindustrythelocationwasmovedtotheMinistryofMining.IthasbeennotedbyCSOsinseveralNationalCouncilmeetingsthatgovernmentrepresentativesontheNationalCouncilhadatendencytodelegateattendancetootherrepresentativesortendedtobepoorlybriefedwhenattendinginperson.87
InpracticeCSOattendanceatNationalCouncilandMSWGmeetingsalsotendstochangefrequently:thePWYPcoalitionhighlightsitsflexibilityandnotesthatallPWYPrepresentativesagreetheirpositionsaheadofmeetings,whichensuresconsistencyindiscussions.ThereisagenerallackofunderstandingoftheneedtonotifytheEITIMSecretariatofanysuchdelegationsaheadofEITIMmeetings,asisstatedintheNationalCouncil’sToR:allthreestakeholdergroupsstatedcategoricallythatsuchnotificationwasnotrequired.InpracticetheEITIMSecretariatcallsallNationalCouncilandMSWGmembersthedaybeforemeetingstoconfirmattendance.
AlthoughseveralNationalCouncilmeetingsdiscussedthepotentialforpublishingattendancesheetsforbothNationalCouncilandMSWGmeetingspubliclyontheEITIMwebsite(mostnotablyatthe10thNationalCouncilmeetingon28November2012),thiswasneverimplemented.TheSecretariatmaintainsattendancesheetsforallmeetingsinexcelformat.
Translations:TranslationfromEnglishtoMongolianposessomeuniquechallenges.Thesamewordin
85http://eitimongolia.mn/en/regulations86Asof1July2016.87Forinstance,duringthediscussionoftherevisedNationalCouncilToRatthe10thNationalCouncilmeetingon28November2012.TopicV(pp.15-17)MinutesofEITIMongolia10thNationalCouncilMeeting(28November2012),http://eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf
33ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
MongoliancandenoteseveralmeaningsinEnglishdependingonthecontext,suchasencouragement/support,promote/advertise,accountability/responsibility.Thusaccountabilitycanbeequatedwithcorporatesocialresponsibility(CSR)attimes.TheUNproducedaglossaryforgovernancetermsin2014thatassignedaMongolianwordforaccountability.However,thiswordisseldomusedandremainsbroadlyunfamiliartomostMongolians.Likewise,thewordtransparencyistranslatedbythreewordsinMongolian.MorebroadlythereisalackofconsensusinMongoliagiventherapidinfluxofnewwordsinMongolianandthegovernmenthasestablishedaspecialcommitteetoclarifythespellingandmeaningofkeywords.AdamSmithInternationalundertookthetranslationofthe2013EITIStandardintoMongolianandGiZundertookthetranslationofthe2016EITIStandardinMarch2016,includingthecivilsocietyprotocolandvalidationprocedures.
Stakeholderviews
Severalrepresentativesfromallthreestakeholder-groupsinvolvedintheEITIMnotedthattheNationalCouncilwaslargelyasymbolicbody,withpoorattendancefromhigh-rankingofficialsotherthantheMinisterofMining.ItwasnotedthatneithertheMinisterofFinancenorthePrimeMinisterhadattendedaNationalCouncilmeetinginthepastfouryears.TheEITIMSecretariatnotedthattherotationofMSWGmeetingchairinghadstoppedinpracticeunderMrsDelgermaa’sleadership,althoughthiswasnotformallyannounced.ItwasnotedbyallstakeholdersconsultedthattheMSWGwaseffectivelythedecision-makingbodygoverningEITIMimplementation.AllCSOsagreedthatdecisionsweretakenbytheMSWGandsimplyconfirmedbytheNationalCouncil.Whiledocumentsarealwayssentoutinadvance,itwasnotedbyseveralgovernmentrepresentativesthattheywerenotalwaysabletoprovideinputduetotimeconstraintsandworkloads.InpracticetheEITIMSecretariattypicallyschedulesmeetingsoneweekinadvance,sendingviaemailthedraftagendaanddocumentsfordiscussionatleastfourdaysinadvance.DraftEITIReportsmusthoweverbesentinhardcopyatleastfourdaysaheadofmeetings,whichisupheld.AfewCSOsarguedthataddingitemstothedraftagendaofmeetingswaschallenging,althoughitwasagreedthatthiswaspossible.Themainreasonwasthatagendasweresentoutthreedaysinadvanceandthatthisdidnotallowsufficienttimeforgatheringallmaterialrequiredforthediscussionofitemsproposed.SomeCSOsrepresentativesnotedthatCSOscouldpreparedocumentsaheadofthemeetingagendabeingsentout,butthatCSOs’capacityconstraintsmadethischallenging.IndustryandgovernmentrepresentativesdidnotexpressanyparticularconcernsovertheircapacitytocarryouttheirEITI-relatedduties.
SeveralindustryrepresentativesnotedthatneithertheNationalCouncilnortheMSWGoperatedefficiently,withconsensus-baseddecision-makingparticularlychallenging,duetothehighnumberofmembersoneach(tenand11respectively)andthatthenumbershouldbereduced,withtheemphasisonrepresentationbygovernmentimplementingagencieslikeMRAMandtheGeneralDepartmentforTaxation.BecausetheToRprovisionsonconsensus-baseddecision-makingfortheNationalCouncilandMSWGwerenotrespectedinpractice,manyCSOscomplainedofadefactoallianceofgovernmentandindustryagainstthem.ArepresentativefromoneoftheEITIM’spastIAsnotedthatminingcompaniesappearedtobemostactiveinshapingthedevelopmentofEITIReports,forinstanceprovidingmostinputtokeyscopingdecisions.Thesamerepresentativenotedwhatwasconsideredanexcessivefocusonpost-reconciliationdiscrepanciesbyallstakeholdersontheMSWG,NationalCouncilandEITIMSecretariat,tothedetrimentofabroaderfocusoncontextualinformationintheEITIReport.OneminingcompanyrepresentativenotontheMSWGnotedthatoverall,companyengagementintheEITIwasquitelowandtheMNMArepresentativesrepresentedindustryinpractice.TheytendedtoengageinEITImainlyduringthedatacollectionphase.
34ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Inpractice,despitethelackofprovisionsforvotingontheNationalCouncil,representativesfrombothIndustryandCSOsnotedthatvotingdidtakeplaceinpracticewithouttheneedforvotesinfavourfromallthreestakeholdergroups.SeveralindustryrepresentativesstatedtheyrarelyraisedobjectionsatMSWGmeetings,astheyfeltthiswouldslowtheprocessdown.ThereisevidenceofvotingbothinMSWGandNationalCouncilmeetings.Fromananalysisofmeetingminutes,theMSWGvotedontheallocationofsavingsonbudgetedexpenditureforIndependentAdministratorservicesatits11March2015meeting.88Mostrecentlyatits12December2015meeting89,theMSWGreferredtoitspatternofvotingonkeydecisionsandnotedthat,giventhelackofquorumattheendofthatmeetingwithonly13ofthe33MSWGmemberspresent,itwasimpossibletoproceedtoavoteinthatinstance.HowevertheMSWGproceededwithits22April2016meeting,despitethefactonly16ofthe33memberswereinattendance.90ThereisevidenceofNationalCouncilvotesatitsmeetingson28November201291,23December201392,13January201593and4June201594.Inallinstancesthemeetingminutesreportthegeneraloutcomeofvotes,includingthenumberofdissentingvotes.ArepresentativefromapastEITIMIAnotedthatvotingappearedtobethenormatMSWGmeetings,withtwostakeholdergroupsoftenabletopromptMSWGdecisionsthatdonotappeartobebackedbyconsensus.Forinstanceminutesofthe13January2015NationalCouncilmeetingshowthattheNationalCouncildeemedtheimplementationofthe2014EITIworkplanassufficientdespiteoppositionfromCSOs.Startingin2016,minuteshavebeenrecordedforalltechnicalworkinggroupmeetings,althoughthesewerenotpublishedonlineaccordingtotheEITIMSecretariat.
Severalindustryrepresentativescalledforimplementationofthechangesproposedaspartofthedraft“EITILaw”,includingthemergeroftheNationalCouncilandMSWGintoasinglebodyandanexpandedrolefortheSecretariat,withhighercapacity.AgovernmentMSWGrepresentativenotedthattheEITIlawcontinuedtoprogressthroughtheGreatKhuraldespitetheJune2016legislativeelections.Havingundergoneafirstparliamentaryreading,whichruledthattheGreatKhuralcouldconsiderthelaw,aparliamentaryworkinggrouphadbeenestablishedandthenewmembersoftheGreatKhuralwouldcontinuethework.HoweveraCSOrepresentativenotedthatthenewlyelectedmembersoftheGreatKhuralcouldeasilydecidetodiscardthedraftlaw.However,itwasnotedthatthenewSpeakeroftheGreatKhural(appointedon8July2016),MiyegombynEnkhbold,whoisalsoChairmanofthemajorityMongolianPeople’sParty(MPP)95,hadbeenhighlysupportiveoftheEITIduringhistimeasPrimeMinisterandChairoftheEITIMNationalCouncilin2006-2007andwasseenasapotentialkeysupporteroftheEITIlaw.
88http://www.eitimongolia.mn/sites/default/files/uploads/en/AH_35_2015.03.11_en.pdf89http://www.eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf90Minutesof40thMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup22April2016,unpublished(asof9July2016).91http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf92http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_11_2013.12.23.pdf93http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_12_20150113_en.pdf94http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_13_20150604_en.pdf95LeeCashell(6July2016),‘Mongolia’selection–aprotestvoteforgood’,http://blogs.ft.com/beyond-brics/2016/07/06/mongolias-election-a-protest-vote-for-the-good/
35ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
SomeCSOrepresentativeshighlightedtheimpactoffrequentpoliticalchangeontheconsistencyofgovernmentrepresentatives’attendanceatEITImeetings.Therewasfrustrationoverthelackofcontinuityinattendance,particularlybygovernmentofficials,althoughthefrequentchangeinCSOattendeeswasalsonoted.SeveralCSOscommentedthatgovernmentandcompanyparticipationinMSWGmeetingsin2015and2016hadbeenlow,withlessthan60%ofmemberspresentatmeetings.MSWGmeetingsincreasinglyfeltlikemeetingsofCSOs,accordingtotheserepresentatives.SeveralindustryrepresentativesnotedthatCSOstendedtorotateattendanceatEITImeetingsfrequently,whichdidnotencourageinformeddiscussion.HoweverseveralCSOrepresentativesnotedthattheparticipationofCSOshadimprovedconsiderablyinthepastfewyears.TheEITIMSecretariatnotedthattherewerecasesofMSWGandNationalCouncilmembersdelegatingparticipationatmeetingstorepresentatives,oftenwithoutconsistencyintheproxiesselectedtoattend.HoweverthesecretariatnotedthatgenerallythegovernmentwaswellrepresentedatMSWGandNationalCouncilmeetings,althoughtheynotedthattherepresentativefromtheStateProfessionalInspectionAgency(SPIA)typicallydidnotattendmeetings.ThesecretariatnotedthedifficultyincommunicatingwiththeSPIAgiventhelackofasingleconsistentpointofcontact.AgovernmentMSWGrepresentativenotedthatattendanceatMSWGandNationalCouncilmeetingwasstrongestonthepartofagencieslikePAM,MRAM,Customs,GDT,NSOaswellastheMinistryofMining.OveralltherepresentativenotedthatmostcapablegovernmentrepresentativeswerepresentatMSWGandNationalCouncilmeetings.
StafffromtheEITIMSecretariatnotedthattheywereconfusedbyMECC’sfrequentchangesofMSWGandNationalCouncilmembers,sometimesonamonthlybasisandwithletterssignedbydifferentMECCofficials.Whiletheyalwayschangedthemembersonthewebsiteandinvitedtherightonestoactivities,theywereconfusedaboutthereasonsforthesefrequentchanges.SecretariatstaffnotedtheirimpressionthatfrequentchangesinMECCrepresentationwerecausedbyinternalfrictions,althoughtheyemphasisedthattheirwishtostayoutoftheinternalaffairsofanyonestakeholdergroup.SeveralCSOsnotedthatwhiletheEITIMongoliaSecretariathadbeennotifiedthroughaPWYPletterdated10July2015ofthechangeofthreeCSOseachontheMSWGandtheNationalCouncil,thePrimeMinisterandChairoftheNationalCouncilhadnotapprovedthesenominationsasofJuly2016.NonethelesstheseCSOsnotedthatthesixnewCSOsmembershadconsistentlybeeninvitedtoMSWGandNationalCouncilmeetingssinceJuly2015regardlessofthePrimeMinister’sformalapproval.SeveralCSOsnotedthattherehadbeenanunderstandingfollowingthe2006DecreeestablishingMongolia’sEITIthatthePrimeMinisterwouldneedtoacceptnominationsfromallthreestakeholdergroupsbeforetheybecameeffective,butconcededthatthe2006DecreedidnotexplicitlyrequirethisandhadbeensupersededbyDecree222in2012.TheEITIMSecretariatnotedthatPrimeMinisterialapprovalwasnotrequiredforMSWGandNationalCouncilmembernominationsbyCSOsandthatthenewmembershadconsistentlybeentreatedasfullmembersassoonastheEITIMSecretariatwasinformedofthechangeofmembers.ACSOMSWGmembernotedthatfollowingseveralyearsofoutreach,theNGOWomenforReformhadfinallyjoinedthePWYPcoalitioninJuly2016.
OilandgascompanyrepresentativesonthetwoEITIbodiesdidnotrecallthereasonsfortheiroriginalnominations,althoughtheyassumedthattheinclusionofacompanyattheproductionstageandoneattheexplorationstagewastoensurerepresentativenessoftheindustry’sstructureinMongolia.ArepresentativefromanoilcompanyopinedthattheinclusionofPetroChinaDaqingTamsagin2007wasduetothefactitwasthefirstoilproducerinMongolia.
SeveralindustrystakeholdersrecommendedthatthesizeofboththeNationalCouncilandtheMSWGbereducedtoensureeffectivedecision-makingandfollow-up.SeveralCSOandindustryMSWGmembers
36ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
notedthattheMSWGdidnottendtoengageintechnicaldiscussionsrelatedtoEITIreporting.SeveraldonorsnotedthatthereappearedtobeavacuumintermsoftheMSWG’soversightofEITIimplementationonmoretechnicalEITIreportingissues.SeveralindustryrepresentativesnotedthattheMSWG’sdiscussionswerefocusedonthefinancialreconciliationratherthanbroaderissues,suchasthoserelatedtolegalinconsistencies.TherepresentativesnotedthatcompaniesweremoreinterestedintheresultsofEITIimplementationthanintheprocessitself.
AgroupofcivilsocietyrepresentativesthatserveonavarietyofsubnationalcouncilsstatedthatCSOrepresentativesontheNationalCouncilortheMSWGdidnottendtoconsultthem.SeverallocalCSOsnotedthatthemainmeansofcommunicationbetweenUB-basedandruralCSOswasviaemailandphone.AseniormemberofbroadcastmediastatedthattherewerenorealconsultationsmechanismsinplacebetweenmembersoftheMSWGandNationalCouncil,andthemediaandgeneralpublic.SeveralindustryrepresentativesnotedthattherewasnoconsultationmechanismforindustryengagementinEITIoutsideofNationalCouncilandMSWGmeetings.ThereisnocanvassingofindustrystakeholdersbeyondoccasionaldisseminationofinformationviaemailtotheMNMA’smembership,accordingtotheserepresentatives.OilandgascompaniesconsultednotedthatindustryrepresentativesneverconsultedthemaboutEITIissues.SeveralCSOsnotedthatindustrymembersoftheNationalCouncilandMSWGrepresentedtheirowninterestsratherthanthoseoftheirconstituency.
MostCSOsexpressedconcernoverthehostingofMSWGmeetingsbytheMinistryofMining,giventhetimeconstraintsthisplacedonthediscussions,andnotedmeetingscouldbeheldattheOpenSocietyFoundation.SeveralCSOsnotedthatNationalCouncilmeetingsweredefactochairedbytheSecretarytotheNationalCouncil,SeniorAdvisortothePrimeMinisterMrsB.Delgermaa,ratherthanbythePrimeMinister.Thiswascontrastedwiththeprevioussituation(overthreeyearsago)whenthePrimeMinisterwouldopenNationalCouncilmeetingsandthendelegatedchairingtohisDeputyChair,theMinisterofMining.
Initialassessment
TheMSWGhasbeenformedandincludesself-appointedrepresentativesfromeachstakeholdergroupwithnosuggestionofinterferenceorcoercion.AlthoughthemechanismforcivilsocietynominationsontheMSWGrestrictsselectionofmembersoutsidethePWYPandMECCcoalitions,thereisnoevidencethatnon-memberNGOsthatwouldhavelikedtoparticipatehavebeenconstrainedfromdoingso.
TheToRfortheMSWGaddressestherequirementsoftheEITIStandard,butstakeholdershavehighlightedcertaindeviationsinpractice,particularlyrelatedtovoting.CertainMSWGdecisionsappeartobepasseddespiteobjectionsofoneofthestakeholdergroups,forinstanceinrelationtodataqualityassuranceprocedures.AttendanceofMSWGmembersisalsoinconsistent,withdelegationofattendancetodifferentrepresentativesbeingcommon.TheinconsistentparticipationoftheSPIAisaconcern,particularlygivenitsresponsibilitiesforverifyinggovernmentrevenueattheleveloflineagenciesandministries(seebelow,ondataquality).IntheInternationalSecretariat’sview,theseweaknesseshaveaffectedEITIimplementationandcontributedtoinconsistentmulti-stakeholderoversightofthetechnicalaspectsofEITIreporting,inparticularwithrespecttodataquality.Whileadhocworkinggroupshavebeenconstitutedtooverseetechnicalaspectsofreporting,theoutcomeoftheirdiscussionsanddecisionsremainunclear,forinstanceinrelationtothedefinitionofquasi-fiscalexpenditures(seeRequirement6.2),dataqualityassurance(seeRequirement4.9)andthereconciliationofsubnationaldirectpayments(seeRequirement4.6).
Inlightoftheseconcerns,theInternationalSecretariat’sinitialassessmentisthatMongoliahasmade
37ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
meaningfulprogressinmeetingthisrequirement.TheMSWGshouldtaskeachstakeholdergrouptoclarifytheirinternalnominationsandrepresentationprocedurestoimprovethetransparencyandparticipationintheprocess.TheMSWGandNationalCouncilareencouragedtoconsidercombiningtheNationalCouncilandMSWG(asenvisagedinthedraft“EITILaw”),andagreeanappropriatemembershipandmeetingschedulethatwillensureeffectiveoversightoftheEITIprocess.EnsuringsupportandparticipationfromSPIAisaprioritygivensomeoftheconcernshighlightedbelow.
Workplan(#1.5)
Documentationofprogress
TheEITIMSecretariattypicallyproducesadraftworkplan,whichisthendiscussedbytheMSWGandapprovedatthesamemeetingfollowingamendments.The2016EITIworkplan,availableontheEITIMwebsite96,wasdiscussedbytheMSWGatitsmeetingon11December201597andapprovedbytheNationalCouncilatitsmeetingon18December201598.
ThefourobjectivesofEITIimplementationarelinkedtotheEITIPrinciples,butalsoappearalignedwithnationalprioritiesinaimingtoimprovetransparencyintheextractiveindustriesforinstance.Therationaleforthefourobjectivesisexplained.Althoughtheworkplan’sfourthplannedoutcomeisthattheEITIReportbeusedatthepolicylevel,theworkplandoesnotincludeexplicitlinkstodocumentsorpoliciesrelatedtonationalreformprioritiesforthesector.Howeverthismarksanimprovementonthe201599and2014100workplans,whoseobjectiveswereidenticaltothe7EITIRequirementsandthusdidnotreflectnationalprioritiesfortheextractiveindustries.
AddressingoneofthechallengesofMongolia’sEITIimplementation,the2016workplanincludesactivitiesaimedatincreasingthecomprehensivenessofEITIreporting,includingworkshopstoencouragemorematerialcompaniestoreportandupgradestotheeReportingsystem.Morebroadly,theworkplanincludesactivitiestofollowuponspecificrecommendationsfrompreviousEITIreportsandValidations,withSections10.1-10.5coveringdisclosureofdatesofapplicationformininglicenses,studiesonstateparticipationintheextractiveindustries,consultationswithgovernmentstakeholdersoninformationgapsidentifiedduringthepilotValidationandareviewofMongolia’sEITIgovernance.Theworkplanincludestime-boundandmeasurableactivitiesaswellasplanstoaddresscapacityandlegalconstraints,suchastrainingworkshopsforcompanies,subnationalEITIcouncilsandcivilsociety(activities2.4,2.5and5inthe2016workplan).Italsoincludesactivities(number1.4)aimedatmonitoringcompliancewithArticle48oftheMiningLaw(requiringcompanydisclosureofpaymentstogovernment)andactivities(numbers10.1-10.3)involvingoutreachtoParliamenttofacilitatepassageoftheEITILaw.TheworkplanactivitiesdesignedtoimprovestakeholderengagementarerelatedtoparticipationinEITIreportingand
96AccessibleontheEITIMongoliawebsite:http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf97Minutesofthe39thMongoliaEITIMSWGmeeting,11December2015,http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf98Minutesofthe15thMongoliaEITINationalCouncilmeeting,18December2015,http://eitimongolia.mn/sites/default/files/uploads/en/NC_15_20151218_en.pdf99EITIMongolia2015workplan,http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf.100EITIMongolia2014workplan,http://www.eitimongolia.mn/sites/default/files/uploads/en/EITIM_POA_2014en.pdf
38ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
donotseemtoaimatimprovingstakeholderoversightofandengagementintheEITIprocess.
The2016workplanincludesclearcostsandsourceoffunding(primarilyWorldBank,EBRDandgovernment)forallactivitiesnotcoveredunderspecificprojects(suchasthesecondphaseofeReporting).ItalsoincludesactivitiestoextendEITIreportingtoareasonlyencouragedundertheEITIStandard,includingdevelopmentofanonlinecontractswebsite(Activity10.4.2)andintegrationoftheonlineEITIdataportalwithothergovernmentdatabases(Activities3.1-3.3).
ApprovedbytheMSWGatits10October2014meetingandbytheNationalCouncilatits12thmeetingon13January2015101andavailableontheEITIMwebsite102,theEITIM2015PlanofAction(workplan)includedmeasurableandtime-boundactivitiesaswellasactivitiesaimedataddressingspecificcapacityconstraintsidentifiedintheEITIReportsandotherassessments.103Whileactivitiesgenerallylinkedtobuildingcapacityinspecificstakeholdergroupswereincluded,onlygeneralreferencetorecommendationsinpreviousEITIReportswereincluded.104
The2013,2014and2015workplansincludedcleartimeframesforcompletionofeachactivity.In2013,theSecretariatreportedthat33ofthe42activitiesplanned(80%ofthetotal)werecompleted,withthemainactivitiesnotcompletedbeingthepassageofthedraft“EITILaw”andthedevelopmentoftelevisionserials.105In2014,theSecretariatreportedthat42ofthe65plannedactivities(65%ofthetotal)werecompleted,withthemainshortfallsbeingenactmentofthedraft“EITILaw”,theorganisationofregionalconferencesandthebroadcastingoftelevisionprogrammes.106Thereviewof2015workplanactivitiespublishedon31December2015notesthatall50activitiesplannedinthe2015workplanhadbeencompleted,evenifthedesiredobjectivewasnotreached.107Theactivitiescompletedwithouttheobjectivebeingmetincludeenactmentofthedraft“EITILaw”andsuccessfulValidationundertheEITIStandard.Stakeholderviews
TheEITIMSecretariatnotedthattheelaborationofthe2016workplanfollowedtheusualprocedures:itpreparedafirstdraftinNovember2015,circulatedittoMSWGmembersforcomment,theMSWGdiscussedandapproveditatits12DecembermeetingandsubmittedittotheNationalCouncil,whichapproveditatits18Decembermeeting.SeveralCSOrepresentativesnotedthatadditionalinputtothe2016workplanhadbeenmadeviaemailbetweentheMSWGandNationalCouncilmeetingsinDecember2015.
CommentsonthedraftworkplanhadbeenreceivedviaemailaheadoftheMSWGmeetingprimarilyfromCSOs,accordingtothesecretariat,althoughindustryhadmadecommentsduringtheMSWGmeetingitself.Commentshadfocusedoncapacitybuildingactivities,subnationaloutreachactivitiesand
101Minutesof12thmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency,13January2015,(onlyavailableinMongolianonthewebsite,http://eitimongolia.mn/sites/default/files/uploads/UZ_12_2015.pdf)102InEnglish(http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf)andinMongolian(http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015mn.pdf).103EITIMongolia2015workplan(p.1),http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf.104EITIMongolia2015workplan(pp.2-3),http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf.109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf
39ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
activitiesrelatedtocorporatesocialresponsibility.CommentsfromgovernmenthadfocusedonthetimingofactivitiesandintegrationofgovernmentdatabasesandstrengtheningsubnationalEITIcouncils,accordingtothesecretariatandgovernmentrepresentativesconsulted.SeveralminingindustryrepresentativesstatedtheywouldonlycommentonaspectsoftheEITIworkplanrelateddirectlytocompanies,sincetheyconsideredmoregeneralcommentsasapotentialbreakonfinalisingthedraftworkplan.Oilandgascompaniesconsulteddidnotrecallreviewingthedraft2016workplanandstatedthatCSOswerethemostengagedinprovidinginputsincetheyhadaninterestinsteeringfundingtowardstheiractivities.
CSOswelcomedthe2016workplanasamarkedimprovementonpreviousworkplans,giventhestrongfocusonuseofEITIdataandcapacitiesofsubnationalEITIcouncils.ThesecretariatnotedPWYP’sstrongapprovalofthe2016workplangiventhatCSOshadbeengiventheleadinorganisingruraloutreachactivities.Severalindustryrepresentativesalsowelcomedthe2016workplan,notingthatitwasmorerealisticthanpreviousworkplans,whichhadseemedlikeunattainablewishlists.Thearguedthatachievableobjectivesshouldbesetinfuture,ratherthanabstractobjectivesandachecklistmentality.
SeveralCSOrepresentativesnotedthatthe2016workplanwasanimprovementonpreviousworkplanssinceitreflectedmoreofthenationalprioritiesatacriticaltimefortheminingsector.TherepresentativesnotedthattheEITIMongoliaNationalForuminNovember2015hadbeenawaytocanvassstakeholdersregardingprioritiesandrecommendations,whichweresubsequentlyincludedinthe2016workplan.APWYPrepresentativenotedthatthecoalitionhadsentthedraft2016workplantotheirmembersandsoughtinput,althoughshealsonotedthateffortstoseekinputfrombroaderstakeholdersbeyondtheirmemberNGOshadnotbeensufficient.
AMECCrepresentativenotedthatthe2016workplanwasrelativelygood,butthatimplementationhadbeenweakgivenbudgetconstraintsinQ1-2016.WhileseveralCSOMSWGmembersnotedtheconstraintsonimplementingthe2016workplaninthefirsthalfoftheyear,theyalsonotedthatallworkwasnotnecessarilylinkedtotheavailabilityoffunds,citingactivitiessuchasworkinggroupmeetings,developingtheToRfortheIAandfollowinguponEITIrecommendations.Despitebudgetconstraints,theMSWGshouldhaveseizedopportunitiesforsuchactivitiesastheyarose,accordingtotherepresentatives.CSOrepresentativesalsonotedthattheabsenceofclearindividualresponsibilitiesforeachworkplanactivitywasachallenge,giventhatMSWGmembersseemedtoconsiderallactivitieswereultimatelytheresponsibilityoftheEITIMSecretariatratherthanofspecificMSWGmembers,whothusdidnottakeresponsibilityforactivitiesnotbeingcompleted.TheworkoftheEITIMSecretariatwaspraisedbyseveralCSOMSWGmembers,particularlygiventhefactthatsecretariatstaffsalarieshadnotbeenpaidforsixmonths.SeveralCSOMSWGrepresentativesnotedthattheyhadcontinuedworkrelatedtoEITIinthefirsthalfof2016,includingtrainingsandworkontheOpenSocietyForum’scontractsportal.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.The2016EITIworkplanispubliclyaccessibleandproducedinatimelymanner,withworkplanobjectivesalignedwithnationalpriorities.TheworkplanalsoincludesspecificactivitiestofollowuponrecommendationsfromEITIreportingandValidation.ItappearsthatconsultationsaroundMongolia’sfirstEITINationalForuminUlaanbaatarinearlyNovember2015weretakenintoaccountintheworkplan’sdevelopment,evenifformulationofalonger-termplanto2020discussedattheNationalForumremainsoutstanding.Thelackofbroaderconsultationswithineachofthethreeconstituenciesisaconcern.TheMSWGshouldensurethatpreparationsforthe2017workplanincludecanvassingofthe
40ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
viewsofthethreestakeholdergroups’broaderconstituencies.Delaysinworkplanimplementationappearreasonablegivenlegislativeandfundingconstraints.
Table1-Summaryassessmenttable:MSGoversight
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
GovernmentengagementintheEITIprocess(#1.1)
ThegovernmentiscommittedtoandengagedintheEITIandrelevantgovernmentrepresentativesarepartoftheMSWG.
Satisfactoryprogress
IndustryengagementintheEITIprocess(#1.2)
Companiesareengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Industryrepresentativestakepartinoutreachandeffortstopromotepublicdebate.TheredonotappeartobeanylegalobstaclespreventingcompanyparticipationintheEITI.
Satisfactoryprogress
CivilsocietyengagementintheEITIprocess(#1.3)
Civilsocietyisengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.CSOrepresentativestakepartinoutreachandeffortstopromotepublicdebate.ThereisanenablingenvironmentforcivilsocietyparticipationintheEITI.
Satisfactoryprogress
MSGgovernanceandfunctioning(#1.4)
TheMSWGcomprisesrelevantactorsandallstakeholdersfeeladequatelyrepresented.TheTORfortheMSWGaddressestherequirementsoftheEITIStandardandappearstobelargelyfollowedinpractice,evenifdecision-makingsometimesincludesvotinginpractice.HoweverthereisevidenceofkeydecisionsbeingtakenwithoutsupportfromallthreestakeholdergroupsontheMSWGandNationalCouncil.WhiletheMSWGmeetsatmostthreetimesayear,severaladhocworkinggroupsundertakespecificwork,althoughrecordsarenotkeptforthesemeetings.Theoutcomeofdiscussionsbythese
Meaningfulprogress
41ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
adhoccommitteesandtheMSWG’sdecisionsonkeyscopinganddatareliabilityquestionsremainsunclear.ThereisnoclauseintheMSWG’sToRrequiringthattheMSWGundertakeoutreachactivitieswithcivilsocietygroupsandcompanies.
Workplan(#1.5)
TheMSWGhasincludedinits2016workplanspecificactivitiestofollowuponrecommendationsfromEITIreportingandValidation.Implementationoftheworkplanappearsbroadlyontrackandspecificdelaysappearreasonable.
Satisfactoryprogress
Recommendations:1.TheMSWGinencouragedtoconsiderhowmoremeaningfuldiscussionsthroughtheEITI,linkingtonationaldiscussionsandpriorities,couldencouragemoreactiveparticipationbyallstakeholdergroups.2.TheMSWGshouldtaskeachstakeholdergrouptocodifytheirinternalnominationsandrepresentationprocedurestoensureindustryandcivilsocietystakeholdersnotmembersoftheMNMA,PWYPorMECCareempoweredtoseekrepresentation.3.TheMSWGisencouragedtoconsidercombiningtheNationalCouncilandMSWG(asenvisagedinthedraft“EITILaw”),andagreeanappropriatemembershipandmeetingschedulethatwillensureeffectiveoversightoftheEITIprocess.4.TheMSWGshouldensurethatpreparationsforthe2017workplanincludecanvassingoftheviewsofthethreestakeholdergroups’broaderconstituencies.5.TheMSWGisencouragedtoconsultwithgovernmententitiesonthefeasibilityofassigninganofficerineachdepartmenttaskedwithEITIreporting,toensureconsistencyandcapacitybuilding.6.TheMNMAisencouragedtoconsiderestablishingaworkinggrouponEITItoensuregreaterconsultationwithcompaniesnotontheMSWGorNationalCouncil.7.TheMSWGshouldreviewitsToRtoensurethataquorumisachievednotonlywhenamajorityofrepresentativesareinattendance,butalsoseveralrepresentativesfromeachstakeholdergroup.TherevisedToRcouldalsobetterdefinetherespectiverolesandresponsibilitiesoftheMSWGandtheEITIMSecretariat.8.TheMSWGshouldconsiderincludingaclauseinitsToRencouragingMSWGmemberstoparticipateinoutreachactivitieswithcivilsocietygroupsandcompanies.TheMSWGisalsoencouragedtoconsideracodeofconductand/oramendingtheMSWGToRstoaddressconflictsofinterestandthetreatmentofconfidentialinformationbyMSWGmembers.9.TheMSWGshouldclarifythemandateandgovernanceofadhocworkinggroups.10.ThegovernmentisencouragedtoreviewthefinancingforEITIimplementationtoensuresustainabilityoverthelongerterm.
42ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
PartII–EITIDisclosures
2. Awardofcontractsandlicenses
2.1 Overview
ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtothelegalframeworkfortheextractivesector,licensingactivities,contracts,beneficialownershipandstate-participation.NotethatallpagenumbersrefertotheEnglish-languageversionofthe2014EITIReport109andthe2013EITIReport110.
2.2 Assessment
Legalframework(#2.1)
Documentationofprogress
The2014EITIReportprovidesanoverviewofthelegalenvironmentofextractiveindustries,includingdescriptionsoftherelevantlawsandgovernmentresolutions.Italsonotesrecentreforms,suchasthe2014PetroleumLaw,andplannedreformssuchasthedraftLawonTransparencyintheExtractiveIndustries.Thebriefdescriptionofthefiscalframeworkonlyappearstocoverroyaltyandwindfallsurchargeratespermineral,notthelevelsofotherapplicabletaxesandfees.Whilethedegreeoffiscaldevolutionisnotaddressedinthenarrative,thetwochartsinSection2.2.1(p.16)providethesplitbetweencentralandsubnationalgovernmentrevenues.Section5.1.3.1(pp.61-63)providesadescriptionofgovernmentinstitutionsintheextractiveindustries.
Thelegalandregulatoryframeworkisdescribedinthe2013EITIReport,includingrelevantgovernmentactionplansandlawsformining(pp.28-29,pp.57-58,andpp.58-60),althoughanumberofimportantlawssuchasthe“LawonProhibitingMineralExplorationandExtractionNearWaterSources,ProtectedAreasandForests”(popularlyknownasthe‘LongNameLaw’)arenotdescribed.Relevantlawsandregulationsforoilandgasaredescribed(onpp.59-60,pp.64-65).Thedegreeoffiscaldevolutionandtherolesandresponsibilitiesoftherelevantgovernmentagenciesaredescribed(pp.54-55),althoughthereportdoesnotincludeanexplanationoflocalgovernments’entitlementsto30%ofroyaltiesdirectlyforallcommoditiesasidefromgoldandcopper,asdescribedinsecondarysources111.DespitethesignificantroleoftheNationalSecurityCouncil(NSC),itisonlyreferredtoonce(p.64)anditspowersofvetoonallnewPSAawardsandawardspertainingtomineralstrategicdepositsarenotdescribed.112ThesepowerswerehighlightedinconsultationswithoilandgasrepresentativesontheMSWGandPAMThe2013EITIReportalsoincludedinformationonreformsimplementedin2014(p.58,pp.63-64).
109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf110http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202013%20en.pdf111Seep.13,WorldBank(2011),“ImplementingEITIattheSubnationalLevel”,http://siteresources.worldbank.org/INTOGMC/Resources/EITI-WBMiningSectorWEB.pdf112Seeforinstancep.86of“AnanalysisofminingsectoreconomicsinMongolia,”ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/gjbres/gjbr-v4n4-2010/GJBR-V4N4-2010-8.pdf
43ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Stakeholderviews
Industryrepresentativesfromboththeminingandoilandgassectorsconsideredthedescriptionofthelegalenvironmentandfiscalframeworkinthe2014EITIReporttobebroadlyaccurate.Upondiscussion,therewasstronginterestfromallindustryrepresentativestoincludemoreinformationondeviationsinpracticefromthelegalframework,giventhefrequentchangesinthepastthreeyears.SeveralCSOsnotedtheyhadaskedformoreinformationontheregulatoryframework,andtheLongNameLawinparticular,tobeincludedinthe2014EITIReportandexpressedsatisfactionthatthedescriptionsincludedweremoreaccuratethaninpastEITIReports.SeveralgovernmentandindustryrepresentativesnotedtheyhadnotactivelyparticipatedinpreparingthedescriptionofthelegalframeworksectionandthatthishadbeenlefttotheIA.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheEITIReportcouldbenefitfrommoreextensivediscussionofpracticalchallengesanddeviationsintheimplementationofrelevantlaws.TheMSWGmaywishtoconsiderincludingamorecompletedescriptionofdeviationsinpracticefromthelegalandfiscalframeworks,andtousetheEITIReporttoraisecommunityandindustryawareness..
Licenseallocations(#2.2)
Documentationofprogress
The2014EITIReportclearlyindicatesthat171newmininglicenseswereawardedin2014(p.65),followingtheliftingofamoratoriumonnewmininglicensesinJuly.TheEITIReportdoesnotprovideinformationabouttherecipientsofthesenewmininglicenses,althoughthisinformationcanbeaccessedthroughMRAM’sonlineminingcadastre114ortheEITIMongoliadataportal115.Thereportalsoprovidesalistofallmininglicensestransferredin2014inthetableinSection5.2.1.1(pp.96-97),includinglicensename,area,nameoftransferorandnameofrecipient.Mininglicenseapplicationprocedures,includingthestandardprocessforawardingandtransferringlicensesandthestandardtechnicalandfinancialcriteriausedforassessingapplications,aredescribedinSection5.2.1(pp.92-98).Theprocessforbiddingformininglicenses,incaseswheremininglicensesareawardedthroughbidding,arealsodescribed,includingbidcriteria.Thesectionassessespracticaldeviationsfromtheproceduresforonlyonespecificlicenseapplication.Thereisnocommentaryonanynon-trivialdeviationsfromstatutoryproceduresforalllicensesallocatedortransferredin2014.
The2014EITIReportalsoprovidesinformationontheprocessofoilandgaslicenseawards.Asoilandgaslicensescanbeawardedthroughbidding,bidcriteriaaredescribedinSection5.1.5.2(p.85).Section5.2.2(pp.99-103)describesthelicenseallocationproceduresforoilandgas,includingadescriptionoftheprocessaswellastechnicalandfinancialcriteriausedforassessingapplications.Italsoassessesdeviationsfromtheproceduresinpractice,usingonelicenseapplicationprocessasacasestudy.However,itisunclearfromtheEITIReportwhetheranynewoilandgasproduction-sharingagreements(PSAs)wereconcludedin2014.Section5.1.5.2(p.85)notesthatSansrynGeologiKhaiguulLLCtransferred
114https://cmcs.mram.gov.mn/cmcs115http://e-reporting.eitimongolia.mn/portalMap/
44ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
responsibilitiesofitsPSA(‘NomgonIX’)toUmnudMongolynPetroleum(UMP)companybutdoesnotclarifywhentheoriginalPSAwithSansrynGeologiKhaiguulLLCwasconcluded.FrompressreportshoweveritappearsthattheoriginalPSAwassignedbetweenSansrynGeologiKhaiguulLLCandthegovernmentinFebruary2014.116BasedonproceduresforotherPSAs,117itappearslikelythattheawardofNomgonIXwasthroughcompetitivebidding,althoughthisisnotclarifiedinthe2014EITIReport.NolistofbiddersforthisPSAisincludedinthe2014EITIReport.Itisalsounclearwhy,inSection5.2.2(pp.99-103),theMSWGdescribedtheprocessfortheallocationofDongShengJonggongPetroleumDevelopmentGroup’spetroleumproducinglicenseawardedin2010andnottheNomgonIXPSAconcludedin2014.ThereportdoesnotindicatewhetheranyoilandgasPSCswereawardedortransferredin2014.
Therewerenomininglicenseallocations(eitherforexplorationorproduction)awardedin2013giventhemoratoriumonnewlicensesfrom2010to2014,butoneoilandgasPSAwasawardedin2013.Equally,therewerenolicensetransfersin2013sincetransferswerenotallowedunderthe2006MineralsLaw(whichwasonlyamendedinJuly2014).The2013EITIReportdoesnotnotetheexistenceofamoratoriuminnewlicensing.Whileitdescribesthelicenseallocationproceduresformining(pp.58-59)andforoilandgas(onp.65),itdoesnotcontainanyinformationonthetechnicalandfinancialcriteriausedinallocatinglicensesineithersector.ItdoesnotprovideanydetailsrelatedtotheoilandgasPSAawardedin2013.
Thereisnoadditionalinformationonlicenseallocations,suchascommentaryontheefficiencyandeffectivenessofthesystemsorcommentaryonlicensesawardedpriortothefinancialyearcoveredbytheEITIReport,althoughthisisnotrequiredundertheEITIStandard.
Stakeholderviews
ArepresentativefromapastEITIMIAnotedthattheMSWGhadnotdiscussedthenumberofnewmininglicenseawardsortransfersin2014priortodatacollectionforthe2014EITIReport.TheIAhadreceivedcadastralinformationfromMRAMandcomparedittoinformationinthe2013EITIReporttodeterminethenumberofnewlicenseallocationsin2014.TheIAdidnotreceiveanyinformationfromtheMSWGregardingwhetheranynewoilandgasPSCshadbeenawardedin2014.TheIAincludedinthe2014EITIReportinformationonPSCsreceivedfromPAM.
SeveralCSOandindustryrepresentativesnotedthatthenumberofnewexplorationlicenseallocationsquotedinthe2014EITIReportappearedincorrect.WhilethemoratoriumonnewexplorationlicenseswasliftedinJuly2014,itwasonlyeffectivefromJanuary2015.Therepresentativesnotedthatthe56newexplorationlicenseswereinfactlicensesthathadbeenreturnedtotheiroriginalownersthroughcourtorder,ratherthannewlicenseallocations.Itwasnotedthatthemoratoriumonnewexplorationlicensesdidnotcoverreturnsofsuchlicensestotheiroriginalowners.IndustryandgovernmentrepresentativesdidnotcommentonwhetheranynewoilandgasPSAhadbeensignedin2014.
ACSOrepresentativeprovidedadditionalinformationabouttheapplicationproceduresforexplorationlicenses,whichwerenotincludedinthe2014EITIReport,notingthatincaseswheretwocompaniesappliedforlicensesonoverlappingareas,theholderofthelowestapplicationnumberwasgiven 116InfoMonglia(February2014),‘ProductionsharingcontractbetweentheGovernmentofMongoliaand“SansrynGeologiKhaiguulLLC”wasapproved’,http://www.infomongolia.com/ct/ci/7396117SeePetroleumAuthorityofMongoliawebsite-http://english.pam.gov.mn/content/14192.shtml
45ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
preference,highlightingthearbitrary(butnotdiscretionary)natureoflicenseallocations.Itwasalsonotedthattheweeklyuseofapplicationnumbersonafirst-come-first-servedbasisbenefittedthosewithfasterinternetconnections.AccordingtotheCSOrepresentative,the2014EITIReportdoesnotmentionedthe30-dayconsultationperiodfortheaimagandsoumgovernmenttoobjecttoalicenseawardonceMRAMhadapprovedalicense,northeprovisionforcompaniestoappealavetooftheaimagorsoumgovernment.
GovernmentrepresentativesandsomeCSOrepresentativesarguedthattherehadbeennosignificantdeviationsfromthelicenseallocationandtransferregulationsinpracticein2014.Severalminingindustryrepresentativesquestionedhowtheywouldknowofpracticaldeviationsinlicenseallocations,statingthattheybelievedthegovernment’sopiniononthis.Deviationswouldonlybeevidentifacompanyfiledaclaimagainstthegovernmentrelatedtolicenseallocations,accordingtotheserepresentatives.StakeholdersdidnotcommentontheproceduresforawardingthePSAin2014.OilandgascompaniesconsulteddidnotknowwhytheallocationprocessforDongSheng’s2010PSAwasselectedfordescriptioninthe2014EITIReport.ThisPSAwasinfactnotanewaward,butratheraPSArenewalaccordingtotheserepresentatives.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogresswithmeetingthisrequirement.Althoughthe2014EITIReportclearlystateshowmanymineralexplorationandproductionlicenseswereawardedandtransferredin2014,itappearstomiscategoriseexplorationlicensesthatwerereturnedtotheiroriginalownersin2014afterseveralyearsofbeingsuspended,asnewexplorationlicenseawards.
Thereportincludesanoverviewoflicenseallocationprocedures,thetechnicalandfinancialcriteriausedforassessingmininglicenseapplicationsandthebidcriteriaforoilandgasPSAs.TheEITIStandardrequiresinformationon“anynon-trivialdeviationsfromtheapplicablelegalandregulatoryframeworkgoverninglicensetransfersandawards”.TheReportincludesanassessmentforonemininglicenseallocationandoneoilandgasPSC,butnotforalllicensesawardedortransferredin2014.TheStandardisclearthattheinformationshouldcover“alllicenseawardsandtransferstakingplaceduringtheaccountingyearcoveredbytheEITIReport”.TheMSWGshouldalsoensurethatfutureEITIReportsclarifythenumberofoilandgasPSAsconcludedandtransferredandanynon-trivialdeviationsfromtheallocationproceduresforalloil,gasandmininglicensesawardedduringtheyearunderreview.
Licenseregisters(#2.3)
Documentationofprogress
The2014EITIReportprovidesmorecomprehensiveinformationonlicensesthanpreviousEITIReports.Section5.1.4.1(pp.65-67)andAppendix14(pp.207-264)provideanoverviewofactivemininglicensesin2014,includinglicense-holdername,licensenumber,mineralscovered,areaname,areasize,province,district,dateofawardanddateofexpiry.Section5.1.6(pp.87-89)providesanoverviewoftheuraniumminingsector,includinganoverviewof57uraniumlicenses.Theinformationprovidedincludeslicensenumber,license-holdername,areaname,areasize,aimag/province,district/soum,dateofawardanddateofexpiry.Thereisnodataonthedateofapplicationorlicensecoordinatesintheoverviewofmininglicensesnorintheuraniumlicenses.Section5.2.1.3(p.98)describestheMRAMonlinecadastreandprovidesalink.Whilebasicinformationisavailablefromthecadastrefreeofregistration,specialaccess
46ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
(throughregistrationfreeofcharge)providesaccesstoalmostallinformationrequiredunderRequirement2.3,includingcoordinates,butnotdateofapplication.
Section5.2.2.3(p.103)providesanoverviewofthepubliclicenseregisterfortheoilandgassector.ItincludesalinktoPAM’spublicregisterof22PSAs(accessiblefreeofcharge)andnotesthattheinformationincludeslicenseareanames,areacodesthatcorrespondtothemaponPAM’swebpageandlicenseholders,butitdoesnotincludecoordinatesofthelicensearea,dateofapplication,dateofaward,durationofthelicenseandcommodityproduced.ThereportalsonotesthatMEITI’seReportingsystemmakes20petroleumlicenseinformationpubliclyavailable,includinglicensenumber,areaname,areasize,licenseholder,licenseissueddateandexpirationdatesontheirwebpagefreeofcharge,althoughthisdoesnotincludedateofapplication,commoditiesbeingproducedorlicensecoordinates.
The2013EITIReportincludesdisclosureoflicenses.Appendix13118containsalistoflicenseholdersinthecountry(all250companiesreconciledaswellasalllicenseholders;radioactivemineralslicenseholders;petroleumlicenseholders).Section6.5.3(p.100)providesanoverviewofchangesinlicense-holdingsin2013andsomegeneralreasonsforthelapsing/withdrawaloflicenses.Table19(p.36)includesdetailsofthe21activePSAs,includingnamesoflicense,dateofaward,GovernmentofMongoliaresolutiongoverningthePSA,license-holdername,countryoforiginoflicenseholderandtypeoflicense(exploration/production).Theinformationcovers3029licenses,whichismorecomprehensivethanthe250companiesincludedinthescopeofreconciliation.However,Chart17(p.62)notesthattherewereatotalof3118activelicensesin2013(1815explorationlicensesand1303mininglicenses).The2013EITIReportincludesanoverview(pp.63-64)oftheWorldBankfundedprojecttodevelopacomputerizedminingcadastresystem,whichwascompletedin2014.
Stakeholderviews
Governmentrepresentativesnotedthatthedateofapplicationisnotdisclosedonthecadastre,butthatthisinformationwasavailableinternally(butnotavailabletothepublic)andthatworkwasplannedinthe2016EITIworkplantodisclosethesedates(underActivity10.4.1).Thecadastreisupdatedeverytimealicenseisawarded,butnotforeveryapplication.Theplanistopubliclylistthedateofapplicationonthecadastreinfuture,althoughnospecificdatehasbeensetandthiswouldrequireanewtechnicalassistanceagreementwiththeWorldBankinordertorevisethestructureofthecurrentcadastre.
OilandgascompaniesconsultedwerenotawareofanyconfidentialityclausescoveringPSAcoordinates,whichwereconsistentlyincludedineachPSA’sannexes,althoughtheynotedtheremaybenationalsecurityconcernsrelatedtothisissuetheywerenotawareof.However,theynotedthattheyconsideredthePSAstobeconfidential,asofJuly2016(seebelowoncontractdisclosure).Since2006,atleast,theprocesswasthatPAMwouldissueapressreleaseonitswebsiteeverytimetheyreceivedanapplicationforanopenoilandgasblock,invitingotherinterestedbidderstoexpressinterestbyaspecificdate,accordingtotheoilandgasrepresentatives.Whilethedateofapplicationwasnotprovidedassuch,itwaspossibletocalculateitsincethedeadlineforexpressionsofinterestprovidedoneachpressreleaserepresented30daysfromtheinitialdateofapplication.However,therepresentativesnoteditwouldnotbepossibletoreconstitutethedatesofapplicationforolderPSAs,particularlythoseinproductionphasethatwereawardedinthe1990spriortoPAM’swebsite. 118Appendix13ispublishedseparatelyfromthe2013EITIReportontheEITIMongoliawebsite(http://www.eitimongolia.mn/sites/default/files/uploads/final-reports/2013%20Report%20annex%20EN.zip)becauseitishundredsofpageslong.
47ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.Whilemostinformationonmininglicensescanbefoundinthe2014EITIReportandtheMRAMonlinecadastre,datesofapplicationforthelicensesaremissing.The2016MSWGworkplanincludesactivitiesrelatedtodisclosingdatesofapplicationforallmininglicenses.TheMSWGshouldworkwithMRAMtoensurethatdatesofapplication,awardandexpiryforalllicensesisfreelyavailableonthecadastreandharmonizethelicensedatabasesmaintainedbydifferentgovernmentagencies.
InformationonoilandgasPSAsisprovidedthroughtheMEITIeReportingportal,althoughdatesofapplicationandlicensecoordinatesarenotprovided.WhilePSAs’coordinatesareavailableinthefulltextofPSAsexpectedtobepublishedontheOpenSocietyForum’sonlinecontractsportaltobelaunchedinAugust2016,todatethisinformationremainsinaccessibletothegeneralpublic.WhileitispossibletoreconstitutethedatesofapplicationforPSAssignedsince2006,thoseforPSAsawardedpriortothisdate(andinparticulartheproducingPSAsawardedinthe1990s)arenotpubliclyavailableatthistime.WhilethecommoditiescoveredbyeachoilandgasPSAisnotprovided,itisimplicitthatthesecoverbothoilandgas.
Contractdisclosure(#2.4)
Documentationofprogress
The2014EITIReportincludesastatementofthegovernmentpolicyoncontractdisclosureandreviewsactualpractice.Section5.5.2.1(pp.122-123)providesanoverviewofgovernmentpolicyoncontractdisclosure,notingfourrelevantlaws(thePetroleumLaw,MineralLaw,NuclearEnergyLawandConcessionLaw).TheStatePolicyontheMineralsSectorrequirespublicationofallinformationonstate-andprivately-fundedgeologicalresearch,exploration,andprocessingactivitiesatalllevelsunlessthereareanylegalbarrierstosuchdisclosures.Italsorequiresthatthetermsoflocaldevelopmentagreementsconductedbetweenaninvestingcompanyandlocalself-governingbodiesmustbetransparent.IntheLawonGlassAccountsadoptedin2014,itisstipulatedthat"Stateandlocal-governmentownedentitiesmustdiscloseinformationonconcessionagreementsandjointventureagreementspublicly”,butthisonlyrequirestheprovisionofinformationabouttheagreement,notthewholeagreementitself.However,Article21oftheLawontheRighttoInformationandInformationTransparency,andArticle3.2oftheOrganizationalConfidentialityLawprovideprotectionforentitieswhichdonotwishtodiscloseinformationonthegroundsofthatdisclosuremightbeharmfultothelawfulinterestsoftheentityanditscompetitiveadvantageinthemarket,orthatinformationrelatestouniqueandconfidentialactivitiesoftheorganizationorbusinessentity.
Section5.5.2.2(pp.123-124)describesactualpracticeofdisclosureofcontracts.Todate,12agreementshavebeenmadepublic,ofwhich11arebetweenlocalauthoritiesandminingcompanies.The12thdisclosedagreementistheOyuTolgoiinvestmentagreement.Inordertoencouragecontractdisclosure,theIAincludedarequestfordisclosureofthecontractssignedwithstateandlocalgovernmentdepartmentsthroughtheEITIreportingtemplates.42ofthe236materialcompaniesreportedbackandprovidedinformationon167contracts(includedinAppendix32(pp.317-325),althoughonlytwocompanies(NoyonGariLLCandAndiinTemuulelLLC)actuallydisclosedtheircontractsinfull.Theothertenpublicly-availablecontractshadbeendisclosedpriortothe2014EITIReport.ThereportalsonotesthatconfidentialityclauseshavebeenremovedfromthenewmodelPSAandminingcontractssince2014.
48ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
The2013EITIReportincludesadetaileddescriptionofinconsistenciesingovernmentpolicyoncontractdisclosures,althoughasinglegovernmentpolicyoncontractdisclosureisnotincluded.Sections2.4.3(p.14)and8.4(p.112)refertocontractdisclosureandtotheconfusionbetweenvariousgovernmentbodies(MinistryofMines,PetroleumAuthority)andcompaniesongovernmentpolicyoncontractdisclosure.The2013EITIReportalsoincludesdetailsofcommunityagreements.Appendix14(p.114)includesdetailsof153agreementswithlocalgovernments,concludedby250companiesinthescopeofreconciliation.
Theinformationoncontractdisclosureinthe2013EITIReporthasbeenfolloweduponbytheMSWG.AspartoftheworkinggrouponcontractdisclosuresestablishedinJanuary2015,collaborationwithPAMsuccessfullyremovedtheconfidentialityclausefromnewmodelPSAsdevelopedfollowingtherevisedPetroleumLawin2014.ThethreePSAssignedsincethestartof2015followedthetemplateandarethusrequiredtobedisclosed.ThePAMhasstatedthatitiscommittedtocontractdisclosurebutthatconfidentialityclausesinoldPSAsstoppedthegovernmentfromdisclosingthem.TheAuthorityalsoexpressedconcerntotheWorkingGroupoverthepotentialimpactofdisclosingthetermsoftheoldestPSAsconcludedinthe1990s,whichitstatedincludedfiscaltermsthatweredisadvantageoustoMongolia,andthepotentialforapplicantsfornewerPSAstodemandequivalentterms.TheMSWGworkinggrouponcontractdisclosurehasmetallcompaniesholdingexistingoilandgasPSAsinMay2016toseektheirwrittenagreementtodisclosetheirPSAcontracts.
Stakeholderviews
AgovernmentMSWGrepresentativethatthegovernmentwasgenerallysupportiveofcontractdisclosure.Therepresentativenotedanumberoflegalrequirementsforcontractdisclosure,includingtheneedfornegotiationsrelatedtocontractnegotiationsonlargeminingprojectsthataresubjecttoparliamentaryscrutiny,andtheprovisionsoftheGlassAccountLawrequiringallgovernmentexpenditurecontractstobepublishedwithinfivedaysofsignature.
SeveralindustryandCSOrepresentativesnotedthatonlythelargestminingprojectsheldcontractswiththegovernment,intheformofstabilisationorinvestmentagreements,whilethemajorityofminingprojectsweregovernedonlybymininglicenses.CSOsnotedthatsincetherewereonlyahandfulofminingcontracts,theyhadaskedforagreementsbetweenminingcompaniesandlocalcommunitiestobedisclosed.Theintroductionofcommunitydevelopmentagreements(CDAs)in2016washighlightedbyCSOs,includingtheirclausesrequiringpublicdisclosureoftheseagreements.
StakeholdersnotedthatithadorganisedtwomeetingsoftheMSWG’scontractdisclosureworkinggroupin2016.Thefirst,on18March,wasaninternalmeetingtodiscussdevelopmentoftheOSF’scontractsportal,whilethesecond,on11May,washeldtogetherwiththeMinistryofMiningandoilandgasPSA-holderstodiscussdisclosureofallactive24PSAsasof2016.Whileoilandgascompaniesagreedtodisclosetheircontractsinprinciple,albeitwithoutsensitiveinformationsuchasfiscaltermsandfeasibilitystudiesinthePSAs’annexes,theEITIMSecretariatnotedthatthe15June2016deadlineforcompaniestosendtheircontractshadpassedwithnocompanieshavingprovidedcopiesoftheircontractsasof1July2016.WhileoilandgasrepresentativesconsultednotedthatholdersofnewerPSAswouldagreetopublishtheircontracts(albeitwiththeredactionsabove),holdersofPSAssignedinthe1990swouldlikelywaituntilthenegotiationsaroundconvertingtheirPSAstothenewmodel.TheoilandgasrepresentativesconsultednotedthatPAMintendstoconvertallexistingPSAstothenewmodelbytheendof2016,whichwouldrequiretheirdisclosure,althoughtheyexpressedreservationsaboutthistimeframe.Itwasnotedthatmuchwoulddependonwhethertherewouldbealegalobligationto
49ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
disclose.
SeveralCSOsnotedthatdevelopmentofthecontractsportalhadbeenincludedinthe2014,2015and2016workplans.Itwasnotedthatwhileacommonunderstandingofthedesirabilityofdisclosingcontractswasreachedduringmeetingswithgovernmentandcompaniesin2014,onlytwominingcontractshadbeendisclosedtodateandnoPSAhadbeendisclosedasofJuly2016.Itwasnotedthatmorecapacitybuildingandpublicitycampaignswereneededtopressurecompaniestodisclosetheircontracts.OneCSOrepresentativenotedthat,attheMay2016meeting,governmentandindustryrepresentativeshadgonebackonthecommonunderstandingaboutthebenefitsofcontractdisclosureandraisedconcernsregardingtheconfidentialityofcontracts.However,therepresentativesnotedthatconfidentialityclausesinPSAsonlyreferredtospecificsectionsofthecontract,suchasfiscaltermsandfeasibilitystudies,ratherthanthewholecontract.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheEITIReport’srecommendationonclarifyinggovernmentpolicyoncontractdisclosureisbeingactivelyfollowedup,andconfidentialityprovisionshavebeenremovedfromthenewmodelPSAdevelopedin2015.AnewcontractsportalisduetobelaunchedinAugust2016,withover100contractsofvarioustypes(investmentagreements,production-sharingagreements,sustainabilityagreementsandlocaldevelopmentagreements).TheMSWGisencouragedtoworkwithPAMtoclarifythetimelineforconversionofexistingPSAstothenewmodelPSAandthelegalimplicationsintermsofcontractdisclosure.
Beneficialownershipdisclosure(#2.5)
Documentationofprogress
MEITIhasundertakenworkonbeneficialownership(BO)disclosuresince2014.AsafirststageinexaminingBO,thescopeforthe2013EITIReportincludedarequirementtoaskcompaniesfordetailsoftheirlegalownership.TheMSWGmeetingon11March2014agreedonthedefinitionofBOtoreflectarticle4.1.26oftheMongolianLawonSecurities.The2013and2014EITIReportsdisclosedinformationonthelegalownershipof215companiesand26companiesrespectively,whichincludedinformationontheBOofcertaincompanies.FollowingextensivediscussionofthenewBOrequirement(#2.5)ofthe2016EITIStandardatits22April2016meeting,theMSWGagreedtoestablishaBOtechnicalworkinggroupchairedbyEnkhbayarNemekhbayar,headoftheFinanceandAccountingDepartmentoftheMinistryofMiningandmemberoftheMSWG.119Its20membersincluderepresentativesfromtheMinistryofJustice,theFinancialandRegulatoryCommission,theNationalStatisticalOffice,theMongolianStockExchange,MRAM,thePetroleumAuthority(PAM),theStateRegistrationBureau,Customs,theGeneralDepartmentofTaxation,ErdenesMongol,twominingcompaniesandfourCSOs.TheOpenSocietyForum(OSF)ispreparingaresearchstudyonBOintheMongoliancontext,whichshouldbepublishedbyAugust2016.TheNaturalResourceGovernanceInstitute(NRGI)planstoincludepreparationsoftheBOroadmapaspartofaweek-longtrainingwiththeMSWGinAugust2016.
Whilethe2014EITIReportdoesnotdefinethegovernment’spolicyonBOdisclosureintheextractive 119Minutesof40thMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup22April2016,unpublished(asof9July2016).
50ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
industries,thereportingprocessincludedrequeststoall236materialcompaniestodiscloseBOinformation.Thisincludedinformationonthreelevelsoflegalownershipaspartofthereportingtemplatesforbothoilandgasandminingcompanies.TheIAagreedwiththeMSWGduringtheinceptionworkshopon7July2015tolookintothreelevelsofownershipincorporatingaminimumof5%shareowningbeneficiariesatthefirstlevel,aminimumof25%shareowningbeneficiariesatthesecondlevelandaminimumof51%shareowningbeneficiariesatthethirdlevel.120Theprevious“supplementaryinformation”sectionofthereportingtemplatehavebeenupdatedforthe2014EITIReporttocompriseschedulesandinstructionstoprovide:
(i) thedefinitionofBO
(ii) theEITIpilotreportingtemplate
(iii) definethe3-layersofequityownershipthresholds(whereapplicable)
(iv) linktothewebpage(whereapplicableforpublicly-listedcompanies)
Ofthe236materialcompanies,30companiesdiscloseddetailsoftheirlegalowners,asdescribedinAppendix21.a(pp.305-314),althoughnocompanydiscloseddetailsoftheirultimateBO.ThenewLawonRegistrationofLegalEntities,passedbytheGreatKhuralinMay2015,didnotincludeprovisionforapublicregistryofBOinformationthathadappearedinearlydrafts.Informationisonlyavailableuponspecificrequestandtherearegroundsforwithholdinginformation.ThedraftLawonTransparencyintheMineralResourcesSector(theso-called‘EITILaw’)includesprovisionsrequiringcompaniesinthesectortodisclosetheirBO.
Stakeholdersview
AgovernmentmemberoftheMSWG’sBOworkinggroupnotedthatthegovernment’spolicyonbeneficialownershipdisclosurewasclearforpublicly-listedcompanies(throughtheLawonSecurities)andforpublic-sectoremployees(throughtheAnti-CorruptionLaw),butthepolicyforothercompanieswasstillevolving.SeveralgovernmentrepresentativesnotedthatwhilethedisclosuresrequiredbytheEITIStandardhadexpanded,therewasinsufficientlegalbasisforthesedisclosures.Theneedforparticipationfromhigh-levelgovernmentofficialswasnotedinordertoestablishaclearlegalframeworkforEITI.RepresentativesoftheMNMAnotedthattheirmemberswerelargelysupportiveofdisclosingtheidentityofrealownersofminingcompanies,butthatimplementationwouldbechallenging.Whilelargercompanieswouldbebroadlysupportive,smallercompaniesthatformthemajorityofminingcompaniesinMongoliawouldprovehardertoreach.
Initialassessment
Implementingcountriesarenotyetrequiredtoaddressbeneficialownership.NonethelesstheMSWGhasundertakensomeworkonBO,includingrequestsforBOdisclosureinreportingtemplatesforboththe2013and2014EITIReports.TheresultswereconvertedintoaninteractiveinfographicontheEITIMwebsite.TheMSWGhasalsoestablishedaBOworkinggrouptosteerpreparationsofMongolia’sthree-yearBOroadmapby1January2017,inlinewithRequirement2.5.b.iiofthe2016EITIStandard.WhiledisclosureofBOinformationhasbeenincomplete,withinformationpertainingtolegalownershipinmostcases,theMSWGhasclearlyconsideredtheissueofBOandundertakenworktodisclosesuchinformationinaphasedapproach.InpreparationforenforcementofRequirement2.5ofthe2016EITI 120SeeTopic3.4ofAppendix1and5oftheKPMG2014EITIMongoliaInceptionReport.
51ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
StandardanddrawingonthefindingsoftheOSFstudyinAugust2016,thegovernmentisencouragedtoclarifygovernmentpolicyonBOdisclosure.
Stateparticipation(#2.6)
Documentationofprogress
Section5.4(pp.110-115)inthe2014EITIReportdescribesstateparticipationintheextractiveindustriesandnotesthatitgivesrisetomaterialrevenues.
Section5.4.2 (p.111)providesdetailsof the21SOEsoperating intheminingsector.Section5.4 (p.115)explainsthattherearenoSOEsoperating intheoilandgassector,butthatPAMrepresentsthestate’sinterestsinthesector,includingthelevelofstateownershipineachproject.
The2014EITIReportnotesthatthefinancialrelationshipbetweenthestateandSOEsis“primarily”governedbytheHumanDevelopmentLaw(p.110).Itstatesthatincomefromdividendsandfromsalesofsharesoflegalentities,includingSOEs,withproductionlicensesforstrategicallyimportantmineraldepositsarerequiredtobetransferredtoHumanDevelopmentFund.ThelawalsodictatesthatacertainpartofloansandprepaymentsreceivedwithregardtotheusageofstrategicallyimportantmineraldepositsaretobetransferredtotheHumanDevelopmentFund.AccordingtotheArticle21ofthe1996LawonStateandLocalGovernmentProperty,companiesownedbythenationalorlocalgovernmentarenottotakeloansfromthirdpartiesorraisecapitalbyissuingsharesofstockwithoutpriorapprovalfromeitherthestatecentraladministrativebodyinchargeofbudgetandfinance,ortheaimagorCitizen’sRepresentativeKhuralrespectively.
TheMRAMdisclosedgovernmentownershipinatotalof21SOEsintheextractiveindustries(pp.111-112),buttheseSOEswerenotaskedtodisclosetheirlevelofownershipinoil,gasandminingcompanies.Equally,Section5.4(pp.110-115)doesnotclarifydetailsofanychangesinownershipinanySOEorSOEsubsidiaryin2014.ThisinformationisnotprovidedintheIA'sinceptionstudyorinminutesofMSWGmeetingsonscopingdecisionsorduringtheinceptionphase.TheEITIReportdoesnotdescribeanypoliciesrelatedtoretainedearningsorreinvestment.Equally,thetermsassociatedwiththegovernment’sequitystakeinlicense-holdingcompaniesarenotdisclosed.
Section5.4.5(p.119)providesadescriptionofloansandloanguaranteestoSOEs.TwoSOEs(ErdenesTavanTolgoiandShiveeOvoo)reportedloanswithinformationincludingloanname/number,debtcontractdate,useofloan,amountandinvolvedparties.ItalsonotesthatwhiledetailedinformationonloanandloanguaranteeswasrequestedduringdatacollectionfromallSOEsincludedinthereconciliationscope,allbuttwoSOEseitherreportedthattherewerenoloansfromthegovernmentordidnotdiscloseanyinformationpertainingtoloansandguaranteesfromthegovernment.The2014EITIReportdidnotspecificallynametheSOEsthatdidnotreportanydetailsofloansorloanguarantees,althoughthiscanbeinferred.
The2013EITIReportexplainsthatthegovernmentholdsownershipin99companies(p.45),butitonlydisclosesthelevelandchangeofownershipduring2013for11ofthe99companies.Itisunclearhowmanyofthe99SOEsoperatedintheextractiveindustries.ThefinancialrelationshipbetweenSOEsandgovernmentisonlypartiallydescribed.TherulesandpracticesgoverningtransfersoffundsbetweentheSOE(s)andthestate,retainedearnings,reinvestmentandthird-partyfinancingarenotdescribed.Itdoesnotincludedetailsofloansandloanguarantees.ThereisnoinformationaboutloansorloanguaranteestoSOEsorothercompaniesintheextractiveindustries.ThereisnomentionofDevelopmentBankof
52ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Mongolia’sUSD200milliondebtinjectionintoErdenesTavanTolgoiin2013.121Onpp.47and49thereisnomentionofthemannerinwhichthegovernmentfinances/exercisesa34%stakeinstrategicdeposits.
Stakeholderviews
GovernmentrepresentativesnotedthattheStatePropertyCommittee(SPC),responsibleforadministeringstateproperty,wastheagencythatwouldholdinformationonSOEs,inparticularontherulesandpracticesgoverningthefinancialrelationshipbetweenSOEsandgovernment.Nolegalbarrierstodisclosureofthisinformationwerenoted.SeveralgovernmentrepresentativesnotedthattheCompanyLaw,theHumanDevelopmentFundLawandtheStateandLocalPropertyLawwouldcovertherulesandpracticesgoverningthefinancialrelationship,althoughtheywereunsurewhethertherewereanydeviationsinpractice.ThishadnotbeendiscussedbytheMSWGaccordingtostakeholdersconsulted.
TheUSDepartmentofStatehighlightedthelackofclaritysurroundingthestate’sroleasequityowner,intermsofmanagementofrevenuesandoperationofmines,inits2015InvestmentClimateStatement.122ItnotedthatSOEsthatsoughtinternationalfinancing“tended”tofollowstatutoryrulesgoverningtheirfinancialrelationswiththestate,butthat,giventhatinternationalbestpracticewasnotinstitutionalisedin–andattimesatoddswith–Mongolianlaw,“many”SOEs“tended”tofollowMongolianrulesbydefault.Thereportalsorelatedconcernsfrominvestorsoverthegovernment’sabilitytoexecuteitsfiduciaryresponsibilitiesasownerandoperatorsofminesandtheriskthatthegovernmentwoulddivertfutureminingrevenuesforunrelatedexpenses.123
TheIAnotedtheomissionofinformationonstateparticipationwasduetothebureaucracyofgovernment,whichpresentedbarrierstoaccesstoinformationonSOEsinpractice.In2014,theSPCcontrolledmostSOEsasidefromOyuTolgoi,TavanTolgoi,“certainminingproperties”anduraniumpropertiesaccordingtotheUSDepartmentofState.124ACSOrepresentativenotedthattheownershipofSOEswassplitbetweenvariousgovernmententities(includingtheSPC,theStateSecretary,theMinistryofFinanceandErdenesMongol),particularlyduringthe2012-2016periodofcoalitiongovernment.TheCSOrepresentativenotedthiswaslikelylinkedtothepoliticsofcoalitiongovernment,wheregovernmententitiescontrolledbydifferentpartiessoughtcontrolofrevenue-generatingSOEs.ACSOnotedthatthelevelofgovernmentownershipinETTwasunclear:while10%ofitsstockwasdistributedtoMongoliancitizensin2011125,thegovernmenthadsubsequentlyboughtbacksomeoftheseshares,mostrecentlytheweekbeforetheJune2016legislativeelections126,meaninggovernmentownershipinETThad
121Seeforinstanceslide6of“AneconomicassessmentofErdenesTavanTolgoi”bytheEconomicResearchInstituteinMay2014,availableonhttp://eri.mn/ERI_TT.pdf.SeealsoIMF(March2014),ArticleIVConsultations,(p.6),availableonhttps://www.imf.org/external/pubs/ft/scr/2014/cr1464.pdf.122USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf123USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf124USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf125FT(24January2013),‘Mongoliacokingcoalminetroublesmount’,http://www.ft.com/cms/s/0/1883afe8-6622-11e2-b967-00144feab49a.html#axzz4Dp84CvFQ
53ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
changedsince2011.TherepresentativenotedthelackofclarityontheamountofsharesboughtbackfromMongoliancitizensbythegovernment,whosubsequentlysoldsomeoftheacquiredsharesbacktoMongoliancompanies.127
SeveralgovernmentandCSOstakeholdersconsultednotedrecentreformsinJanuary2016thatdisbandedtheSPCandtransferreditsresponsibilitiestoErdenesMongol,aspartoftherestructuringofSOEswithsupportfromtheInternationalFinanceCorp.andtheAsianDevelopmentBank(whichagreedUSD35millionloansupportforstrengtheningErdenesMongolinMarch2016128).
ArepresentativefromapastEITIMIAandMSWGmembersconsultednotedthattherehadbeennodiscussionbytheMSWGofloansorguaranteesextendedbygovernmentorSOEstoextractivescompaniesinMongoliapriortodatacollectionforthe2014EITIReport.IndustryandgovernmentrepresentativesconsultedwerenotawareofanyotherloansfromthestateorSOEstoextractivescompanies,althoughtheynotedtheirimpressionthattherewouldbenowayofknowingiftherehadbeenadditionalloansorguarantees.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadeinadequateprogressinmeetingthisrequirement.Whilethe2014EITIReportaddressesstateparticipationintheextractiveindustries,itdoesnotdiscloseallinformationrequiredunderRequirement2.6.Itlists21extractivescompaniesinwhichthestateholdsmajorityequity,someoftherulesandpracticesgoverningfinancialtransfersbetweenSOEsandgovernment,includingrelevantlawsandpracticesrelatedtodividendsandthird-partylending,andsomedetailsofloansandloanguarantees.However,itdoesnotclarifywhethertherewereanychangesinownershipofextractivesSOEsortheirsubsidiariesin2014anditremainsunclearwhetherdisclosuresofloansorloanguaranteesarecomprehensive.Thetermsassociatedwithgovernmentequityineachcompanyarenotdisclosed,andtherulesandpracticesgoverningSOEs’retainedearningsandreinvestmentarenotdescribed.
TheMSWGdoesnotappeartohavediscussedtheissueofgovernmentorSOElendingtocompaniesintheextractiveindustrieswiththeMoFortheBankofMongoliatoascertainthetotaluniverseofgovernmentdirectloans,state-ownedbanks’loansorthird-partyloanstoSOEs.TheInternationalSecretariat’sunderstandisthatwhollygovernment-ownedStateBank129hadextendedloansworthroughlyMNT2.6billiontominingcompaniesin2014,althoughthisaccountedforlessthan1%ofitstotallendingthatyearaccordingtoitsannualreport.130TheUSDepartmentofStatehasestimatedtotalthird-partydebtatETTalonewasUSD700millionin2015,althoughthisincludedobligationstobothpublicand
126TheUBPost(13June2016),‘CabinettobuybackErdenesTavanTolgoisharesfromthepublic’,http://theubpost.mn/2016/06/13/cabinet-to-buy-back-erdenes-tavan-tolgoi-shares-from-the-public/127Forbes(25February2015),‘Mongolia’sendlesslegalflexibility’,http://www.forbes.com/sites/jonspringer/2015/02/25/day-828-mongolias-endless-legal-flexibility/#7a64a3f943ed128USDepartmentofTreasury,MonthlyMDBVotingRecord,March2016,https://www.treasury.gov/resource-center/international/development-banks/Documents/March%202016.pdf129StateBankwebsite,https://www.statebank.mn/w/en/m285130Seep.80,StateBank,2014AnnualReport,https://www.statebank.mn/w/content/2015/11-26/Statebank%20Annual%20report%202014%20Eng_baga.pdf
54ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
privatecreditors.131DBMhasstartedpublishinginterimfinancialstatementsontheGlassAccountswebsitesincelate2015132,providingsomeinformationonitsloanportfolioandcreditratingagenciesexpectthegovernmenttocontinueusingthebankasitsmaincreditpolicyvehicletoprovideloanstosectorssuchasinfrastructure,transportandmining.133DevelopmentpartnershaveraisedconcernsoverthefiscalrisksassociatedwithlimitedoversightofSOEs,suchasDBM.134
AcomprehensiveassessmentofstateparticipationisparticularlyimportantforMongoliagiventhestate’sextensiveroleinthesectorandthesignificantoff-budgetstatefundingforSOEs,includingintheextractiveindustries.TheMSWGshouldconsiderclosercollaborationwithongoingtechnicalassistancetoSOEreformasameansofenhancingtheimpactoftheEITIandsupportingbroaderreforms.
Table2-Summaryassessmenttable:Awardofcontractsandlicenses
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
Legalframework(#2.1)The2014EITIReportaddresstherelevantlaws,regulationsandfiscalregime.
Satisfactoryprogress
Licenseallocations(#2.2)
Whilethe2014EITIReportprovidessomeusefulinformationonlicenseawardsandtransfers,theexactnumbersoflicensesthatwereallocatedortransferredremainsunclear.Thereportalsofailstodisclosewhethertherewereanydeviationsfromthelicenseallocationprocedures.
Meaningfulprogress
Licenseregisters(#2.3)
Mostaspectsof2.3areaddressedintheEITIReportand/orarepubliclyavailablethroughtheMRAMcadastreandtheeReportingsystem.Howeverinformationondatesofapplicationisnotavailableformininglicenses.Intheoilandgassector,thereisnoinformationondatesofapplication,
Meaningfulprogress
131USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf132WorldBank(November2015),MongoliaEconomicUpdate,http://pubdocs.worldbank.org/en/920971447119845335/meu-nov2015-en.pdf133Moody’s(3November2015),SupportforDevelopmentBankofMongoliatoremainstrong,https://www.moodys.com/research/Moodys-Support-for-Development-Bank-of-Mongolia-to-remain-strong--PR_337354134WorldBank(2015),MongoliaPublicFinancialManagementPerformanceReport,http://www.adb.org/sites/default/files/linked-documents/49210-001-sd-02.pdf
55ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
commoditiesproducedandlicensecoordinates.
Contractdisclosures(#2.4)
The2014EITIReportclarifiesgovernmentcontractdisclosurepolicyandprovidesareviewofactualdisclosurepractice.TherehasbeenfollowupbytheMSWGtodevelopacontractsportal,amendthemodeloilandgasPSAstoremoveconfidentialityclausesandtodiscloseallPSAs.
Satisfactoryprogress
Beneficialownershipdisclosure(#2.5)
TheMSWGhasconsideredbeneficialownershipdisclosureindetailatseveralMSWGmeetingsandhasconductedinitialworkondisclosureoflegalownershipinformation(whichincludessomebeneficialownershipdisclosures)inthe2013and2014EITIReports.
State-participation(#2.6)
The2014EITIReportlists21extractivescompaniesinwhichthestateholdsmajorityequity,someoftherulesandpracticesgoverningfinancialtransfersbetweengovernmentandSOEsandsomedetailsofloansandloanguarantees.HowevertherulesandpracticesrelatedtoSOEs’retainedearningsandreinvestmentarenotdescribed.ThereportdoesnotclarifyanychangesinownershipofextractivesSOEsortheirsubsidiariesin2014anditremainsunclearwhetherdisclosuresofloansorloanguaranteesarecomprehensive.
Inadequateprogress
Recommendations:1.TheMSWGisencouragedtousethedescriptionoftheregulatoryframework–anddeviationsinpractice–intheEITIReportsasameansofclarifyinganymisunderstandingsbetweengovernmentandindustry.Clarifyingtheapplicationoflawsinpracticewouldalsosupportthegovernment’sinvestmentpromotionefforts.2.TheMSWGshouldseekinformationandtheEITIReportshoulddescribeanydeviationsinpracticefromthestatutorylicenseawardprocess.3.TheMSWGshouldworkwithMRAMandPAMtoensurethatdatesofapplication,awardandexpiryforalllicensesisfreelyavailableonthecadastre.TheMSWGcouldalsoconsideropportunitiestoharmonisedatabasesofextractiveindustrycompaniesacrossdifferentgovernmententities.4.TheMSWGshouldreviewtherulesandpracticesgoverningfinancialrelationsbetweenthestateandSOEs(includingloans).TheEITIReportcouldplayausefulroleinimprovingoversightofoff-budgetliabilities,whichhavegrownsignificantlysince2012.5.TheMSWGisencouragedtoworkwithPAMtoclarifythetimelineforconversionofexistingPSAstothenewmodelPSAandthelegalimplicationsintermsofcontractdisclosure.
56ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
6.InpreparationforenforcementofRequirement2.5ofthe2016EITIStandardanddrawingonthefindingsoftheOSFstudyinAugust2016,thegovernmentshouldconsiderclarifyinggovernmentpolicyonBOdisclosure.
3. Monitoringandproduction
3.1 Overview
ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtoexploration,productionandexports.
3.2 Assessment
Overviewoftheextractivesector,includingexplorationactivities(#3.1)
Documentationofprogress
The2014EITIReportprovidesanoverviewoftheextractiveindustries(Section5.1,pp.47-91).Thisincludestheabsoluteandrelativevalueoftheextractiveindustries,adescriptionofkeyregionsformining(Section5.1.4.3,pp.71-73)andoilandgas(Section5.1.5,pp.84-86)aswellasanoverviewofexplorationinmining(Section5.1.4,p.65,andSection5.1.4.2,pp.68-70)andoilandgas(Section5.1.5,pp.84-86).Appendix15(pp.265-287)providesinformationonthemining,oilandgaslicenseswhereprivately-fundedexplorationactivitiestookplacein2014.Anoverviewofartisanalandsmall-scaleminingisincludedinSection5.1.4.5(pp.79-83),whileAppendix17(pp.296-297)providesmoreinformationbysoum/district,includingthenumberofartisanalminerspersoum,althoughthereisnoestimateofthevalueoftheseactivities.
Stakeholderviews
IndustryandCSOstakeholdersconsultedconsideredtheoverviewoftheextractiveindustriesinthe2014EITIReporttobecomprehensive.CSOsinparticularwelcomedtheexpandeddescriptionofartisanalandsmall-scalemininginthelatestEITIReportandthedisaggregationofinformationbysoum,whichwasseenasparticularlyrelevantgivensubnationalEITIcouncils’demandsforinformation.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.
Productiondata(#3.2)
Documentationofprogress
The2014EITIReportprovidescomprehensiveproductiondata.Section5.1.4.4(pp.74-78)providesinformationonproductionvolumes,valuesandshareoftotalproductionvaluebymineralforall23ofthemineralsMongoliaproduces.Section5.1.4.3(pp.71-73)providesanoverviewofproductionfromthe110companiesthatreportedsuchfiguresdisaggregatedbybothprovince/aimaganddistrict/soum,althoughnotfromallproducingcompanies.Notallmineralproductionisdisaggregatedbyprovince/district,particularlyforcoal.
Sections5.1.5.3and5.1.5.4(pp.86-87)alsoprovideanoverviewofcrudeoilproduction,including
57ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
productionvolumesforcrudeoil.WhileitisnotexplicitlystatedthatthereisnocommercialnaturalgasproductioninMongolia,theoverviewofsignificantexplorationactivitiesinSection5.1.5.2(p.85)indicatesthatonlynon-commercialquantitiesofnaturalgashavebeendiscovered.Whiletheprovinceanddistricthostingeachofthethreeproducingoilfieldsarenotdisclosed,itispossibletoreconstitutethegeographiclocationofoilproductionusingthenamesofPSCsprovidedinSection5.1.5.3(p.86)andthelow-definitionmapofoilblocksinSection5.1.5.1(p.84).Whiletheoilproductionvalueisnotprovided,itcaneasilybecalculatedgiventheprovisionofaverageprice.Appendix16(pp.288-295)providesinformationonproductionandsalespermineral,includingproductionvolumesandvalue.
Stakeholderviews
Severalindustryandgovernmentrepresentativesnotedinconsistenciesbetweenvarioussourcesofproductiondata,dependingonthemethodologyusedandthetimingofdatacollection,butsupportedtheinclusionoffiguresfromMRAMinthe2014EITIReport.SeveralgovernmentrepresentativesnotedthatMRAMproducedweeklydataforproductionvolumesandvalueofthe15commoditiesMongoliaproducesandthatitmustthushavebeenamistakeifthe2013EITIReportdidnotincludethisdata.Duringdiscussionsregardingthedefinitionofproductionvalue,itwasnotedthattheproductioncostsofmineralswasconfidentialbutthatthesalepricewaspublicallyavailable.From2015onwardsroyaltiesforcoalandironorearecalculatedonthecontractprice,whileroyaltiesforallothercommoditiesaredeterminedonthebasisofbenchmarkprices.Therewouldthusnotseemtobeanyobstaclestodisclosureofproductiondata.Itwasagreedthattheuseofinternationalbenchmarksforthecalculationofproductionvaluewasproblematic,giventhelowersalepriceofMongolia’skeycommodities(inparticularcoal,whichsellsatlessthanhalfofAustralianfobprices).
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.The2014EITIReportdisclosesvolumesandvaluesofmineralsandcrudeoilproduced,disaggregatedbycommodity,andbystate/regionwhereavailable.Whiletheoilproductionvalueisnotprovided,itcaneasilybecalculatedgiventheprovisionofvolumesandpricingbenchmarks.
Exportdata(#3.3)
Documentationofprogress
The2014EITIReportprovidesmorecomprehensiveinformationonmineralexportsthanpreviousEITIReports.Thesalesvolumes,valuesandshareoftotalsalesvalueareprovidedinSection5.1.4.4(pp.74-78)forall23mineralsproduced,disaggregatedbycommodity.Howeveraccordingtofootnote2inSection5.1.4.4(p.74)thesesalesvolumesandvaluesarerecordedwhenmineralsareshipped,regardlessofwhethertothedomesticorexportmarkets.Allcopper,coal,ironore,zinc,molybdenum,fluorspar,tungsten,silver,tinandleadsalesareexported(meaningthatsalesfiguresrefertoexports),accordingtoFootnote4inSection5.1.4.4(p.74),whichmeansthatsalesvolumesandvaluesofcoal,gold,cement,crushedrock,bricks,chalk,gravel,clinker,limestone,gypsum,zeolite,sand,gravelmix,sandandsiltstone,whicharealsouseddomestically,donotrepresentexports.Thusexportvolumesandvaluesarenotprovidedforcoal,gold,cement,crushedrock,bricks,chalk,gravel,clinker,limestone,gypsum,zeolite,sand,gravelmix,sandandsiltstone.VolumesandvaluesofMongolia’sfivelargestexportedmineralsareprovidedinthetableinSection5.1.4.4(p.75).CrudeoilexportvolumesandvaluesarealsoprovidedinSections5.1.5.3and5.1.5.4(pp.86-87).Whiletheexportfiguresprovideddonotaccountforallmineralexports,itisinferablefromthepiechartinSection5.1.1.3(p.49)thatthefivemineralsfor
58ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
whichexportvolumesandvalueswereprovidedaccountformorethan90%ofMongolia’sextractiveindustryexports.Mineralandcrudeoilexportvolumesandvaluesarenotdisaggregatedbyprovinceordistrict.
Stakeholderviews
IndustryrepresentativesconsulteddidnotrecalltheMSWGdiscussingtheissueofmineralexportfigures.GovernmentrepresentativesconsultedconfirmedthatMRAMhadstatisticsformineralexportvolumesandvaluesbutthattheEITIreportingtemplateshadonlyrequestedtheyprovidesalesfiguresinthe2014EITIReport.SeveralindustryandgovernmentrepresentativesnotedthelargediscrepanciesbetweenMRAMandCustomsexportdata,giventhatMRAMdatacoveredproductionintheyearunderreviewthatwasexported,whileCustomsdataincludedadditionalexportssuchasstockpiledmineralsfrompreviousyears’productionandnon-commercialexportssuchassamples.AMRAMrepresentativequestionedthereliabilityofCustomsexportfigures,giventhatthesewerebasedonexporters’self-declarationsandwerenotverified.IndustryrepresentativesconsultednotedthatMongolia’stop-fivemineralexportsneverchanged,althoughthereweresignificantfluctuationsinthesmallermineralexports.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Whilethe2014EITIReportdoesnotincludeexportvolumesandvaluesforallmineralcommoditiesexported,itprovidesfiguresforthefivelargestcommodityexportsaccountingforover90%oftotalextractiveindustryexports.MRAMpublishesexportvolumeandvaluefiguresforallmineralsexportedinitsannualinformationcirculars,withlessthanone-yeartimelag.135ItisrecommendedthattheMSWGexplores,inconsultationwithMRAM,optionsforincludingexportvolumeandvaluefiguresforallcommoditiesexportedbyMongolia,inadditiontothesalesfiguresalreadyprovided,ontheEITIMdataportalandinfutureEITIReports..TheremayalsobeopportunitiestousetheEITItoreconcileproductionfiguresacrossrelevantgovernmententitiestoimprovethereliabilityofMongolia’sexportstatistics.
Table3-Summaryassessmenttable:Monitoringandproduction
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
Overviewoftheextractivesector,includingexplorationactivities(#3.1)
The2014EITIReportincludesadetaileddescriptionoftheextractiveindustries,includinginformalactivities,andofsignificantexplorationactivities.
Satisfactoryprogress
Productiondata(#3.2) The2014EITIReportincludes Satisfactoryprogress
135SeeTable6(p.25),MRAM(2015),MRAMInformationCircular2015,http://www.bgr.bund.de/DE/Themen/Zusammenarbeit/TechnZusammenarbeit/Downloads/1094_Circular2015.pdf?__blob=publicationFile&v=2
59ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
volumesofproductioninminingandcrudeoil.Whilethelocationofminingproductionisprovidedforonlysomemininglicenses,itispossibletoreconstitutethelocationofproductionusingtheEITIMdataportal.
Exportdata(#3.3)
The2014EITIReportprovidesexportvolumesandvaluesforonlythefivelargestcommodityexports.MRAMpublishesexportvolumeandvaluefiguresforallmineralsexportedinitsannualinformationcirculars,withlessthanone-yeartimelag.
Satisfactoryprogress
Recommendations:1.TheMSWGisencouragedtoconsultwithMRAMandtheBankofMongoliatosourcethevolumesandvaluesofallcommodityexports.ThiswouldbeparticularlyrelevanttoinformingthedomesticpolicydebateonMongolia’stermsoftradeandtheimpactoflowerglobalcommoditypricesonMongolia’sbalanceofpayments.2.TheMSWGmaywishtoconsideropportunitiestousetheEITIprocesstoreconcileproductionfiguresacrossrelevantgovernmententitiestoimprovethereliabilityofMongolia’sexportstatistics.
4. Revenuecollection
4.1 Overview
ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtorevenuetransparency,includingthecomprehensiveness,qualityandlevelofdetaildisclosed.ItalsoconsiderscompliancewiththeEITIRequirementsrelatedtoproceduresforproducingEITIReports.
4.2 Assessment
Comprehensiveness(#4.1)
Documentationofprogress
Forthe2014EITIReport,theMSWGandtheIArespondedtoarecommendationfromthe2013EITIReport(Section8.2.2,p.109)torevisethemethodforselectingwhichcompaniesshouldberequiredtoreport.The2014EITIReportprovidesadefinitionofmaterialityandajustificationforadoptingatwo-tierapproachtoreconciliationasdefinedinSections2.3.1.1(p.18)and3.1(pp.20-21),3.3.1and3.3.2(pp.28-29).TheMSWGagreedatwo-tierapproachtoreconciliationwiththeIA,includingindividualreconciliationforthelargestcontributorstogovernmentandarisk-basedapproachforsmallercompanies.Italsoagreedtwodistinctmaterialitythresholdsforpaymentstonationalgovernmentandsubnationalgovernments.The2014EITIReportreferstotheoptionsconsideredindeterminingthe
60ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
materialitythresholdduringtheinceptionworkshopinJuly2015andreferstotheneedtobalancebenefitsofexpandingcoveragewithcostandcomplexity(p.20).136
Allmaterialrevenueflowswereincludedinthescopeofreconciliationinthe2014Report,whichprovidesarationaleforselecting24revenuestreams,coveringallstreamslistedinRequirement4.1.b.ItdescribestheselectioncriteriaforrevenuestreamstobeincludedinreconciliationinSection3.3.2(pp.28-29).WhileEITIM’seReportingsystemrequiresreportingofatotalof40revenuestreams(atbothnationalandsubnationallevels),theMSWGagreedwiththeIAtoonlyreconcilethelargest24revenuestreams,asdescribedinSection2.3.1.2(p.18).Byselectingthe15largestrevenuestreamsatthenationalleveland9largestsubnationalrevenuestreams,the2014EITIReportprovidesacoverageofreconciliationof99%ofthevalueofbothnationalandsubnationalrevenuestreams.AsnotedinSection4.4(p.16)ofthe2014InceptionReportdated4August2015,thesamereportingtemplatesoriginallyagreedon3January2014wereusedfortheoriginaldatacollectionthrougheReportingandforthe2014Report.ThelistofmaterialrevenuestreamsisprovidedinSection3.4.1.3(pp.33-34)andtheprocessforselectingthemisdescribedinSection3.4.1.2(pp.32-33).WhileAppendix3(pp.152-153)providesalistofthe28revenuestreamsincludedinreconciliation,the2014EITIReportdoesnotincludeadescriptionofeachmaterialrevenuestream,althoughthisinformationisreadilyavailableelsewhereonline.
Atthenationallevel,thematerialitythresholdforindividualreconciliationswassetatMNT250million.CompanieswithtotalpaymentsofmorethanMNT100millionbutlessthanMNT250millionagainsttherevenuestreamsidentifiedasmaterial,wereincludedinsampledreconciliationsunderariskbasedapproach.Atsub-nationallevel,thematerialitythresholdforindividualreconciliationswassetatMNT100million.CompanieswithtotalpaymentstolocalgovernmentsofmorethanMNT30millionbutlessthanMNT100millionwereincluded.Thisapproachyieldedatrancheof242companiesselectedforindividualreconciliation(including183identifiedthroughthenationalmaterialitythresholdand59throughthesubnationalone),aswellasasecondtrancheof66companiesforarisk-basedreconciliation(including44throughthenationalmaterialitythresholdand22throughthesubnationalone).Afterprovidingforcompaniescountedtwice,atotalof236companieswereselectedforreconciliation,covering98.8%ofgovernmentrevenuein2014.The2014EITIReportreferstotheoptionsconsideredindeterminingthematerialitythresholdduringtheinceptionworkshopinJuly2015.137ThematerialcompaniesarelistedinseveralplacesintheEITIReportincludingAppendix7(pp.170-176).
ResultsofreportingbycompaniesisdetailedinSection6.2.3(pp.142-143).Sevencompaniesdidnotreport.Thenon-reportingcompaniesarelistedinSection4.2.2(p.43).Allsevencompanieswerenamedandinclude:
- ErdenesshashirtminingresourceLLC- OyushengmingLLC- UlgazanTsamkhagLLC- MongolBolgarGeoLLC- SpecialMinesLLC- GangarInvestLLC- Gan-IlchLLC
WhiletheiraggregatecontributionisstatedasMNT1.051billion(USD582,377),theircombinedshareof
136SeeInceptionpresentationfromKPMG,7July2015,notpublishedonthewebsite.137SeeInceptionpresentationfromKPMG,7July2015,notpublishedonthewebsite.
61ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
totalgovernmentextractivesrevenueisnotprovided,althoughitcanbecalculatedas0.064%oftotalgovernmentrevenues.
Inadditiontothesesevencompanies,fivemorecompaniesinitiallyreportedbutdidnotprovideadditionaldetailswhencontactedtoreconcileinitialdiscrepancies,asdescribedinSection4.2.3.4(p.44).
ThetableinSection4.2.1(p.41)alsoprovidesthevalueofpaymentsfrom23companiesthatreturnedreportingtemplatesinitiallybutdidnotprovideadditionalinformationforresolutionofdiscrepancies:theyaccountedforacombinedMNT2,974billion(USD1.65billion),or0.182%oftotalgovernmentrevenues(althoughthisshareisnotprovidedinthe2014EITIReport).The23companiesarenamedinAppendix4(pp.154-162).
Althoughthe2014Reportincludesasection,4.1.3(p.41),oncomprehensivenessandreliabilityofdatapresented,theIAdoesnotincludeanassessmentofthecomprehensivenessofdatapresented.Inaddition,thematerialityofnon-reportingcompaniesisnotassessedasashareoftotalgovernmentextractiveindustryrevenue.TotalgovernmentextractivesrevenueswereMNT1632billionandthecoverageofreconciliationwas96.57%.138
The2014Report,inSection3.3.3(p.30),clarifiesthematerialitythresholdfordiscrepanciesatMNT100,000(USD55)“foreachreceiptscategory”.Sections4.1.1(p.35)and4.2(p.41)presenttheresultsofreconciliation,includingtheMNT581million(USD322,000)innetdiscrepancies(disaggregatedbetweennational-levelandsubnationaldiscrepancies).Thisaccountsfor0.03%ofgovernment’sinitiallyreportedrevenue.TheinitialgrossdiscrepanciesofMNT271billion(USD150.2million)werereducedtoMNT581million(USD322,000)afterreconciliation,asdescribedinSection2.1(p.13).ThetableinSection4.2.1(p.41)providestheinitialandfinaldiscrepancies,disaggregatedbyrevenuestream:thethreelargestsourcesoffinaldiscrepanciesare,inorderofsize,corporateincometax,employers’socialandhealthinsurance,andlicensefeesfortheexploitationandexplorationofmineralresources.
The2014EITIReportidentifiesthegovernmententitiesreceivingextractiveindustryrevenuesinSection3.4.1.1(p.32).Appendix5(pp.163-164)providesanoverviewoftheinformationprovidedbyeachreportinggovernmententity:itappearsthattwogovernmententities,theStateProfessionalInspectionAgency(SPIA)andKhovdAimag,didnotprovideanyinformationtotheIA.The2014EITIReportdoesnotincludeanassessmentofthematerialityofomissionsbygovernmententitiesnoradescriptionofthereasonsfornon-reporting.FromSection3.4.1.1(p.32)itappearsthatSPIAisonlyresponsibleforcollectingpenalties,whichaccordingtoAppendix3(pp.152-153)amountedtoatotalofMNT30million(USD16,600),whichcouldbeconsiderednonmaterial.WhilepaymentstoKhovdAimagarenotknown,itislikelythesewerealsonon-material.FullunilateralgovernmentdisclosureforallmaterialrevenuestreamsisincludedinAppendix3(pp.152-153).
The2014Reportprovidesseveralrecommendationsrelatedtothecomprehensivenessofreporting.SeveralrevisionstotheEITIMeReportingsystemarerecommendedinSections6.2.1(p.142)and6.2.7(p.144),includingaddressingITcontrolweaknessesthatcouldaffecttheintegrityofthedataandprovidingclearinstructionsforreporting.
TherecommendationinSection6.2.3(p.143)isforgreateroutreachtoandcapacitybuildingofreportingcompanies.Section6.2.4(p.153)notesthelackofdisaggregationinkeyrevenuestreams,suchas 138Whilethisreconciliationcoveragewasnotprovidedinthe2014EITIReport,itcouldbecalculatedfromfiguresprovidedonp.17andp.48.
62ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
corporateincometax,andtheimpactonselectionofcompaniesforreconciliation.Largetaxpayersmayhaveonlymarginalactivitiesintheextractiveindustriesbutbeincludedinreconciliationasmininglicense-holdersgiventheirmaterialaggregatepaymentstogovernment.Thesectionthusrecommendsthegovernmentreviseitsrevenuemanagementsystemstodistinguishextractiveindustryrevenuesfromotherincome.
Stakeholderviews
RepresentativesfromtwopastEITIMIAsnotedthattheinceptionphaseofthe2014EITIReportmarkedthefirsttimeanIAhadconsultedtheMSWGonscopingdecisionsandhighlightedthelackofevidenceofpastMSWGdiscussionsonkeyscopingdecisions.OneoftherepresentativesnotedthatthiswasduetothefactthattheToRforthe2014EITIReportwereasignificantimprovementonpreviousToRs,giventhattheyrequiredadistinctinceptionphase.OnepastIArepresentativenotedthatpriortothe2014EITIReport,theEITIMSecretariatandMSWGundertookthescoping,whichtheIAtookasagivenoncecontracted.Forthe2014EITIReport,severalCSOMSWGmembersandtheEITIMSecretariatnotedthattheIAhadproposedonlyoneoptionforkeyscopingdecisionssuchasmaterialityandqualityassurance,onwhichafewmembersprovidedlimitedcommentsandeventuallyapproved.
Twogovernmentrepresentativeswerecriticalofthecurrentmaterialitythresholdadoptedforsettingthescopeofreconciliation.Itwasuncleartothesestakeholderswhy,ifinformationwascollectedfromover1300companies,thisdatawouldnotbereconciledwithgovernmentdisclosures.Severalindustryrepresentativesnotedthataproposalhadbeenputforwardtorevisethematerialitythresholdonseveraloccasions,mostrecentlyattheNationalForumon3November2015.Theproposalwasthattherebetwodifferentthresholds(forexplorationandproductionlicenseholders)sothattheIAwouldnotspendtimechasingexplorationcompaniesmakingsmallpayments.Allstakeholdersconsultedconsideredtheapproachtoselectingmaterialcompaniesforthe2014EITIReportwasanimprovementonpastEITIreporting,particularlygiventhetwo-tierapproach,andnotedthattheMSWGhadapprovedthismaterialitythresholdforcompaniesviaemailfollowingthe7July2015inceptionmeeting.Itwasnotedbyseveralindustryrepresentativesthatrelativelyinactiveexplorationcompaniesonlypaidlicensefeesandthatthelicensesweresuspendedinanycaseifsuchpaymentswerenotmade.Upondiscussion,onegovernmentrepresentativeconsultedrecognisedthatthenumberofcompaniesforwhichgovernmentdiscloseditsrevenuesdidnotmatchwiththetotalnumberofcompaniesholdinglicenses,althoughthishadnotbeendiscussedbytheMSWG.Therepresentativenotedtherewerenopracticalbarrierstogovernment’sdisclosingofinformationonalllicense-holders.
Thereappearstobeconfusionrelatedtothedefinitionofthematerialitythresholdforselectingrevenuestreams.IndustryandCSOstakeholdersconsultedandrepresentativesfromseveralpastIAsconceivedoftheMNT10,000thresholdasapplyingtoindividualtransactions,ratherthantheaggregateannualrevenueperpaymentstream.AllstakeholdersconsultednotedtherehadnotbeenanMSWGdiscussionofthematerialitythresholdforselectingrevenuestreamsforthepastthreeEITIreportingcycles.
ArepresentativefromtheNationalStatisticsOffice(NSO)notedthatthatlastrevisiontoEITIreportingtemplatesagreedinDecember2015includedrequirementstoreportsector-specificfeesonaproject-levelbasis,althoughcommontaxes(suchasCorporateIncomeTax)werestillreportedonacompanybasis.GiventhatproposalsforrevisionstoEITIreportingtemplateswerealwaysvettedbyseveralcommittees,theNSOhadalwaysincorporatedtheNationalCouncil’sandMSWG’ssuggestedamendmentstothetemplates.ItwasalsonotedthatthefinalreportingtemplateswereapprovedjointlybytheNSOandtheMoF.
63ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Thenumberofcompaniesreportinginthe2014EITIReportthroughtheeReportingsystemdroppedto987.InourdiscussionswithgovernmentagencieslikeMRAM,itwasnotedthatthereasonforthelowerlevelofreportingbycompaniesfor2014wasduetothefactthatmanycompanieshadstoppedoperatingorhadgoneintoreceivership.Itwasnotedthatofthemorethan1500companieswithlicenses,380hadsubmittedminingplanstoMRAM,ofwhich300wereapprovedand78wereoperationalandproducing.Yeteveniflicenseholderswerenotproducing,theystillmadematerialpaymentstogovernmentintheformofannuallicensefees.
Twogovernmentrepresentativescalledfortheintroductionofsinglecompanyidentificationnumberstobeusedconsistentlyacrossallgovernmentdepartments,asthiswouldfacilitateidentifyingcompanypaymentsacrossvariousentities.
IndustryandCSOsdidnotexpressanyparticularviewsonthecomprehensivenessofrevenueflowsincludedinreconciliation.Onegovernmentrepresentativenotedthatallrevenuestreamshadbeenincludedandthat,giventhelowmaterialitythresholdofMNT10,000perpayment,theMSWGhadclearlydemonstrateditsdesiretoincludeallrevenueflowsinthescopeofreconciliation.Severalgovernmentrepresentativesexpressedfrustrationatthislowmaterialitythresholdandarguedformorediscussionontheselectionofrevenueflowstobeincludedinthescopeofreconciliation,sothateffortscouldfocusonadequatelydisclosingallinformationrelatedtomaterialrevenueflows.
MSWGmembersconsultedwerenotawareoftheneedfortheIAtoprovideanassessmentofthecomprehensivenessofEITIreporting,notingthattheMSWGtendedtofocusonthesizeofunreconcileddiscrepanciesratherthantechnicaldiscussionsrelatedtothescopeofEITIreporting.TheIAnotedithadnotbeeninstructedtoprovideanassessmentofthecomprehensivenessoftheEITIReport,despitetheprovisionsoftheToR.
Initialassessment
The2014EITIReportincludesadefinitionofthematerialitythresholdforpaymentsandcompaniestobeincludedinreconciliation,includingajustificationforwhythethresholdwassetatthislevel.TheMSWGwasinvolvedinsettingthematerialitythresholdforpaymentsandforcompaniesinJuly2015,althoughtherewassomeconfusionaboutwhetherthematerialitythresholdsappliedtoaggregatepaymentsorindividualrevenueflows.Whileallmaterialrevenuestreamsarelisted,the2014EITIReportdoesnotincludeadescriptionofeachrevenueflow.
Thecompaniesthatdidnotreportarenamedandthevalueoftheircombinedpaymentstogovernmentisprovidedinabsoluteterms.Whilethe2014EITIReportdoesnotincludeanassessmentoftheshareoftotalrevenuesthatnon-reportingcompaniesamountto,noranassessmentbytheIAofthematerialityoftheomissions,thiscanbeeasilyinferredwithavailablefigures.Theshareofnon-reportingcompaniesappearstobeinsignificant.Similarly,theEITIReportnamesthetwonon-reportinggovernmententitiesbutdoesnotprovideanassessmentofthematerialityofomissions,althoughtheseappearstobein-significant.WhilethecommentaryfromtheIAonthecomprehensivenessoftheEITIreportislimitedtoastatementoftheirworkonrepresentinglimitedassurance,itispossibletocalculatethematerialityofomissions.Giventhattheseappearimmaterial,andinlightofthelowmaterialitythresholdadoptedforselectingmaterialrevenuestreams,theInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.However,theMSWGisurgedtoclarifywhetherfuturethresholdsapplytototalpaymentsorindividualrevenuestreams,andtoensurethattheIAincludesaclearerassessmentofthecomprehensivenessofthenextEITIReport.Concernsregardingdatareliabilityareaddressedseparatelyinsection4.6,below.
64ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
In-kindrevenues(#4.2)
Documentationofprogress
The2014EITIReportclarifiesthestructureofoilandgasPSAsinSection5.5.7(pp.139-140).Thegovernmentisentitledtoashareofin-kindrevenue(ProfitOil),whichisvariabledependingonthePSA.ForthethreeproducingPSAs,thestate’sshareofin-kindrevenueiscommercializedbythetworespectiveoperators,withtheproceedsthenremittedthroughPAMtotheTreasury.The2014EITIReportreferencesMSGdeliberationsonthesubject:“Duringtheinceptionworkshop,arepresentativefromPAMstatedthatcompaniespayincashfromthesaletotheGovernmentforitsshareundercurrentarrangement.Inthefuturethereareplanstopaysuchprofit-oilshareinoilbarrels.100%ofoilextractedbythecompaniesisexported.ThegovernmentdoesnotselloilinMongolia.”(p.139)Adescriptionofin-kindrevenueflowsundertheproducingPSAsisincludedinSection5.5.7(pp.139-140),alongsidethevalueofcashproceedsofthesaleofthestate’sshareofin-kindrevenues,inaggregateforeachofthetwooperatorsfor2014.
Stakeholderviews
AgovernmentrepresentativeontheNationalCouncilwithjurisdictionovertheoilandgassectorexplainedtheprovisionsforin-kindrevenueunderMongolia’sPSAsystem.Oilandgasoperatorsarerequiredtotransferashareofproductioninkindtothegovernment(theshareisvariableaccordingtothePSA,whicharealldifferent).ForthethreeproducingoilandgasPSAs,thetwooperatorstakecareofcommercialisingthegovernment’sshareofprofitoilandthentransfertheproceedstoPAM(netofmarketingfees).Thegovernment,throughPAM,monitorsthevolumesofcommercialisedoilwiththreeseparatechecksbyacustomsofficeratthewell-head.Thelegalframeworkforminingdoesnotprovideforin-kindpayments.Oilandgascompaniesconsultedconfirmedthattherewerenoin-kindpaymentstogovernmentintheoilandgassectorandthattheproceedsofthesalesofthestate’sshareofProfitOilwerepaiddirectlytothePAMaccountatUlaanbaatarCityBank.
OnegovernmentrepresentativeraisedtheissueofthesaleofETT’sproductionasanexampleofin-kindrevenues,althoughthiswouldnotstrictlycountasin-kindrevenuegiventhattheETTandotherminingSOEsmakematerialpaymentstogovernmentinlinewiththosefromprivately-heldcompanies,suchastaxes,licensefees,etc,aswellasdividends(eithertoErdenesMGL,whichisapartoftheHumanDevelopmentFund,forfourSOEsandtotheStatePropertyCommissionforallotherSOEs)butthisdoesnotincluderevenuesderivedfromthesaleofin-kindrevenue.State-ownedminingcompanieslikeETTselltheirproductionandpayfees,taxesanddividendstogovernmentonthebasisoftheirsales.DespitetheabsenceoflegalbarrierstodisclosingsalesofETT’scoalproduction,inpracticethesewerenotdisclosedasgovernmentrepresentativeswereconcernedovertheinformationbeing“misinterpreted”byNGOsgiventhepubliccriticismofETT’scokingcoalpre-salesagreementwithChalcoin2011.139
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicable.The2014EITIReportexplainsthatthestate’sshareofin-kindrevenueunderthethreeproducingoilandgasPSAsiscommercialisedbythetworespectiveoperators,andthegovernmentreceivestherevenueincashrather
139SeeforexampleNews.mn(9March2015),“TavanTolgoistalledbyErdenesTavanTogloi’sChalcodebt”,http://www.news.mn/r/206199
65ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
thanin-kind.Thevalueofcashproceedsofthesaleofthestate’sshareofProfitOilisdisclosedandreconciled.Therearenostatutoryprovisionsforin-kindrevenueintheminingsector.WhilenotrequiredundertheEITIStandard,theMSGmaywishtoincludethevolumesofthestate’sentitlementofin-kindrevenuesunderthethreeproducingPSAs.ThiswouldbeparticularlyrelevantgiventheongoingdebateonoversightofthetwocurrentPSAoperators.
Barterandinfrastructuretransactions(#4.3)
Documentationofprogress
Section5.5.3(pp.125-126)ofthe2014EITIReportdescribestheapproachadoptedtoinfrastructureprovisionandbarteragreements,settingthematerialitythresholdatMNT1billion(USD554,100).However,itnotesthatnocasesofinfrastructureprovisionsorbarterswerereportedoridentifiedbyreportingcompaniesorgovernmententities.Threecompanies(TerraEnergyLLC,UsukhZoosLLCandOyuTolgoiLLC)reportedinfrastructureinvestmentsindependentofanygovernmentconcession.Thestate-ownedErdenesMongolLLC,whichmanagesstateparticipationinfiveextractivesSOEs,reporteditsownpublicinfrastructureinvestments.
Stakeholderviews
TheInternationalSecretariatunderstandsfromdiscussionswithindustryandgovernmentstakeholdersthatbarteragreementsexist,particularlyusedbylicense-holdersforpayingtheircontractorsinkind(minerals),andthattheirusehasincreasedastheavailabilityofUSDhasdeclinedinMongoliaduringtheeconomicdownturnsincemid-2012.SeveralindustryrepresentativesnotedthatSOEsinparticularusedpaymentsinkindtocoverthecostsofcontractminingbyprivateserviceproviders.However,neitherindustrynorgovernmentstakeholdersnotedtheexistenceofanybartersforthepaymentoftaxesorfeestogovernment.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicable.The2014EITIReportadequatelycoversinfrastructureprovisionsandbarters,demonstratingthatthesewerenotrelevantinMongoliain2014.
Transportrevenues(#4.4)
Documentationofprogress
Section5.5.8(p.140)ofthe2014EITIReportprovidesanoverviewoftheMSWG’sapproachtotransportationrevenues,althoughnospecificmaterialitythresholdisprovided.TheIAnotesthatitdidnotidentifyanysignificanttransportationrevenuestreamduringtheinceptionworkshop140.Havingincludedarequestforsuchinformationinthereportingtemplates,theinformationreceivedfromErdenesMongolonrevenuefromthetransportofcoalthrougharoadfeeisprovided.Whilethereisnoadditionalinformationsuchasadescriptionofthetransportationarrangements,thisisonlyencouragedunderRequirement4.4.
Stakeholderviews
140ConfirmedinSection4.2.7(p.14)inthe2014InceptionReport.
66ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Mostindustryandgovernmentstakeholdersconsultednotedthatthegovernmentdidnotreceiveanymaterialrevenuesfromthetransportationofmineralsoroilandgas.CSOsconsulteddidnotexpressanyviewontheissue.HoweveroilandgascompaniesconsultednotedthatDongShengPetroleumexportedcrudeoilexclusivelybyrail,whilePetroChinaexportedexclusivelybyroad,subcontractingtransporttotruckingcompanies.Mongolia’srailwayisoperatedbytheUlaanbaatarRailwayMongolian-RussianJointVenture(UBTZ),50%-ownedbyeachgovernment.ArepresentativefromDongShengexplainedthatthecompanypaidUBTZdirectly,notthroughafreight-forwarder,andthatfixedtransportratesweresetaccordingtoweight.
Initialassessment
OurinitialassessmentisthatthisMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.The2014EITIReportdisclosesthevalueoftransportationrevenueslinkedtotheextractiveindustries,evenifitdoesnotsetamaterialitythresholdforsuchrevenues(implyingamaterialitythresholdof0).Whileadescriptionofsuchtransportationarrangementsisnotprovided,sucheffortsareonlyencouragedandarenottakenintoaccountinassessingcompliance.WhiletheMSWG’slackofconsiderationofrailtransportrevenuesfromcrudeoilexportsisaconcern,UBTZwouldnotbeconsideredaSOEunderthedefinitionprovidedinRequirement2.6ofthe2016EITIStandard,whichdefinesanSOEas“awhollyormajoritygovernment-ownedcompany”.ThesignificanceoftransportrevenuesmaygrowinfutureEITIReports,giventhegovernment’stake-overoftheownershipofcoal(roadandrail)transportinfrastructurein2014,withprovisionsguaranteeingaccesstotheinfrastructuretoprivatethird-parties.141GiventheimportanceofroadandrailbasedtransportationofextractivesproductsinMongolia,itisrecommendedthattheMSWGadoptsacleardefinitionofSOEsforfutureEITIreportingandconsidersamoredetaileddescriptionoftransportationarrangementsinfutureEITIReports.Thisshouldincludeappropriatedefinitionsofmaterialityfortransportationrevenues,anddisclosureofstateandSOErevenuesfromthetransportofcrudeoilifmaterial.
TransactionsbetweenSOEsandgovernment(#4.5)
Documentationofprogress
The2014EITIReportclarifiesthatnoSOEcollectsrevenuesonbehalfofthestate,asnotedinSection5.5.7(pp.139-140).Section5.3.1(p.104)disclosesthedividendspaidbyextractivesSOEstogovernment.Whilethegovernmentisentitledtoashareofin-kindrevenuefromthethreeproducingoilandgasPSAs(ProfitOil),theTreasuryreceivestheproceedsfromthesaleofthisprofitoilincash,throughPAM,sincetheoiliscommercializedbytheprivateoperatorsonbehalfofthestate.ThedividendsofstateinvestmentsintheextractiveindustriesareprovidedinAppendix10(pp.192-200)fornationalgovernmentandAppendix11(pp.201-203)forsubnationalgovernments,bothdisaggregatedbycompany.
SOEsmakepaymentstolocalgovernments,equivalentto0.26%oftotalgovernmentextractivesrevenue142,withthesubnationaldirectpaymentsbyeightSOEstovarioussoumsdescribedinSection5.4.3ofthe2014EITIReport(pp.116-117).TheEITIReportdoesnotaddresswhetheranySOEsfailedto
141USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf142ThesumofSOEs’quasi-fiscalexpenditurescanbecalculatedasMNT4167.369million.
67ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
reportsuchsubnationalpayments,implying(butnotclearlystating)thatthislistiscomprehensive.WhilemostofthepaymentsreportedinSection5.4.3representfeesandtaxestosubnationalgovernmentsleviedonallextractivescompanies,paymentscategorisedasstateandlocaldividendsareonlyapplicabletoSOEs.
Section5.4.4(p.118)thenlistsdetailsof“subnationaltransfers”byfourSOEstovarioussubnationalgovernments(soumsandaimags)in2013.ThedistinctionbetweenSOEs’“directsubnationalpayments”and“subnationaltransfers”isunclear.TheSOEs’“subnationaltransfers”listedinSection5.4.4appeartoconsistofsocialexpendituresthathavebeenmiscategorised.Inaddition,theIAnotesinfootnotetothetablesinSections5.4.3and5.4.4that“KPMGnotedthatsomeofthesub-nationalpaymentsaboveasreportedbytheentitiesappearhigh.Noverificationofthesereportedfigureshasbeenperformed.”
Section5.4.4(p.118)alsodescribesdetailsofpasttransfersfromSOEstogovernmentin2011-2013,butdoesnotmentionanyfor2014.ItdoesnotappearfromMSWGmeetingminutesandstakeholderconsultationsthattheMSWGconsideredthisdistinctionpriortodatacollectionforthe2014EITIReport.
Stakeholderviews
AgovernmentrepresentativefromErdenesMongolnotedtherewerenolegalbarrierstodisclosingthefinancingstructureofSOEs,northetotaluniverseofcompanydividendspaidtoeitherErdenesMongolortotheStatePropertyCommission.AllMSWGmembersconsultedagreedtherehadbeennoconsiderationofthedefinitionofSOEs’directsubnationalpaymentsand“subnationaltransfers”priortodatacollectionforthe2014EITIReport.
Initialassessment
WhiletherearemanydifferenttransactionsbetweenSOEsandgovernment,theassessmentofRequirement4.5isfocusedontransactionsspecifictoSOEs(suchasdividends).Transactionsthatareapplicabletoallextractivescompanies,includingSOEs,arecoveredunderRequirement4.6below.
TheroleofSOEsoperatingintheextractiveindustriesisdisclosedintheEITIReport.The2014EITIReportprovidesdetailsofpasttransferstotheHumanDevelopmentFundin2011-2013.Nodetailsofanysuchtransfersareprovidedfor2014andtheInternationalSecretariat’sunderstandingisthattherewerenoHDFtransfersthatyear.TheEITIReportdisclosesdetailsofdividendspaidbythe21SOEsoperatingintheextractiveindustries,butdoesnotclearlyaddresswhetherthesedisclosuresarecomprehensive.AsnotedinRequirement2.6,thereisaneedforacomprehensiveassessmentofstateparticipationintheextractiveindustries.Inaddition,theIndependentAdministratorhighlightsconcernsaboutthereliabilityofSOEs’disclosures.Inaddition,the2014EITIReportappearstomiscategoriseSOEs’socialexpendituresas“subnationaltransfers”.Inlightofthis,theInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.TheMSWGshouldconsultErdenesMongol,theSPCandtheMoF,tobetterdefineSOE’stransferstogovernmentdirectsubnationalpayments,determinetheirmaterialityandensurefulldisclosure.ImprovingthetransparencyofcurrentpracticeswouldseemparticularlyrelevanttocurrentreformsofErdenesMongol’scorporategovernance,supportedbytheIFCandtheADB,withaviewtoeventuallytransformingitintoacommerciallyorientedstateassetmanagemententity(similartoTemasek).
Subnationaldirectpayments(#4.6)
Documentationofprogress
68ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
The2014EITIReportcomprehensivelylistsanddisclosescompanies’directsubnationalpayments.Section3.3.2(pp.28-29)describestheselectioncriteriaforrevenuestreamstobeincludedinthe2014reconciliation.Byselectingtheninelargestsubnationalrevenuestreams,outofatotalof12subnationalrevenuestreams,the2014EITIReportprovidescoverageof99%ofthevalueofsubnationalrevenuestreams.Totalsubnationaldirectpaymentsaccountedfor5.16%oftotalgovernmentextractivesrevenue.ThelistofmaterialrevenuestreamsisprovidedinSection3.4.1.3(pp.33-34)andtheprocessforselectingthemisdescribedinSection3.4.1.2(pp.32-33).Appendix11(pp.201-203)providesdetailsofsubnationaldirectpaymentsasreportedbycompanies.
Section5.4.3(pp.116-117)describessubnationaldirectpaymentsby8SOEstovarioussoums,andSection5.4.4listssubnationaltransfersfromfourSOEstovarioussoums,withthreeSOEsreportingtransactionsunderbothcategories.However,the2014EITIReportappearstoconfusetheterms“subnationaldirectpayment”and“subnationaltransfer”forSOEs.ThetaxesandfeespaidbySOEstosubnationalgovernmentslistedinSection5.4.3areapplicabletoallextractivescompanies,whilestateandlocaldividendsareapplicableonlytoSOEsandarethuscoveredunderRequirement4.5above.TheIAhasnotedinfootnotestothetablesinSections5.4.3and5.4.4that“KPMGnotedthatsomeofthesub-nationalpaymentsaboveasreportedbytheentitiesappearhigh.Noverificationofthesereportedfigureshasbeenperformed.”
Stakeholderviews
CSOstakeholdersplaceparticularimportanceondirectsubnationalpayments,givendisseminationeventsandsubnationalMSGmeetingshaveshownstrongdemandforthisinformation.Industryrepresentativesalsoseetheinclusionofsuchinformationasdesirable,toensurebetterunderstandingfromlocalcommunitiesofthedegreeofcontributionsbycompaniesoperatingintheirrespectivesoums.SeveralgovernmentrepresentativessawtheestablishmentofsubnationalMSGsashelpfulinimprovingEITIreportingbysoumsandaimags.NoneoftheMSWGmembersconsultedcommentedonthedistinctionbetweensubnationaltransfersanddirectpaymentsbySOEs,notingthatthishadnotbeenconsideredbytheMSWG.
Initialassessment
TheMSWGhastakenconsiderablestepstoincludesubnationalpaymentsinEITIreporting.Companypaymentstosubnationalgovernmentshavebeendisclosed,disaggregatedbypaymentstream.However,whiletheMSWGhasassessedthematerialityofthesetransfersandsetaspecificmaterialitythresholdfordirectsubnationalpayments,thereisconfusionoverthedefinitionofSOEs’“subnationaldirectpayments”and“subnationaltransfers”,andwhilebotharedisclosed,theyarenotreconciledwithsubnationalreceipts.AsnotedinRequirement2.6,thereisaneedtoclearlydefinethescopeofSOEsforthepurposesofEITIreporting.Finally,wenotetheIA’sreservationsoverthereliabilityofSOEs’disclosuresoftheirdirectsubnationalpaymentsandthelackofanassessmentfromtheIAonthecomprehensivenessofthesedisclosures.TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.
Levelofdisaggregation(#4.7)
Documentationofprogress
WhileSection3.2.4(p.26)notesthatEITIdataispresentedbycompany,revenuestreamandreceivinggovernmententity,andfurtherdisaggregatedbynationalandsubnational-levels,the2014EITIReport
69ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
doesnotactuallypresentthedatadisaggregatedbyreportingcompanyandrevenueflow.HoweverthisdataisaccessiblethroughtheSummaryDataTemplateforthe2014EITIReportaswellasthroughtheEITIMdataportal.143Section3.2.4(p.26)alsonotesthatthe2014EITIReportdoesnotincludereportingdisaggregatedatproject-level.
TheNationalCouncilconsideredtheissueofproject-by-projectreportingwhenitconstitutedaworkinggrouptoassessthefeasibilityofdisaggregatingcorporateincometaxinformationintheextractiveindustriesatitsmeetingon13January2015.Thiswasseenasafirststeptoreportingdisaggregatedbyproject.
Stakeholderviews
CSOconsultedexpressedsatisfactionatthelevelofdatadisaggregationavailablethroughtheEITIMDataPortal.However,theissueofproject-levelreportinghadyettobediscussedbytheMSWG,accordingtoMSWGmembersconsulted.AgovernmentMSWGrepresentativenotedthatthemajorityofminingcompaniesinMongoliaoperatedasinglemine,whichmeanttheydefactoreportedminingtaxesandfeesonaproject-levelbasis.OneCSOrepresentativeconsultednotedthatwhiletheMSWGhadconstitutedaworkinggroupin2015ondisaggregatingcommontaxeslikecorporateincometaxtodistinguishextractivesfromnon-extractivesactivities,henotedthatthegrouphadmetonlyonceandthatworkstreamwasinactive.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressthisrequirementismet.Ratherthanpresentingalldatainthe2014EITIReportdisaggregatedbycompanyforallrevenuestreams,thisdatawasmademoreaccessiblethroughtheEITIMdataportal,withEITIdatafortheperiod2006-2015available(andsearchable)online.
Datatimeliness(#4.8)
Documentationofprogress
The2014EITIReportwaspublishedinDecember2015,havingbeenapprovedbytheNationalCouncilon18December2015.ReportingcompaniesandgovernmententitiesarerequiredtosubmittheirreportsthroughtheEITIMeReportingsystemwithinthreemonthsoftheendofthefiscalyear(i.e.by31March)annually.BothcompaniesandgovernmententitiessubmittedtheiroriginalreportsontheeReportingsystem(partoftheEITIMdataportal)by31March2015,whichwereaccessibleonlineimmediately,althoughadditionalreportingtemplatesweresubmittedoverthedatacollectionperiodofAugust-November2015.By31March2015,atotalof987companieshadreportedthroughtheeReportingsystemdatausedforthe2014EITIReport.
Stakeholderviews
SeveralCSOMSWGrepresentativesnotedthatpre-reconciliationEITIdatathroughtheeReportingplatformwasverytimely,butthatthereweredifferencesofopiniononwhetheritwaspossibleforCSOstouseit.TheEITIMSecretariatclarifiedthatitwaspossibletousethisdata,aslongasitwasmadeclearthatitwasunreconciled.AMECCrepresentativenotedthatgovernmentminingdatawasavailableona 143Historicaldataover2006-2015isaccessibleontheEITIMdataportal.Itcanbequeriedbynameofcompanyorbylicensenumber.http://e-reporting.eitimongolia.mn/reportList
70ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
monthlybasisbutthattheEITIReportwasproducedlessfrequently,whichcausedadilemmaforpeopledecidingonwhichdatasettouse.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheeReportingsystemhashadasignificantimpactontimelinessofreportingandreconciliationofpaymentsnowtakesplacewithin12monthsoftheendofthefiscalyearunderreview,onanannualbasis.
Dataquality(#4.9)
Documentationofprogress
ToRfortheIA:InMarch2015,theMSGusedthetemplateToRforIndependentAdministratorsfromtheEITIinternationalwebsiteasthebasisforprocurementofthe2014EITIReport.HoweveritpublishedthisdrafttemplatewithouttailoringittoMongoliancircumstancesinitscallfortendersontheEITIMongoliawebsite.148IndeedtheMongoliantranslationofthetemplateToRincludesthe[bracketblue]placeholders,thereforeomittingsomeessentialdetails.WhileanumberofunsuccessfulbidderslodgedcomplaintsthroughtheMoF’stenderdepartment,thecontractwassignedinJune2015.
Whiletheinitialreportingtemplatessubmittedbefore31March2015weredesignedaspartoftheeReportingsystem’sdevelopment,andthusbasedonreportingtemplateslastagreedinDecember2013,theMSWGagreedwiththeIAasetofadditionalreportingtemplatesforsupplementalinformationforthefinancialreconciliationaswellaskeycontextualinformation.ThesewerediscussedattheInceptionworkshopon7July2015andagreedaspartoftheInceptionReportinAugust.TherearehowevernoMSWGortechnicalworkinggroupmeetingminutespublishedtoreflectthesediscussions.149
Inaddition,inSection2(p.7)ofthe2014Reportondatacollection,whiletheMSWGhasagreedanalternateapproachtodatacollection(usingtheeReportingplatform),itdidnotincludeprovisionsforconsultationswiththeIndependentAdministratortoensuretheintegrityoftheinformationtransmittedtotheIndependentAdministrator,asrequiredunderSection2.1(p.7)oftheStandardToRforIndependentAdministratorsapprovedbytheEITIBoard.The4August2015InceptionReportdidnotincludeareviewofthequalityassuranceproceduresoftheeReportingsystem,butratherexplained(Section4.5(p.18))theproposedscopeoftheIA’sworkforthe2014Report,whichconsistedofareviewbytheIAoftherepresentationlettertemplateusedtocertifyentities’eReportingsubmissionsandmakerecommendationsforimprovementifrelevant.
InSection3(pp.7-8)ofthe2014Report,theMSWGalsoomittedreferencetoamaterialitythreshold,definedinproportiontototalgovernmentrevenues,asrequiredunderSection3.4(p.7)ofthetemplateToR.ItshouldalsobenotedthattheapprovedToRdidnotcontainanyprovisionsforensuringtheconfidentialityofEITIdisclosurespriortoreconciliation.WhileSection4.6(p.18)ofthe4August2015InceptionReportandSection3.2.5(p.27)ofthe2014ReportdescribetheIA’sprovisionsforpreservingtheconfidentialityofEITIinformation,thisdoesnotcoverdisclosuresforreconciliationgiventhatsubmissionswerethroughtheeReportingsystem,priortotheIA’sappointment.Anumberofsmaller
148http://www.eitimongolia.mn/en/node/4858149SeetheInceptionReportandInceptionWorkshopPresentationbyKPMG,unpublished.
71ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
discrepanciesfromthestandardToRforIAsapprovedbytheEITIBoardaredescribedinSection4(pp.8-9)oftheIA'sToRapprovedbytheMSGforthe2015EITIMReport.150TheapprovedToRalsoomitsthetemplate’srequirementforconsultantstohaveexpertiseandexperienceintheoil,gasandminingsectorsinSection4(pp.9-10)onconsultantqualifications.Whilethestatementsofmateriality,relatedtorevenuestreams,unilateralgovernmentdisclosuresandreportingentities,werenotincludedintheapprovedToR,theMSWG’srequirementthattheIndependentAdministratorprepareascopingstudyimpliesthatthesematerialitydecisionswouldbetakenduringthescopingphase.
On3February2016151theMSWG’sevaluationcommitteeissuedacallfortendersforthe2015EITIReport’sIndependentAdministrator,havingapprovedtheToRon1February2016.152Theevaluationcommitteeiscomposedofsevenmembers(twofromeachstakeholdergroupandonefromtheEITIMSecretariat,whoallhavetoundergotrainingintheMoF’sprocurementprocedures).However,followingcomplaintsregardingthetechnicalandcommercialselectionproceduresbythreeofthefourlosingbidders(seestakeholderviewsbelow),theMinistryofFinancerequiredtheEITIMworkinggrouptore-issuethetenderon19April2016153,basedonthesameToR.InJune2016,the2015IAcontractwasawardedtoUlaanbaatarAuditCorp.,itssixthIAcontracthavinglastpreparedthe2013EITIReport.Inmostrespects,theapprovedToRfollowstheStandardToRforIndependentAdministratorsapprovedbytheEITIBoard.TheMSWGalsoincludedprovisionsfortheIndependentAdministratortopreparebothascopingstudyandtheactual2015EITIReport,inSection2(p.3)oftheToR.
TheapprovedToRincludessimilardataqualityassuranceproceduresasinpreviousEITIReports,includingrequirementsformaterialcompaniesand,whererelevantandapplicable,governmententitiestosubmitlettersfromtheirexternalauditorscertifyingthereliabilityofEITIdisclosures.TheMSWGincludedtheBoard-approvedtemplate’slanguageinSection1.2.3(p.6)ofthe2016ToR(“TheMSGmaydecidetophaseinanysuchproceduresothattheconfirmationlettermaybeintegratedintotheusualworkprogrammeofthecompany’sauditor.”)withoutclearlydefiningtheapproachselected.ThisprovidesflexibilityfortheMSWGtodiscussthephasinginofqualityassuranceprocedureswiththeIAduringtheinceptionphaseforthe2015EITIReport.
Reviewofauditandassurance(companies).TheIAdidnotundertakeareviewofmaterialcompanies’auditingpracticesduringtheinceptionphaseforthe2014EITIReport.Howeverthe2014EITIReportintroducesmorecomprehensivequalityassuranceproceduresforcompanies.TheIAconductedareviewofauditingpractices,requestingcopiesofmaterialcompanies’auditedfinancialstatementsfor2013,asdescribedinSection3.3.4(p.30).Appendix12(p.204)containsreferencesto15companies’websiteswheretheIAwasabletoidentifythattheauditedfinancialstatementsarepubliclyavailable.
Sections2.3.2(pp.18-19)and3.3.4.2(p.30)describethequalityassuranceproceduresforcompanydata:arepresentationletter,signedonbehalfoftheboardofdirectorsorseniorexecutive,acopyofaudited2014financialstatementsunderIFRS(InternationalFinancialReportingStandards,currentinMongolia),andattestationsbyexternalauditorsofEITIMsubmissions.Giventhatareviewofauditingpracticeshad
150http://eitimongolia.mn/sites/default/files/uploads/ToR_for_Mongolia_EITI_2015_Report_IA_English_Updated.pdf151http://eitimongolia.mn/en/node/4883152EITIM(February2016),TermsofReference,IndependentAdministratorforthe2015EITIReport-http://eitimongolia.mn/sites/default/files/uploads/ToR_for_Mongolia_EITI_2015_Report_IA_English_Updated.pdf153http://eitimongolia.mn/en/node/4894
72ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
notbeenconductedpriortodatacollection,theIAagreedwiththeMSWGtorequirecopiesoftheauditedfinancialstatementsaspartofthequalityassuranceproceduresforEITIreporting.Section2.3.2(p.19)providestheresponsesfromcompaniesandAppendix4(pp.154-162)providesdetailedinformationregardinginformationprovidedbyeachcompany.Ofthe236materialcompanies:
- 173companiessubmittedamanagementrepresentationletter,63companiesdidnot.
- 143companiesprovidedtheirauditedfinancialstatements.
- NocompanyprovidedaISAE3000limitedassurancereportsfromexternalauditors
- TwocompaniesprovidedagreeduponproceduresreportsverifyingamountsreportedtoEITI.(thesecompaniesareallnamedinAppendix4(pp.154-162)
Section4.2.4(p.45)describesthelimitationstotheIndependentAdministrator’swork:“TwocompaniesprovidedagreeduponproceduresreportsverifyingamountsreportedtoM.EITI.Bothannualauditreportsandfinancialstatementswereprovidedby143companiesoutofthe236includedinthereconciliation.”(p.45)Howevernoassessmentofthematerialityofomissions(i.e.asashareofgovernmentextractivesrevenue)isprovided,thereisonlyanestimateintheshareofnon-complyingcompanies:“6outofthe96respondedcompaniespresentedqualifiedauditopinionsontheirfinancialstatements,whichmeansover90%ofcompaniessentunqualifiedauditopinions.”(Section4.3(p.45)).Thestatementalsoimpliesthat140materialcompaniesdidnotprovideauditopinionsontheirfinancialstatements.Finally,thereisnogeneralassessmentbytheIAofthereliabilityofcompanyEITIdata,althoughitraisesconcernsovertheintegrity,confidentialityandreliabilityofdatadisclosedthroughtheeReportingsysteminSection3.2.1.2(p.24).
Reviewofauditandassurance(government).Section5.1.3.1ofthe2014EITIReport(p.63)providesadescriptionoflegislativerequirementsfortheMongolianNationalAuditOffice(MNAO)toundertakeauditsofallofthegovernment’srevenueaccounts.EnactmentoftheGlassAccountsLaw,effectivefromJanuary2015andrequiringdisclosureofallgovernmentexpenditure,isalsoreferencedinSection5.1.3.2(p.63).However,the2014EITIReportdoesnotstatewhethertheMNAOauditreportsarepubliclyavailable.
Thequalityassuranceproceduresforreportinggovernmententitiesreflectthedatacollectionapproach:theMoFistheinitialreporterofallgovernmentdata,withsupplementaryrequestsforinformationsentdirectlytogovernmentagencies.ThequalityassuranceproceduresforgovernmentreportingtemplatesaredescribedinSections2.3.2.3(p.19)and3.3.4.3(pp.30-31):representationletterstobesignedbytheheadofeachgovernmententitytoconfirmthecompletenessandaccuracyoftheinformationpresentedwithintheadditionalinformationtemplates.TheMoFwasalsoaskedtoprovideacertificationletterconfirmingcompletenessandaccuracyofdatainitiallyreported,asdescribedinSection3.3.4.3(pp.30-31).WhiletheMNAOandsubnationalauditofficesdidnotprovideanyassuranceforEITIdisclosures,the2014EITIReportappearstomarktheMSWG’sfirstattempttoengagewiththemonEITIreporting.Section3.3.4.3(pp.30-31)describestheengagement:
“CurrentlytheMNAOandlocalgovernmentauditofficesdonotprovideanyassuranceorreportingontheM.EITIreporteddatabygovernmententities.However,theMNAOexpresseditisopentoperformsucharoleinthefuture,subjecttonecessaryresourcesandtimingoftheprocedures,indicatingthatlateMaytoearlyJulyisthemostsuitableperiodforthem.TheMNAOhasanannualactionplanpreparedforeachyear,andideallyinvolvementintheEITIprocesswouldformpartoftheactionitems.Therolemightfallunderthescopeoftheperformanceaudit
73ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
departmentoftheMNAOratherthanthefinancialauditdepartment,whichtheMNAOwouldconsiderafterarequesttobeinvolved.”
CompliancewiththeseproceduresisdetailedbygovernmententityinAppendix5(pp.163-164).Intotal,24ofthe41materialgovernmententitiesdidnotproviderepresentationlettersasrequestedbytheIA.,theMoFprovidedonlyasignaturefromahighofficialwiththereportingtemplates,withnodescriptionofthemeaningofthissignaturegiventhat“nospecificrepresentationorattestationwasincludedfromtheMoF.”(Section2.3.2.3,p.19)Whenaskedtoprovidetheconfirmationofcompletenessandaccuracyofdatainitiallyreported,theMoFreplied“itisnotabletoprovidethisletterbecauseitdoesnothavedetailedoversightofeachrevenuestreaminthereporteddata.”(Section3.3.4.3,p.31)TheIAalsoreceivedasummaryofpaymentsreceivedfromextractiveindustrycompaniesgroupedbyreceiptcategoryandsignedbyaMoFrepresentative,describedinSection4.2.3.1(p.43):nosignificantdifferenceswerenotedwiththedatafromtheeReportingsystem,confirmedthroughadditionalcertifiedreportingtemplatestogovernmententities.
ThelimitationsoftheIA’sworkarenotedinSection4.2.4(p.45),butthe2014EITIReportdoesnotincludeanassessmentofthematerialityofomissionsinqualityassuranceprocedures,inshareoftotalgovernmentextractivesrevenue.GiventhattheMoFdidnotprovidetheagreedqualityassurancesforgovernmententities’EITIdisclosures,theimplicationisthattherearenoassurancesoveranyofthegovernmentdatainthe2014EITIReport.
Itisnotpossibletocalculatethisshare,eitherfromthe2014ReportorfromtheEITIMDataPortal,giventhatthetotalpaymentsfromtheseentitiesisnotprovided.Finally,althoughtheIAincludescommentaryonthecomprehensivenessandreliabilityofthedatainSection4.1.3(p.41),noclearassessmentofthelevelofcomprehensivenessandreliabilityoftheEITIReportisprovided.
Onthereliabilityofgovernmentdisclosures,Section2.4.1.2(p.11)ofthe2013EITIReportnotesthat“therewasnoformalassuranceprocess(see2.3.2.4),andthattheinformationcontainedsomeinaccuracies(seenextsection),althoughthesewerenotmaterial.”InSection2.4.2.4(pp.13-14)theIAnotes:“ThegovernmentspreadsheetofreceiptsissignedbyStateSecretaryoftheMoF.Thereis,however,norepresentationorassurancegiveninrespectofthegovernmentreceiptsdeclaredtotheIAforEITI,andthereisnoindicationofwhatthegovernmentsignaturesignifies.”
Section8.3(pp.110-111)providesanoverviewofauditproceduresforgovernmententities,eitherbyNationalAuditOfficeoraqualifiedauditingfirm.Thereisnoassessmentofwhetherthereweredeviationsfromtheseauditrequirementsforgovernmententitiesinpractice.
ThemismatchintimeframeswasmentionedasakeychallengeinpreviousEITIReports,includingthe2013EITIReport.TheMoFwasrequiredtosubmitreportsforthe2013EITIReportonbehalfofthegovernmentinmid-February2014andthisinformationwasthenstoredbytheEITIMSecretariatbeforebeingtransmittedtotheIAinQ32014.HowevertheStateAuditAgencyonlyauditedaccountsofsoumsandaimagsby20April,beforeaconsolidatedauditofgovernmentaccountswasundertakenthereafter.ItwouldthereforenothavebeenpossibletoprovideacertificationofcompliancewithStateAuditsbymid-February2014.
Confidentialityofinformationpre-reconciliation:WhileprovisionsforthesafeguardingofinformationbytheIAhavebeenstrengthenedinthe2014EITIReport,anumberofconcernsareraisedinSection3.2.1.1(p.22-23)aboutlackofsafeguardsintheeReportingsystem,usedfortheinitialdatacollection.Thekeyconcern,accordingtotheIA,focuseson‘root’(Superuser)accounts,whichallowforhumaninterference
74ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
inthedatabetweencollectionandreconciliation.
TheeReportingprocessanditsinputtotheIA’sworkisdescribedindetailinSection3.2.1.1(p.22-23):
“ThecurrentE-Reportingdatacollectionprocessisinitiatedbyreportinggovernmententitiesandcompaniesoncetheyaregrantedwithloginaccess.ThereporteddataisthencollectedinanE-Reportingdatabase.Atthedatacollectioncut-offdate,theITconsultantattheM.EITISecretariatpreparesreconciliationdatafromthedatabaseandprovidesittotheIndependentAdministratorinMicrosoftExcelformat.OncetheIndependentAdministratorperformsthereconciliation,itreportsbacktotheE-Reportingsystemthereconciledfigures.Attheend,usersareabletoviewboththeinitialandreconciledfiguresateachcompany’sindividualrevenuelevel.”
ThefirstrecommendationinSection6.2.1(p.142)isforafullreviewoftheeReportingsystemtoensuretheconfidentiality,integrityandreliabilityofthesystem.
TheIAdetailsinSection3.2.5(p.27)thesafeguardsimplementedtoensuretheconfidentialtreatmentofinformationwithintheIA’swork.Safeguardsincluded:
- ElectroniccorrespondencewithcompaniesandgovernmententitieswasconductedviaaspecialemailaddresscreatedonlyfortheEITIproject,andthelistofemployeeswithaccesstothisemailaccountwasrestricted.
- Allelectronicinformationreceivedfromentitieswassavedinafolderwithrestrictedaccess.
- Physicalsecuritytopaperdocumentswasprovidedforbykeepingthedocumentslockedupwhennotinuse.
- Allphonecallswithentitieswereperformedfromarestrictedaccessarea.
- AllemployeesinvolvedintotheEITIprojectwereinstructedontheimportanceofnon-disclosureofconfidentialinformation.
- KPMGpolicies,professionaldutiesandethicsrequireconfidentialityofallsuchdatabyallstaff.
Provisionsforsafeguardingtheconfidentialityofinformationpriortoreconciliationarenotrobustinthe2013EITIReport.Theflowchartinthe2014handbookforreportingentitiesclearlyrevealsthecentralroleplayedbytheEITIMSecretariatincollectinginformationfrombothcompaniesandgovernmententities,whothemselvescentralisetheirdisclosuresthroughtheGeneralDepartmentofTaxationandtheMoF.Thishashoweverbeenresolvedinthe2014EITIReport,wherereportingentities(bothgovernmentandcompanies)inputtheirinformationdirectlyintotheeReportingsystem.However,disclosuresontheeReportingsystemarepublisheddirectlyonthewebsitebeforereconciliation,althoughnomemberoftheMSWGandnoreportingentityseemstohaveraisedanyconcernoverthisprocedure.
SummarydatatemplateshavebeenpostedonthewebsiteforallEITIReports,withgovernmentreports154andcompanyreports155.ThestandardisedsummarydatatemplatewascompiledonthisbasisbytheEITIInternationalSecretariat156,formingthebasisofthedatavisualisationsontheEITIcountry
154http://www.eitimongolia.mn/en/government-reports155http://www.eitimongolia.mn/en/companies-reports156https://drive.google.com/folderview?id=0B7tEEAf2PsWEUjllV1g2Zy02MFE&usp=sharing&tid=0B7tEEAf2PsWEaF84YkN2MUl4Y0U
75ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
pageforMongolia.157
Sourcesfornon-financial(“contextual”)informationareconsistentlyprovidedinthe2014EITIReport,whilethisinformationwasnotconsistentlyprovidedfornon-financialfiguresinthe2013EITIReport.
Stakeholderviews
OnlytwogovernmentrepresentativesnotedthattheyhadprovidedinputtotheToRfortheIAforboththe2013and2014EITIReports.SeveralCSOsnotedthattherehadbeenemailexchangesontheToRfortheIA,butthattheyfeltthatMSWGmembersdidnottakesuchrequestsforinputseriouslyandtendednottocomment.TherewereseldomanyMSWGcommentsonthedraftToRfortheIA,buttherewererelativelyminorcommentsfrommembersoftheevaluationcommittee,accordingtoseveralindustryrepresentatives.Biddershadrespondedtothecallforexpressionsofinterestforthe2014EITIReportin2015basedonaToRthatappearedincomplete,accordingtoseveralbidders.
Regardingthetenderforthe2015EITIReportin2016,representativesfromseveralpastEITIMIAsnotedthatallunsuccessfulbiddershadcomplainedfollowingthefirstselectionround.158SeveralCSOsexpressedconcernoverallegationsrelatedtotheIAprocurementprocess,whileindustryrepresentativesdidnotcommentotherthanexpressingsatisfactionthattheprocurementwasweightedtowardsthetechnicalscoresandthatthequalityoftheEITIReportsdependedonthequalityoftheIA.SeveralCSOsquestionedthebasisforcancellingthefirstIAround,statingthiswasonlyanexcuseforsomethingelsegoingon.
Areviewofauditingpracticesbyallmaterialentitiesdoesnotappeartohavebeenundertakenduringtheinceptionphaseofeitherthe2013orthe2014EITIReports,accordingtoMSWGmembersandpastIAsconsulted.GovernmentrepresentativesconsulteddidnotrecalladiscussionofauditpracticesattheMSWGandhadnotrealiseditwastheirresponsibility.OneCSOemphasisedthetimingchallengesposedbytheEITIreportingcycleinMongolia,whereannualgovernmentauditswerefinalisedinJunewhenEITI
157https://beta.eiti.org/implementing_country/7158Theroundwascancelledduetothefactthattwoofthefourbiddershadsubmittedbidswiththewrongdateforthebankguaranteecertificate,accordingtoseveralbiddersandtheEITIMSecretariat.Whiletheinitialcallforexpressionsofinterestincludedthiswrongdate,amemberoftheEITISecretariathadsubsequentlyfollowedupwithaseparateemailcorrectingthedate,accordingtooneofthebidders.However,oneofthebiddersconsultedclaimednottohavereceivedthissecondemailandquestionedwhytwoofthefourbiddersclearlyhadnotreceivedit.OnebidderalsoraisedconcernsovertheinclusionbyoneofthebiddersofaMoFstaffaspartofthebidteam,whichcreatedtheappearanceofaconflictofinterest.TwobiddersconsultedraisedconcernsoverapotentialconflictofinterestgiventhattheheadoftheevaluationcommitteewaspreparingfortheCertifiedPublicAccountant(CPA)testwhenapartneratoneofthebiddingfirmswasthesittingpresidentoftheMongolianInstituteofCertifiedPublicAccountants.Thebidderinquestiondeniedsuchclaims.
Inthesecondround,allbidderseffectivelykneweachothers’commercialoffersandtechnicalscores(althoughnotthetechnicalproposalsthemselves)accordingtoseveralbiddersconsulted,whichmeantthesecondtenderwaseffectivelyapricewarbetweenbidders.Twobiddersnotedthattheevaluationcommitteetookonlyonedaytoconsiderthefourdetailedtechnicalproposals,whichwerehundredsofpageslong,providinginsufficienttimetoassessproposalsindetail.OneofthebidderssuggestedthattheMSWGconsidermovingtoatenderbasedwhollyonthetechnicalproposaltoavoidwhatwasconsistentlycompetitiononpricingalonegiventhatallbiddersweregivensimilartechnicalscores.TheIAcontracthadalwaysbeenbelowtheamountbudgetedbythegovernment,withunspentfundsreturnedtotheMoFeveryyearaccordingtotheEITIMSecretariat.Thesecretariatalsonotedthatthecompositionoftheseven-memberevaluationcommitteehadchangedonlyslightlyoverthepastfiveyears,withanewrepresentativefrombothgovernment(outoftwo)andthesecretariatappointedin2016.RepresentativesfromallpreviousEITIMIAsconsultednotedthatcomplaintshadnotcausedsignificantdelaystotheIAprocurementprocessinpreviousyears.
76ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
reportingtendedtoalreadybecompleted.ThequalityassuranceproceduresforcompanyEITIreportingwereagreedfollowingtheinceptionreport,accordingtoMSWGmembersconsulted.
OnegovernmentrepresentativenotedthatanofficialletterhadbeensentfromtheMoFtotheMongolianNationalAuditOffice(MNAO)duringthespringof2015requestingtheagencyundertakeauditsofthegovernment’sEITIdisclosures.Theagencyhadrespondedthatthiswouldbepossible,butonlyifincludedinitsfutureworkplanandapprovedbytheGreatKhuralaspartofthenationalbudget.Thiswasnotincludedthisinthedraft2016NationalBudget.TheMNAOalsonotedthattheywouldonlyprovidefullassurance,whichwouldentailafirstauditofgovernmentsubmissionsandasecondauditofthefinalEITIReport.GovernmentrepresentativeswereawarethiswouldposechallengesatValidationgiventhatithasconsistentlyfeaturedasarecommendationofpastEITIReports.ArepresentativefromtheMNAOnotedthatMongoliawasanactivememberofINTOSAI(andhavebeenpartoftheirWorkingGroupontheAuditofExtractiveIndustriessince2014)andthatMongoliawasdirectlyapplyingatranslatedversionofInternationalStandardsofAccounting.WhilenotingtheopportunitiesofEITIforimprovingextractivesrevenuesauditingstandards,therepresentativenotedthattheMNAOhadprimarilyengagedwithEITIbyattendingdisseminationevents,ratherthanthroughconsultationsonEITIreporting.ItwouldberelevanttoincludetheMNAO’sinputindraftingtheIA’sToRandinselectingtheIAaccordingtotherepresentative,whohighlightedthepotentialfortheMNAO’smandatetoexpandfromfinancialauditstoprocessaudits,assessingimplementationofextractiveindustrylaws.
AgovernmentrepresentativeandpastIAsnotedthatacertificationofqualityassuranceforgovernmentdisclosureswasonlyintroducedinreportingtemplatesusedforthe2014EITIReport.Previously,theIAreceivedqualityassuranceproceduresfromtheMSWG’sscopingandwasnotconsulted.HoweverarepresentativefromapastEITIMIAstatedthattheMoFshouldnotbeinvolvedincertifyingEITIreportinggivenitsfunctionasanimplementationagency;abetterchoicewastheMNAO,whowasstatutorilyindependentandreporteddirectlytotheGreatKhural.AllpastIArepresentativesnotedtheconsistentEITIrecommendationsthatgovernmentdisclosuresbeadequatelyauditedtointernationalstandards.ANSOrepresentativenotedthatthenewmanagementrepresentationletterinthereportingtemplatesagreedinDecember2015includedreferencetoanaudit,butnottointernationalstandardsorcash/accrualbasisofaccounting.Forgovernment,theNSOrepresentativeexplainedthattheMoFhadbeenselectedforcertificationofgovernmentdisclosuresbecauseitwasthefinalrecipientofthedatabeforesubmissiontotheeReportingportal.
Severalgovernmentrepresentativesexplainedthatfortheirpurposesasimplesignaturefromahigh-levelofficialwassufficienttoprovidedataqualityassurance.ThechallengewithcertificationstatementsthatrefertoauditedfinancialstatementswasthattheMNAOonlyperformedfinancialauditsongovernmentexpenditure,notrevenues.TheGDTisgivenarevenuetargetannuallyandtheMNAOonlyreconcilesthereportsfromtheGDTwiththosefromthesingleTreasuryaccount.GovernmentrepresentativesandpastIAsexplainedthattheRevenueDepartmentreconciledrevenueswithfinancialstatement,whiletheMoF’saccountingandeconomicdepartmentauditedrevenuefromlargetaxpayersthroughthelargetaxpayersoffice.Attheprovincialanddistrictlevels,aMoFrepresentativewastaskedwithreconcilingrevenues,whiletheMNAOperformedonlyauditofgovernmentexpendituresandconsolidatedrevenues.AccordingtooneCSO,theclosesttoanauditorforallgovernmententitiesincludinglineagencieswastheSPIA,whichanswerstotheStateSecretary,responsibleforinspectionoflegalcompliance,including‘validating’governmentrevenuesagainstreceipts.
TheUSDepartmentofStatehashighlightedthedeviationsfrominternationalbestpracticesof
77ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
governanceandaccountingamongSOEsthatdonotseekinternationalfinancing.Ithighlightstheinconsistenciesincorporategovernance,management,disclosureandaccountingbetween“some”SOEsandforeign-investedfirmsthatfollowtheinternationalrules.160
Largercompanies,whopaytaxtotheGDT’slargetaxpayers’office,tendedtobeauditedbyreputablecompanies,whilethequalityofsmallercompanies’auditsvariedsignificantlyandwasnotconsistentlyinlinewithinternationalstandards,accordingtoapastIA.Therepresentativenotedthatmostsmallercompaniesproducedonlyshortauditopinions,ratherthandetailedauditreports,whichwerenotnecessarilyreliable.IndustryrepresentativesclaimedqualityassuranceofEITIreportingwasatrustissue,citingthetaxdisputesoverOyuTolgoiandSouthGobiSandsasevidenceofthegovernment’slackofunderstandingofinternationalauditingstandards.
ArepresentativefromapastIAnotedthatitconsideredthereviewoftheeReportingqualityassurancetobepartofthescopeofworkforthe2014EITIReport.SeveralgovernmentrepresentativesnotedthattheeReportingsystemstillposedchallengesforMRAMandCustomsinparticular,giventhattheydidnotmaintainsingleidentificationnumbersforcompanies.SeveralgovernmentrepresentativesalsonotedthatthequalityofdatadisclosedtoEITIwouldbeimprovedifthenumberofcompaniesincludedinreconciliationwasreduced.GovernmentrepresentativesandpastIAscouldnotfullyconfirmthereliabilityofgovernment’sEITIreporting,giventhelackofqualityassuranceforgovernmentreporting.However,theyarguedthatreconciliationoffiguresprovidedsomedegreeofqualityassuranceinitself,albeitnotthatofaninternationalaudit.AnMNAOrepresentativehighlightedthedifferencesinfiguresproducedbydifferentgovernmententities,betweenMRAMandSPCfiguresforinstance,callingforsystemisationofgovernmentfiguresacrossallpublicentities.
CSOandindustryMSWGmembersconsultedstatedtheydidnotconsidertherecommendationsintheEITIReportstobetheirown,butratherthoseoftheIA,althoughtheydidfeelliketheycouldcommentontheIA’sdraftrecommendations.SeveralindustryrepresentativesnotedthattheirinputtoEITIrecommendationshadonlyfocusedonstrengtheningEITIreportingratherthanonbroaderreforms.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.TherehasbeensignificantimprovementintheMSWG’sapprovedToRfortheIA.Whilethe2013ToRdifferssignificantlyfromthetemplateapprovedbytheEITIBoardandthe2014ToRwasnottailoredbeforebeingpublished,the2015ToRreflectsactiveinputfromtheMSWG’sworkinggroup.ThereportingtemplateswererevisedinconsultationsbetweentheadhoctechnicalworkinggroupoftheMSWGandtheIAattheInceptionworkshopon7July2015,althoughitisunfortunatethatthereisnopublicrecordofthesedeliberations.
WhiletheproceduresforagreeingrevisedreportingtemplatesdiffersfromthatrequiredundertheEITIStandard,withfinalapprovalfromtheNationalStatisticsOfficeandtheMinistryofJustice,thesetwogovernmentinstitutionsdonotappeartohaveactedagainstthewishesoftheMSWGandhavenotamendedthereportingtemplatesapprovedbytheMSWG.
Boththe2013and2014EITIReportsincludeareviewofauditandqualityassuranceprocedures,althoughthereisnoassessmentofdeviationsinpractice.Basedonthisreview,theIAforthe2014Reportagreed 160USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf
78ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
assuranceprocedureswiththeMSWGduringtheinceptionphase(July2015)andaredescribedinSection3.3.4.2(p.30).Howevertheinceptionofthe2014EITIReportdidnotprovideareviewofthequalityassuranceoftheeReportingplatformnorproposealternativesystemsforfinancialdatacollection.The2014EITIReportincludesanassessmentofwhetherthequalityassuranceprocedureswerefollowed,wheretheIAnotedthattherewasformalassurancefromonly24ofthe41reportinggovernmententities(Appendix5,pp.163-164)andthat63ofthe236materialcompaniesdidnotprovidetherequiredassurancecertifications(Appendix4,pp.154-162).However,theEITIReportdoesnotassessthematerialityoftheseomissions,eventhoughitdoesnamethecompaniesthatdidnotprovidetherequiredassurances,anddoesnotincludeageneralassessmentofthereliabilityoftheEITIReport.
Theprovisionsfortheconfidentialityofinformationpre-reconciliationwerenotrobustforthe2013EITIReport.AlthoughtheuseoftheeReportingsystemforthe2014EITIReporthavepartlyaddressedthisgap,theIAraisedconcernsovertheuseof‘root’(administrator)accounts.DespitetheimprovedqualityassurancerequirementsbuiltintotheeReportingsystemusedforthe2014EITIReport,weunderstandasignificantnumberofcompaniesandgovernmententitiesdidnotcomplywiththeseinpractice.Asignificantnumberofcompaniesdidnotprovidetheagreed-uponqualityassurancecertificationsfortheirdisclosuresinthe2013and2014EITIReports,accordingtoAppendix4(pp.154-162)ofthe2014Report,whiledisclosuresofoverathirdofgovernmententitiesinthe2014EITIReportwerenotcertifiedatallaccordingtoSection6.2.9(pp.145-146)andAppendix5(pp.163-164)ofthe2014Report.TheMSWGmaywishtorevisitthequalityassuranceproceduresbuiltintotheeReportingsystemtoconstrainreportingentities’abilitytoalterqualityassurancecertifications.
The2014EITIReportprovidesmoreconsistentsourcingofallcontextualinformationthaninthe2013EITIReport,whichdidnotconsistentlysourceallcontextualinformation.InpreparingitsnextEITIReport,theMWSGneedstoensurethattheprocessforpreparingtheEITIReportcomprehensivelyaddressesalloftherequirementsandreportingobligationsassetoutintheToRfortheIA.
Table4-Summaryassessmenttable:Revenuecollection
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
Comprehensiveness(#4.1)
TheMSWGhasagreedadefinitionofmaterialityandmaterialitythresholds.AlthoughtheIAdoesnotprovideanassessmentofthecomprehensivenessofthe2014EITIReport,itispossibleforreaderstoassessthematerialityofomissionsandreachconclusionsabouttheoverallcomprehensivenessoftheEITIReport.
Satisfactoryprogress.
In-kindrevenues(#4.2)
The2014EITIReportstatesthatthetwoproducingoilandgasPSAoperatorscommercialisethestate’sshareofin-kindrevenues(ProfitOil).Therearenoin-kindrevenues
Notapplicable.
79ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
inmining.Thevalueofcashproceedsfromthesaleofthestate’sProfitOilisprovided.
Barterandinfrastructuretransactions(#4.3)
The2014EITIReportdetailsinfrastructureprovisionsandnotesthatnobartersexist.
Notapplicable.
Transportrevenues(#4.4)
TheMSWGhasconsideredwhethergovernmentreceivestransportationrevenuesintheminingsectoranddisclosedrevenuescollectedbyErdenesMongol,evenifamaterialitythresholdforsuchrevenuesisnotexplicit(itisonlyimpliedas0).TheMSWGdoesnotseemtohaveconsideredtheexistenceoftransportationrevenuesinoilandgashoweveralthoughweunderstandthatnoSOEs(undertheEITIStandard’sdefinition)collectedtransportationrevenues.
Satisfactoryprogress
TransactionsbetweenSOEsandgovernment(#4.5)
TheMSWGhasconsideredthetransactionsbetweenSOEsandgovernmentanddiscloseddividendsfromthe21SOEsoperatingintheextractiveindustries.Whilethe2014EITIReportincludesSOEs’paymentstosubnationalgovernment,thereisconfusionbetween“subnationaldirectpayments”and“subnationaltransfers”.
Meaningfulprogress.
Subnationaldirectpayments(#4.6)
TheMSWGhasconsideredsubnationaldirectpayments,disclosedandreconciledtheminthe2014EITIReport,disaggregatedbypaymentstream.However,thereisconfusionbetweenSOEs’“subnationaldirectpayments”and“subnationaltransfers”:whilebotharedisclosed,theyarenotreconciledwithsubnationalreceipts.
Meaningfulprogress.
Levelofdisaggregation(#4.7)
Whilethe2014EITIReportdoesnotpresentalldatadisaggregatedbyrevenuestreamandbycompany,theEITIMdataportalprovidesaccesstothislevelofdisaggregatedinformation.
Satisfactoryprogress.
Datatimeliness(#4.8) TheeReportingsystemhashada Satisfactoryprogress.
80ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
significantimpactontimelinessofreportingandreconciliationofpaymentsnowtakesplacewithin12monthsoftheendofthefiscalyearunderreview.
Dataquality(#4.9)
TheMSWGhasneverundertakenareviewofauditingpracticespriortoagreeingqualityassuranceprocedures.Issuesofdataqualityassurance(forbothcompaniesandgovernment)aresignificantin2014EITIReport.WhiletheeReportingsystemusedforthe2014EITIReporthasaddressedconcernsovertheconfidentialityofEITIfinancialinformationpre-reconciliation,itdoesnotappeartohaveresolveddataqualityassurancechallenges.Whilethe2014EITIReportprovidesoverviewofqualityassurances,thematerialityofomissionsbyreportingcompaniesandgovernmententitiesisnotassessed.
Meaningfulprogress.
Recommendations:1.TheMSWGisurgedtoconsiderrevisitingthematerialitythresholdforpayments(Includingin-kindrevenues,transportrevenuesandbarterandinfrastructuretransactions)tostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSWGshouldagreewiththeNationalStatisticsOfficetheproceduresforupdatingreportingtemplatesinconjunctionwiththeIA,andmaketheseprocedurespublic.TheMSWGshouldalsoensurethattheIAincludesaclearassessmentofthecomprehensivenessofthenextEITIReport.2.TheMSWGshouldrevisitthequalityassuranceproceduresbuiltintotheeReportingsystemtoconstrainreportingentities’abilitytoalterlettersofcertificationrequired.3.WhilenotrequiredundertheEITIStandard,theMSGmaywishtoincludethevolumesofthestate’sentitlementofin-kindrevenuescommercializedbythetwooperatorsofthethreeproducingoilandgasPSAs.ThiswouldbeparticularlyrelevanttotheongoingdebateonoversightofthetwoPSAoperatorsandthecommercializationprocessforMongolia’sshareofProfitOil.
4.TheMSWGmaywishtoengagewithErdenesMongol,theSPCandtheMoF,ondeterminingthematerialityofSOEs’transferstogovernmentandbetterdefinedirectsubnationalpayments.ImprovingthetransparencyofcurrentpracticeswouldseemparticularlyrelevanttocurrentreformsofErdenesMongol’scorporategovernance,supportedbytheInternationalFinanceCorporation,withaviewtoeventuallytransformingitintoacommerciallyorientedstateassetmanagemententity(similartoTemasek).
5.Singlecompanyidentificationnumbersacrossallgovernmentagenciescouldalsobeconsideredtoimprovetheefficiencyofdatacollectionwithingovernmentreportingentities.6.GiventheimportanceofroadandrailbasedtransportationofextractivesproductsinMongolia,theMSWGmaywishtoconsideramoredetaileddescriptionoftransportationarrangementsrelatedtotheextractiveindustriesinfutureEITIReportsandconsidertheexistenceoftransportationpaymentsinthe
81ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
oilandgassector.
5. Revenuemanagementanddistribution
5.1 Overview
ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtorevenuemanagementanddistribution.
5.2 Assessment
Distributionofrevenues(#5.1)
Documentationofprogress
The2014EITIReportprovidesadescriptionofthebudgetprocess(pp.104-105).Anoverviewofsomeextractiveindustryrevenuesincludedinthenationalbudget(royalties,licensefees)isalsoprovided(pp.105-106),includingearmarkedrevenuesfortheGeneralLocalDevelopmentFund,theFundforCityandAimag,theFundforDistrictandSoumandtheHumanDevelopmentFund.TheEITIReportalsoclarifies,onthebasisofinformationprovidedbytheMoFtotheEITIMSecretariat,thatallothertaxesandfeesfromextractivescompaniesarerecordedintheannualbudget,inlinewiththeGeneralTaxLaw(p.105).
Stakeholderviews
AMinistryofFinancerepresentativenotedthattheworkofcentralisingallrevenuesthroughthesingletreasuryaccountwasstillongoing,althoughshedidnotspecifywhetheranyextractivesrevenuesflowedtootheraccounts.IndustryandCSOrepresentativesconsulteddidnotexpressviewsonthedescriptionofrevenuedistributioninthe2014EITIReport,notingthattheMSWGhadnotconsideredthisduringtheinceptionphaseofthe2014EITIReport.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.
Subnationaltransfers(#5.2)
Documentationofprogress
MongoliaoperatesasystemofsubnationaltransferslinkedtoextractivesrevenuesundertheGeneralLocalDevelopmentFund(GLDF)aspertherevised2011BudgetLawand,since2016,aseparatesystemofsubnationaltransfersofroyaltiesandlicensefees.Ashareofroyalties,licensefeesandtheoilresourcelevycollectedbythenationalgovernmentistransferredonamonthlybasistotheGLDFaccordingtoasetformulabasedonfourvariables(notlinkedtowhethersubnationalgovernmentshostextractiveindustries),whichthenexecutessubnationaltransferstoaimags,whointurntransferseachsoum’sshareforwhichtheyareresponsible.TheGLDFreceives5%ofminingroyaltiesand,followingtheamendedBudgetLawinJuly2014,30%ofoilroyalties(forthosePSAsthatincluderoyalties)accordingtoSection5.3.3(p.105),while20%ofoilexplorationandproductionlicensesarenowtransferredtoCityandAimag
82ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
fundsand10%todistrict/soumfundssinceJuly2014.Followingsurveysofneedsatthesoumandaimaglevels,between60%and100%oftheGLDFfundsarethenallocatedtosoumandaimagleveldevelopmentfunds.Thefourgeneralcriteriafordeterminingsubnationaltransferstosoumsandaimagsare:developmentindexoflocalgovernment;population;populationdensity,remotenessandsizeofterritory;andtaxinitiativesoflocalgovernment.
The2014EITIReportprovidesadescriptionofstatutorysubnationaltransfers,includingtheformulafordeterminingsubnationaltransferstoaimagsandsoumsinaggregate,butnotthespecificformulausedfordetermining2014subnationaltransferstoindividualaimagsandsoums(pp.106-107).Thedisclosedsubnationaltransfersaccountedfor1.17%oftotalgovernmentextractivesrevenues.Thesourcesusedforeachofthefourvariablesarenotprovidedanditisthusnotpossibletocalculatethetransfersthatshouldhavebeenreceivedin2014byindividualaimagsandsoums.The2014Reportdoesnotrefertoadefinitionorthresholdformaterialityofsubnationaltransfers,whileSection4.3.6(p.16)ofthe4August2015InceptionReportonlyreferstotheEITIStandard’srequirementfortheMSGtodefinematerialityforsubnationaltransfersandtheIA’ssuggestiontoincludesubnationaltransfersinreportingtemplates.Basedonanalysisofmeetingminutesandstakeholderconsultations,nomaterialitythresholdforsubnationaltransfersseemstohavebeenconsideredbytheMSWGinthe2014EITIReport.Section5.3.3.1(p.107)includesdatafromMoFontheactualtransfersmadetoeachaimag’sGeneralLocalDevelopmentFundandtheHumanDevelopmentFundin2014,butnottheactualtransfersfromtheaimagstothesoumsGiventhatthereportdoesnotprovidethelevelofsubnationaltransfersthatwerecalculatedundertheformulafor2014,itisnotpossibletoascertainanydiscrepanciesbetweenthecalculatedtransferandtheactualtransfer.Inaddition,Section5.3.3.1(p.107)notesthattherevenuesharingformulafortransfersmadefromaimagtosoumswasn’tprovidedbyanyoftheaimags,despitebeingincludedinthereportingtemplates.
Section5.3.4.2(p.107)describestheGLDFandtherevenuesourcesandgeneralprocessofallocationstosoumsandaimags.
ThereisnoevidencefrommeetingminutesorotherdocumentsreviewedthattheMSWGdecidedtoreconcilesubnationaltransfers,althoughtheIAdescribesattemptsmadetoreconcilesubnationaltransfers,whichwerebroadlyunsuccessful.TheIAdescribeditsattemptstocontactallprovincial(aimag)governmentsthatreceivedsubnationaltransfersassociatedwithextractiveindustryrevenueinSection5.3.3.1(p.107)butnotesonlythattwoaimags,Bayan-UlgiiandKhentii,reportedtheserevenues.Thereasonsforotheraimags’non-reportingarenotexplained.Thetwoaimags’reportingisdisclosedinAppendix19(p.302)).TheEITIReportdoesnotcommentonthematerialityofsubnationaltransfers,inparticulartransfersfromaimagstolocalfunds.TheMSWGshouldtoconsiderthematerialityofsuchsubnationaltransfersinthenextEITIReport,assessingthepotentialforvoluntaryunilateraldisclosuresinthecaseoftransfersassessedasnon-material.
Stakeholderviews
TheMSWGdidnotdiscussamaterialitythresholdforsubnationaltransfersduringtheinceptionphaseofthe2014EITIReportaccordingtoboththeIAandMSWGmembersconsulted.
SeveralgovernmentrepresentativesnotedthattheMSWGhadnotdiscussedincludinginformationontheactuallevelofsubnationaltransfersandanydiscrepancieswiththeamountssoumsandaimagsshouldreceiveaccordingtotheformula.However,theynotedthatinformationonsubnationaltransferstoindividualaimagsandsoumswaspubliclyavailableinbudgetexecutionreportsandthattheMoF’sFiscalAuditCommitteeconductedmonthlyassessmentsoffiscalperformance.ACSOrepresentative
83ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
notedthatwhiletheMoFexecutiveorderestablishingtheGLDFprovidedthegeneralformulaforcalculatingtransferstoaimagsandsoums,itwasunclearwhethertheformulaforcalculatingGLDFtransferstospecificaimagsandsoumswaspubliclyavailable.OilandgascompanyrepresentativesnotedthatoneofPetroChina’stwoproducingPSAsprovidedforroyalties,whileDongSheng’sPSAalsoincludedroyalties,meaningthatashareofroyaltiesfromtwoofthethreeproducingPSAsistransferredtotheGLDF.
AgovernmentMSWGrepresentativehighlightedthesecondtypeofsubnationaltransfersrelatedtoextractiverevenueseffectivefrom2016,wherebyaimagsandsoumsreceive30%ofminingandoilroyaltiesand50%oflicensefees,whichwerepaidtothenationalgovernmentbeforebeingtransferredtothesubnationalgovernmentsonaquarterlybasis.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.The2014EITIReportprovidesthegeneralformulaforcalculatingsubnationaltransfers,butnottheactualformulausedforcalculatingtransferstoindividualaimagsandsoums.Furthermore,discrepanciesbetweenactualandcalculatedtransfersarenotdisclosedintheEITIReport.WhiletheEITIReportincludesadetaileddescriptionoftheGeneralLocalDevelopmentFund,itdoesnotmakereferencetotheMSWG’sdiscussionofthematerialityofsubnationaltransfers.
InformationonactualtransferstoindividualaimagsappearstobeavailablefromtheMoF,basedonsecondarysources.162FiguresforbudgetedandactuallyexecutedGLDFtransfersfromcentralgovernmenttoaimagsareavailablefromtheMinistryofFinance,withinonemonthoftheendofthehalf-year(seeAnnexFforsuchfiguresfortheperiod2013toH1-2016).The‘Ороннутгийнхөгжлийнсан’website163providesunreconcileddataonbothbudgetedandexecutedGLDFtransferstoaimagsandsoums,sourcedfromtheMoF,from2013onwards(whenthe2012BudgetLawcameintoeffect)andincludesfiguresonexpendituresfundedbyGLDFtransfersaswellasafunctionforbrowserstocommentonthedata.Finally,the‘Төсвийнилтодбайдал:СангийнЯам’website164providesinformationonaggregateGLDFtransferstoallaimagscombined.However,detailsabouttheformulausedforthesecalculationsarenotpubliclyavailablefromsecondarysources.
Additionalinformationonrevenuemanagementandexpenditures(#5.3)
Documentationofprogress
The2014EITIReportdescribesrevenueearmarks,withSection5.3.4(pp.107-109)notingearmarksforspecificprogrammesincludingtheFiscalStabilityFund,theGeneralLocalDevelopmentFund,theHumanDevelopmentFundandtheFutureHeritageFundDraftLaw.Theoverviewofthebudget-makingprocessinSections5.3.1,5.3.2(pp.104-105)and5.3.5(p.109)includelinkstotheMNAOperformancereportsfor2014aswellasnationalbudgetplanningandperformanceassessmentsfor2014.Governmentforecastsforthenationalbudgetto2018areincludedinSection5.3.5(p.109). 162Seeforinstancesubnationaltransferstoaimagsin2013,inFigure3(p.16),GovernmentofMongolia(30June2015),DecentralisationPolicySupport,Component3ofGovernanceandDecentralisationProgramme,phaseII,2015-2018,http://cabinet.gov.mn/files/fileres/16010002.pdf163http://tusuv-oronnutag.mn/164http://www.iltod.gov.mn/
84ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Stakeholderviews
MoststakeholdersconsulteddidnothaveanyviewsonincludingadditionalinformationonrevenuemanagementandexpendituresandnotedtheyhadexpectedtheIAtoprovidethisinformationwithouttheneedforMSWGinvolvement.SeveralCSOsnotedthatstakeholdersatthesubnationallevel–bothlocalgovernmentsandcivilsociety–hadexpressedinterestingainingmoreinformationonhowrevenueswereusedatthesoumandaimaglevel.HoweveritwasnotedthattheMSWGhadnotconsideredmeansofextendingEITIreportingtoincludemoreinformationontheuseofrevenuesorbudgetexecution.Thegovernmentproducesadditionalrevenuemanagementinformationonanannualbasis,suchasannualminingrevenueforecastsbasedonreportedplansbythe100largestminespreparedaspartoftheannualbudget,whichcouldbeincludedinfutureEITIReportsaccordingtoaMoFrepresentative.
Initialassessment
ItisencouragingthattheMSWGhasmadesomeattempttoincludeinformationonrevenuemanagementandexpendituresinthe2013and2014EITIReports.Sucheffortsareonlyencouragedandarenottakenintoaccountinassessingcompliance.Wenotetheexistenceofthe‘Төсвийнилтодбайдал:СангийнЯам’website165,whichprovidesdetailedinformationontheapprovedannualgovernmentbudget,andtheMoFwebsite166,whichprovidesmonthlybudgetexecutionreportsthatcoverrevenue,disaggregatedbyrevenuestreamforbothcentralandaimaggovernments.
Table5-Summaryassessmenttable:Revenuemanagementanddistribution
Summaryassessmenttable:
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
Distributionofrevenues(#5.1)
The2014EITIReportdiscloseshowrevenuesareallocated.
Satisfactoryprogress.
Sub-nationaltransfers(#5.2)
Thegeneralformulaforcalculatingsubnationaltransfersisdisclosedinthe2014EITIReport,althoughtheformulaforcalculatingtransferstoindividualaimagsandsoumsisnotprovided.Discrepanciesbetweenactualandcalculatedtransfersarenotdisclosed.
Meaningfulprogress.
Informationonrevenuemanagementandexpenditures(#5.3)
The2014EITIReportdisclosesthemanagementofearmarkedrevenues.
Recommendations:1.TheMSWGshoulddisclosetheformulaforcalculatingtransferstoindividualaimagsandsoumsinfutureEITIReport. 165http://www.iltod.gov.mn/166http://mof.gov.mn/
85ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
2.TheMSWGmaywishtodiscloseanydiscrepanciesbetweenthefundsthatshouldbetransferredundertheformulaandtheactualtransfers,asabasisforassessingtheefficiencyofthecurrentsystemoffiscaldevolution.3.TheMSWGmaywishtoconsidertheefficiencyofbudgetexecutionbytheHumanDevelopmentFundandtheGeneralLocalDevelopmentFund.4.TheMSWGmaywishtoconsiderthematerialityofsuchsubnationaltransfersinthenextEITIReport,assessingthepotentialforvoluntaryunilateraldisclosuresinthecaseoftransfersassessedasnon-material.5.InordertoaddresspublicdiscussionsaroundMongolia’sdependenceontheextractivesector,theMSWGmaywishtoobtainfurtherinformationrelatedtothebudgetcycle,productionandcommoditypriceassumptionsandrevenuesustainability,resourcedependence,andrevenueforecasting.
6. Socialandeconomicspending
6.1 Overview
ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtosocialandeconomicspending(SOEquasi-fiscalexpenditures,socialexpendituresandcontributionoftheextractivesectortotheeconomy).
6.2 Assessment
Socialexpenditures(#6.1)
Documentationofprogress
The2014EITIReportincludesdisclosureofbothmandatoryandvoluntarysocialexpenditure.AsdescribedinSection6.3(p.56)ofthe4August2015InceptionReport,miningcompaniesarerequiredtoundertakemandatorysocialexpendituresunderLocalDevelopmentFundregulations,whileMinisterofFinanceOrder45of2010167requiresthattheseexpendituresbeclassifiedasdonations.Underthe2006MiningLaw,miningcompaniesarerequiredtoconcludeLocal-LevelAgreementssettingsocialexpenditurerequirementswiththesoumandaimaggovernmentsinwhichtheyoperate.168Inaddition,somecompaniesmakevoluntarysocialexpenditurestosoumsandaimags.Howeverthedelineationbetweenmandatoryandvoluntarysocialexpendituresinthe2014ReportappearstohavebeendefinedbythereportingentitiesthemselvesratherthanbytheMSWG.Cashandin-kindexpendituresareclearlydistinguished,withthenatureofin-kindexpendituresindicatedforeach.
AccordingtoSection5.5.4(pp.127-128),sevenofthe236materialcompaniesreportedsocialexpendituresfor2014.MandatorysocialexpenditurestotalledMNT11,295million(USD6.3million)whilevoluntaryexpenditurereachedMNT670,826million(USD371.7million),meaningthat98.3%ofsocialexpenditureswasvoluntaryaccordingtocompanies’unilateraldisclosures.However,itisuncleariftheMSWGconsideredwhetheranyoftheother229materialcompaniesmadeanymaterialsocialexpenditurein2014.TheEITIReportshoulddescribetheframeworkforsocialexpenditures,giventhatcontractsforkeyprojectslikethoseofOyuTolgoi169orEnergyResourcesLLCincludeprovisionsfor
167http://www.eitimongolia.mn/sites/default/files/uploads/en/Order_45_en.pdf168SeedescriptioninUniversityofQueensland(2015),‘Mining,“sociallicense”andlocal-levelagreementsinMongolia’-http://socialsciences.hawaii.edu/conference/demr2015/_papers/byambajav-dalaibuyan.pdf169Forexampleclauses7.13-7.15oftheOyuTolgoi2009InvestmentAgreementcovertheprovisionofsocialandeconomic
86ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
mandatorysocialexpenditure.Whilethemandatoryandvoluntarysocialexpendituresareclearlydelineatedinthedescriptionofcompanies’individualprogrammesinSection5.5.5(pp.129-132),thebasisfordistinguishingbetweenthetwotypesisnotclearlyexplained.Itisimpliedthatcompanieswereaskedtocategorisetypesofexpenditurethemselvesincompletingthereportingtemplates.
Thecashandin-kindexpendituresareclearlydistinguishedforbothmandatoryandvoluntarysocialexpendituresreportedinAppendix9(pp.188-191),includingadescriptionofthetypeanddeemedvalueofin-kindsocialexpenditure.Finally,whilethemajorityofrecipientsofmandatorysocialexpendituresaregovernmententities(predominantlyaimagsandsoums),thereisnoadditionalinformationprovidedaboutthefunctionofonerecipientlistedonlyasanon-governmentalorganisation(recipient#56inAppendix9(p.188)),thatreceived2%ofallmandatorysocialexpendituresaccordingtothetableinSection5.5.5(p.131).
Stakeholderviews
PriortotheamendedMineralsLawofJuly2014,therewerenoprovisionsinthelawrequiringcompaniestomakesocialexpendituresaccordingtoseveralgovernmentrepresentativesconsulted.Inmostcaseslocalcommunitiesappliedpressuretocompaniesoperatingintheirareatomakedonations,althoughtherepresentativesnotedthisoftenledtoseeminglyendlessdemands.However,largerminingcompanies(MongolianEnergyCorp.,Centerra,Erdenet,Baganuur,ShiveeOvoo)thatheldoperatingcontractswiththegovernment(intheformofstabilisationorinvestmentagreements)wererequiredtoundertakemandatorysocialexpendituresinlinewiththeircontracts.MostoilandgasPSAsincludedmandatorysocialexpenditures,accordingtoseveralgovernmentandoilcompaniesconsulted.OilandgascompaniesconsultedclarifiedthatwhileallofthemorerecentPSAsincludedmandatorysocialexpenditures,whichwereoneofthekeytermsfornegotiatingtheoriginalPSAwiththegovernment,olderPSAssignedinthe1990sdidnot.However,itwasnotedthatthetwooilproducingcompanieshadsubsequentlysignedadditionalprotocolscoveringsocialexpenditures(PetroChinawiththelocalgovernment,DongShengwithPAM),althoughitwasnotclearwhethertheseadditionalprotocolsrepresentedmandatorysocialexpenditures.ThenewerPSAsthatincludedmandatorysocialexpendituresclarifiedthattheseexpenditureswerenotcostrecoverable,accordingtooilcompaniesconsulted.Allmandatorysocialexpendituresweremadeincash,notinkind,accordingtogovernmentrepresentativesconsulted.
ApastIAnotedthattherehadbeennodiscussionoftypesofmandatorysocialexpendituresundertakenbyextractivescompaniesinMongoliabytheMSWGpriortodatacollectionforthe2014EITIReport.SeveralCSOsclarifiedthatwhiletherehadbeendiscussionofthedistinctionbetweenmandatoryandvoluntarysocialexpendituresduringtheinceptionphaseforthe2014EITIReport,theMSWGhadnotreachedafinaldecisiononthedistinctionpriortodatacollection.ThepastIAnotedthatthecategorisationoftypesofsocialexpendituresduringEITIreportingwasthuslefttothediscretionofreportingentities.Severaloilandgascompaniesnotedthatthedistinctionbetweenmandatoryandvoluntarysocialexpenditureswereparticularlyrelevanttothem,despitetheirrecollectionthatthishadnotbeendiscussedbytheMSWG,sincetheirinvestorsonlywantedtopaymandatorysocialexpenditureswhilethecompanymanagementconsideredsomeformsofvoluntarysocialexpenditureseffectivelymandatory,giventheimportanceofdemandsfordonationsbylocalcommunities.
Severalgovernmentandindustryrepresentativesnotedthatthemis-categorisationofsocialexpenditures
infrastructuretothirdparties.See:http://www.turquoisehill.com/i/pdf/Oyu_Tolgoi_IA_ENG.PDF
87ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
wasoneofthemaincausesofdiscrepanciesinEITIreconciliations.Thiswasbecausecompaniesdidprovidesocialinfrastructurelikewatersupplybut,giventhatdonationsfromcompaniestogovernmentwereillegalunderMongolianlaw,localgovernments(atbothsoumandaimaglevels)reclassifiedthesereceiptsasconstructionorfees.
AgovernmentMSWGrepresentativenotedthatfollowingtheamendmenttotheMineralsActinJuly2014(underArticle42.1),allcompanieswerenowrequiredtoconcludeCommunityDevelopmentAgreements(CDAs)withlocalgovernments,whichcoveredprocurementoflocalhumanresources,infrastructuredevelopmentandenvironmentalprotectionandthusincludedmandatorysocialexpenditures.AmodelCDAwasapprovedbythegovernmentinearly2016.
Regardingvoluntarysocialexpenditures,severalgovernmentandCSOrepresentativesnotedthatgovernmententitieswerelimitedintermsofthetypesofdonationstheycouldaccept,withonlythreetypesofdonationsallowed(education,healthandculture),whileprivatebeneficiarieswerenotlimited.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.InMongoliathereisacleardistinctionbetweensocialexpendituresthatarecontractualobligationsandthosethatarenot:forinstance,theOyuTolgoiInvestmentAgreementclearlymandatescertainsocialexpenditures170whilemostPSAsalsoincludemandatorysocialexpenditures.AlthoughtheEITIReportdisclosescompanies’socialexpenditure,thedistinctionbetweenmandatoryandvoluntarysocialexpenditureappearstohavebeenmadebyeachreportingentityratherthansetbytheMSWGpriortodatacollection.Itisthusunclearwhetherthesepaymentshavebeenfullydisclosedgiventhelackofclarityonwhetheranyoftheother229materialcompaniesmadeanymaterialsocialexpenditurein2014.Thus,thereportdoesnotclearlyascertainwhichsocialexpendituresaremandatoryandwhichonesarenot.Equally,whilegovernmentrepresentativesnotedthatallmandatorysocialexpenditurestookplaceincashratherthaninkind,itappearsfromthe2014EITIReportthatin-kindmandatoryexpendituresexistalthoughthenatureandbasisforreportingin-kindsocialexpendituresisnotclearlydescribed.TheMSWG,andcivilsocietyinparticularasabasisfortheiradvocacy,maywishtoclearlydelineatemandatoryfromvoluntarysocialexpendituretobetterassesscorporatecontributionsthatarediscretionaryandthoserequiredbylaw,andensurethatthesearecomprehensivelydisclosed.
SOEquasifiscalexpenditures(#6.2)
Documentationofprogress
Thereisevidenceofsubstantialquasi-fiscalexpenditures,particularlyin2014whentheDevelopmentBankofMongoliaaccountedforoff-budgetspendingof6.75%ofGDPinsectorsrangingfromsocialhousingtoinfrastructureaccordingtotheIMFandADB.171Thereisalsoevidencethatatleasttwostate-ownedcoalproducerssellsub-marketpricedcoaltostate-ownedpowerplants172,withonlyashareof 170ChapterfouroftheOyuTolgoiInvestmentAgreement(pp.14-15),http://www.turquoisehill.com/i/pdf/Oyu_Tolgoi_IA_ENG.PDF171SeeADB(2015),Mongolia:SocialWelfareSupportProgram,http://www.adb.org/printpdf/projects/49210-001/mainandIMF(2015),MongoliaArticleIVConsultation:DebtSustainabilityAnalysis,https://www.imf.org/external/pubs/ft/dsa/pdf/2015/dsacr15109.pdf172SeeforinstanceAsianDevelopmentBank(September2013),“Mongolia:UpdatingtheEnergySectorDevelopmentPlan”(p.15),http://www.adb.org/sites/default/files/project-document/81826/43079-012-tacr-01f.pdf
88ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
thissubsidycoveredbythenationalbudget.
Section5.4.6(p.119)ofthe2014EITIReportdescribesSOEs’quasi-fiscalexpenditures,butonlyfor13SOEsincludedinthescopeofreconciliation(listedinSection5.4.2(pp.110-111)),outofatotalof21SOEsoperatingintheextractiveindustries.WhilefiveoftheeightSOEsexcludedfromreconciliationoperatedinconstructionmaterials,threeoperatedinhardminerals(uranium,coalandtungsten).Allbutoneofthe13SOEsincludedinthereconciliation(ShiveeOvooprovideddetails)eitherdidnotlistanyquasi-fiscalexpendituresintheirreportingtemplatesorstatedthattheydidnotundertakeanyquasi-fiscalexpenditures.The2014EITIReportdoesnotclarifyornamewhichSOEsdidnotdiscloseanyinformationhowever.TheMSWGdoesnotappeartohaveconsideredtheissueofsubsidiesaheadofdatacollection,northeexistenceofotherquasi-fiscalexpendituressuchas(potentially)thelackofpenaltiesforlatepaymentsforstate-ownedminingcompanies’salesoftheirproductionandpaymentsforsocialinfrastructuredevelopmentbysubnationalgovernments.WhileitisnotedthatsomeSOEssoldcoalatbelowmarketpricestostate-ownedpowerplants,thecostofthesesubsidiesisnotprovided.AlthoughthetableinSection5.4.4(p.118)providesalistofSOEpaymentstosubnationalgovernments,itisunclearwhetherthesepaymentsshouldbecategorizedasquasi-fiscalexpenditures,mandatoryinfrastructureprovision,mandatorysocialpayments,voluntaryinfrastructureprovisionorvoluntarysocialexpenditures.
Stakeholderviews
Agovernmentrepresentativeclaimedthattheannualgovernmentbudgetincludedquasi-fiscalexpendituresunderstabilisationprogrammesfundedbytheDevelopmentBankofMongolia,whichincluded,forinstance,thesaleofsub-marketpricedthermalcoaltopowerplants.However,severalCSOrepresentativesnotedthatwhilestate-ownedBaganuursoldthermalcoaltopowerplantsataUSD2,500/tondiscountonproductioncosts,itwasunclearhowmuchofthiswascoveredbyfiscalsubsidiesfromthestatebudget.
ApastIAandMSWGmembersconsultednotedthattherehadbeennodiscussionoftypesofquasi-fiscalexpendituresundertakenbySOEsinMongoliabytheMSWGpriortodatacollectionforthe2014EITIReport.SeveralgovernmentrepresentativesnotedthattherewerenolegalbarrierstodisclosingSOEs’quasi-fiscalexpenditures.Twogovernmentrepresentativesnotedthatwhilesubsidiesforstate-ownedcoalproducerswererecordedintheannualStateBudget,thisaccountedforonlyashareofthecostofsubsidisedcoalsalestostate-ownedpowerproducers.Itwasnotedthatthegovernmentfixedthedomesticsalespriceofthermalcoalbutthatthesubsidiestransferredtostate-ownedcoalproducersonlyapartofthissubsidyandthecoalproducerswereforcedtoacceptlowermarginsduetoregulationoftheirsalesprices.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadeinadequateprogressinmeetingthisrequirement.The2014EITIReportprovidesdetailsofonlyoneSOE’squasi-fiscalexpenditures,butthisdoesnotappeartobeacomprehensiveoverviewofquasi-fiscalexpendituresintheminingsector.Therealsoappearstobeconfusionaboutthedistinctionbetweenquasi-fiscalexpenditures,SOEs’socialexpendituresandtheirdirectsubnationalpayments,giventheMSWG’slackofdiscussionofthistopicaheadofdatacollection.ItislikelythatanumberofSOEs’paymentstosubnationalgovernmentsaremiscategorisedandcouldbeconsideredasquasi-fiscalexpenditures.Thisisaparticularlyimportantissueinrelationtothermalcoalsalestostate-ownedpowerplants(althoughitmayalsoinvolveothermineralproducers)andgiventhesubstantialoff-budgetcreditsupportextendedbythecentralbanksince2013.TheMSWGshouldexaminethisissueingreaterdetailandincludeamore
89ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
detailedexplanationofquasi-fiscalexpendituresintheminingsector.Thisinformationcouldproveparticularlyusefulgiventhegovernment’sreformplansforthepowersector.
Contributionoftheextractivesectortotheeconomy(#6.3)
Documentationofprogress
The2014EITIReportprovidesacomprehensivedescriptionofthecontributionoftheextractiveindustriestotheeconomy,providing:
- thesizeoftheextractiveindustriesinabsolutetermsandasashareofGDPinSection5.1.1.1(p.47),
- keyareaswhereproductionisconcentrated,formininginSection5.1.4.3(p.71)andforoilinSection5.1.5.3(p.86),
- theircontributiontogovernmentrevenuesinabsolutetermsandasashareoftotalgovernmentrevenuesinSection5.1.1.2(p.48),
- thevalueofextractiveindustryexportsinabsolutetermsandasashareoftotalexports,inSection5.1.1.3(p.49),
- extractiveindustryemploymentinabsolutetermsandasashareoftotalemploymentinSection5.1.1.4(p.50).Appendix13(pp.205-206)providesfurtherdetailsof79companies’employmentfigures,disaggregatedbynationality,employmenttypeandlocalsoum/districtemployees,
- estimatesoftheinformalsector,includingadescriptionofartisanalandsmall-scalemininginSection5.1.4.5(pp.79-83).Appendix17(pp.296-297)providesfurtherdetailsofASMproductionreportedbyaimags,butonlyforthreeaimags.
Stakeholderviews
IndustryandCSOstakeholdersconsultedconsideredthedescriptionofthecontributionoftheextractiveindustriesinthe2014EITIReporttobecomprehensiveandaccurate,notingthatthesamenumbersappearedusedinotherpublicationsontheextractiveindustriessuchastheUNDPCorruptionRiskAssessmentintheMiningSectorreportpublishedinJune2016.CSOsinparticularwelcomedtheexpandeddescriptionofartisanalandsmall-scalemininginthelatestEITIReportandthedisaggregationofinformationbysoum,whichwasseenasparticularlyrelevantgivensubnationalEITIcouncils’demandsforinformation.SeveralCSOsalsoconsideredtheinclusionofemploymentfiguresdisaggregatedbylocationtobeparticularlyimportant,givensubnationalcouncils’demandsforthistypeofinformation.Nostakeholdersconsultedexpressedviewsonanybarrierstodisclosingthelocationofoilproductionandexports.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogress.The2014EITIReportexpandsonpreviousEITIReports’descriptionofthecontributiontotheeconomy.Itincludes,inabsoluteandrelativeterms,thesizeoftheextractiveindustries,theircontributiontogovernmentrevenue,exportsandemployment.Adescriptionoftheinformalsectorandofthemainareasofproductionisalsoprovided.ThisisalsonowprovidedthroughtheEITIMdataportal.TheMSWGhasalsogonebeyondthebasicEITIRequirementsindisclosingdetailedinformationonemploymentbymineandnationality,althoughnotforoilandgas.ThisisanexampleofhowtheEITIReportcanbeusedtodiscloseinformationthatismeaningfulandrelevanttonationaldebates.
90ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Table6-Summaryassessmenttable:Socialandeconomicspending
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
Socialexpenditures(#6.1)
AlthoughtheMSWGhasconsideredsocialexpendituresindetailanddisclosedtheseinthe2013and2014EITIReports,thedistinctionbetweenmandatoryandvoluntarysocialexpendituresseemstohavebeenmadebyreportingentitiesthemselves.Thecomprehensivenessofdisclosuresofmandatorysocialexpendituresisunclear.Thenatureandbasisforreportingin-kindexpendituresisnotdescribed.Nodetailsontheidentityofnon-governmentalrecipientsareprovided.
Meaningfulprogress.
SOEquasifiscalexpenditures(#6.2)
The2014EITIReportprovidesdetailsofonlyoneSOE’squasi-fiscalexpenditures,butthecomprehensivenessofassessmentsofquasi-fiscalexpendituresisunclear.TherealsoappearstobeconfusionabouttheclassificationofanumberofSOEs’“paymentstosubnationalgovernments”.TheMSWGdoesnotappeartohaveconsideredwhethersuchexpendituresexist,despitethewidespreadknowledgeofsubsidisedstate-ownedcoalsalestopowerplants.
Inadequateprogress.
Contributionoftheextractivesectortotheeconomy(#6.3)
The2014EITIReportexpandsonpreviousEITIReports’descriptionofthecontributiontotheeconomy.Itincludes,inabsoluteandrelativeterms,thesizeoftheextractiveindustries,theircontributiontogovernmentrevenue,exportsandemployment.
Satisfactoryprogress
Recommendations:1.TheMSWGshouldconsidertheexistenceofsubsidiesintheminingsectorandofotherquasi-fiscal
91ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
expendituresundertakenbySOEsintheextractiveindustries.Givengovernmenteffortsrelatedtopowersectorandpublicfinancemanagementreforms,theMSWGcouldusetheEITIReportasameansofclarifyingthedifferentdirectandindirectstatesubsidies.2.TheMSWGshouldagreeadistinctionbetweenmandatoryandvoluntarysocialexpenditures.
92ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
PartIII–OutcomesandImpact
7. OutcomesandImpact
ThissectionprovidesdetailsontheimplementationoftheEITIRequirementsrelatedtotheoutcomesandimpactoftheEITIprocess.
7.1 Publicdebate(#7.1)
Documentationofprogress
Communications:ThegapinfundingforEITIimplementationfromJanuary-May2016constrainedtheEITIMSecretariat’scommunicationsactivities,althoughanumberhavecontinued.ThreedisseminationeventswerehostedinUlaanbaatarinlateDecember2015,basedonthe2014EITIReport.Thisincludedaneventforjournalistson21December(withroughly15journalistsinattendance),aneventforCSOson23December(withroughly15CSOsinattendance)andalargereventon25DecembertargetingcompaniesattheMiners’Day,organisedbyMRAMandtheMinistryofMining.Apressconferenceforthe2014EITIReportwasorganisedatGovernmentHouseon18January2016,bringingtogetherroughly15mediaorganisations.TheEITIMsecretariatdevelopedandpublishedasummary2014EITIReport.WithsupportfromGiZ,EITIMhasalsoproducedfoursummaryreportsbasedonthe2014EITIReportfocusedonspecificaimags(Bayankhongor,Övörkhangai,UvsandSelenge)inQ2-2016,althoughthesehadyettobepublishedontheEITIMwebsiteasofJuly2016.
TheEITIMSecretariathasproducedinfographicsbasedonthe2014EITIReport174,usingtheservicesofIcon.mn,andupdatedthevisualisationsbasedonthe2014EITIdataontheEITIMdataportal.175OutreachanddisseminationhasalsofocusedontheEITIMeReportingsystemanddataportal.TheSecretariathostedseveraljournalisttrainingworkshopsinNovember2015andApril2016.MeanwhileupdatesinEITIM’ssocialmediaoutreachhaveacceleratedin2015and2016,withmorefrequentpostsparticularlyontheEITIMopendataeffortsandglobalEITIdevelopmentssuchasthe7thEITIGlobalConference.Atthe7thGlobalConference,Mongoliadistributedsummary2014EITIReports,infographicsandpromotionalmaterialssuchascalendars.TheEBRDisplanningtoincludesupportforEITIMcommunicationsinitsrevisedcountryprogramme,withaparticularfocusonuseofEITIdatainpolicy-makingatnationalandsubnationallevels.
Inlinewithitscommunicationsstrategy,theEITIMSecretariatcontractedMongolMassMediaLLCinlate2013toimplementamediacampaigntoincreasepublicawarenessabouttheEITI.Underthecontract12TVserialsandfiveinterviewswerebroadcastandfivearticleswerefeaturedonthewww.news.mnwebsite,threeeventswerefeaturedliveonTV.InterviewsontheEITIwerebroadcastonkeyTVchannelssuchasBloombergMongoliaTV,TV9,TV8,EagleTVandEcoTV.TheEITIMSecretariatalsore-organizedthewww.eitimongolia.mnwebsitetomakeitmoreuser-friendly,toincreasetheuseofEITIReportsandtoimprovepublicawareness,andlaunchedanentirelynewwebsiteinFebruary2016,aheadofthe7thEITIGlobalConferenceinLima,Peru.Itcreatedseveralinfo-graphicsusing2012EITIReportandpublishedthesebothontheEITIMwebsiteandonthewww.ikon.mnnewswebsite.
174http://eitimongolia.mn/en/infographics175http://e-reporting.eitimongolia.mn/
93ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
In2015theEITIMSecretariatcontractedMongolian-languagenewspaperNationalPosttopublishfivearticlesonthefindingsofthe2013EITIReport(oneamonthfromJanuarytoJuly).Aninteractiveinfographiconbeneficialownershipdisclosuresinthe2013EITIReportwasalsodevelopedinearly2015.Amonthlynewsletterisalsosentouttoadatabaseof400contactsmaintainedbytheSecretariat,sinceSeptember2014.
EITIMhasalsopursuedasocialmediacommunicationstrategy.AccordingtoconsultationswiththeEITIMSecretariat,theEITIMtwitterandFacebookaccountsaretypicallyupdatedatleastonceamonth,whileupdatestotheEITIMYoutubeandFlickraccountsdependedonthefrequencyofpublicevents.Asof5July2016,theEITIMFacebookpage176launchedinOctober2014had398followers,itsTwitteraccount177launchedinJune2014had210followers,itsYouTubepage178featured15videosanditsFlickraccount179featured20photoalbums.WhileitsFlickraccounthasonlythreefollowers,theEITIMSecretariatprimarilyusesthismediumforuploadingpicturesandsubsequentlyalertsitscontactsviaemail,sothenumberoffollowerlikelyunder-estimatestheimpactofthismedium.TheEITIMSecretariatplanstocontractlocalmediaadvisoryfirmMaximaMediatotrackthemediaexposureofEITIcommunicationsandanalysetheimpact.
Asurveyonimprovingcommunicationsactivities,requestedbySecretariatandNationalCouncilanddiscussedattheMSWG’s34thmeetingon13December2013,foundthatmoreeffortswereneededfordisseminationofEITIinformation.Thesubnationaloutreachandimplementationstrategyhasengagedabroadersectionofmine-affectedcommunities.(seebelow,onsubnationalimplementation).On10November2015,theEITIMSecretariatandtheMongolianMiningJournalconductedatrainingworkshopfor52localjournalists,includingasessiononhowtoreadandinterpretEITIreports.
Outreach:TheEITIMSecretariathasledregulartrainingandoutreacheventsinrecentyears.Despitefundingconstraintsinthefirsthalfof2016,outreachcontinuedwithaparticularfocusontheonlinedataportalwork.TheMinistryofMining,togetherwiththeSecretariat,theEBRDandAdamSmithInternational,hostedaworkshopforaround30journalistsonthenewEITIMdataportalon20April2016.TheEITIMSecretariathasalsocontinuedprovidinginputtoacademicandotheranalyticalstudies,mostrecentlyprovidinginputtotheUNDPandMinistryofMining’sCorruptionRisksAssessmentintheMiningSectorreportpublishedinMay2016.
In2013,theSecretariatandtheMSWG,withsupportfromAdamSmithInternationalandtheEuropeanBankforReconstructionandDevelopment(EBRD),heldeventsinUlaanbaatarandfouraimags(Darkhan-Uul,Khovd,Govi-Altai,Khentii)reachingroughly700peoplefrom20ofMongolia’s21aimags.InalltheSecretariatestimatesittrained25trainersand20journalistsattheseevents.ItisnoteworthythatMongoliaisacountrywiththeadvantageofwidespreaduseoftheMongolianlanguage,withnowidespreadregionaldialectorlanguageused.Whilethisshouldfacilitatedisseminationofinformationandstimulationofnationalpublicdebateontheextractiveindustries,themajorityoftheMongolianpopulationresidesinthecapitalUlaanbaatar,withtraveltoregionalcentrescomplicatedbyinfrastructurechallenges.
176https://www.facebook.com/EITIMongolia/177https://twitter.com/eitimongolia178https://www.youtube.com/user/eitimongoliamn/videos179https://www.flickr.com/photos/123397335@N02/albums
94ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
In2014theMSWGandtheEITIMSecretariatundertookoutreachanddisseminationeventsandroadshowsinninesoums,reachingatotalof619peopleinruralareas.Thisinvolvedtheproductionofaimagandsoum-levelsummaryEITIReportsforthefirsttime.In2014and2015combined,theSecretariatproducedfouraimag-levelsummaryEITIReportsand12soum-levelreports,distributingatotalof4800copies.180In2016theSecretariatisplanningsummaryEITIreportsforfouraimagsandsixsoums.TheGermandevelopmentcooperationagencyGiZdevelopedthreesoumandaimaglevelsummaryreportsbasedonthe2013EITIReport,contractingtheMongolianMiningJournaltoimprovetheaccessibilityofpublications.Itproducedfourmorein2016(Bayankhongor,Övörkhangai,UvsandSelenge),basedonthe2014EITIReportandisplanningoutreachevents(EITIOpenDays)inthesefouraimagsinJuly-August2016.
TheEITIMSecretariatalsocarriedoutsurveysin2014infiveoftheseninesoums(120respondents),andin2015inthreesoums(102respondents)askingresidentswhatinformationontheextractiveindustriesisalreadyavailableandwhatwouldbeofmostinterest.Respondentshighlightedthefollowingtopics:environmentalrehabilitation(20%),donations(25%),jobcreation(15%),communitydevelopmentagreements(15%),tax(10%),reserves(10%),licenses(5%)andbeneficialownership.In2015,theEITIMSecretariatandMSWGhaveconductedfoursubnationalEITIOpenDays(inthreedistrictsandoneaimag)andthreeregionalEITIconferencesintheWest,NorthandSouthin2015,withplansforanotherregionalconferenceinEastin2016.Theconferencesweredesignedtofosterpeerlearningandsharingofinformation,whiletheOpenDaysweredesignedtobemoredetailedinprovidingMongolian-languageinformationaboutminingactivityinthesoumsandaimagshostingtheevents.
DebateatthesoumandaimagOpenDaysin2015focusedonthreekeyareas,accordingtotheSecretariat,withdemandsformoreinformation:
- Timeframeforspecificminingactivitiesandtheimpactonemployment
- Licenseallocationprocedures
- Environmentalimpactsofmining(especiallyintermsofwaterusesandtheimpactonlocalagriculture)andthegovernment’sresponsetoenvironmentaldegradation.
TheEITIMSecretariathasalsoparticipatedinanddeliveredpromotionalmaterialsatseveralinternationalanddomesticconferencesinboth2014and2015includingthe“CoalTrans”Forum,“DiscoverMongolia”InvestmentForum,“OpendayofMinistryofMining”.TheSecretariathasalsoheldtrainingworkshopsforeachstakeholdergroupin2015.InAprilitheldaworkshopforCSOs(thePWYPandMECCcoalitions)onhowtoextractinformationfromthe2013EITIReport,usingexcelspreadsheets.InFebruaryandMarchitheldtwoworkshopsforgovernmententitiesandoneforcompanies,whichincludedabriefingonthe2013EITIReportandtrainingonhowtoimprovethequalityofdisclosures.
AlthoughGovernmentResolution222of2012requiresEITIReportstobepresentedtoParliament’sStandingCommitteeonEconomicAffairsonceayear,thishasneverbeendoneinpractice.TheEITIMSecretariatclaimsthatthisstemsfromlackofclarityoverwhowouldbetaskedwithpresentingtheEITIReporttoParliament(StateSecretary,MinisterofMining,etc),althoughsomeCSOswespoketoarguedthatthePrimeMinisterwasclearlyempoweredtodosoasChairoftheNationalCouncil.TheNaturalResourceGovernanceInstitute(NRGI)ranatrainingprogrammeforparliamentariansfromDecember 180InterviewwithMrsDelgermaa,communicationsofficeratEITIMongoliaSecretariat,andproceedingsoftheNationalForum,3November2015.
95ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
2014toMarch2015onextractiveindustriesgovernance,whichfeaturedonemoduleongeneralEITIimplementation.
Sub-nationalimplementation:GovernmentResolution222on4July2012requiresallprovinces(aimags)anddistricts(soums)thathostextractiveindustriestoestablishEITIsub-councils.All21ofMongolia’saimagshostextractiveindustryactivities,asdo103ofits329soums.Giventheinfrastructurechallengestotraveltoprovincialcentres,thecreationofsubnationalEITIcouncilsisofparticularsignificanceinstimulatingpublicdebateabouttheextractiveindustriesinruralareas.Asofmid-2015,some20aimagsand14soumshadestablishedoperationalsub-councilsaccordingtoPWYP,althoughtheSecretariathadnotreceivedofficialnotificationofalldirectivesestablishingthesecouncils(all20aimagsbutonlysevensoums).TheResolutionclearlydefinestherolesandresponsibilitiesoflocalgovernmentsinestablishingthesesub-councilsandprovision11.2statesthatrepresentationofthethreestakeholdergroupsshouldbeequalinnumber.Theroleofthesub-nationalcouncilsatbothaimagandsoumlevelsistoassistinEITIreporting,advancingEITIatlocallevelandpromotingconsultationsbetweenlocalauthorities,communityandcompanies,withaparticularfocusonresolvinglocaldevelopmentissues.TheResolutiondoesnotspecifythefunctionsofthesubnationalcouncils,ortherelationbetweensubnationalcouncilsandtheNationalCouncilandMSWG,aswellassourcesoffunding.Howeveritdoesregulatedisclosuresofinformationbeyondthatdefinedinthereportingtemplatesandincludesenvironmentalreclamationfundsandexpenditure.Themeetingpracticesdifferaccordingtothesoumandaimag.Somesub-nationalcouncilsmeetmonthly,othersfarlessfrequently,althoughthe20sub-nationalcouncilrepresentativeswemetnotedtheeaseoforganisingsuchmeetingsgiventhesmallsizeofthecommunitiesinvolved.
Despitetheorganisationalchallengeshowever,the20representativesofbothlocalgovernmentsandlocalcivilsocietywemetspokeofachangeinattitudesofcentralgovernmententitiesandcompanies.Whiletheywerepreviouslyperceivedasnotcaringabouttheimpactonlocalcommunities,itwasnotedtherewasnowmorerespectandattentionpaidtotheneedsandinterestsoflocalcommunities.Localresidentsnowhadaccesstoinformationonthenumberoflicensesactiveintheirsoumandaimag,wherepreviouslyonlythelocalgovernorhadaccesstothisinformation.Therepresentativesnotedthekeyareasofdiscussionandinterestonthesub-nationalcouncils,whichweresimilartothoserelatedbytheEITIMSecretariat:
- Licenseallocationprocedures
- Localcooperationagreementsbetweencompaniesandlocalgovernments
Inits2016workplan,EITIMplanstofocuscapacitybuildingeffortsonfouraimagsandsixsoumsbutalsoaimstoimprovethelegaldistinctionbetweenfunctionsofaimag-andsoum-levelEITIcouncils.TheEBRDisplanningtosupportapilotprojectonaselectionofEITIsubnationalcouncilsaspartofitsrevisedcountryprogramme.Inthe2016workplan,CSOsweregiventheleadinorganisingruraloutreachanddisseminationactivitiesandagreementwasreachedtoprovidefundingtothePWYPcoalitionforspecificactivitiesinruralareas.
Stakeholderviews
Ahigh-levelgovernmentofficialcloselyinvolvedintheEITInotedthatEITIReportsweresystematicallydistributedtoallmembersofparliamentbutthatitwasnotformallypresentedatparliament.ThusitwasseenasunlikelythatmembersofparliamentactuallyreadtheEITIReportbecauseoflackoftimeandthefactitwassobig.ItwasarguedthatEITIReportsdidnotgeneratedebate.ItwasrecommendedthattheEITIMSecretariatshouldextracttheinformationfromEITIReportsbycontractingtheservicesofathink
96ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
tank,butthatthiswasnotpossibleduetolackoffunds.TwoindustryrepresentativesnotedtheproposalthateithertheSecretariatortheMSWGshouldprovideaprioritisationoftheinformationcontainedinEITIReportsandmakemoreuseofinfographics,inorderagreatersectionofthegeneralpublictoaccessanduseEITIinformation.SeveralCSOsnotedthestrongerfocusonuseofEITIdatainthe2016workplan.OneCSOrepresentativearguedthatthegovernmentcoulddemonstrateitscommitmenttoEITIimplementationbyfacilitatingdisseminationofEITIinformationandoutreachthroughthestate-ownedMongoliaNationalBroadcaster,althoughthishadneverbeendone.TherepresentativenotedthatEITIoutreachwouldbemoreefficientthroughadvertising,ratherthanthroughpublicdisseminationevents.
IndustryrepresentativesnotedtheMNMAdidnotusetheEITIReportsitselfgivenitslackofcapacity,notingitsstaffhadbeendownsizedtofourasaresultoftheminingdownturnsince2012.IndustryrepresentativeassumedthatsincecompaniesreporteddatathroughtheEITI,theywouldbecuriousabouttheresultsandthatpublicrelationsstaffwouldatleastconsulttheEITIReports.SeveralindustryrepresentativesnotedwhattheysawasariskifcompaniesactivelyengagedindisseminatingEITIinformation:giventhelackofpublictrustinminingcompaniesinparticular,theyworriedthatthepublicwouldnothaveconfidenceinEITIfiguresiftheyweredisseminatedbycompanies.ItwasnotedthattheOyuTolgoiquarterlybrochureslaunchedin2014usedsomeEITIdataalongsidethecompany’sown“scorecard”disclosures.Oilandgascompaniesconsultednotedthatwhiletheyorganisedtheirownbilateralmeetingswithlocalcommunitiesinwhichtheyoperated,theydidnottendtouseEITIinformationandonlyreliedontheirowndisclosures.TherewasaperceptionofexcessivefocusintheEITIontheprocessofreportingandthenumbers,ratherthananalysisoftheinformation.Inthefaceoflongtablesofdata,theimpressionamongstthegeneralpublicwasthattheminingindustrywasstillopaque.ThereneededtobebetteranalysisoftheEITIdataandmorevisuallyappealingsummaryreportsandbrochures.
CSOsconsultednotedtheirimpressionthatthemainusersofEITIinformationwereCSOs,ratherthantheotherstakeholdersorjournalists,highlightingtheeffectivenessofsubnationaldisseminationoflocation-specificsummaryreports.OneCSOrepresentativestatedthatpublishingonebigreportwasinefficient,giventhatpeoplenevertendedtoreadit,andthatEITIMshouldfocusonpublishingonlylocation-specificreportsforaimagsandsoums,wheretheyweremostindemand.
Representativesofsub-nationalcouncilsconsultednotedthattheonlytimetheyreceivedinformationontheEITIwasduringtheEITIOpenDayoutreachevents.MembersofthemediaconsultedstatedthatmostmediadidnotconsulttheEITIMwebsiteunlessspecificallyinstructedtodoso.ItwasnotedthattherewerefewchannelsofdisseminationofEITIinformationtothepublic,beyondsummaryreportsforspecificaimagsandsoums,theEITIMwebsiteanddataportalandthedifferentsocialmediachannelsusedbytheEITIMSecretariat.AlthoughEITIReportswerepublishedandpublicisedonceayeartherewaslittlefollowup.Mongoliahadoneofthehighestpercapitamediauseintheworld,particularlyonlinesocialmedia.ItwasnotedthiscouldbeusedmoreactivelythanthecurrentmonthlyupdatestodisseminateEITIinformationandengagethepublicindebatingEITIdisclosures.ItwasalsonotedthatnetworksofjournalistsexistedinvariousfieldsanditwasrecommendedthattheEITIandPWYPshoulddevelopsuchanetworktofeedthroughEITIinformationtothepublic.Severalmembersofcivilsocietyhighlightedthedifferencebetweenthepublic“frenzy”surroundingtheannualpublicationofassetdeclarationsbypoliticallyexposedpersonsinFebruaryeachyeartothelackofpublicdiscussionoftheEITIReportswhenpublished(despitethefactthatonly200oftheroughly10,000assetdeclarationsbyPEParedisclosedtothepublic).
97ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
AnumberofCSOrepresentativeslamentedthelackofcivilsocietyrepresentationonsomesoum-levelcouncils.However,representativesofsubnationalcouncilsnotedthatinsomecasesnodedicatedCSOsexisttotakepartinthesub-nationalcouncil.Insuchcases,itwasnotedthatalternativeCSOs(notpartofthePWYPorMECCcoalitions)wereinvitedtoparticipate,suchasassociationsoftheelderly,youthandwomen.SeveralCSOmembersofsubnationalcouncilsnotedthattherewasnocompanyrepresentationontheirsoum-levelEITIcouncilandonlytendedtomeetcompanieswhenEITIreportsweredisseminated.MembersofthemediaconsultednotedthatthereweresignificantdiscussionsanddebatesatthelocallevelandrecommendedthatmoreeffortsshouldfocusonthelocalCitizensRepresentatives’Khurals(subnationalparliaments).UndertheMineralsLawapprovalfornewmininglicenseswasrequiredtobegrantedinconsultationwithlocalKhurals,whichmetinfrequently.ThiswasseenasanopportunityforlocalKhuralstousetheEITIinconsultationswithcompaniesovermininglicenseapplications,whichrarelyhappened.SeveralruralCSOrepresentativesnotedthatthemainfocusoftheirEITIcouncilswasonlocalhiring,environmentalimpactsofmining,licenseallocationsandtheownershipofexplorationlicenses.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheMSWGhastakenstepstoensurethattheEITIreportiscomprehensible,activelypromotedandpubliclyaccessible.Throughtheorganisationofsubnationaldisseminationeventsandworkshops,aswellastheestablishmentofsubnationalMSGs,EITIMhasensuredthattheEITIhasalsocontributedtopublicdebate,particularlyattheaimagandsoumlevels.PublicdebatehasbeengeneratedbyspecificdatafromEITIReports,suchasinformationonlicenses,socialexpenditureandenvironmentalprovisions,buttheEITIhasalsoprovidedaplatformfordiscussionsanddebatesabouthowtheminingsectorismanaged.TheMSWGmaywishtoconsiderestablishingmoreformalmechanismsforsubnationalMSGstoprovideinputtonationalEITIdiscussions,toensurediscussionsatthelocallevelarereflected.
7.2 DataAccessibility(#7.2)
Documentationofprogress
TheEITIMSecretariathasmadeexcelspreadsheetsofEITIdataavailableonitswebsiteforseveralyears.SummarydatatemplatesforallEITIReportsareavailableforbothgovernmentreports181andcompanyreports182.Summaryreportsbasedonboththe2013and2014EITIReporthavealsobeenproducedforfouraimagsand12soumseach(seeabove).
TheOpenSocietyForumisalsoworkingwithNRGItoestablishacontractsportal,hostedontheOSFwebsitebutusingthesourcecodefromNRGI’swww.resourcecontracts.orgportal,tohostthe20PSAsintheoilandgassectorthatareexpectedtobedisclosedasaresultofworkbytheMSWGworkinggrouponcontracts.ThecontractsportalisexpectedtobelaunchedinAugust2016andNRGI’scontractsportalwillincludecopiesofthesecontractsonitswww.resourcecontracts.orgportal.ThePWYPcoalitionalsoorganisedatrainingseminarforjournalistsonusingEITIdatainNovember2015.184 181http://www.eitimongolia.mn/en/government-reports182http://www.eitimongolia.mn/en/companies-reports184http://www.publishwhatyoupay.org/pwyp-news/big-data-ready-set-go/
98ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
TheEITIMhasalsobeensupportedbytheEBRDindevelopinganeReporting185platformaimedatautomatingEITIdisclosuresandimprovingaccessibilityofthedatatothegeneralpublic.Inturn,thisismeanttoempoweruserswithmoreaccessibleinformationtoengagewithminingcompaniesandthegovernment.ThefirstphaseoftheprojectwasundertakenbyAdamSmithInternationalincooperationwithlocalsoftwaredeveloperInteractiveLLCandwascompletedinAugust2014,beforebeingpubliclylaunchedinJanuary2015.Theaimoftheprojectwastoimprovetheefficiencyofthereportingprocess,inparticularcompilationandsubmissionbybothcompaniesandgovernmententities.Thesystemstoresdatainacodified,electronicformatinasinglesecurelocation.TheeReportingsystemprovidesforthefollowing:
• OnlinesubmissionofEITIReportsbothcompaniesandgovernment
• CadastralmapoflicensesonGooglesatelliteimage
• Onlinesubmissionmoduleforextractivecompanies
• Onlinesubmissionmoduleforgovernmententities
• ReconciliationmodulefortheIAtocomparereportsandinputadjustments
• PubliclyaccessibledataportaltoshowandanalyseEITIMdata
TheeReportingsystemwasusedforthefirsttimeinforthe2014EITIReport,with987companiesand35governmententitiessubmittedtheirreportsviatheeReportingsystembythedeadlineof31March2015.Thegovernmententitiesprovidedinformationon1570companies.Oncesubmitted,allreportsarepubliclyavailableviatheportalandendusersareabletofindreportsbycompanyname,mineraltype,licensenumbersandsoon.Thishasimprovedthetimelinessofdataavailabletothepublicandincreasedtheaccessibilitytogeneralusers.
ThesecondphaseoftheeReportingprojectwaslaunchedinAugust2015andwillbecompletedbyDecember2016.Themainaimsofthesecondphaseinclude:
• Apublishable,highqualitycasestudyonthee-Reportingpilotphase–thiswillbethefirststepinreplicatingthesysteminotherEITIimplementingcountries.
• Redesignedreportingforms,field/definitions(onlinehelpfiles),andalternativesubmissionproposals.
• On-goingon-demandsupportduringthe2015reportingperiod.
• Uploadofavailablehistoricaldatatodemonstrateselectedtools.
• Integrationofdatafeedsandautomatedupdatingofe-Reportingdatabase.ApprovalhasalreadybeensecuredforintegratingtheGeneralDepartmentofTaxationdatabasethroughtheNationalDataCentre.TheintegrationofMRAM’sfourseparatedatabase,whicharenotinteroperable,willtakelonger,althoughwenoteafeasibilitystudysupportedbytheWorldBankontheintegrationofthefourMRAMdatabasesontotheNDCwason-goinginNovember2015.
• Modificationstothereconciliationprocesstoincludeanoptionto‘drilldown’intothedetailsofanyonetransaction,withautomaticreportingbyexceptionand/oranalysisofreportsselectedbytheReconciler.
185http://e-reporting.eitimongolia.mn
99ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
• Uploadofavailableadditionaldatasets,includingenvironmentaldata.
• Demonstrableexportofalldata(orselectedsubset)inXML/XSDsoftware.
• Selection,acquisitionandimplementationofdemonstratortools,integrationguideformanipulationandgenerationofreportsfortabular,graphicalandcadastraldata.
• Designdocumentsfordisaggregatingdatatoexplaintheprocess,thetemplatesinExcel,importviaXML/XSDandacceptabledemonstrationoftheprocess/software.
• Trainingplan,descriptionoftrainingcurricula,trainingmaterialsandtrainingfeedback.
• Enhancementstothereportingpartoftheadminmodule,withautomaticgenerationoftables,graphsandmaps(showinguserlocations).
By20April2016,whentheSecretariat,togetherwiththeEBRD,AdamSmithInternationalandtheMinistryofMining,ranaworkshopforaround30journalistsontherebrandedEITIMdataportal,theprojecthadreachedalandmark.HavinguploadedhistoricalEITIMdatafortheperiod2006-2014,theprojectwasontracktointegratethedataportalwiththeGeneralDepartmentofTaxation,allowingforautomaticexchangeofinformation.WhileMRAMhadthusfarrefusedautomaticexchangeofinformation,despitetheabsenceoftechnicalconstraints,agreementwasreachedonmanualexchangeofcadastralinformationonamonthlybasis.Theremainingeightmonthsoftheprojectin2016weretobefocusedonend-userapplicationsanddatavisualisation/analysis.
Stakeholderviews
SeveralgovernmentrepresentativesnotedtheydidnotuseEITIinformationintheirwork,althoughothersfromtheRevenueDepartmentandNSOnotedtheyusedEITIdatatoreconcilerevenuedataandGDPfiguresrespectively.ItwasnotedthatfollowingtheimplementationoftheJuly2014LawonGlassAccountsascandaleruptedwhenanillegalpaymentwasfoundinearly2015,butthatnosuchscrutinytookplaceasaresultofthepublicationofanEITIReport.OnegovernmentrepresentativenotedhediduseEITIinformationinhiswork,asameansofcomparingandconfirmingthestatisticshisowndepartmentproduced.ArepresentativefromtheMNAOnotedthattheyconsultedEITIdataparticularlyintheirworkwithSOEs,althoughtheynotedtheirneedfor“official”figures,notingtheydidnotconsiderEITIfiguresas“official”,notingtheMNAO’sconcernsaboutthereliabilityofEITIdata.CSOsexpresseddoubtthatgovernmententitiesliketheMoFusedEITIdata,buthighlightedPWYP’s‘datamining’projectusingEITIdatalaunchedin2013.IndustryrepresentativesconsultedstatedthattheydidnotuseEITIdatafortheirownwork,notingthattheyconsideredtheEITIdatatobeoutdatedbythetimeofpublication.WhiletheserepresentativespraisedthedevelopmentofsubnationalEITIsummaryreports,theyconsideredthatinsufficientoutreachhadtakenplacetoensurethatcitizensinaimagsandsoumsreceivedthesereports.Severalrural-basedCSOsnotedthatthenewinformationprovidedbyEITIonthelegalownershipofexplorationlicenseswasparticularlyusefulforlocalcommunitiesandgovernments,whooftendidnotknowhowmanycompanieswereoperatingintheircommunities.
MembersofthemedianotedwhileEITIreportscontainedmuchusefuldataforcitizens,theyweredifficulttomakesenseofwithsomanydatatables.TheEITIMeffortstodevelopsubnational(soumandaimag)summaryEITIreportswereveryhelpfulinmakingrelevantinformationaccessibletothepublic.Itsimplifiedtheinformation,madeitmorereader-friendly(presentinginformationingraphsandinfographics)andwastailoredtothespecificinterestsoflocalcitizensaccordingtotheirlocation.
SeveralCSOsnotedthatamajorconcernwasthelackofintegrationbetweengovernmentITsystemsand
100ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
theEITIMdataportal,whichcausedinconsistenciesindatadependingonsources,althoughtheinclusionoflinkstotherelevantgovernmentdatabasesinthe2014EITIReportandworkonintegratingthesystemsin2016werewelcomed.AllstakeholdersconsultedpraisedtheEITIMDataPortalformakingmoredatathanwaspreviouslyaccessiblethroughtheMRAMwebsitemoreaccessibletoabroadersectionofstakeholders.CSOsinparticularnotedthedataportaladdressedCSOs’significantconcernspreviouslyaboutthelackofaccessibilityofEITIinformation.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthattheMSWGhasmadesignificantprogressinmakingdatainEITIReportsaccessible.TheEITIMdataportalisasignificantimprovementinrenderingthisdataaccessibletothebroaderpopulation,notablyinawaythatprovidesforlocation-basedqueries.
7.3 LessonsLearnedandfollow-uponrecommendations(#7.3)
Documentationofprogress
TheNationalCouncilandMSWGhavebothdiscussedrecommendationsfromthe2014EITIMReportandMongolia’sNovember2015pilotValidationreport,althoughonlyingeneralterms.TheMSWGdiscussedsomeoftherecommendationsofthedraft2014EITIReportatits11December2015meeting.186ThediscussionfocusedontherecommendationtoengagetheIAearlierintheyeartoensureitsinputindatacollectionthroughtheeReportingsystemandtherecommendationforacomprehensivereviewoftheeReportingsystemtoensureintegrityofthedata.WhileaCSOrepresentativeraisedtheissueofrecommendationsfromthepilotValidationreportingeneralterms,butthisdidnotincludediscussionofspecificrecommendations.
TheNationalCouncilconsideredtherecommendationsfromthe2014EITIReportatits18December2015meeting187,includingapresentationbytheIA.SeveralCSOrepresentativesexpressedsupportfortherecommendationtoengagetheIAearlierintheyear.TheNationalCouncildecidedtofollowuponall12recommendationsfromthe2014EITIReport,althoughtheEITIMSecretariatwasdesignatedastheentitytofollowupandimplement11ofthe12recommendations.WhiletheNationalCouncildiscussedthefactthatthepilotValidationhadtakenplaceinNovember2015,theredonotappeartohavebeendiscussionsaboutthespecificrecommendationsofthepilotValidationreport.
The2016EITIworkplan188includesactivitiesrelatedtofollowinguponrecommendationsfromthe2014EITIReportandthepilotValidationreport,butonlyingeneralterms.Activity10.4oftheworkplanincludesageneralactivitytoprepareforandorganiseValidation,submitfinalfindingstoNationalCounciland“havediscussions”,aswellasafootnoteindicatingthatunspecified“additionalwork”isplannedtofollowuponrecommendationsofthepilotValidationreport.AheadofimplementationofRequirement1.5.c.ivfrom31December2016,theMSWGshouldconsiderincludingactivitiesrelatedtofollowinguponspecificrecommendationsfromEITIreportingandValidationinits2017EITIworkplan.
186http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf187http://eitimongolia.mn/sites/default/files/uploads/en/NC_15_20151218_en.pdf188http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdfhttp://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf
101ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
The2015annualactivityreport189includesthelistof12recommendationsinthe2014EITIReportandacopyoftheexecutivesummaryandkeyrecommendationsofthepilotValidationreport.Whilethe2015AARstatesthatmostofthepilotValidation’srecommendationswereincludedinthe2016EITIworkplan,onlyageneralreferencetofollowingupontheserecommendationsisincluded,asnotedabove.Howeverthe2015AARdoesconfirmtheNationalCouncil’sapprovalatits18December2015meetingtoacceptandfollowuponallrecommendationsfromthe2014EITIReportandpilotValidationreport.However,itshouldbenotedthatatthetimeofwriting(April2016)thatEITIMhasfacedafundinggapinthesixmonthssincepublicationofthe2014EITIandpilotValidationreports,delayingimplementationofkeyactivitiesinthe2016EITIworkplan.
TheMSWGandtheIAhavesystematicallyfollowedupondiscrepanciesinthefinancialreconciliationsectionofthe2013EITIReport.TheMSWGhasclearlystatedatseveralmeetings190thatoneofthemaingoalsofEITIimplementationwastoeliminatediscrepancies,whichexplainsthesignificantattentiondevotedtofollowingupondiscrepancies.Duringdiscussionsofthedraft2013EITIReportatitsmeetingon10October2014,theMSWGdiscusseddiscrepanciesindetail.TheMNT55billiondiscrepancyrecordedinPetroChinaDaqingTamsag’sdisclosuresfor2013wereexplainedbythefactthatPetroChinabookedrevenuefromoilsalesthroughitsChinesesubsidiaryratherthanitsMongoliansubsidiary,butthatfollowingtheJuly2014PetroleumLawitwouldbeobligedtoaccountforsuchsalesthroughitsMongoliansubsidiary.191Theotherdiscrepanciesaremostlyduetolackofclarificationfromthecustomsserviceonthedisaggregationofcustomstax,VATonimportedgoodsandcustomsservicefeesaswellasthelackofreportingbythreecompanies(p.80ofthe2013EITIReport).
TheissueoffollowinguponpastEITIrecommendationshasbeenoneofthemainpointsofdiscussionontheMSWGandtheNationalCouncilsince2013inparticular.TwoCSOs–theCenterforHumanRightsandDevelopmentandtheZorigFoundation–completeda“MonitoringReportontheImplementationStatusofRecommendationsProvidedbytheEITINationalReconciliationReports”in2014.Evaluatingthefollowupofrecommendationsinthe2006-2011EITIReports,thestudysurveyed89recommendationsincludedinthesesixEITIReports,ofwhich40weredistinctrecommendations.Therewereseveralrepeatedrecommendations:threewereincludedinfiveEITIReports,28wereincludedintwotofourEITIReportsand12wereincludedinonlyoneEITIReport.TherecommendationswereallfocusedontheEITIreportingprocessitself,ratherthanincludingbroadersuggestionsforsectorreform.Thestudyfoundfivekeytypesofrecommendations:
- Recommendationsonreportingtemplates
- Recommendationsonreportingscope
- Recommendationsonreportingparties
- Recommendationsonarrangingreportingprocesses
- RecommendationsonimprovingEITIimportanceandeffectiveness
ItnotedthatEITIReportrecommendationswerediscussedateightofthe11meetingsoftheNational 189http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongol%20EITI%20AAR%202015%20report%20in%20English.pdf190Mostrecentlyatits10October2014meeting.191MSWGmeetingminutes,10October2014,p.4.
102ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Councilbetween2006and2014.WhilethestudynotedthattheEITIMSecretariatestimated27ofthe40distinctrecommendationswereimplemented,thestudyestimatedalowernumberofeightrecommendationsimplemented.Themainreasonsforthislackofimplementationof32recommendationswerethelackofactionablerecommendationsandlackofclarityinthepartiesresponsibleforimplementation.Further,thestudynotedfourkeychallengesinfollowinguponrecommendations:
- Recommendationsweretoogeneral,sometimesunclearandinsomecasescontravenedlegislation
- Lackofresourcesforeffectiveimplementationoftherecommendations
- Longprocessandabsenceofresponsibilityforimplementationoftherecommendations
- InsufficientcooperationbetweenEITIstakeholdersinimplementingrecommendations
Stakeholderviews
SeveralgovernmentrepresentativesandtheEITIMSecretariatnotedtheinclusionoffollow-uponrecommendationsfromthe2014EITIReportandMongolia’spilotValidationinthe2016workplan,underactivities10.1-10.5.SeveralCSOsnotedthatthetwosetsofrecommendationshadbeendiscussedbytheMSWGandNationalCouncilinDecember2015,butnotedthelackofimplementationofrelatedworkplanactivitiesinthefirsthalfof2016duetobudgetconstraints.HoweveroneCSOnotedthatactivitiesrelatedtofollowinguponEITIrecommendationsdidnotnecessarilyrequirefunding,citingexamplesofMSWGmeetingsordiscussionswithgovernmentrepresentativesaboutinformationgaps.
OnegovernmentrepresentativenotedthatthemainrecommendationtheywerepartlyresponsibleforimplementingwasthatcoveringqualityassuranceofgovernmentEITIdisclosuresandthatthishadyettobeimplemented.AnofficialletterhadbeensenttotheStateAuditAgencyduringthespringof2015requestingtheagencyundertakeauditsofthegovernment’sEITIdisclosures.Theagencyrespondedthatthiswouldbepossible,butonlyifincludedinitsfutureworkplanandapprovedbytheGreatKhuralaspartofthenationalbudget.Thiswasnotincludedthisinthedraft2016NationalBudget.TheStateAuditAgencyalsonotedthattheywouldonlyprovidefullassurance,whichwouldentailafirstauditofgovernmentsubmissionsandasecondauditofthefinalEITIReport.SeveralgovernmentrepresentativeswereawaretheissueofdataqualityassurancewouldposechallengesatValidationgiventhatithasconsistentlyfeaturedasarecommendationofpastEITIReports.
ThestructureoftheNationalCouncilandMSWGdidnotsupporteffectivefollow-uponEITIrecommendations,accordingtoaMNAOrepresentativeconsulted.Whilethereweremanysuchmulti-stakeholdercouncilsinMongolia,coveringissuesrangingfromHIVpreventiontolabourrights,giventhatthesewerenotconsideredgovernmententitiestheirrecommendationstendednottobetakenasseriouslyasinternalgovernmentrecommendationsaccordingtotherepresentative.HenotedthatiftheEITIReportwassubmittedtoParliamentortoagovernmentstructuredirectly,recommendationswouldbemoreeffectivelyimplemented.SeveralgovernmentrepresentativesstatedtheyconsideredmostoftheworkrelatedtoimplementingEITIrecommendationswastheresponsibilityofgovernment.
TwogovernmentrepresentativesnotedthattheEITIrecommendationswereusefulandthatitwasattemptedtoincorporatethemintothevariousMinistries’activities.HoweverthechallengewasthatindividualsresponsibleforimplementingrecommendationswerenotidentifiedintheEITIReports.ItwasexpectedthatthefiveworkinggroupsconstitutedbytheMSWGinJanuary2015wouldleadtomore
103ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
actionablerecommendationshowever.Ahigh-levelgovernmentofficialcloselyinvolvedintheEITIconcededthatrecommendationswouldbebetterimplementedifhigh-levelgovernmentofficialsweremoreinvolvedintheprocess.HoweverthePrimeMinisterwasconsistentlybriefedonEITIdevelopments.TwoindustryrepresentativesnotedthatEITIrecommendationsnevermadeittothetopofthegovernment’slistofpriorities.Allindustryrepresentativesnotedthatthelackofimplementationofrecommendationshadbeendiscussedindetailsince2013,withnoclearresults.TheyhadnotconsideredtheuseofEITIReportsasinstrumentsforlobbyinggovernmentonareasofregulatoryuncertaintyhowever.OneCSOnotedthattheimpactofEITIReportshadbeenlowduetothelackofimplementationofpastrecommendations.Giventhemembershipofhigh-rankingofficialsontheNationalCouncil,itwasnotedthatthefollow-uponrecommendationsshouldbefeasiblebutthatlackofpoliticalwillwasthecauseofpoorimplementation.
OneCSOandarepresentativefromtheAnti-CorruptionAgencynotedthelackofformalinvestigationslaunchedonthebasisofdiscrepanciesidentifiedthroughEITIreporting,whichconcernedtheCSOgiventhecumulativeMNT51billionindiscrepanciesidentifiedthroughninefiscalyearsofEITIreporting.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.WhilerecommendationsofEITIReportsarenotconsistentlyimplemented,theMSWGhasheldconsistentdebatesovertherecommendations,particularlyoverthepastthreeyears.TheMSWGhasestablishedadhocworkinggroupstofollowuponspecificrecommendations.
7.4 Outcomesandimpactofimplementation(#7.4)
Documentationofprogress
WhileboththeNationalCouncilandMSWGhavediscussedtheneedforanassessmentoftheoutcomesandimpactofEITIimplementationinMongolia,mostrecentlyattheNationalForuminNovember2015,areviewofmeetingminutesshowsthatnoattemptatwiderstakeholderconsultationsoraformalimpactassessmenthasbeenmade.
The2015AnnualProgressReport(APR),publishedon30December2015,wassplitintotwodocuments:anarrativereportandamatrixofthe2015workplanwithdetailsofprogressachieved.The2015APRprovidesanoverviewandsummaryofactivitiesundertakenin2015,butnodetailedassessmentofprogressinmeetingeachEITIRequirement.Whileitssecondsectionisdedicatedtothe“StatusofmeetingeachEITIrequirementandprogress,”itconsistsofaverbatimquoteofthepilotValidationreport’sexecutivesummary.
Section2.2states“MongoliaEITI2014or9thReportcoversallnecessaryinformationrequiredbythestandard,”whichisdifficulttoreconcilewithcommentsonthe2014EITIReportfromvariousstakeholdersidentifyinggapswithrequirementsoftheEITIStandard.TheAPRreferstotheMSWG’sfollow-upofrecommendations,butonlyinbroadtermsandonlythosefromthe2014Report.Itcited,forinstance,thattheNationalCouncilagreedtofollowuponallrecommendationsfromthe2014EITIReportbutnoindicationoftheorderofpriorityorpracticalstepstobeundertaken.The2015AnnualProgressReportdoesnotrefertofollowuponanyrecommendationsfrompriorEITIReports,despitethefacttherehadbeenprogressonseveralrecommendationsfromthe2013EITIReport.TheAnnualProgressReportdoesincludeanoverviewofstepstakentoexceedtherequirements(mainlyintheareaoftheeReportingsystemandsubnationalimplementation).
104ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Whilethe2015AnnualProgressReportnotesthat47ofthe50plannedactivitieshadbeencompletedin2015(90%completionrate),itdoesnotnotewhethertheobjectivesoftheworkplanwereachieved,nordoesitrecalltheobjectivesofEITIimplementation.AlthoughtheAnnualProgressReportcommentsthatstakeholderengagementisnotregular,itdoesnotprovidereflectionsonpasteffortstostrengthenparticipationorthoughtsonfutureeffortstoimproveparticipation.
TheInternationalSecretariatdidnotfindevidenceofwiderconsultationsaroundthedevelopmentofthe2014orthe2015AnnualActivityReportsandgatheredthattheMSWGandNationalCouncilapprovedboththe2014and2015annualactivityreportafterlimiteddebateandconsultation.Moregenerally,therewaslittleevidenceofdiscussionsorfeedbackprovidedontheEITIprocessandtheimpactoftheEITIingeneralbeyondtheMSWG.
CSOrepresentativeshavemadesignificanteffortstoassessandadviseonstrengtheningEITIimplementationinMongolia.InMay2014NRGIpublishedagapanalysisontheEITIprocessinMongolia.ThegapanalysisbasedonEITIReport2012identifiedsignificantgapsbetweenreportingpracticesandthenewStandardandprovidedrecommendationsforthe2013EITIMReport.NRGImadeapresentationofthestudytominingcompanies,CSOsandgovernmentrepresentativesinJuly2014andalsosentittotheEITIMSecretariat,butdidnotbelievethegapanalysishadbeensharedmorewidelywithstakeholders.NRGIitselfheldtwomeetingswiththeIAin2014tosharetheoutcomesoftheanalysesandprovideadviceonwaysofaddressingspecificgaps.TheIndependentResearchInstituteofMongolia(IRIM)hasdevelopedamodelofimpactassessmentforEITI.Thedevelopmentofthemodelwasthefirststagebutthesecondstage–anactualimpactanalysis–hasnotyetbeenapprovedandimplementedasofNovember2015.ThemodelshowshowEITIprinciplessupportedatheoryofchange,andhighlightsquestionssuchaswhyMongoliawasimplementingtheEITI,thepotentialimpactofimplementationandtheneedtofocusnotoninputsbutonoutputsandoutcomesofEITIforthecountry.
Stakeholderviews
AllstakeholdersconsultedagreedthatCSOsweretheonlyMSWGmemberstohaveprovidedsubstantiveinputtothedraftannualactivityreport.WhilemoststakeholdersreferredtotheAARas“thedocumentpreparedfortheEITIInternationalSecretariat”,oneCSOsaidtheyhadraisedthisataMSWGmeetingandarguedforthedocumenttobeameansofcommunicatingEITIachievements,challengesandrecommendationstothebroaderMongolianpublic.
SeveralgovernmentandpastIArepresentativesnotedthattheEITIhadhadadefiniteimpactinthatmanypeopleinlocalcommunitiesandlocalgovernmentnowunderstoodtheminingsectoranditscontributiontotheeconomymuchbetter.Protestsovermining,whichtheyadmittedhadapoorreputation,continuedbutthelevelofunderstandinghadgrown.ThiswasconfirmedbyseveralCSOsconsulted,althoughtheyemphasisedconflictwithlocalcommunitieshadonlyreducedinsomeinstances,butthatdisseminationofEITIinformationhadalsoservedasanexampleforlargerminingandoilcompanies,whonowalsoheldpublicmeetingswithlocalcommunities.Severalgovernmentrepresentativesalsonotedthatrevenuetransparencyinrevenuesandexpenditurescreatedasupportiveenvironmentforinvestment,createdgroundsforbuildingtrustwithlocalcommunitiesandensuredasociallicenseforextractivescompaniestooperate.However,governmentrepresentativesnotedthattheEITIwasnotsufficientinandofitself,citingotherrecenttransparency-relatedreformssuchasthoserequiringdisclosuresofgovernmentexpenditure,procurementandconflictofinterest.
SeveralminingindustryrepresentativesnotedthattheEITIhadbroughtmoretransparencytotheminingsector,butthattheydidnotconsiderthistobeanimpactinitself.Fortheretobesubstantialimpact,EITI
105ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
recommendationshadtobeconsistentlyimplementedaccordingtotheserepresentatives.OilandgascompaniesconsultednotedthattheyconsideredtheincreasedtransparencythroughEITItohavereducedpublicsuspicionsabouttheindustry.ApastIAnotedthatitappearedthattaxcompliance,atleastbylargercompanies,hadincreasedinthepastdecadeanddrewthelinktoEITIimplementation.SomeCSOslinkedimprovementsinMongolia’sminingcadastresince2007toEITIimplementation,albeitnotingthattherewereotherfactorsinvolved.
AgovernmentrepresentativenotedtherewasscopefortheEITItohaveagreaterimpact,forinstanceintheareaofdatareliability.TheTavanTolgoiprojectwascitedasanexample:whiletheplannedprojectwassignificantandincludedassociatedinfrastructure,therewasverylittlepublicinformationabouttheproject.CompaniesinvolvedinTavanTolgoihadhiredhigh-costauditors,yetthegovernmenthadreservationsabouttheauditmethodologiesemployedandthiswasanareawheremoreinformationcouldbedisclosedthroughtheEITI.SeveralgovernmentrepresentativesalsonotedthatbeneficialownershipdisclosureinfutureEITIreportingwouldlikelyhaveabigimpactonpublicoversightofextractiveindustriesgovernance.
Initialassessment
TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.WhiletheMSWGhasheldregulardiscussionsontheimpactandoutcomesofEITIimplementationinMongolia,thesehavetendedtoremainadhocandinformal.CivilsocietyorganisationsproducedamonitoringreportontheimplementationofEITIrecommendationsin2014,assessingtheimpactoftheEITIProcessonpoliciesandpractices.TheMSWGhasalsoconsideredundertakinganimpactassessmentbyeachstakeholdergroupinitsdevelopmentofthe2016workplan,althoughthishasyettobeundertaken.The2015annualactivityreportisnotusedasameansofassessingtheimpactofEITIimplementation.
Table7-Summaryassessmenttable:Outcomesandimpact
EITIprovisions Summaryofmainfindings
InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)
Publicdebate(#7.1)
TheMSWGhassoughttoensuretheEITIReportiscomprehensible,accessibleandactivelypromoted,particularlythroughaimagandsoumlevelreports.EITIinformationhasgeneratedpublicdebate,particularlyatthesubnationallevel.
Satisfactoryprogress
Dataaccessibility(#7.2)
EITIdataisaccessible,referencesinternationalclassifications,machine-readableandactivelydisseminatedthroughtheeReportingwebsite.
Lessonslearnedandfollowuponrecommendations(7.3)
RecommendationsofEITIReportsarefolloweduponbytheMSWG,eveniftheyarenotconsistentlyimplemented.
Satisfactoryprogress
106ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Outcomesandimpactofimplementation(#7.4)
TheMSWGhasproducedannualprogressreportsdocumentingprogressandoutcomesofimplementation,althoughnottrackingitsimpact.Itappearsthatonlyoneofthethreestakeholdergroupsprovidedinputtothe2015annualactivityreport.Furtherworkonassessingimpactshouldinneededandstakeholderengagementindevelopingtheannualprogressreportshouldbestrengthened.
Meaningfulprogress
Recommendations:1.TheMSWGmaywishtoconsiderestablishingmoreformalmechanismsforsubnationalMSGstoprovideinputtonationalEITIdiscussions,toensurediscussionsatthelocallevelarereflected.2.TheMSWGshouldconsiderdiscussingtheroletheEITIcouldplayinachievingnationalprioritiesinreformoftheextractiveindustriesaspartofitsannualreviewoftheworkplan.3.TheMSWGcouldconsiderestablishingclearpublicreportingmechanismsforadhocworkinggroupsthatfollowuponEITIrecommendationsandsettimeframesforcompletingtheirwork.4.TheMSWGmaywishtoundertakeanimpactassessmentwithaviewtoidentifyopportunitiesforincreasingtheimpactofimplementation.5.TheMSWGcouldconsiderpresentingthefindingsofEITIReportstoParliament’sStandingCommitteeonEconomicAffairsannually,inlinewithGovernmentResolution222of2012.6.LocalKhuralsmayconsiderusingthesubnationalEITIcouncilsforconsultationswithindustryandcivilsocietyontheapprovalofnewmininglicenses,inlinewiththenewMineralsLaw.7.TheMSWGmaywishtoclarifyspecificstakeholdersresponsibleforfollowinguponindividualEITIrecommendations,toensuremoreeffectivefollowupandimplementationofrelevantrecommendationsfromEITIreportingandValidation.
7.5 Impactanalysis(nottobeconsideredinassessingcompliancewiththeEITIprovisions)
Documentationofprogress
Impact:TheEITIprocessinMongoliahashadsomeimpact,evenifstakeholdersagreeithasbeenlimitedtoawarenessraisingandfocusedonthereportingprocess.AspartoftheInternationalSecretariat’sassessmentoftheimpactoftheEITIinMongoliainitstenyearsofimplementation,allstakeholderswereaskedwhyMongoliawasimplementingtheEITI.OnegovernmentstakeholdernotedthatMongoliahaddecidedtoimplementtheEITIin2005whentheextractiveindustrieswereopaqueandatatimewhenthegovernmentwasseekingtoattractforeigninvestmentintheminingsector.TheEITIwasthusseenasatooltoattractinvestment.OneofCSOrepresentativenotedthattheend-goalofimplementingEITIwastoreducepovertyinMongolia.
SeveralCSOsnotedthatbeforetheEITI(pre-2006),nocommunitiesknewhowmuchmoneythegovernmentwasgettingfromthesector.Peoplenowhaveaccesstothisinformationandthelevelofnationalandsubnationaldebateoverthegovernanceoftheextractiveindustrieshasgrown,evenifthiswasseenasduetotheminingboomsince2009.Nowthatlocalcommunitieshadaccesstoinformationonhowmuchmoneytheirlocalgovernmentswerereceivingfromextractivescompanies,theywerenoweagertoknowmoreonissuesoflicenses(includingtheirallocation),employment,environmentalissues,etc.ThenumberofNGOsfocusedontransparencyhasalsogrown,andtransparencyisnowaregulartopicofdiscussionsamongparliamentarians,studentsandgovernmentofficials.CSOsalsonotedthegovernmentusedMongolia’scompliancestatusasasignofprestige,eveniftheywereconcernedover
107ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
thelackofmeaningfulsupportfortheprocessanddisclosuresrequiredundertheEITIStandard.Civilsocietyalsoconsideredtheircampaigningforamininglegislationandonspecificdeals,liketheErdenesTavanTolgoidealhaltedinearly2015,asaconcreteoutcomeoftheEITIinthesensethatCSOscouldnowrefertothegovernment’scommitmenttoitsEITIcompliancestatusintheirlobbyingandasameanstoensurepublicoversightofminingdeals.WhilegovernmentrepresentativesnotedthatEITIcompliancestatusreflectedtheircommitmenttotransparencyandsecuringasociallicensetooperateforcompanies,industrydidnothighlightasignificantimpactofimplementation.
Severalgovernment,industryandCSOrepresentativesnotedthatthemostsignificantevidenceoftheimpactoftheEITIwastheformationofsubnationalcouncils,whichhadbroughtmuchclosertiesbetweengovernmentagencieslikeMRAM,companiesandlocalcommunitiesandlocalgovernmentsandwasstartingtobuildtrustamongststakeholders.Howeveritwasnotedthatthemaininteractionwasatspecificeventsandfollow-upcontactwasentirelyconductedthroughtheEITIMSecretariat.AfewCSOsnotedthattheEITIcouldyieldmorebenefitstocitizensby,inparticular,disclosingmoreinformationonbeneficialownership,whichcouldreducetheriskofconflictofinterestandcorruption,andpublishingcontracts,toenablecitizenstojudgethe“fairness”ofdeals.
TheMay2016studyoncorruptionriskassessmentinMongolia’sminingsector,producedbytheUNDevelopmentProgrammetogetherwiththeMinistryofMiningandIRIMMongolia,highlightsthelimitedimpactofEITIimplementationoncorruptionintheminingsector.192Howeverthereport’sdescriptionoftheimpactofEITIimplementationfocusedonlyonthereductionindiscrepanciesduringtheEITIreconciliationratherthanabroaderfocusondisclosuresofinformationrelatedtotheextractiveindustriesvaluechainrequiredundertheEITIStandard.Thereportonlynotesthat“noactionwastakenandnoonewasheldaccountablewhenrequireddisclosures(…)weremissing.”
Sustainability:TheEITIprocessalsofacessignificantriskstoitssustainability,bothfinanciallyandintermsofconsistencyofengagement.AdraftLawonMineralResourceSectorTransparency(the“EITILaw”)hasbeeninpreparationforalmostthreeyearsnow.
ThefinancialsustainabilityoftheEITIprocessalsoposesarisk.TheEITIMhashadtooperatewithoutfundsforseveralmonthsatatimeonanannualbasisinrecentyears,duetodelaysinaccessingWorldBankgrantfunding.WhiledisbursementofMDTFgrantscoveredexpensesretroactively,thetransitiontotheExtractiveIndustriesGlobalProgrammaticSupport(EGPS)fundfromJanuary2016ledtoasix-monthgapinfundingfortheEITIMSecretariat.
Atthepoliticallevel,thesustainabilityoftheEITIprocessfacessomerisksgiventhepotentialimpactofJune2016parliamentaryelectionsongovernmentrepresentationandchairingofMSWGmeetings,givenexperienceofthelackofNationalCouncilmeetingsin2014asaresultofpoliticalchanges.
192UNDP,MinistryofMining(May2016),‘CorruptionriskassessmentintheminingsectorinMongolia’-http://www.mn.undp.org/content/dam/mongolia/Publications/DemGov/20160603_MiningCorruptionStudy/Corruption%20risk%20assessment_Mining_Eng.pdf?download
108ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Annexes
AnnexA-ListofMSGmembersandcontactdetails
ListofNationalCouncilmembersandcontactdetails(asof11July2016)
Name Position E-MailMembersince
Ch.Saikhanbileg PrimeMinisterofMongolia [email protected] Nov2014
R.Jigjid MinisterforMining [email protected] Dec2014
B.Bolor MemberofParliament,MinisterforFinance
[email protected] Sep2015
N.Battsereg MemberofParliament,MinisterforTourism,EnvironmentandGreenDevelopment
[email protected] Sep2015
Ch.Ulaan ChairmanofStandingCommitteeonStateBudgetofParliament
[email protected] Oct2015
A.Zangad GeneralAuditorofMongolia [email protected] Nov2012
S.Mendsaikhan ChairmanofGeneralAgencyofRegistrationandStatistics
[email protected] Jan2009
N.Ganbold ChairmanofIndependentAuthorityAgainstCoruption
[email protected] Nov2011
D.Bayarbat GovernorofTuvaimag Dec2012
N.Bayarsaikhan HeadofStepwithoutBorderNGO
[email protected] Mar2009
G.Urantsooj HeadofHumanrightsandDevelopmentCenter
[email protected] Dec2006
P.Erdenejargal ExecutiveDirectorofOpensocietyforum
[email protected] Dec2006
109ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Name Position E-MailMembersince
D.Tserenjav ExecutivedirectorofTransparentFoundationNGO
[email protected] Jul2012toMay2013;
Jul2015
N.Narantsetseg HeadofBaigaliEhiinAvralSanNGO
[email protected] Jul2015
B.Bayarmaa HeadofOwnersofKhuvsulLakeMovementNGO
[email protected] May2013
L.Dolgormaa MemberofBoard,ResponsibleMiningInitiativeNGO
[email protected] May2013
O.Otgonsaikhan HeadofMyMongolianLandMovementNGO
[email protected] Jul2015
B.Batbold MemberofBoard,CivilCouncilforEnvironment
[email protected] Jul2012
MemberofBoard,CivilCouncilforEnvironment
N.Algaa PresidentoftheMongolianNationalMiningAssociation
[email protected] Jun2014
L.Davaatsedev HeadofBoardofCoalAssociation
[email protected] Jul2012
T.Ganbold PresidentofMongolianGoldProducersAssociation
[email protected] Dec2014
ExecutiveDirectorofPetrochinaDachinTamsagLLC
G.Tsogt VicePresidentoftheMongolynAltMAKLLC
[email protected] Jul2012
110ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Name Position E-MailMembersince
G.Battsengel ChiefExecutiveOfficerofEnergyResourceLLC
[email protected] Jul2012
AndrewWoodley
PresidentandCEOofOyuTolgoiLLC
[email protected] Oct2014
M.Boldbaatar AdvisortoCEOofMongolrostsvetmetLLC
[email protected] Jul2012
S.Enkhtuya ExceutivedirectorofMonpolymetLLC
[email protected] Jul2012
D.Galbaatar DeputydirectorofMarketingDepartmentofErdenetMiningCorporationLLC
[email protected] Jul2012
B.Delgermaa SeniorAdvisortothePrimeMininster,SecretaryofNationalCouncil
[email protected] Dec2014
ListofMSWGmembersandcontactdetails(asof11July2016)
№ Name Position E-Mail Membersince
1 B.Delgermaa SeniorAdvisortothePrimeMinisterofMongolia
[email protected] Dec2014
2 E.Sumiya SenoirOfficerofCabinetSecretariatofGovernmentofMongolia
3 B.Bat-otgon HeadofEnlightenmentandPreventionDepartment,
111ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
IndependentAuthorityAgainstCoruption
4 Kh.Purevsuren HeadofAccountingPolicyDepartment,MinistryofFinance
5 N.Enkhbayar HeadofStrategicPolicyandPlaningDepartment,MinistryofMining
6 G.Nyamdavaa HeadofNaturalResourcesDepartment,MinistryofTourism,EnvironmentandGreenDevelopment
7 S.Purev ChairmanofGeneralDepartmentofTaxationandCustoms
8 Ts.Sharavdorj ChairmanofGeneralAgencyforSpecializedInspection
9 D.Uuriintuya ChairwomanofMineralResourcesAuthority
10 G.Ulziiburen ChairmanofPetroleumAuthorityofMongolia
11 N.Batdorj DeputyGovernorofSelengeaimag
12 D.Enkhbold CEOofMongolianNationalMiningAssociation
[email protected] Jun2014
112ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
13 T.Naranzaya ExecutivedirectorofGoldProducersAssociation
14 I.Batmunkh OfficerofErdenesTavanTolgoiLLC
[email protected] Feb2014
15 Ch.Ochirlkham DirectorofFinanceandEconomicDivisionofBaganuurJSO
[email protected] Feb2014
16 Kh.Lkhamaa AdvisorofStakeholdersEngagementofOyuTolgoiLLC
[email protected] Sep2012
17 P.Bolormaa SeniorTaxAccountantofBorooGoldLLC
[email protected] Feb2014
18 DirectorofPRDeparmentofSouthgobiSandsLLC
Feb2014
19 Ch.Byambasuren CommunicationsmanagerofCGBEMLLC
[email protected] Feb2014
20 Ts.Enkhjargal DirectorofSDLADepartmentofArevaMongolLLC
[email protected] Sep2015
21 T.Amarzul ExecutivedirectorofPetroMatadLLC
22 ExecutivedirectorofPetroChinaDachinTamsagLLC
23 N.Bayarsaikhan HeadofStepwithoutBorderNGO
[email protected] Mar2009
113ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
24 G.Chagnaadorj HeadofSacredStupaMovement
[email protected] May2013
25 N.Narantsetseg HeadofBaigaliEhiinAvralSanNGO
[email protected] Jul2015
26 L.Tur-Od PresidentofTransparencyInternationalMongolia
[email protected] Sep2015
27 B.Bayarmaa HeadofOwnersofKhuvsulLakeMovement
[email protected] May2013
28 L.Dolgormaa MemberofBoard,ResponsibleMiningInitiativeNGO
[email protected] May2013
29 N.Baigalmaa OfficerofCenterofHumanrightsandDevelopment
[email protected] May2013
30 D.Tserenjav ExecutiveDirectorofTransparencyFoundationNGO
[email protected] Jul2012
31 O.Otgonsaikhan HeadofMyMongoliaLandMovement
[email protected] May2013
32 B.Batbold MemberofBoard,CivilCouncilforEnvironment
[email protected] Jul2012
33 MemberofBoard,CivilCouncilforEnvironment
34 Sh.Tsolmon CoordinatorofMEITISecretariat
[email protected] Jul2012
114ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
AnnexB-Listofstakeholdersconsulted(96)
Government
DelgermaaBanzragch,senioradvisortothePrimeMinisterofMongoliaandChairoftheMSWG
B.BolormaaandG.Zulai,DepartmentofAccountingPolicyDepartment,MinistryofFinance
DambaDorj,seniorofficer,divisionofminingpolicy,MinistryofMining
EnkhbayarNemekhbayar,directorgeneral,strategicpolicyandplanningdepartment,MinistryofMining
ChinbaatarNachin,directorofcadastredivision,MineralResourcesAuthorityofMongolia(MRAM)
BattulgaSosorbaram,headofminingdivision,MRAM
ByambadagvaBayaraa,headofreserveandeconomicresearchsubdivision,MRAM
AmraaTsengemaa,vicechairman,PetroleumAuthorityofMongolia(PAM)
SunderiyaBatjargal,chieflegalofficer,ErdenesMongol
TumurpurevJamtsaa,miningprojectdirector,ErdenesMongol
MrZANGADAyur,AuditorGeneralofMongolia
BATTUYABuyandelger,DeputyAuditorGeneralofMongolia,PrincipalAuditor
B.Bat-otgon,HeadofEnlightenmentandPreventionDepartment,IndependentAuthorityAgainstCoruption
MrsSarangere,IndependentAuthorityAgainstCorruption;
AyunaNechaeva,NationalStatisticsOffice
OtgonbayarChimeddorj,directorMacro-economicDivision,MinistryofFinance
Industry
BaigalmaaShurka,GeneralManagerofCommunities,OyuTolgoi
BrianWhite,PrincipalAdvisorCommunications,OyuTolgoi
LkhamaaKh.,advisorstakeholderengagement,OyuTolgoi
Enkh-AriunaaOidovdanzan,PrincipalAdvisorCompensationAgreement,OyuTolgoi
RenchinpagmaB.,OfficerExternalRelations,OyuTolgoi
GraemeHancock,PresidentandChiefRepresentativeinMongolia,AngloAmerican
SunjidmaaJamba,managerforcorporateaffairsandsustainability,AngloAmerican
Bolormaa,BorooGold
N.Algaa,presidentoftheMNMA
D.Enkhbold,executivedirectoroftheMNMA
B.BoldbaatarofMongolrstsvetmet
MrsZ.Sugarmaa,generalmanagerofcommunityrelationsdepartmentofEnergyResourcesLLC
AmarzulTuul,executivedirectorofPetromatad
115ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Erinbileg,DongShengPetroleum
Bolon,PetrochinaDaqingTantsag
BatmunkhIderkhangai,foreignrelation,localcommunity,publicrelationofficer,ErdenesTavanTolgoi
GerelmaaDarambazaar,CSRofficer,ErdenesTavanTolgoi
NaranzayaT.,CEO,MongolianGoldProducersAssociation
CivilSociety
D.Tserenjav,executivedirectorofTransparencyFoundationNGO
Ts.Otgonsuren,journalistwithTransparencyFoundationNGO
BatboldB.,memberoftheboardoftheMECCandheadoftheGreenParliament,MongolianEnvironmentalCivilCouncil
JanaGanbaatar,chairmanoftheinspectioncommittee,MongolianEnvironmentalCivilCouncil
G.Chagnaadorj,headofAriunSuvragaMovementNGO
NamsraiBayarsaikhan,member(andformerNationalCoordinator)ofPWYPMongolia(+97688724869)
ErdenechimegDashdorj,NationalPWYPCoordinatorforMongolia(+97688077077)
SelengeOyunbileg,OSF
DorjdariNamkhaijantsan,NationalCoordinatorforMongolia,NaturalResourceGovernanceInstitute
Numuun,NRGI
BayarsaikhanNamsrai,member(andformerNationalCoordinator)ofthePWYPMongoliacoalition
BolormaaL.,foundingeditor,MongolianMiningJournal
B.Oyunchimeg,journalistattheMongolianNationalBroadcaster
L.Tur-Od,TransparencyInternational-MongolianNationalChapter
N.Narantsetseg,Head,MotherNatureSaveFoundation
O.Narangerel,Head,KhangaikhanNetworkforRegionalEnvironmentConservation
E.Byambajav,AlumniAssociationofIrkutskEconomicsUniversity
Ts.Tuyatsetseg,DeputyHead,MongolianLawyers’AssociationforEnvironment
Otgontsetseg,OnonandUlzRiverNGO
S.Tserenpurev,CEO,NewAdministrativeInitiativeNGO
Ch.Tuya,Head,KhanKhentiiMountainandKhatanOnonRiverProtectionAssociationNGO
SanjaasurenOyun,ZorigFoundationGanbaatarJana,MECCAltantsatsralt,MECC
EmilOmarov,PWYPEurasiaRegionalCoordinator
Sub-nationalcouncilmembers
116ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Kh.BaasankhuuSecretaryofEITISub-nationalcouncil,KhovdaimagGovernor’sOffice
D.Natsagdorj,DeputyMayorofUmnugobiaimag
B.Tuulaikhuu,Speaker,AiragsoumCitizens’RepresentativeKhural,Dornogobiaimag
Ts.Aldarmaa,Secretary,LuussoumCitizens’RepresentativeKhural,Dundgobiaimag
S.Sukhdorj,Speaker,KhuldsoumCitizens’RepresentativeKhural,Dundgobiaimag
B.Munkhbat,Membersub-nationalcouncil,Governor’sAdministrationofSelengeaimag
Ts.Ganbat,Speaker,ShinejinstsoumCitizens’RepresentativeKhural,Bayanhongoraimag
Kh.Enkhtur,DeputyGovernor,AdministrationofShinejinstsoum,Bayankhongoraimag
Kh.Otgonmunkh,Speaker,UlziitsoumCitizens’RepresentativeKhural,Dundgobiaimag
E.Nandintsetseg,Ikhkhetsoum,Dornogobiaimag
D.Batzul,OfficerforMiningandEnvironment,AdministrationofUvsaimag
O.Badarch,TraditionandFutureNGO,Umnugobiaimag
P.Batsailkhan,Speaker,GaluutsoumCitizens’RepresentativeKhural,Bayankhongoraimag
D.Sondor,LawyerCenterNGO
S.Battulga,Governor,Galuutsoum,Bayankhongoraimag
N.Enkhjargal,EnkhUranItgelpartnership
Mr.Munkhdelger,grassrootsNGObasedinTsogttsetsiisoum,Umnugobiprovince
MrOtgonmunkh.Kh,Chair,citizen’srepresentativekhural,basedinUlziitsoum,Dundgobiaimag
MrZandraa.B,Head,Mongoliannationalcoalitionofbaghandsoums
Others
MarkEberst,partneratKPMGAuditMongolia
Sh.Nomindari,KPMGMongolia
AlexisMajnoniD'intignano,KPMGFrance
OsorgaravBookhuu,generaldirectorpartner,UlaanbaatarAuditCorp.
ErdenetsogNatsadorj,auditmanager,UlaanbaatarAuditCorp.
TserengavaaJIGDEN,DalaivaAudit
JargalsurenJ,,DalaivaAudit
BryanLand,TaskTeamLeader,WorldBank
JamesAnderson,CountryManager,WorldBankMongolia
TuyenD.Nguyen,ResidentRepresentative(Mongolia),InternationalFinanceCorp.(IFC)
DoljinsurenJambal,UNDPProgrammeManager
Dr.StefanHanselmann,ProgramDirectorIMRIIntegratedMineralResourceInitiative,GiZ
RichardBiastoch,Officer,IMRIIntegratedMineralResourceInitiative,GiZ
117ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
NancyFoster,developmentconsularattheCanadianEmbassy
OyunbilegP.,communicationsmanager,Australia-MongoliaExtractivesProgram(AMEP),AdamSmithInternational
PatienceSingo,ProjectDirector,"SustainableArtisanalMining"Project,SwissAgencyforDevelopmentCooperation
DanielValenghi,headofprogramme,SwissAgencyforDevelopmentCooperation
118ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
AnnexC-Listofreferencedocuments
WorkplansandAnnualactivityreports:
• MongoliaEITIAnnualActivityReport2015-http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongol%20EITI%20AAR%202015%20report%20in%20English.pdf
• ReportonPlanofAction2015ofMongoliaEITI-http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%20Activities%20by%20activities%20Report%202015%20in%20English.pdf
• Mongolia2016EITIWorkplan-http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf
• PLANOFACTIONOFEITIMFOR2015(EITIM2015workplan)
http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf
• PLANOFACTIONFORTHEYEAROF2014OFEITIMIMPLEMENTATION(EITIM2014workplan)http://www.eitimongolia.mn/sites/default/files/uploads/en/EITIM_POA_2014en.pdf
• TheEITIMmid-termstrategy2010-2014http://www.eitimongolia.mn/sites/default/files/uploads/en/Mongolia_EITI_Strategy_2010-2014.pdf
• EITIM2014annualactivityreport,January2015http://www.eitimongolia.mn/sites/default/files/uploads/EITIMWorkReport2014en.pdf
• EITIM2013-2014annualactivityreport,July2014https://eiti.org/files/document/Mongolia_EITI_Activitie_report_2013_half_2014_half_last.pdf
• ActionPlanofpreparationfortheEITIinternationalvalidation,approvedbythePrimeMinisterandChairmanoftheEITINationalCouncil,HECh.Saikhanbileg,28August2015http://www.eitimongolia.mn/mn/node/4872
EITIReports,Summaries,ValidationReportandSecretariatReview:
• MongolianinthEITIReconciliationReport2014-http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf
• Mongolia2014EITIInceptionReport(4August2015),unpublished.
• MongoliaeighthEITIReconciliationReport2013http://www.eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202013%20en.pdf
• Mongolia2012EITISummaryReport(ОҮИТБС-ын2012онынэгтгэлийнтайлан)http://www.eitimongolia.mn/sites/default/files/uploads/Summary_report_2012.pdf
• Mongolia2009ValidationReporthttps://eiti.org/files/Mongolia%20Final%20Validation%20Report.pdf
119ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
• EITIInternationalSecretariatReviewofMongolia,September2010https://eiti.org/files/Secretariat%20Review%20-%20Mongolia.pdf
• TheMonitoringReportonImplementationstatusofrecommendationsprovidedbytheEITINationalReconciliationReports,preparedbytheCenterforHumanRightsandDevelopment,inpartnershipwiththeZorigFoundation,in2014.
• EITIM(February2016),TermsofReference,IndependentAdministratorforthe2015EITIReport-http://eitimongolia.mn/sites/default/files/uploads/ToR_for_Mongolia_EITI_2015_Report_IA_English_Updated.pdf
• EITIM(March2015),TermsofReference,IndependentAdministratorforthe2014EITIReport-http://www.eitimongolia.mn/sites/default/files/attachments/ToR%20for%20IAuditor%20en.pdf
LegaldocumentsandToRsrelatedtoEITIimplementation:
• TheStatuteofEITIMSecretariat,order62,2007.06.27http://www.eitimongolia.mn/sites/default/files/uploads/en/Statute_of_Mongolia_EITI_secretariat.pdf
• LawofMongoliaonMinerals(revised),8July2006
http://lrcm.mn/wp-content/uploads/2014/10/06e4ce_b4da5304144d40f68772950fe7eafeef.pdf
Mongolianversionofthe2006LawonMinerals(revised)
http://www.eitimongolia.mn/sites/default/files/uploads/Tsomiin_energii_tuhai_huuli.pdf
• Governmentresolutionnumber1,on3January2006,onMongolia’sintentiontoimplementtheEITI(Mongolian)(Олборлохүйлдвэрлэлийнилтодбайдлынтухайсанаачилгыгдэмжихтухай)
http://www.eitimongolia.mn/sites/default/files/uploads/1%20-%202006.01.04.pdf
• TermsofReferenceoftheNationalCouncilcommittedtocoordinateandmonitortheImplementationoftheExtractiveIndustriesTransparencyInitiativeinMongolia,2012.11.28http://www.eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf
• TermsofReferenceoftheMulti-Stakeholders’WorkingGroupcommittedtoimplementExtractiveIndustriesTransparencyInitiative,2012.11.09http://www.eitimongolia.mn/sites/default/files/uploads/en/ToR_of_MSWG_Mongolia_EITI.pdf
• TripartiteMemorandumofUnderstandingoneffectiveimplementationofExtractiveIndustriesTransparencyInitiativeandpartnershipbetweenGovernmentofMongolia,companiesandNGOcoalitionhttp://www.eitimongolia.mn/sites/default/files/uploads/en/MoU_Mongolia_EITI.pdf
• TermsofReferenceforIndependentAdministrator,2014EITIReporthttp://www.eitimongolia.mn/sites/default/files/attachments/ToR%20for%20IAuditor%20en.pdf
• HandbookforbusinessentitiesonreportingtoEITI,March2014(inMongolianonly)(ОЛБОРЛОХҮЙЛДВЭРЛЭЛИЙНИЛТОДБАЙДЛЫНСАНААЧИЛГЫНХЭРЭГЖИЛТИЙГОРОННУТАГТХАНГАХҮҮРЭГБҮХИЙДЭДЗӨВЛӨЛИЙНГАРЫНАВЛАГА)http://eitimongolia.mn/sites/default/files/uploads/EITI_sub_council_guide_%2020140423.pdf
• GovernmentofMongolia(15September2012),GovernmentResolution30,
120ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
http://pubdocs.worldbank.org/en/917021434986534073/pdf/Mongolia-GovRes30-2012-Procedure-on-Transfers-from-GLDF-and-LDF-and-Baseline-expenditures-Sep2012.pdf
• GovernmentofMongolia(30June2015),DecentralisationPolicySupport,Component3ofGovernanceandDecentralisationProgramme,phaseII,2015-2018,http://cabinet.gov.mn/files/fileres/16010002.pdf
Otherdocumentsonline:
• EITIMeReportingsystem
http://e-reporting.eitimongolia.mn/
• EITIMbeneficialownershipinteractiveinfographichttp://www.eitimongolia.mn/en/beneficial-owners
• OpenSocietyForum(2013),“Extractingdata:AnalysisofEITINationalReportsfrom2006-2011,”http://www.forum.mn/res_mat/OSF/Data%20Mining_eng.pdf
• EBRD(2014),LawinTransition,Throughthelookingglass:theroleoftheExtractiveIndustriesTransparencyInitiative(EITI)insustainableresourcedevelopment,http://www.ebrd.com/downloads/research/law/lit14eb.pdf
• EBRD(25June2013),StrategyforMongolia-http://www.ebrd.com/downloads/country/strategy/mongolia.pdf
Meetingminutes:
• MinutesofmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency3March2010
http://eitimongolia.mn/sites/default/files/uploads/en/NC_6_20100305.pdf
• MinutesofmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency24June2010
http://eitimongolia.mn/sites/default/files/uploads/en/NC_7_20100624.pdf
• MinutesofEITIMNationalCouncilMeeting(10November2011)http://eitimongolia.mn/sites/default/files/uploads/en/NC_8_2011.11.10.pdf
• MinutesofmeetingofMongoliaExtractiveIndustryTransparencyInitiativeNationalCouncil,8May2012http://eitimongolia.mn/sites/default/files/uploads/en/NC_9_2012.05.08.pdf
• MinutesofEITIM10thNationalCouncilMeeting(28November2012)http://eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf
• Minutesof11thmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency23December2012
http://eitimongolia.mn/sites/default/files/uploads/en/NC_11_2013.12.23.pdf
• MinutesofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(29April2011)http://eitimongolia.mn/sites/default/files/uploads/en/AH_22_20110429.pdf
• MinutesofMeetingofMulti-StakeholderWorkinggroupofMongoliaExtractiveIndustries
121ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
TransparencyInitiative(2June2011)http://eitimongolia.mn/sites/default/files/uploads/en/AH_23_20110602.pdf
• MinutesofMeetingofMongoliaExtractiveIndustryTransparencyInitiativeMulti-StakeholderWorkingGroup(23December2011)http://eitimongolia.mn/sites/default/files/uploads/en/AH_24_20111223.pdf
• MinutesofMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup24January2012http://eitimongolia.mn/sites/default/files/uploads/en/AH_25_20120124.pdf
• MinutesofMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(12October2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_26_20121012.pdf
• MinutesofmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMultiStakeholderWorkingGroup(18October2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_27_20121018.pdf
• MinutesofmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(9November2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_28_20121109.pdf
• 29thmeetingofEITIMMSWG(14December2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_29_20121214.pdf
• Minutesof30thmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMultiStakeholderWorkingGroup(6March2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_30_20130306.pdf
• MinutesofmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMultiStakeholderWorkingGroup(27March2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_31_2013.03.27.pdf
• MinutesofEITIMMSWGMeeting(15May2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_32_2013.05.15.pdf
• MinutesofMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(3December2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_33_2013.12.03.pdf
• MinutesofmeetingofEITIMMulti-StakeholdersWorkingGroup(13December2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_34_2013.12.13.pdf
• Minutesof12thmeetingofEITIMNationalCouncil(13January2015)-http://eitimongolia.mn/sites/default/files/uploads/en/NC_12_20150113_en.pdf
• Minutesof13thmeetingofEITIMNationalCouncil(4June2015)-http://eitimongolia.mn/sites/default/files/uploads/en/NC_13_20150604_en.pdf
• Minutesof14thmeetingofEITIMNationalCouncil(18December2015)-http://eitimongolia.mn/sites/default/files/uploads/en/NC_15_20151218_en.pdf
• Minutesof35thmeetingofEITIMMSWG(11March2014)–
122ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
http://eitimongolia.mn/sites/default/files/uploads/en/AH_35_2015.03.11_en.pdf
• Minutesof36thmeetingofEITIMMSWG(10October2014)–http://eitimongolia.mn/sites/default/files/uploads/en/AH_36_20141010_en.pdf
• Minutesof37thmeetingofEITIMMSWG(11December2015)-http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf
• Minutesof38thmeetingofEITIMMSWG(25May2015)-http://eitimongolia.mn/sites/default/files/uploads/en/AH_37_20150525_en.pdf
• Minutesof39thmeetingofEITIMMSWG(12December2015)-http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf
• Minutesof40thmeetingofEITIMMSWG(22April2016)–unpublishedasof12July2016.
Secondaryliterature:
• PWYPMongoliaCoordinatingCommittee,31March2015,unpublished,providedbythePWYPcoalition.
• IMFWorkingPaper(April2015),‘FromNaturalResourceBoomtoSustainableEconomicGrowth:LessonsforMongolia-https://www.imf.org/external/pubs/ft/wp/2015/wp1590.pdf
• WorldBank(November2015),MongoliaEconomicUpdate-http://pubdocs.worldbank.org/pubdocs/publicdoc/2015/11/920971447119845335/meu-nov2015-en.pdf
• WorldBank(January2016),MongoliaEconomicBrief-http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/2/419151454466826444/MEB-Jan-2016-en.pdf
• USEnergyInformationAdministration(September2015),‘TechnicallyRecoverableShaleOilandShaleGasResources:Mongolia-https://www.eia.gov/analysis/studies/worldshalegas/pdf/Mongolia_2013.pdf
• EuropeanBankforReconstructionandDevelopment(November2015),‘Countryassessments:Mongolia’-http://2015.tr-ebrd.com/wp-content/uploads/2015/11/TR2015_16_CA_Mongolia.pdf
• MinistryofFinance(August2015),‘ExtractiveIndustryFiscalRegimeInMongolia’-http://www.imf.org/external/np/seminars/eng/2015/natrestax/pdf/batbayar.pdf
• AmericanCenterforMongolianStudies(2015),‘StateownershipandthedevelopmentofnaturalresourcesinMongolia’-http://socialsciences.hawaii.edu/conference/demr2015/_papers/krusekopf-charles.pdf
• WorldBank(November2007),GrowthDiagnosticsforaResource-RichTransitionEconomy:TheCaseofMongolia-http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1206974166266/4833916-1206974192224/IanchovichinaGooptuwps4396.pdf
• FT(30June2016),“Mongoliaoppositionscoreslandslideelectionvictory”,http://www.ft.com/cms/s/0/fc03c8c8-3e66-11e6-8716-a4a71e8140b0.html#axzz4DRX5OA7M
• LeeCashell(6July2016),‘Mongolia’selection–aprotestvoteforgood’,http://blogs.ft.com/beyond-brics/2016/07/06/mongolias-election-a-protest-vote-for-the-good/
123ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
• FreedomHouse(2015),FreedomintheWorld2015:Mongolia,https://freedomhouse.org/report/freedom-world/2015/mongolia
• USDepartmentofState(2014),2014HumanRightsReports:Mongolia,http://www.state.gov/j/drl/rls/hrrpt/2014/eap/236460.htm
• USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf
• FT(24January2013),‘Mongoliacokingcoalminetroublesmount’,http://www.ft.com/cms/s/0/1883afe8-6622-11e2-b967-00144feab49a.html#axzz4Dp84CvFQ
• TheUBPost(13June2016),‘CabinettobuybackErdenesTavanTolgoisharesfromthepublic’,http://theubpost.mn/2016/06/13/cabinet-to-buy-back-erdenes-tavan-tolgoi-shares-from-the-public/
• Forbes(25February2015),‘Mongolia’sendlesslegalflexibility’,http://www.forbes.com/sites/jonspringer/2015/02/25/day-828-mongolias-endless-legal-flexibility/#7a64a3f943ed
• USDepartmentofTreasury,MonthlyMDBVotingRecord,March2016,https://www.treasury.gov/resource-center/international/development-banks/Documents/March%202016.pdf
• StateBank,2014AnnualReport,https://www.statebank.mn/w/content/2015/11-26/Statebank%20Annual%20report%202014%20Eng_baga.pdf
• Moody’s(3November2015),SupportforDevelopmentBankofMongoliatoremainstrong,https://www.moodys.com/research/Moodys-Support-for-Development-Bank-of-Mongolia-to-remain-strong--PR_337354
• WorldBank(2015),MongoliaPublicFinancialManagementPerformanceReport,http://www.adb.org/sites/default/files/linked-documents/49210-001-sd-02.pdf
• MRAM(2015),MRAMInformationCircular2015,http://www.bgr.bund.de/DE/Themen/Zusammenarbeit/TechnZusammenarbeit/Downloads/1094_Circular2015.pdf?__blob=publicationFile&v=2
• News.mn(9March2015),“TavanTolgoistalledbyErdenesTavanTogloi’sChalcodebt”,http://www.news.mn/r/206199
• UniversityofQueensland(2015),‘Mining,“sociallicense”andlocal-levelagreementsinMongolia’-http://socialsciences.hawaii.edu/conference/demr2015/_papers/byambajav-dalaibuyan.pdf
• OyuTolgoiInvestmentAgreement,http://www.turquoisehill.com/i/pdf/Oyu_Tolgoi_IA_ENG.PDF
• AsianDevelopmentBank(September2013),“Mongolia:UpdatingtheEnergySectorDevelopmentPlan”(p.15),http://www.adb.org/sites/default/files/project-document/81826/43079-012-tacr-01f.pdf
• UNDP,MinistryofMining,Anti-CorruptionAgency(May2016),‘CorruptionriskassessmentintheminingsectorinMongolia’-http://www.mn.undp.org/content/dam/mongolia/Publications/DemGov/20160603_MiningCorruptionStudy/Corruption%20risk%20assessment_Mining_Eng.pdf?download
124ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
125ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
AnnexD-DetailsofMongolia’sEITIandValidationReports
Contractamount(USD)
Contractamount(MNT)
NameofIndependentAdministrator
DateofPublication
Companydisclosures-numberofcompany
Governmentdisclosures-numberofcompanies
Numberofcomd\paniesreconcile
Unresolveddiscrepancy
Mongolia1stReconciliationReport2006
101,564.40 N/A CraneandWhiteAssociates(Australia)
May-08
64 137 25 4billionMNT
Mongolia2ndEITIReconciliationReport2007
121,000.00 N/A ConsortiumofMongolianandMalaysiaauditfirmsErnstandYoung
Nov-09
102 184 38 775millionMNT
Mongolia3rdEITIReconciliationReport2008
94,501.00 N/A ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse
Jun-10 115 184 46 425millionMNT
Mongolia4thEITIReconciliationReport2009
132,165.00 N/A ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse
Jun-11 129 363 101 58millionMNT
126ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
EITIMValidationReport2009
65,747.00 N/A ConsortiumofBritishCoffeyInternationalDevelopmentandMongolianauditfirmDalaivan
Mar-10
274 477 150
Mongolia5thEITIReconciliationReport2010
144,860.03 202,278,203.00
ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse
Jan-12 301 518 200 360thousandMNT
Mongolia6thReconciliationReport2011
139,777.12 194,583,734.00
ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse
Nov-12
1529 1829 200 75millionMNT
Mongolia7thReconciliationReport2012
109,603.30 181,294,812.00
ConsortiumMooreStephensandDalaivanAuditLLC
Dec-13 1180 1617 200 360millionMNT
Mongolia8thReconciliationReport2013
116,727.69 220,101,739.00
ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse
Dec-14 1197
1617 250 36millionMNT
Mongolia9thReconciliationReport2014
USD84,000 MNT169million
ConsortiumofKPMGFranceandKPMGMongolia
Dec-15 990 1570 236 577millionMNT
127ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Mongolia10thReconciliationReport2014
USD77,000 MNT152,344,500
ConsortiumofUlaanbaatarAuditCorp.AndHartNurse
Dec-16(planned)
Total 1,186,945.54
Source:EITIMSecretariat
128ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
AnnexE–Resultsofthe2013-2015IndependentAdministratortenders
2013EITIReportTenderResults(in2014)
# Company Technicalscore
Financial(MNTm)
Financialscore%
Totalscore
1 KPMG 84.99% 65.0% 79.0%
2 UlaanbaatarAudit
92.03% 57.0% 81.5%
3 Dalaivan 87.10% 55.0% 77.5%
2014EITIReportTenderResults(in2015)
# Company Technicalscore
Financial(MNTm)
Financialscore%
Totalscore
1 KPMG 93.87% 100.0% 95.7%
2 UlaanbaatarAudit
90.21% 83.0% 88.0%
3 Dalaivan 93.17% 87.0% 91.3%
2015EITIReportTenderResults(in2016)
Round1
# Company Technicalscore
Financial(MNTm)
Financialscore%
Totalscore
1 KPMG 89.44% 180.0 87.3% 88.8%
2 UlaanbaatarAudit
86.39% 170.4 92.3% 88.1%
3 Dalaivan 88.01% 157.2 100.0% 91.6%
Round2
# Company Technicalscore
Financial(MNTm)
Financialscore%
Totalscore
1 KPMG 92.29% 180.0 81.9% 89.2%
2 UlaanbaatarAudit
88.18% 152.3 96.7% 90.7%
3 Dalaivan 95.76% 147.4 100.0% 97.0%
129ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
AnnexF–GeneralLocalDevelopmentFundtransfers,2013-H1-2016
Aimag/Name/
2013
Planned TransferredRevenue/byeachsource/
MinieralRoyalties
VAT AimagSurplus/CapitalCitySurplus
Total Fulfilled Fulfilled%
Numberofprojectscarriedout
Arkhangai
8,704,084.40
684,896.19
6,399,258.57 1,039,390.70
8,123,545.45
8,123,545.45
93.3 346
Bayan-Ulgii
7,646,648.60
699,197.39
5,464,334.17 899,631.39
7,063,162.95
7,063,162.95
92.4 394
Bayankhongor
10,176,249.50
621,351.00
7,744,453.13 1,239,994.28
9,605,798.41
9,605,798.41
94.4 398
Bulgan 7,353,908.90
436,665.15
5,148,386.10 897,794.99
6,482,846.24
6,482,846.24
88.2 267
Gobi-Altai
9,959,821.00
436,803.31
6,830,168.27 1,237,319.88
8,504,291.46
8,504,291.46
85.4 352
Dornogobi
8,130,427.80
487,284.16
6,137,282.50 991,973.69
7,616,540.35
7,616,540.35
93.7 216
Dornod 8,907,879.30
566,024.73
6,156,009.46 1,082,386.58
7,804,420.78
7,804,420.78
87.6 313
Dundgobi
8,023,392.70
305,110.55
5,879,329.40 1,003,224.89
7,187,664.84
7,187,664.84
89.6 294
Zavkhan
8,218,412.80
518,333.06
6,340,013.05 999,139.50
7,857,485.60
7,857,485.60
95.6 389
Uvurkhangai
9,586,099.70
816,523.74
6,377,641.78 1,136,110.28
8,330,275.80
8,330,275.80
86.9 297
130ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Umnugobi
9,737,962.00
563,959.21
6,562,718.20 1,190,828.78
8,317,506.20
8,317,506.20
85.4 246
Sukhbaatar
8,396,890.90
419,910.72
6,908,707.86 1,036,010.69
8,364,629.27
8,364,629.27
99.6 248
Selenge
7,174,198.80
804,557.74
5,038,808.51 823,504.29
6,666,870.54
6,666,870.54
92.9 219
Tuv 7,621,652.50
690,446.96
5,336,104.05 897,581.70
6,924,132.71
6,924,132.71
90.8 376
Uvs 8,095,164.70
590,884.07
5,953,745.52 973,055.29
7,517,684.87
7,517,684.87
92.9 422
Khovd 8,792,874.70
626,902.33
6,224,942.73 1,058,984.38
7,910,829.45
7,910,829.45
90.0 293
Khuvsgul
9,358,054.60
938,245.68
6,134,019.06 1,089,556.28
8,161,821.03
8,161,821.03
87.2 304
Khentii 8,332,411.10
539,720.50
6,711,731.40 1,011,046.60
8,262,498.50
8,262,498.50
99.2 395
Darkhan-Uul
6,915,534.40
752,155.67
4,994,438.70 797,050.09
6,543,644.45
6,543,644.45
94.6 91
Ulaanbaatar
35,030,643.30
9,790,736.17
14,765,220.11
3,210,330.95
27,766,287.24
27,766,287.24
79.3 374
Orkhon 7,511,136.00
757,603.63
5,383,787.21 873,899.79
7,015,290.64
7,015,290.64
93.4 87
Gobi-Sumber
5,940,363.10
111,533.56
4,568,063.68 758,585.59
5,438,182.83
5,438,182.83
91.5 118
209,613,810.80
22,158,845.54
141,059,163.47
24,247,400.60
187,465,409.61
187,465,409.61
89.4 6439
131ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
/Thousand
Tugrugs/
Aimag/Name/
2014
Planned
TransferredRevenue/byeachsource/
VAT MineralRoyalties
AimagSurplus/CapitalCitySurplus
Total Fulfilled
Fulfilled%
Numberofprojectscarriedout
Arkhangai
11,073,753.24
5,154,971.25 617,867.75
2,266,175.25
8,039,014.24
8,039,014.24
72.6
412
Bayan-Ulgii
9,638,774.47
4,425,490.56 598,035.55
1,912,482.87
6,936,008.98
6,936,008.98
72.0
388
Bayankhongor
12,789,616.29
5,882,341.55 638,071.20
2,462,422.82
9,482,835.57
9,482,835.57
74.1
463
Bulgan
9,253,561.33
4,552,402.30 394,536.19
1,917,693.66
6,864,632.16
6,864,632.16
74.2
399
Gobi-Altai
12,373,300.35
6,538,516.21 371,725.67
2,739,625.22
9,649,867.10
9,649,867.10
78.0
508
132ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
Dornogobi
10,146,842.66
4,887,619.89 412,134.02
2,135,591.70
7,435,345.61
7,435,345.61
73.3
221
Dornod
11,184,497.56
5,630,818.54 586,422.57
2,161,951.58
8,379,192.69
8,379,192.69
74.9
336
Dundgobi
9,947,539.36
5,059,827.51 381,876.93
1,948,154.73
7,390,901.61
7,390,901.61
74.3
443
Zavkhan
10,347,604.62
4,932,000.75 468,313.94
2,157,078.46
7,557,393.15
7,557,393.15
73.0
393
Uvurkhangai
12,263,936.40
5,974,417.75 743,332.69
2,632,488.40
9,350,238.84
9,350,238.84
76.2
367
Umnugobi
12,185,360.12
6,285,161.85 423,255.06
2,663,549.57
9,371,966.49
9,371,966.49
76.9
270
Sukhbaatar
10,495,067.20
5,188,187.66 458,062.48
2,050,291.92
7,696,542.06
7,696,542.06
73.3
312
Selenge
9,215,881.39
4,333,539.43 581,516.80
1,719,243.48
6,634,299.70
6,634,299.70
72.0
310
Tuv 9,618,24
4,420,083.38 592,854.58
1,909,959.9
6,922,897.87
6,922,897.8
72.0
420
133ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
4.23 1 7
Uvs 10,131,962.85
4,687,205.97 501,183.72
2,086,023.51
7,774,413.19
7,774,413.19
76.7
421
Khovd
11,002,556.57
5,380,369.65 613,522.45
2,101,487.93
8,095,380.03
8,095,380.03
73.6
430
Khuvsgul
11,997,624.07
5,806,994.56 922,526.45
2,197,696.31
8,927,217.32
8,927,217.32
74.4
480
Khentii
10,461,535.90
4,787,896.52 474,136.18
2,183,545.71
8,445,578.41
8,445,578.41
80.7
427
Darkhan-Uul
8,548,986.32
3,851,539.30 602,905.10
1,641,802.99
6,096,247.39
6,096,247.39
71.3
155
Ulaanbaatar
46,330,654.49
15,581,801.23 8,040,350.46
8,515,433.71
32,137,585.40
32,137,585.40
69.4
667
Orkhon
9,455,287.19
4,290,777.75 635,321.98
1,848,339.27
6,774,438.99
6,774,438.99
71.6
122
Gobi-Sumber
7,328,760.09
3,734,959.86 102,231.19
1,587,790.66
5,424,981.72
5,424,981.72
74.0
140
265,
121,386,923.47 19,16
52,83
195,386,97
195,3
73.5
8084
134ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
791,346.70
0,182.97
8,829.64
8.53 86,978.53
/Thou
sandTugrugs/
Aimag/Name/
2015
Planned TransferredRevenue/byeachsource/
VAT MineralRoyalties
PetroleumRoyalties
Aimag/CapitalCitySurplus
Fulfilled Filfilled%
Numberofprojectscarriedout
Arkhangai
5,049,164.24
3,121,836.31
559,048.70
245,186.90 263,826.18
4,189,898.09
83.0 210
Bayan-Ulgii
4,588,614.50
2,762,331.56
603,580.73
216,964.64 233,469.17
3,816,346.10
83.2 250
Bayankhongor
5,918,656.90
3,771,136.99
512,144.79
296,205.01 318,725.84
4,898,212.63
82.8 377
Bulgan 4,338,622.27
2,779,589.06
356,130.30
218,312.65 234,865.66
3,588,897.67
82.7 256
Gobi-Altai
5,733,752.41
3,766,348.50
351,654.66
295,819.32 318,298.31
4,732,120.78
82.5 318
Dornogobi
4,755,750.85
3,032,518.96
408,775.73
238,171.05 256,257.87
3,935,723.60
82.8 136
Dornod 5,173,098.81
3,280,819.07
467,126.47
257,695.40 277,271.05
4,282,911.99
82.8 223
Dundgobi
4,581,3
3,037,4
245,04
238,571.24 256,699.0
3,777,764.9
82.5 220
135ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
92.32 48.68 6.05 2 9
Zavkhan
4,840,962.90
3,082,312.66
421,969.92
242,082.57 260,453.68
4,006,818.84
82.8 322
Uvurkhangai
5,557,418.93
3,397,866.25
663,931.74
266,887.24 287,144.05
4,615,829.27
83.1 282
Umnugobi
5,649,276.45
3,604,975.57
482,115.09
283,136.06 304,623.98
4,674,850.70
82.8 210
Sukhbaatar
4,856,354.33
3,150,609.77
348,146.93
247,470.06 266,231.51
4,012,458.26
82.6 202
Selenge
4,450,072.63
2,605,122.63
679,767.41
204,602.95 220,162.15
3,709,655.13
83.4 219
Tuv 4,594,193.91
2,798,646.52
562,130.65
219,810.16 236,467.90
3,817,055.23
83.1 299
Uvs 4,693,119.35
2,930,425.97
482,692.55
230,161.39 247,625.65
3,890,905.56
82.9 276
Khovd 5,235,145.32
3,287,155.58
515,323.01
258,169.36 277,781.46
4,338,429.41
82.9 274
Khuvsgul
5,492,913.52
3,265,526.50
775,264.74
256,478.47 275,932.26
4,573,201.98
83.3 358
Khentii 4,946,144.65
3,141,099.67
441,508.21
246,705.55 265,448.27
4,094,761.70
82.8 326
Darkhan-Uul
4,241,535.22
2,484,428.02
645,986.54
195,142.60 209,971.65
3,535,528.81
83.4 85
Ulaanbaatar
24,576,761.37
10,314,453.65
8,963,770.59
810,138.53 871,638.10
20,960,000.87
85.3 411
Orkhon 4,577,2
2,706,9
664,02
212,618.61 228,734.6
3,812,304.1
83.3 94
136ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
27.21 29.82 1.13 2 8
Gobi-Sumber
3,308,778.37
2,256,679.99
96,571.79
177,233.88 190,671.63
2,721,157.29
82.2 85
127,158,956.46
74,578,261.71
19,246,707.74
5,857,563.62 6,302,300.00
105,984,833.06
83.3 5433
/Thousand
Tugrugs/
Aimag/Name/
2016/1-6months/
Planned TransferredRevenue/byeachsource/
VAT MineralRoyalties
PetroleumRoyalties
Aimag/CapitalCitySurplus
Fulfilled Fulfilled%
Arkhangai
4,107,646.64
673,639.37
109,914.95
64,473.12 1,400,611.01 2,248,638.45
54.7
Bayan-Ulgii
4,017,988.10
440,089.35
116,216.81
54,186.02 1,056,903.60 1,667,395.78
41.5
Bayankhongor
5,681,933.38
813,689.58
150,349.69
125,560.55 1,670,418.80 2,760,018.62
48.6
Bulgan 4,043,587.18
464,597.89
71,038.78
57,203.63 1,110,014.75 1,702,855.05
42.1
Gobi-Altai
6,569,770.15
1,106,608.72
69,268.26
80,844.97 2,111,956.14 3,368,678.10
51.3
Dornogobi
6,366,661.01
542,847.69
78,732.08
66,838.14 1,287,914.16 1,976,332.07
31.0
Dornod 5,035,324.24
557,743.10
90,770.87
68,672.14 1,330,208.49 2,047,394.59
40.7
Dundgo 4,852,11 62,975.59 1,221,069.89 40.1
137ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
bi 2.42 611,476.71
50,796.44
1,946,318.63
Zavkhan 4,900,506.23
534,789.33
84,290.87
65,845.95 1,272,782.98 1,957,709.13
39.9
Uvurkhangai
4,444,612.93
547,719.20
132,120.27
67,437.95 1,313,703.02 2,060,980.43
46.4
Umnugobi
13,446,795.70
609,724.93
161,784.04
75,072.40 1,454,946.46 2,301,527.83
17.1
Sukhbaatar
5,188,521.59
512,011.96
73,272.96
63,041.49 1,226,978.75 1,875,305.16
36.1
Selenge 7,472,574.44
443,379.36
140,072.22
54,591.10 1,057,317.47 1,695,360.14
22.7
Tuv 6,679,827.41
464,544.68
113,834.91
57,197.08 1,110,702.82 1,746,279.49
26.1
Uvs 3,893,900.62
597,604.30
92,228.56
61,267.55 1,186,913.37 1,938,013.78
49.8
Khovd 4,419,902.75
546,408.02
98,894.12
67,276.51 1,306,232.41 2,018,811.05
45.7
Khuvsgul 4,435,988.69
556,709.73
150,559.45
68,544.91 1,327,347.99 2,103,162.08
47.4
Khentii 5,341,137.69
725,982.15
87,775.78
64,761.57 1,556,432.05 2,434,951.55
45.6
Darkhan-Uul
3,909,740.70
393,971.68
124,312.93
48,507.78 946,638.36 1,513,430.74
38.7
Ulaanbaatar
18,890,809.97
1,970,735.84
1,807,077.10
205,709.41 4,105,134.43 8,088,656.78
42.8
Orkhon 4,890,58 55,456.28 1,076,629.97 37.8
138ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation
4.04 450,406.25
267,681.71
1,850,174.21
Gobi-Sumber
2,453,421.65
358,612.02
19,123.57
44,154.12 861,464.74 1,283,354.45
52.3
131,043,347.52
13,923,291.85
4,090,116.39
1,579,618.24 30,992,321.64 50,585,348.11
38.6
/Thousand
Tugrugs/