Trafigura Beheer B.V., one of the world’s leading commodity trading firms, on Tuesday announced its commitment to the Extractive Industries Transparency Initiative, EITI, in maintaining global
standards for transparency of revenues from natural resources.
The company said in Geneva, Switzerland, that it was announcing a new policy to promote the disclosure of payments to governments by commodities traders under the auspices of the EITI global standard and principles to promote accountability and transparency in the management of revenues from natural resources.
With the announcement, Trafigura, which is one of the traders on Nigeria’s commodities, becomes the first commodity trading company to join the 90 oil, gas and mining companies that have already embraced the EITI principles.
The company said it has already published a policy on payments to governments, drawn up in consultation with the EITI International Secretariat to confirm its commitment to disclose payments it makes to governments in EITI compliant and candidate countries beginning in 2015.
“This policy reflects Trafigura’s commitment to transparency and accountability, as core components of responsible trade and better-governed natural resource sectors”, said Trafigura Chief Executive Officer, Jeremy Weir, said.
“We believe that as a leading commodities trader we have a role in disclosing how much we pay to governments and their National Oil Companies (NOCs), and that governments have an important part to play in demonstrating how those proceeds have contributed towards socio-economic development.”
Describing EITI as “the right mechanism for the disclosure of relevant information to citizens in a comprehensive and responsible manner,” Mr. Weir said Trafigura’s decision to make these commitments followed engagement with stakeholders, including the Swiss Government.
He said the commitment was an important step towards development of a disclosure standard for the trading industry within the EITI framework.
According to Mr. Weir, as a leading commodities trader, Trafigura has a role in disclosing how much the company pays to governments and their NOCs, while governments also have an important part to play in demonstrating how those proceeds have contributed towards socio-economic development.
Head of the EITI International Secretariat, Jonas Moberg, said the transparency group welcomed Trafigura’s support of the EITI process, pointing out that its unprecedented commitment aligns with the EITI Principles and transparency requirements.
Mr. Moberg expressed the hope that Trafigura’s decision would spur transparency and accountability in the commodity trading industry, pointing out that improved transparency would give citizens in the 48 EITI member countries the opportunity to examine their government’s
sales of their natural resources.
While welcoming Trafigura’s commitment, EITI Secretariat called on all commodity traders to join the work towards comprehensive and practical reporting guidelines that would bring more transparency and accountability to the sector.
“With the increased focus on the trading of oil, gas and minerals, disclosure of payments to government has to improve. The EITI alone cannot deliver full transparency and accountability in the trading industry, but it is a good start to ensure that the citizens who need this information the most have access to it in a comprehensive manner,” Mr. Moberg said.
In practice, Trafigura’s new means it would henceforth be disclosing their payments to governments in accordance with the reporting approach adopted by the EITI multi-stakeholder group in each
The new arrangement should result in improved EITI reporting, as the government receipts could be reconciled with Trafigura’s reports to ensure transparency.
In many resource-rich countries, revenues from sales of oil represent a substantial source of income. The EITI requires the government and State-owned Enterprises (SOEs) to disclose information about these sales.
Disclosures from commodity trading companies would allow these figures to be reconciled and verified. Additional sources of information ensure more reliable data and more informed public debate.
Disclosure of the payments to governments for oil sales, EITI noted, would reduce the risk of corruption and improve the accountability of SOEs that sell oil, gas and minerals on behalf of the government.
The scope of Trafigura’s policy would include disclosures on payments to NOCs for crude oil and petroleum products, including gas, corporate taxes and license payments to governments in the 48 EITI member countries.