Press Release: 2017 Revenue Governance Index
2017 Revenue Governance Index
Trinidad and Tobago scored 64 out of 100 points in the 2017 Resource Governance Index and ranked 14th out of the 89 assessments undertaken for the 81 countries surveyed. Trinidad and Tobago scored relatively high for publishing timely, regular reports on oil and gas production, prices and exports as well as sound Heritage and Stabilisation Fund governance.
This Index in an international benchmarking standard which measures how countries govern their resources by focusing on: revenue management, value realization and enabling the environment.The index report credits Trinidad and Tobago for satisfactory results in enabling the environment and value realization components but it achieves weak scores in the revenue management component.
The Index measures the quality of governance in select oil, gas and mining sector countries worldwide. The 81 countries surveyed produce 85 percent of the world’s oil, 90 percent of diamonds and 80 percent of copper, generating trillions of dollars annually.
To determine how each country performs, the Index looks at three key areas of transparency and accountability:
- Value Realization: this covers the governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state owned enterprises.
- Revenue Management: this incorporates national budgeting, subnational resource revenue sharing and sovereign wealth funds.
- Enabling Environment: the broader governance environment, based on six (6) worldwide governance indicators (voice and accountability; political stability and lack of violence; government effectiveness regulatory quality; rule of law; and control of corruption).
Of the 81 Index countries, only 6 are doing a satisfactory job ranking high in all three criteria. In Latin America, six countries – Brazil, Chile, Colombia, Mexico, Trinidad and Tobago, and Peru – all earned satisfactory composite scores while Ecuador, Venezuela and Bolivia, received only partially satisfactory scores.
Overall, Trinidad and Tobago scored 64 out of 100. Trinidad and Tobago performs better in practices than in rules and regulations, with a 10-point difference in favor of the former. This result is particularly impacted by taxation. Currently, Trinidad and Tobago discloses company payments data in a disaggregated manner via the Extractive Industries Transparency Initiative. In contrast, key tax terms such as royalty, state equity and production sharing rate (where applicable), are not set in laws but are left open for negotiation between the Ministry for Energy and Energy Industries and the licensee, bringing down the law result.
The Index offers recommendations for both highly-ranked countries like Norway and low-ranked countries like Eritrea. From focusing on implementation and continuing to open governments to bolstering state-owned enterprise governance and driving reforms, there are many ways for governments of resource-rich countries to become more effective and accountable to their citizens.
State energy enterprises were also assessed in the Index and Petrotrin ranked 9th out of the 74 state companies assessed with a score of 75. Petrotrin performed particularly well for its rules and reporting on finance and operations. However, the index noted that the company needed to be more transparent as it relates to the sales of its commodities.
“Trinidad and Tobago’s favourable index results validate the progressive work done by all stakeholders in implementing the Extractive Industries Transparency Initiative (EITI) under the guidance of the TTEITI Steering Committee. In participating in the EITI we have provided the public with relevant data in annual EITI reports on the energy sector that stands up to scrutiny as payments and production are verified and reconciled by an independent audit firm. The EITI reports also help citizens answer questions on whether we are getting maximum value from our extractive sectors, which are the companies with whom government is partnering, and ways for us to improve our revenue collection system, data management and audit and assurance processes,” said the TTEITI Steering Committee Chair Victor Hart.
Trinidad and Tobago has published four EITI Reports to date covering Fiscal Years 2010 to 2015. Based on the reports’ findings, an estimated $840 million in differences between extractive companies’ declared revenue payments and Government’s declared corresponding receipts have been identified, audited and satisfactorily reconciled. The reports have also provided extensive recommendations on improving Government revenue collection, data management and audit and assurance processes. Data published in the reports have also informed the findings of the recent Gas Master Plan and assisted Trinidad and Tobago in meeting its obligations to the Open Government Partnership. The EITI Report for Fiscal Year 2016 is due to be published in the last quarter of 2017.