Press Release: “Fake Oil Scandal” and the EITI
“Fake Oil Scandal” and the EITI
The recent public outcry over the alleged ‘fake oil scandal’ has raised serious questions about how well the country captures information on its oil and gas production and its resulting revenues. As an agency that independently reconciles energy sector production and revenue data, the Trinidad and Tobago Extractive Industries Transparency Initiative (EITI) wishes to share a perspective on the issue.
Recent newspaper headlines alluded to a comment made by the Chair of the TTEITI Steering Committee, Mr. Victor Hart, that “there are no discrepancies in energy tax receipts.” The data in the last four published EITI Reports shows that this statement is correct. The TT$ 114 billion in revenue payments to Government declared by participating oil and gas companies closely matched the receipts declared by the Government. A difference between the payments and receipts of TT$ 840 million (i.e. 7%) was identified, audited and satisfactorily explained by the Independent Auditor.
In addition to revenue payments and receipts, the EITI Auditor also reconciles oil and gas production declared by companies and by Government. However, the EITI process does not capture information from all companies operating in the country’s extractive sectors given that the EITI is a voluntary initiative. This information gap somewhat defeats the search for greater transparency and accountability in the exploration of the country’s natural resources. It highlights the need for serious consideration and an early decision by extractive sector stakeholders (government, companies and civil society) to make reporting under the EITI mandatory through EITI legislation. Consider the fact that the lease operator linked to the alleged “fake oil scandal” does not participate in the EITI (as is their right) and therefore does not disclose data to the Independent Auditor. It should be emphasized that this matter is still being investigated and in the absence of the final report, it is premature to make assumptions.
The checks and balances offered by the EITI reporting process and the independent work of the Auditor provide the extractive sectors, unlike other sectors, with a very high level of transparency and accountability. However valuable the EITI process is, it must not be thought of as a magic pill that can eradicate corruption. Rather it provides an extra layer of independent assurance for a public prone to suspicion, acts as a major disincentive to corruption, helps Government increase its revenue receipts from companies and protect the people’s patrimony.
For more information on the EITI please visit www.tteiti.org.tt or call Sherwin Long at 769-1391.