The EITI Glossary

Disclaimer: This glossary is compiled by the EITI International Secretariat. While every effort has been made to present accurate and up-to-date definitions, this glossary is only provided as a resource. All suggestions for how it can be further improved are welcome.

Accountability

The obligation of an individual or organisation to account for its activities, to accept responsibility for them, and to disclose the results in an open manner.

Aggregation

A method of reporting which consolidates payments made by individual companies. This prevents individual company payments or government revenues being identified in a published EITI Report. Aggregation can also refer to the consolidation of different types of payments or revenues received so that individual payments or revenue streams cannot be identified.

Annual progress report (APR)

The annual activity report communicates the efforts a country implementing the EITI has undertaken during a specific year to meet and/or maintain compliance with the EITI Requirements. The report includes the progress made in achieving the objectives set out in the country’s workplan and examples of the impact of the EITI in a particular year. The multi-stakeholder group is required to publish the annual activity report (Requirement 7.2) for a specific year no later than 1 July of the following year.

Artisanal mining

Mining activity carried out by persons or groups not employed by a mining company, but working independently, using their own resources.

Auditor

An organisation, typically an independent audit firm, licensed or otherwise certified to provide financial audits and related services by professional standards or chartering authority for auditors within a designated legal jurisdiction. In EITI context, the auditor is typically charged with the responsibility of inspecting the financial accounts and other information held by those companies and/or government agencies involved in the extractive industries, for purposes of ascertaining whether such accounts and information are accurately recorded and reported.

Barter

An agreement between an extractive company and the government where the company uses non-monetary exchange (usually infrastructure) for a country’s natural resources. The resources involved may include exploration or production rights for oil, gas, andminerals, and other elements such as access to land, energy and water resources. The infrastructure projects may include railways, roads, ports, power plants, schools and hospitals. These agreements are also called: “infrastructure provisions”, “barter agreements”, and “minerals for infrastructure”deals.

Beneficial ownership

Describes the ‘natural’ person(s) who, directly or indirectly, ultimately own(s) or control(s) a corporate entity, a license or other property.

Brent crude

A major trading classification of sweet light crude oil comprising Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.

Cadastre

An official register of oil, gas and mining licenses. These registers often include information such as the name of the company holding thelicense, the duration of the license and coordinates of the license area.

Candidate country

A country that has fully, and to the satisfaction of the EITI Board, completed the four sign-up steps set out in the EITI Standard. EITI Candidature is a temporary statys that is intended to lead, in a timely fashion, to compliance with the EITI Requirements. When the EITI Board admits an EITI Candidate, it establishes deadlines for publishing the first EITI Report and undertaking Validation. The first EITI Report must be published within 18 months and Validation must commence within two and a half years.

Civil society organisation

Non-governmental organisations such as trade unions, issue-based coalitions, faith-based organisations, indigenous peoples movements, the media, think tanks and foundations. The term civil society organisation is abbreviated with "CSO".

Compliant country

A country is designated as Compliant when the EITI Board considers that it has met all of the EITI Requirements. Compliant countries must undergo Validation every three years or upon the request from the EITI Board. Compliance with the EITI Requirements does not necessarily mean that a country's extractive sector is fully transparent, but that there are satisfactory levels of disclosure and openness in the management of the natural resources, as well as a functioning process to oversee and improve disclosure.

Contextual information

Refers to the requirement in the EITI Standard to provide information about the extractive sectors that allows the reader to understand the figures disclosed in an EITI Report.

Cost oil

Oil (or gas) produced that is shared with the contractor at a defined valuation, in accordance with a formula specified in the relevantproduction sharing contract. This enables the contractor to recover the costs spent on a project by the contractor.

Country Workplan

An action plan agreed by the national multi-stakeholder group. This includes the objectives and priorities for EITI implementation and associated activities. See Requirement 1.4.

Crude oil

Oil that is not treated or refined.

Delisting

When a country is no longer recognised as implementing the EITI due to failure of adhering to the EITI Requirements or if the country’s political environment makes the EITI process impossible.

Depletion allowances

An allowance that is deductible when calculating tax liabilities or when reporting financial profits (depending on the context). It relates to the depletion of an asset in the ground. The costs of producing wells and facilities, and the costs of leases are gradually written off over the life of an oil field or mineral deposit. The annual depletion allowance is calculated by relating the production for the year to the total producible reserves at the beginning of the year.

Disaggregation

A method of reporting by which individual company payments made to a government are disclosed and can be identified separately. It can also refer further to reporting individual types of payments, so that each payment type (royalty, tax, etc.) can be identified.

Dividend

A payment to a partner or shareholder out of the profit of a company as a return on the investment made.

Dodd-Frank Act

In the EITI context, this typically refers to Section 1504 of the Dodd–Frank Wall Street Reform and Consumer Protection Act. 1504 requires companies listed on the US Securities and Exchange Commission (SEC) to report the payments made to governments for access to oil, gas and minerals.

Downstream

The activities in the oil and gas industry such as transportation, refining and marketing, that occur after production.

EI value chain

Extractive industries value chain: The steps from the extraction of natural resources, to their processing and sale, all the way through to the ultimate use of the revenues.

EITI Association

The legal entity of the EITI, governed by the EITI Articles of Association.

EITI candidate

Also called a candidate country; a country that has fully, and to the satisfaction of the EITI Board, completed the four sign-up steps set out in the EITI Standard. EITI candidature is a temporary status which is intended to lead, in a timely fashion, to compliance with theEITI Requirements. When the EITI Board admits an EITI candidate, it establishes deadlines for publishing the first EITI Report and undertaking Validation. The first EITI Report must be published within 18 months and Validation must commence within two and a half years.

EITI Champion

The term EITI Champion is an informal title that usually refers to the person the government of an EITI implementing country appoints to lead the implementation of the EITI (see requirement 1.1.b.).

When used in this way, the EITI Champion should have the confidence of all stakeholders, the authority and freedom to coordinate action on the EITI across relevant ministries and agencies, and be able to mobilise resources for EITI implementation.

The champions should be listed on the country pages under the section “implementation – governance”. See Ghana, for example.

EITI compliant

A country is designated as EITI compliant when the EITI Board considers that it meets all of the EITI Requirements. Compliant countries must undergo Validation every three years or upon the request from the EITI Board. To be EITI compliant does not necessarily mean a country's extractive sector is fully transparent, but that there are satisfactory levels of disclosure and openness in the management of the natural resources, as well as a functioning process to oversee and improve disclosure. See also compliant country.

EITI Countries

Countries implementing the EITI Standard. They are either Candidate or Compliant.

EITI Global Conference

The EITI Global Conference, or EITI Conference, brings together all stakeholders of the EITI. The EITI Conference is held at least every three years.

EITI international management

EITI international management is a term to cover the activities carried out by the international organs of the EITI, such as the Global Conference, Members Meeting, Board, and international secretariat (as opposed to national EITI secretariats and their implementation activities). For example, the EITI international management budget covers activities of the Board and international secretariat including the Global Conference and Members Meeting.

EITI International Secretariat

The EITI International Secretariat works closely with countries implementing the EITI and international partners to manage the EITI on the global level. The EITI International Secretariat supports the EITI Board and is located in Oslo, Norway.

EITI Member's Meeting

The main task of the Members’ Meeting is to appoint an EITI Board for the next term (two to three years). The Members’ Meeting is held during the EITI Conference.

EITI Report

All EITI countries publish annual EITI Reports, which allow citizens to follow the value of the country's natural resources from production all the way into government accounts. The report is compiled by an Independent Administrator.

EITI Requirements

These are the seven requirements for reaching Compliance. The requirements can be found in the Standard.

EITI Rules

This document is replaced by the EITI Standard, which was published in May 2013.

EITI Standard

It is the global transparency standard for improving governance of natural resources.

Export duties

Duty tax applied to the export of products. Oil and gas are usually exempt from export duties.

Extractive industries

Usually refers to the oil, gas and mining industries.

Financial audit

In the EITI context, this is a process of obtaining, verifying, potentially reconciling, and reporting financial or physical information relevant to the extractive industries.

Fiscal year

The period which a country calculates its financial year. This may differ from the calendar year.

Fiscalisation

The conversion of a unit of production (e.g. a barrel of oil) into monetary terms. For example, when oil is measured at the wellhead the measured quantity is then priced for purposes of calculating the government’s tax or royalty.

Flow rate

The volume or quantity of oil or gas coming out of a well or flowing through a pipeline. The flow rate is often measured in oil field units, such as “barrels per day” or “millions of cubic feet per day".

Good governance

In international development literature this describes how public institutions conduct public affairs and manage public resources in sound ways.

Import duties

Duty tax applied to the import of products. Oil and gas are usually exempt from import duties.

In-kind payments

Payments made to a government (e.g. royalty) in the form of the actual commodity (oil, gas, or minerals) instead of cash

Independent Administrator

An organisation, typically an auditing firm, appointed by the multi-stakeholder group to produce the EITI Report. TheIndependent Administrator is charged with comparing different sets of data, and investigating and explaining any discrepancies identified. The Independent Administrator does not usually carry out an actual audit of such transactions.

Institutional investor

An organisation that pools large sums of money and invests those sums in securities and other investment assets.

International accounting standards

Several accounting standards are commonly recognised as international accounting standards. For example, the International Financial Reporting Standards (IFRS), set by the International Accounting Standards Board (IASB).

Joint venture

A group of companies, which can include a state-owned company, that have joined together to conduct explorations and prospectively exploit minerals or hydrocarbons in a specified area under the terms of an agreed contract.

License

A permission granted by a licensor to a licensee, usually for a time-bound period and for a fee.

License fee

A fee/tax which must be paid to obtain a license to operate.

Liquefied Natural Gas

Natural gas consisting of nearly pure methane that has been cooled to 162°C to become a liquid. LNG occupies about 1/600 of its volume as a gas. For short: LNG.

LNG

Liquefied natural gas: Natural gas consisting of nearly pure methane that has been cooled to 162°C to become a liquid. LNG occupies about 1/600 of its volume as a gas.

Mapping of financial flows

A simplified illustration that traces payments to show which entity makes the payments and which entity receives them.

Material payments

Important or relevant revenue streams. The EITI requires that all material benefit streams be published. According to the EITI Validationguide, a benefit stream is “material if its omission or misstatement could materially affect the final EITI Report.” It is typically the responsibility of the national multi-stakeholder group to decide how to define material in quantitative or qualitative terms.

Materiality

A threshold amount or percentage to determine if a company or a payment is significant to an outcome. Multi-stakeholder groups in EITI implementing countries often set materiality levels based on company or payment size.

MDTF

Short for Multi-Donor Trust Fund, which is a major fund for technical and financial assistance to countries implementing the EITI. The World Bank administers the fund.

Memorandum of understanding

A document that describes the general principles of an agreement between parties, but does not amount to a legal contract. For short:MoU.

Minerals

Can include, but not limited to: bronze, coal, copper, diamonds, gold, iron ore, silver, uranium and zinc.

MoU

Memorandum of understanding: a document that describes the general principles of an agreement between parties, but does not amount to a legal contract.

MSG

Multi-stakeholder group: A group made up of government, company, and civil society representatives that oversee the EITI implementation in a country. The MSG develops the country Work plan, oversees the production of the EITI Report and ensures that the EITI contributes to public debate.

Multi-Donor Trust Fund

A major fund for technical and financial assistance to countries implementing the EITI which is administered by the World Bank. Abbreviated with MDTF.

Multi-stakeholder group

A group made up of government, company, and civil society representatives that oversee the EITI implementation in a country. The MSGdevelops the country Workplan, the production of the EITI Report and ensures that the EITI contributes to public debate. For short: MSG.

National Coordinator

In most countries, the National Coordinator leads EITI process on a day-to-day basis in an implementing country and heads the national EITI secretariat. The National Coordinator may be part of or chairs the multi-stakeholder group. There is, however, no strict definition of the National Coordinator in the EITI Standard, so the role can vary from country to country.

National secretariat

The organisation responsible for carrying out the process and coordinating national efforts in implementing the EITI. Most implementing countries have national EITI secretariats with full-time staff. The national secretariats report to the multi-stakeholder group or line ministries.

Operator

An entity, which may be an oil company or group of oil companies, which operates an asset alone or on behalf of others.The asset could be an oil field or a number of oil fields. A joint operating agreement usually governs the agreement between the operator and the shareholders.

Payment stream

Refers to the individual methods by which money comes into a company, organisation and/or government. For example, tax is apayment stream, and bonus is a different payment stream.

Physical audit

The physical checking or measuring by controllers of the amount of oil, gas and/or minerals that has been extracted, and the arrangements for transporting, processing or selling those resources.

Politically Exposed Person (PEP)

A natural person who is or who has been entrusted with prominent public functions. Often referred to in beneficial ownership legislation.

Process audit

An audit to check the effectiveness of a system.

Production sharing agreement

A petroleum production arrangement in which the contractor bears all costs of exploration and production without such costs being reimbursable if no find is made in the contract area and in which the government and contractor are both paid in the resource produced. For short: PSA.

Production sharing contract

A petroleum production arrangement in which the contractor bears all costs of exploration and production without such costs being reimbursable if no find is made in the contract area and in which the government and contractor are both paid in the resource produced.

Project tax

A tax applied to a specific project.

Profit

The net excess of income over expenses, according to the appropriate accounting rules. Profit may be defined either before and/or after deducting applicable taxes owed.

Profit oil

A quantity of crude oil/gas which remains to be split between the government and contractor after the recovery of costs, through cost oil/gas, and payment of royalty and other taxes (if applicable) under a production sharing contract.

PSA

Short for production sharing agreement. A petroleum production arrangement in which the contractor bears all costs of exploration and production without such costs being reimbursable if no find is made in the contract area and in which the government and contractor are both paid in the resource produced.

Reconciler

A term sometimes used for Independent Administrator. An organisation, typically an auditing firm, appointed by the multi-stakeholder groupto produce the EITI Report. The Independent Administrator is charged with comparing different sets of data, and investigating and explaining any discrepancies identified. The Independent Administrator does not usually carry out an actual audit of such transactions.

Reconciliation

Comparison of two sets of figures to reveal any differences between them.

Regulator

The government official or organisation lawfully specified as having the responsibility to administer rules and regulations. A regulator might have authority to develop and issue rules.

Remedial action

In EITI context, this usually refers to corrective measure(s), which must be undertaken in order to comply with the EITI Requirements.

Resource curse

The phenomenon by which revenue from natural resources leads to poor standards of human development, bad governance, increased corruption and sometimes conflict.

Return on investment

The income that an investment produces for each unit (e.g. dollar) of capital invested. This is measured in percentage. For example, if $1 million invested produces $100,000 the next year, that is a 10 per cent return on investment.

Royalty

Refers specifically to the individual methods by which money comes into a company, organisation and/or government. For example, tax is a revenue stream, and bonus is a different revenue stream.

Scope

In EITI context, the features and functions included in an EITI Report or Workplan.

Scoping

On-going assessment of a situation, usually through monitoring, consultations, and discussions. In the context of the EITI, scoping tends to refer to the preparation of an EITI Report.

Secretariat Review

When the EITI International Secretariat assesses a country's progress in implementing the EITI against the EITI Requirements. This takes place when a Validation has deemed that the country has not met all of the EITI Requirements and the Board asks that the Secretariat checks that the corrective measures taken meet the requirements.

Service contract

An agreement whereby an oil company is contracted to produce oil/gas on a simple fee basis. Usually the state maintains sole rights over the resources, and the contractor is compensated by a fee per barrel, plus cost of recovery.

Signature bonus

Payment demanded by authorities in certain host countries in advance of exploration activities for the rights to develop an exploration area.

Small-scale mining

Mining activity carried out by persons or groups not employed by a mining company, but rather by working independently, using their own resources. This differs from artisanal mining in that a small scale mining operation could have employees.

Social expenditure

Contributions made by extractive companies to regional or local governments, communities, NGOs or other third parties in the areas where they operate. These contributions are in addition to taxes levied by central, regional and local governments. Social expenditures can take multiple forms, and may involve cash payments such as donations, grants or other types of cash transfers, the transfer of assets such as the construction of roads or schools, or the provision of services like training and health care. In some cases, these social expenditures are based on legal or contractual obligations. In other cases, companies make voluntary social contributions. These transactions can also be called “corporate social repsonsibility”, “social payments”, or “social investments”.

SoE

State-owned enterprise: a company owned by a state.

State-owned enterprise

A company owned by a state. SoE in short.

Task Team Leader

Supports the processing of a grant application to the World Bank and ensures that the supervision requirements are met. The TTL is contracted by the World Bank.

Tax holiday

A government incentive programme that offers a tax reduction or elimination to businesses for a certain period of time. Tax holidays are commonly used by governments in developing countries to help stimulate foreign investment.

Tax justice

The term used by campaigners to call for global action against tax havens, tax evasion and mispricing.

Technical assistance

In EITI context, assistance provided to facilitate the implementation of the EITI.

Tender

An offer to enter into a contract.

Terms of reference

Describes the purpose, background and objectives for a project (e.g. EITI Report) or group (e.g. multi-stakeholder group). It also includes roles and responsibilities of those involved. For short: ToR.

The Association for the Extractive Industries Transparency Initiative

The legal entity of the EITI, governed by the EITI Articles of Association.

ToR

Terms of reference: Describes the purpose, background and objectives for a project (e.g. EITI Report) or group (e.g.multi-stakeholder group). It also includes roles and responsibilities of those involved.

Transfer price

The price at which one company buys and sells goods or services or shares resources with another division in the same company in another country. Aggressive transfer prices may inflate profits in low-tax jurisdictions and depress profits in high-tax countries. For example, the sale of mineral output from one subsidiary to another at a price under the market value may serve to reduce the revenue that the company reports to the government, and thus limit the tax payments that the company owes. Similarly, purchasing a good or a service from a related company at an inflated price, a company can raise its reported costs thereby increasing deductions and decreasing income tax liabilities.

Transparency

Openness and public disclosure of activities.

TTL

Stands for Task Team Leader, who is contracted by the World Bank to supports the processing of a grant application and ensures that the supervision requirements are met.

Upstream

The exploration and production phases of the oil and gas industry.

Validation

An external, independent evaluation mechanism, undertaken by a Validator procured by the International Secretariat. It is intended to provide all stakeholders with an impartial assessment of whether EITI implementation in a country is consistent with the EITI Standard. TheValidation report will also address the impact of the EITI, lessons learned in implementing the EITI, as well as any concerns stakeholders have expressed and recommendations for future implementation of the EITI.

Validation report

A report that is compiled by an independent validator assessing the country’s progress in implementing the EITI against theEITI Requirements.

Value added tax

A tax applied to each stage of the manufacture and sale of a product or service. For short: VAT. The rules for a VAT system are specified at country level and differ between countries. Typically, the VAT that the company pays on goods can be offset against any VAT it charges on the sale of goods or the provision of services. The difference is paid to (or received from) the government. Export of oil and gas is usually exempt from VAT.

VAT

Value added tax: a tax applied to each stage of the manufacture and sale of a product or service. The rules for a VAT system are specified at country level and differ between countries. Typically, the VAT that the company pays on goods can be offset against any VAT it charges on the sale of goods or the provision of services. The difference is paid to (or received from) the government. Export of oil and gas is usually exempt from VAT.

Workplan

In the EITI context, an action plan agreed by a multi-stakeholder group that includes the objectives and priorities for EITI implementation and associated activities. See Requirement 1.4.