Jakarta – The Extractive Industries Transparency Initiatives (EITI) International Board Meeting on May 17, 2023, resulted in an important decision in the history of transparency in extractive industry management. Namely, the approval of changes to the EITI Standard launched at the EITI Global Conference held on June 13-14, 2023, in Senegal, attended by representatives of EITI implementing countries worldwide, including Indonesia.

The International EITI Board is a representative of the Government, Business Actors, and Civil Society of more than 50 EITI implementing members worldwide.

The EITI Standard was developed to promote good governance by increasing transparency, strengthening accountability, and facilitating public debate on natural resource management. Since it was first launched ten years ago, the EITI Standard has evolved and established a common set of rules governing what information and when should be disclosed by governments and companies.

Significant changes in the 2023 EITI Standard include several new and enhanced provisions in four thematic areas: Anticorruption; Energy Transition; Gender, Social and Environment, and Collection of State Revenues from the Extractive Sector.

Aryanto Nugroho, National Coordinator, Publish What You Pay (PWYP) Indonesia, revealed that as a civil society coalition that has been overseeing the birth of EITI and, at the same time, its implementation, of course, we welcome the decision of the International EITI Council (24/7).

He added that this decision not only shows the progress of civil society advocacy to encourage transparency and accountability in the extractive sector. However, it also indicates that the EITI initiative continues beyond one stage but continues to develop over time.

“The beginning of EITI’s presence, which only transparency of state revenues, has now moved far to encourage transparency in almost all extractive industry business chains, including integrating anti-corruption initiatives, gender equality and justice, attention to social and environmental issues. EITI also demands efforts to encourage real improvements in extractive industry governance reform in strengthening the case of energy transition, “he said.

Aryanto said Indonesia as an EITI implementing country since 2010 with the legal umbrella of Presidential Regulation (Perpres) Number 26 of 2010 concerning Transparency of State and Regional Revenues Obtained from the Extractive Industry, which was later amended through Perpres Number 82 of 2020 concerning the Committee for Handling Corona Virus Disease 2019 (COVID-19) and National Economic Recovery, is expected to become a pioneer country that progressively encourages transparency and accountability in this sector.

“This is also very relevant to Indonesia, which is currently aggressively pushing for the acceleration of an equitable energy transition. On the one hand, Indonesia, as a country rich in oil and gas and mineral and coal mining products, is also faced with the challenge of how to anticipate the impact of the energy transition, especially for people living around oil and gas, coal and mineral mines such as nickel, bauxite, and others,” said Aryanto.


Regarding the Anti-Corruption aspect, the 2023 EITI Standard requires efforts to mainstream anti-corruption policies in the objectives and work programs of the EITI multi-stakeholders group (MSG) (Requirements 1.4, 1.5, 2.1 and 2.7), disclosure of the company’s anti-corruption policies and practices (Requirements 1.2 and 2.6); share ownership threshold in beneficial ownership identification to 10% or below (2.5).

It aligns with efforts to eradicate corruption in Indonesia, which currently faces the challenge of preventing crime synonymous with conflict of interest practices and the number of politically exposed persons (PEPs) identified in the extractive sector.

This can also be a momentum to encourage the implementation of beneficial ownership disclosure, which is currently cultivated in Indonesia. It includes, if necessary, revising Presidential Regulation Number 13 of 2018 concerning the Application of the Principle of Recognizing Beneficial Owners of Corporations in the Context of Preventing and Eradicating the Criminal Acts of Money Laundering and the Criminal Acts of Financing Terrorism. In particular, related to articles regarding the definition and recognizing beneficial ownership.

Energy Transition

The 2023 EITI Standard also introduces requirements for EITI-implementing countries to increase public knowledge related to the impact of energy transition policies in the extractive sector, including encouraging the disclosure of information related to carbon pricing or carbon tax policies (requirement 2.1). The 2023 EITI Standard also requires the disclosure of data and rationalization if there are efforts to provide easy business licensing for the mineral sector, including social and environmental obligations (requirement 2.2). Encourage the disclosure of proven oil and gas and mineral and coal reserves data that will be used to accelerate the energy transition, including analysis of the potential carbon emissions generated (requirement 3.1). Furthermore, it also encourages companies to disclose greenhouse gas (GHG) emission data (requirement 3.4).

In addition to the energy transition aspect, the 2023 EITI Standard also requires the disclosure of data and information related to the Government’s efforts to anticipate the impact of the energy transition on state revenues and the country’s economy (requirement 5.3).

This standard also aligns with various commitments that Indonesia is currently undertaking related to the energy transition, for example, through the Energy Transition Mechanism (ETM) Country Platform and the Just Energy Transition Partnership (JETP).

Astrid D. Meliala, Civil Society Representative for EITI, said, We still have a lot of homework related to the energy transition. Opportunities for cooperation with various platforms will significantly support the implementation of multiple policies related to the energy transition. Of course, this can be achieved if each existing platform opens information and provides sufficient space for the public to participate.

He continued that one of the energy transition policies currently being encouraged is the early retirement of coal-fired power plants (PLTU) which is also expected to be fully supported by JETP. However, many financial issues must be considered by the government, along with environmental issues, as well as social justice. It requires in-depth discussions between stakeholders to resolve differing views and priorities.

“In Indonesia, one of the most contentious issues is the transparency of power purchase contracts. From the community’s perspective, for example, they want to know about the term of the power purchase agreement, especially those sourced from fossil energy, so there is certainty about the termination period. However, power purchase agreements are still considered the same as civil contracts. It, of course, needs to be further discussed in comparison between the public’s interest in the information and the level of confidentiality in the discussion rooms. Information disclosure can also help the public to oversee the government’s efforts to achieve the renewable energy mix by the target,” concluded Astrid.

Astrid continued that implementing the EITI transparency initiative is increasingly relevant to collaborate with the performance of ETM, JETP, and other industries in Indonesia.

Gender, Social, and Environment

Yusnita Ike Christanti, another Civil Society Representative in EITI Indonesia, reminded us that gender equality and justice should be the mainstream along the extractive industry business chain, whether or not there is an EITI initiative. It is about more than disaggregated data or employment.

“Gender justice and equality must go beyond that,” said Yusnita.

She explained in the 2023 EITI Standard, and companies must disclose information about the wage gap as well as policies that consider gender aspects in their business activities (requirement 6.3).

She said companies must also disclose information about the public consultation process when applying for licenses (requirement 2.2). In addition, the government and companies are asked to be able to explain how state revenues from the extractive sector are managed and benefit communities at the local level, including women, indigenous peoples, and other vulnerable groups.

Companies are also expected to compile, publish and explain to the public the environmental, social, and gender impact assessments that have been carried out (requirement 6.4).

Collection of State Revenues from the Extractive Sector

Civil society also fully supports the affirmation of transparency aspects of state revenues under the 2023 EITI Standard. These aspects include more detailed, comprehensive, and higher quality disclosure of production and export data (requirements 3.2 and 3.3), disclosure of sales agreements; infrastructure provision and barter; and contracts requiring social and environmental payments (requirements 4.2, 4.3, and 6. 1), clarification of disclosure requirements for resource-backed loans, including collateralized sovereign debt (requirement 4.3), introducing a more streamlined process for revenue disclosure, disclosing effective corporate tax rates, incentives and deductions (requirements 4.1 and 4.9); and explanation of the costs of corporate and government systems for conducting audits (requirement 4.10).

In addition to ensuring a match between state revenues and company payments, this aspect also provides the collection of more detailed information on state revenues from the extractive sector.

“We urge the Government that the requirements in the 2023 EITI Standard can also be integrated into several regulations and policies in Indonesia, especially in the extractive sector. This is to provide more assurance to improve the quality of transparency, participation, and accountability, especially in the extractive sector, which poses the most risks to the environment,” said Yusnita.

Source: Pijar Nasional