Transparent International (TI) on Monday announced that leading oil and gas companies have done little to save resource-rich countries from poverty.
According to TI's report, poor countries that are endowed with rich resources have not benefited enough when it comes to payments from the leading oil and gas companies operating on their soils, leaving their doors open to corruption and hampering efforts to fight poverty.
From the report, poor countries endowed with rich minerals receive low payments because of unavailability of data on oil and gas revenues and how they are managed. The 2008 report on revenue transparency of oil and gas companies evaluates 42 leading international and national oil and gas companies operating in 21 countries, based on the transparency of their reporting, particularly on payments made to governments for resource extraction rights.
According to the report, sixty percent of the world's poorest live in resource-rich countries, yet beneficiary companies from these resource-rich countries have done little to uplift citizens whose ultimate ownership of their country's natural resources are backed by the constitution of their respective countries from poverty.
The report categorizes companies into high, middle and low performers based on transparency of their reporting with respect to payments made to government for resource extraction rights. Only a third of the companies evaluated in the report were considered high performers.
In identifying high-performers, TI's report shows that revenue reporting on a country-by-country basis, which is identified as best practice, is possible. With oil prices at record high and industry revenues in OPEC countries alone expected to reach nearly US $1 trillion in 2008, the question of transparency has never been more critical, according to the report.
“Oil and gas wealth, if properly managed, should support better services and infrastructure. It should lead to a better quality of life for all citizens. It is the duty of civil society to work with companies and governments to unlock this potential,” said Huguette Labelle, Chair of Transparency International.
Transparency International therefore advised companies to quickly introduce proactive reporting which according to the body; transparency could enhance confidence in the financial markets with stakeholders.
TI therefore has challenged governments to enact, promote and enforce regulations towards a more equitable exploitation of oil and gas wealth since government of the host country are more accountable for the management of their resources.
The report also recommended that governments, stock exchange Institutions and regulatory agencies should urgently consider mandatory reporting for companies operating within the country and abroad.
TI also recommended that regulatory agencies and companies should agree to publish information in a uniform and accessible format that would facilitate both comprehension and comparability.
It also strongly recommended that governments of oil and gas producing countries should introduce legislation, mandating revenue transparency by all companies operation in their territorities.