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The Board agreed that Mauritania has made meaningful progress in implementing the 2016 EITI Standard.

Outcome of the Validation of Mauritania.

Decision reference
2017-10 / BM-36
Decision basis
2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

Board decision

The Board came to the following decision regarding Mauritania's status:

The Board agrees that Mauritania has made meaningful progress overall in implementing the 2016 EITI Standard. In taking this decision the EITI Board commended the efforts of the Mauritanian EITI National Committee (MSG) to play a proactive role in the national natural resource governance debate and to follow up on recommendations from the EITI reporting process. The EITI Board also noted the MSG’s active engagement with stakeholders such as the Prime Minister’s Office to actively follow up on EITI recommendations, as well as the efforts to go beyond the EITI’s requirements on bringing transparency to other sectors such as fisheries. The EITI Board highlighted that the EITI has provided a positive platform for driving reforms in the mining, oil and gas sector as well as public finance management. The EITI Board was encouraged by the government’s efforts to make government systems more transparent and accountable and urged the MSG to work towards further mainstreaming EITI disclosures. 

The Board’s determination of Mauritania’s progress with the EITI’s requirements is outlined in the assessment card, below. The EITI Board agreed that Mauritania had not made satisfactory progress on requirements 1.4, 1.5, 2.2, 2.3, 2.4, 2.6, 4.1, 4.9, 5.1, 5.2 and 7.4. The major areas of concern relate to MSG governance (#1.4), workplan (#1.5), license allocations (#2.2), license registers (#2.3), contract disclosure (#2.4), state participation (#2.6), comprehensiveness (#4.1), data quality (#4.9), revenue management and expenditure (#5.1), subnational transfers (#5.2) and review of outcomes and impact (#7.4). The EITI Board disagreed with the validator on the following requirements: civil society engagement (#1.3), barter and infrastructure agreements (#4.3), subnational transfers (#5.2), social expenditures (#6.1), quasi-fiscal expenditures (#6.2) and contribution to the economy (#6.3).

Accordingly, the EITI Board agreed that Mauritania will need to take corrective actions outlined below. Progress with the corrective actions will be assessed in a second validation commencing on 8 September 2018. Failure to achieve meaningful progress with considerable improvements across several individual requirements in the second Validation will result in suspension in accordance with the EITI Standard.  In accordance with the EITI Standard, the MSG may request an extension of this timeframe, or request that Validation commences earlier than scheduled.

The Board’s decision followed a Validation that commenced on 1 July 2016. In accordance with the 2016 EITI Standard, an initial assessment was undertaken by the International Secretariat. The findings were reviewed an Independent Validator, who submitted a Validation Report to the EITI Board. Mauritania’s MSG was invited to comment throughout the process. The MSG’s comments on the report were taken into consideration. The final decision was taken by the EITI Board.

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective actions. Progress in addressing these corrective actions will be assessed in a second Validation commencing on 8 September 2018:
 

  1. In accordance with requirement 1.4.a.ii, the MSG should ensure that its procedures for nominating and changing multi-stakeholder group representatives are public and confirm the right of each stakeholder group to appoint its own representatives. In accordance with requirement 1.4.b.ii and 1.4.b.iii, the MSG should undertake effective outreach activities with civil society groups and companies, including through communication such as media, website and letters, informing stakeholders of the government’s commitment to implement the EITI, and the central role of companies and civil society. Members of the MSG should liaise with their constituency groups. In accordance with requirement 1.4.b.vi, the MSG should ensure an inclusive decision-making process throughout implementation, particularly as concerns industry. In accordance with requirement 1.4.b.vii the MSG should ensure timely announcement of meetings and circulation of documents. It should also ensure written records of its discussions and decisions are kept, in accordance with requirement 1.4.b.viii.

  2. In accordance with requirement 1.5.a, the MSG should maintain a current work plan that sets EITI implementation objectives that reflect national priorities for the extractive industries. In accordance with requirement 1.5.b, the work plan must reflect the results of consultations with key stakeholders.

  3. In accordance with requirement 2.2.a, the government should ensure annual disclosure of which mining, oil, and gas licenses were awarded and transferred during the year, highlighting the technical and financial requirements and any non-trivial deviations from the applicable legal and regulatory framework governing license awards and transfers. In accordance with requirement 2.3, the government should also ensure that the dates of application, commodities covered and coordinates for all oil, gas and mining licenses held by material companies are publicly available.

  4. In accordance with requirement 2.4.b, the MSG is required to document the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil, gas and minerals through the EITI Report. This should include relevant legal provisions, any reforms that are planned or underway as well as an overview of contracts already published.

  5. In accordance with requirement 2.6, the MSG should provide an explanation of the prevailing rules and practices related to SOEs’ retained earnings and reinvestment. The government should also ensure annual disclosure of any changes in government ownership in SOEs or their subsidiaries as well as terms associated with their equity, and provide a comprehensive account of any loans or loan guarantees extended by the state or SOEs to mining, oil, and gas companies. In accordance with requirement 6.2, the MSG should consider the existence and materiality of any quasi-fiscal expenditures undertaken by SOEs and subsidiaries in the extractive industries and ensure that all material quasi-fiscal expenditures are disclosed.

  6. In accordance with requirement 4.1.c, the MSG should ensure that the Independent Administrator assesses the materiality of non-reporting companies and government entities as well as provide its opinion on the comprehensiveness of the EITI Report. The MSG should also ensure that aggregate information about the amount of total revenues received from each of the benefit streams agreed in the scope of the EITI Report, including revenues that fall below agreed materiality thresholds, be provided by government, in accordance with requirement 4.1.d.

  7. In accordance with requirement 4.9.b.iii and the standard Terms of Reference for the Independent Administrator agreed by the EITI Board, the MSG and Independent Administrator should:

    1. examine the audit and assurance procedures in companies and government entities participating in the EITI reporting process, and based on this examination, agree what information participating companies and government entities are required to provide to the Independent Administrator in order to assure the credibility of the data in accordance with Requirement 4.9. The Independent Administrator should exercise judgement and apply appropriate international professional standards[1] in developing a procedure that provide a sufficient basis for a comprehensive and reliable EITI Report. The Independent Administrator should employ his/her professional judgement to determine the extent to which reliance can be placed on the existing controls and audit frameworks of the companies and governments. The Independent Administrator’s inception report should document the options considered and the rationale for the assurances to be provided.

    2. ensure that the Independent Administrator provides an assessment of comprehensiveness and reliability of the (financial) data presented, including an informative summary of the work performed by the Independent Administrator and the limitations of the assessment provided.

    3. ensure that the Independent Administrator provides an assessment of whether all companies and government entities within the agreed scope of the EITI reporting process provided the requested information. Any gaps or weaknesses in reporting to the Independent Administrator must be disclosed in the EITI Report, including naming any entities that failed to comply with the agreed procedures, and an assessment of whether this is likely to have had material impact on the comprehensiveness and reliability of the report.

  8. In accordance with requirement 5.1.a, the MSG should ensure that the allocation of extractives revenues not recorded in the national are explained, with links provided to relevant financial reports as applicable.

  9. In accordance with requirement 5.2.a, the MSG should assess the materiality of subnational transfers prior to data collection and ensure that the specific formula for calculating transfers to individual local governments be disclosed, to support an assessment of discrepancies between budgeted and executed subnational transfers.

  10. In accordance with requirement 6.1.a, the MSG should ensure that mandatory social expenditures are comprehensively disclosed once they become effective through implementing regulations.

  11. In accordance with requirements 6.3, the MSG should ensure that an estimate of informal mining activities be disclosed for the year(s) under review.

The MSG is encouraged to consider the other recommendations in the Validator’s Report and the International Secretariat’s initial assessment, and to document the MSG’s responses to these recommendations in the next annual progress report.

 

[1] For example, ISA 505 relative to external confirmations; ISA 530 relative to audit sampling; ISA 500 relative to audit evidence; ISRS 4400 relative to the engagement to perform agreed-upon procedures regarding financial information and ISRS 4410 relative to compilation engagements.

Background

The Government of Mauritania first announced its first commitment to the EITI in September 2005. A multi-stakeholder group, the National EITI Committee (MSG) was formed in September 2006 and the country was accepted as an EITI Candidate in September 2007 and Compliant under the EITI Rules in February 2012. Mauritania has published EITI Reports covering a total of nine fiscal years (2006 – 2014).

The Validation process commenced on 1 July 2016. In accordance with the Validation procedures, an initial assessment was prepared by the International Secretariat. The MSG were invited to comment. Comments were received from the MSG. The assessment was then reviewed by the Independent Validator, who prepared the Validation Report. The MSG were invited to comment on the Report. Again, comments were received from the MSG.

The Validation Committee reviewed the case on 15 February 2017. Based on the findings above, the Validation Committee agreed to recommend the assessment card and corrective actions outlined below.

The Committee also agreed to recommend an overall assessment of “meaningful progress” in implementing the 2016 EITI Standard. Requirement 8.3.c. of the EITI Standard states that:

ii.    Overall assessments. Pursuant to the Validation Process, the EITI Board will make an assessment of overall compliance with all requirements in the EITI Standard.

iii (c) Meaningful progress. The country will be considered an EITI Candidate and requested to undertake corrective actions until the second validation.

The Validation Committee agreed to recommend a period of 18 months to undertake the corrective actions. This recommendation takes into account the complexity of corrective actions, and seeks to align the Validation deadline with the deadline for the next (2016) EITI Report.

Scorecard for Mauritania: 2017

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Scorecard by requirement View more Assessment View more

Overall Progress

MSG oversight

1.1Government engagement

The Government of Mauritania has made regular public statements of support for the EITI and a senior advisor to the Prime Minister leads day-to-day EITI implementation, with the authority and freedom to coordinate actions related to the EITI across relevant ministries and mobilise funding. High-level government officials participate in MSG meetings, government agencies participate in EITI reporting and the Ministry of Finance uses EITI Reports to monitor budget implementation.

1.2Company engagement

Companies are actively engaged in the design and implementation of the EITI, which has benefited from high-level participation from oil and gas companies in particular. There are no legal obstacles preventing company participation in the EITI process, with the Mining and Petroleum Codes providing an enabling environment for company participation in the EITI. However, companies could play a greater role in EITI dissemination and outreach to local communities.

1.3Civil society engagement

Civil society are somewhat engaged in the design, implementation, monitoring and evaluation of the EITI process. Participation of civil society representatives in the MSG has been uneven, due to capacity constraints that civil society has recognised and is addressing through its own code of conduct. There is an enabling environment for civil society participation in the EITI.

1.4MSG governance

The multi-stakeholder group (MSG) has been formed and comprises relevant actors, with most stakeholders feel adequately represented. The Terms of Reference (ToR) for the MSG addresses the requirements of the EITI Standard, but it has not been fully implemented. The nominations procedures for current MSG members are unclear and the level of consultations within each constituency about MSG representation is a concern. The MSG meets frequently and attendance is sufficient to reach the quorum, but MSG deliberations are poorly documented. Government and industry representatives have strong capacities to carry out their work, but weak capacity within civil society has negatively impacted on the functioning of the MSG.

1.5Work plan

The work plan is available on the EITI Mauritania website and is costed, although sources of funding are not specified. The MSG has not considered linking objectives of EITI implementation to broader national priorities and stakeholder input to the development of the work plan was limited. The work plan included activities related to overcoming general capacity constraints. The work plan did not address the scope of EITI reporting, despite including activities aimed at expanding EITI reporting to other sectors, and did not include activities related to following up on EITI recommendations. Nonetheless delays in implementing activities in the work plan appear reasonable in light of funding constraints.

Licenses and contracts

2.2License allocations

The 2014 EITI Report provided a comprehensive overview of the process followed for allocating two mining licenses awarded through competitive bidding and the general oil and gas license allocation statutory rules. However, it did not describe the process for transferring licenses in the mining, oil and gas sectors, nor the process for awarding the four licenses granted on a first-come-first served basis in 2014. A description of the technical and financial criteria used for direct negotiation of oil and gas PSCs was also missing.

2.3License register

The 2014 EITI Report provided the license-holder names and dates of award and expiry for all mining, oil and gas licenses as well as the dates of application, commodity covered and coordinates of some licenses, but not all. Despite ongoing reforms of the mining and petroleum cadastral systems, the EITI Report did not provide commentary on the status of reforms.

2.4Policy on contract disclosure

The 2014 EITI Report did not document the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil, gas and minerals. It provided only partial details of relevant legal provisions and actual disclosure practices, but did not include a commentary on any reforms that are planned or underway. The 2014 EITI Report did not provide an overview of the contracts and licenses that are publicly available.

2.1Legal framework

The 2014 EITI Report describes the legal framework and fiscal regime governing the extractive industries, including the lack of fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and responsibilities of the relevant government agencies. However, it appears that a number of reforms undertaken in 2013 and 2014 appear to be missing from the EITI Reports covering those respective years.

2.5Beneficial ownership

Not assessed

The MSG has considered beneficial ownership disclosure at several MSG meetings and has conducted initial work on disclosure of legal ownership information, but not the government’s policy, in the 2013 and 2014 EITI Reports.

2.6State participation

While the 2014 EITI Report listed two extractives companies in which the state holds majority equity and some of the rules and practices governing financial transfers between SOEs and government, including relevant laws and practices related to dividends and third-party lending, it did not clarify whether there were any changes in ownership of extractives SOEs or their subsidiaries in 2014 and it remains unclear whether disclosures of loans or loan guarantees are comprehensive. The terms associated with government equity in each company were not disclosed, and the rules and practices governing SOEs’ retained earnings and reinvestment were not described.

Monitoring production

3.1Exploration data

The 2014 EITI Report includes a detailed description of the extractive industries and of significant exploration activities. There does not appear to be significant informal activities in the extractive industries in 2014.

3.2Production data

The 2014 EITI Report provides production volumes and values for all of Mauritania’s mineral and oil production, disaggregated by commodity.

3.3Export data

The 2014 EITI Report provides export volumes and values for all of Mauritania’s exported mineral and oil commodities, disaggregated by commodity.

Revenue collection

4.3Barter agreements

Not applicable

The MSG has considered the existence of barter and infrastructure agreements and concluded that this requirement was not applicable to Mauritania in 2014.

4.6Direct subnational payments

Not applicable

The 2014 EITI Report incorrectly categorises three types of payments as direct subnational payments, as these payments were paid to the central government and earmarked for transfer to specific communes.

4.7Disaggregation

All reconciled financial data in the 2014 EITI Report was presented disaggregated by company, revenue stream and receiving government entity, although government unilateral disclosures were only disaggregated by company not by revenue streams.

4.9Data quality

The MSG adopted a ToR for the IA in line with the standard ToR approved by the EITI Board. Although it did not have final approval over the selection of the IA, MSG members considered that they had adequate oversight of the selection process. The 2014 EITI Report described statutory audit procedures for companies and government as well as deviations in practice from these procedures on the part of government. It described the quality assurance procedures for reporting entities, assessed the materiality of non-compliance by companies, provided the coverage of reconciliation and included the IA’s overall assessment of the reliability of the 2014 EITI Report. It also reviewed progress in following up on past EITI recommendations and formulated new recommendations. However, the MSG and IA do not appear to have undertaken a review of actual auditing practice by companies in 2014 prior to agreeing quality assurance procedures. The 2014 EITI Report did not describe the agreed procedures for the IGF’s certification of government disclosures, nor reference to where this information was publicly-accessible, and did not provide the IA’s assessment of any non-compliance by government entities with the quality assurance procedures.

4.1Comprehensiveness

The MSG agreed a set of materiality thresholds that ensure sufficiently comprehensive coverage for the 2014 EITI Report, which provides justification for the two materiality thresholds and lists all material revenue streams and companies. The materiality of non-reporting was assessed and full unilateral government disclosure was provided, albeit disaggregated by company. While a quantitative threshold was not provided for selecting companies, the MSG’s agreed approach provided sufficiently comprehensive coverage of extractives revenues. However, the 2014 EITI Report did not include the Independent Administorator’s clear statement regarding the comprehensiveness of the EITI Report nor full unilateral government disclosures disaggregated by revenue stream.

4.2In-kind revenues

The 2014 EITI Report confirmed the materiality of in-kind revenue in the oil and gas sector and disclosed volumes collected and sold as well as proceeds of sales. While it did not explicitly state that the state did not collect in-kind revenues in the mining sector, it provided a diagram of revenue flows that did not specify any in-kind revenues.

4.4Transportation revenues

Not applicable

The MSG has considered the existence of transport revenues and concluded this requirement was not applicable to Mauritania in 2014.

4.5SOE transactions

The 2014 EITI Report describes the role of SOEs operating in Mauritania and comprehensively disclosed and reconciled statutory financial transfers between SOEs and the government. While the 2014 EITI Report does not refer to any ad-hoc transfers from SOEs to the government in 2014, we understand that there were no such ad-hoc transfers in 2014.

4.8Data timeliness

Mauritania published its 2011, 2012, 2013 and 2014 EITI Reports within two years of the start of the fiscal year under review.

Revenue allocation

5.1Distribution of revenues

While the 2014 EITI Report defined the extractives revenue streams that are not recorded in the national budget and raised concerns over the lack of audit if oil and gas revenues collected by the FNRH, the MSG has not used the EITI Report to clarify the asset allocation practices for FNRH funds.

5.2Subnational transfers

While the 2014 EITI Report listed three types of payment flows earmarked for communes and referred to companies’ unilateral disclosures of such payments, it does not describe the statutory mechanism nor the barriers to implementation of such subnational transfers, nor the payments themselves.

5.3Revenue management and expenditures

Not assessed

The 2014 EITI Report provided limited information on earmarked revenues.

Socio-economic contribution

6.1Mandatory social expenditures

Not applicable

Although not explicitly stated in the 2014 EITI Report, we understand that mandatory social expenditures were not material in the mining, oil and gas sectors in 2014. The MSG has made efforts to include companies’ unilateral disclosures of voluntary social expenditures in the 2013 and 2014 EITI Reports.

6.2Quasi-fiscal expenditures

Not applicable

While the MSG appears to have considered the existence of quasi-fiscal expenditures and requested disclosures of such expenditures from the Treasury and SOEs, the 2014 EITI Report stated that there were no such expenditures in 2014. The MSG considered subtential expenditures by the SNIM foundation for local development as social, rather than quasi-fiscal, expenditures.

6.3Economic contribution

The 2014 EITI Report provided, in absolute and relative terms, the size of the extractive industries, their contribution to government revenue, exports and employment.

Outcomes and impact

7.2Data accessibility

Not assessed

Mauritania’s EITI data is available in machine readable format on the EITI global website, drawing on summary data tables completed by the national secretariat. However, these are not published on the EITI Mauritania website.

7.4Outcomes and impact of implementation

The MSG has produced annual progress reports documenting progress and outcomes of implementation, with some limited assessments of impact. However, the 2015 annual progress report focused more on outcomes than on impact and the overall impact of EITI Mauritania remains unclear.

7.1Public debate

The MSG has sought to ensure that EITI Reports are accessible and contribute to public debate. Dissemination activities involving civil society groups, parliamentarians and the media appear to be effective in stimulating an informed debate about the management of the extractive sector within the capital. Dissemination of the findings in EITI reports and follow-up on the recommendations by the relevant government agencies has also given the EITI new momentum. However, accessibility of EITI data beyond Nouakchott remains weak. Stakeholders affected by mining activities in rural areas appear to be rarely reached by dissemination of EITI information and their voices are rarely heard at the central level, where all decisions about the sector are made.

7.3Follow up on recommendations

The MSG and the government have taken steps to act upon lessons learnt, to identify, investigate and address the causes of any discrepancies and weaknesses of the EITI process and to consider the recommendations for improvements from the Independent Administrator, even if these are not consistently fully implemented.

Countries
Mauritania