The Board agreed that Germany has made satisfactory progress overall in implementing the 2016 EITI Standard.

Outcome of the Validation of Germany.

Decision reference: 2019-39 / BC-273
Decision basis: 2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

8 May 2019

Board decision

The Board agreed that Germany has made satisfactory progress in implementing the 2016 EITI Standard. EITI implementation in Germany has improved the availability of information and strengthened dialogue between stakeholders.

The EITI Board commended Germany’s efforts to increase the relevance of EITI implementation by addressing environmental aspects, subsidies and renewable energy. Government, civil society and industry are working together to ensure meaningful implementation proportionate to economic importance of the domestic extractive industries.

The Board recognised Germany’s efforts to overcome challenges to implementation posed by the federal system and legal constraints relating to tax confidentiality. The coordination between the federal and state-level governments is commendable. The Board encouraged Germany to ensure that the minor gapsin publicly available licensing information are addressed, and that further efforts are made to ensure that licensing information is made available online.

The Board encouraged the MSG to undertake further efforts to consider a mainstreamed approach to implementation and to ensure that implementation is proportionate considering the size of the sector and stakeholder interest. Germany may wish to seek further synergies between mandatory company disclosures and EITI implementation. The government is encouraged to regularly monitor compliance with the mandatory disclosure regime and disclose results. There is potential for the EITI to contribute to ensuring that mandatory payment reports and beneficial ownership data are accessible and user-friendly. Germany is required to ensure that beneficial ownership data is made publicly available by 1 January 2020.

The Board has determined that Germany will be re-Validated in three years, i.e. on 8 May 2022.

Background

Germany became an EITI Candidate in February 2016 and has published one EITI Report, covering the year 2016. The report was published in August 2017 and updated in October 2018. On 4 September 2018, the Board approved Germany’s request for early Validation. The Validation process commenced on 1 November 2018. In accordance with the Validation procedures, an initial assessment [English] was prepared by the International Secretariat. The MSG submitted comments to the initial assessment and the draft Validation report [English | French] on 14 February. The Validation report was subsequently finalised by the Validator [English | French]. The Validation report did not take into account information disclosed subsequent to the commencement of Validation. In February and April 2019, the MSG published information addressing proposed corrective actions related to license allocations (2.2), license register (2.3), comprehensiveness (4.1) and transactions related to state-owned enterprises (4.5). The International Secretariat prepared a comparison table on the four requirements [English].

The Validation Committee reviewed the case on 10 April 2019. Based on the findings above, the Validation Committee agreed to recommend the assessment card and corrective actions outlined below.

The Committee agreed to recommend an overall assessment of “satisfactory progress” in implementing the 2016 EITI Standard. Requirement 8.3.b. 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.

iv. Where Validation verifies that a country has made satisfactory progress on all of the requirements, the EITI Board will designate that country as EITI compliant.

EITI compliant countries must maintain adherence to the EITI Principles and Requirements in order to retain Compliant status.

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 is fully and actively engaged in the EITI process. Agencies both on the federal and state-level contribute to disclosures, discussions and drafting the EITI Report.
1.2Company engagement
There is an enabling environment for company participation. Challenges to EITI reporting posed by taxpayer confidentiality provisions have been overcome through annual confidentiality waivers signed by all reporting companiesand receiving agencies. Mining, oil and gas companies are actively and effectively engaged in the EITI process.
1.3Civil society engagement
Civil society is fully, actively and effectively engaged in EITI implementation. There are no indications of any legal, regulatory or practical barriers to civil society’s ability to engage in EITI-related public debate, to operate freely, to communicate and cooperate with each other.
1.4MSG governance
The MSG functions in an equitable and effective manner, and the Terms of Reference is followed. The MSG reflects a broad representation of constituencies. The MSG contributes to the EITI Report and has explored topics beyond the scope of the EITI Standard.
1.5Work plan
The 2018 work plan is publicly accessible, produced in a timely manner and updated on an ongoing basis. It is effectively used as a monitoring and tracking tool. Objectives are aligned with national priorities and go beyond the scope of the EITI Standard on, for example, environmental reporting.
Licenses and contracts
2.2License allocations
The process and criteria for awarding and transferring licenses is defined in legislation. Awards and transfers of oil, gas and mining licenses in 2016 are publicly available.
2.3License register
Information about licenses is mostly available in online license cadastres maintained by states. D-EITI also publishes a list of all licenses on its website.
2.4Policy on contract disclosure
The EITI Report addresses the requirement, both policy and practice, only superficially. On balance, the terms of exploration and extraction are strictly defined in legislation.
2.1Legal framework
All information under Requirement 2.1 is provided in the EITI Report, including reforms in the sector. Due to the federal structure, the EITI Report and the D-EITI online portal are useful tools for collating information and links to state-level sources.
2.5Beneficial ownership
The Validation of Requirement 2.5 in 2021 focused only on assessing the country’s progress in meeting the initial criteria. Germany has established legal framework and reporting practices for beneficial ownership disclosures, aligned with the implementation of the EU’s anti-money laundering directives. A public online register has been created, and beneficial ownership data is requested from all extractive companies. The accessibility of the register could be improved, in particular with regard to legal ownership data.
2.6State participation	Not applicable
Technically Südwestdeutsche Salzwerke AG is a state-owned enterprise. However, while dividends from one company give rise to material revenues on the level of individual payments, state participation in the extractive sector is not material as a whole.
Monitoring production
3.1Exploration data
The EITI Report includes an overview of the production of key commodities and other public sources include further information. No significant exploration activities are taking place.
3.2Production data
The EITI Report and the D-EITI online portal provide clear and comprehensive production data.
3.3Export data
The EITI Report includes the volumes and value of exports by four commodity groups. Data disaggregated by each commodity is publicly available in the database of the Federal Statistics Office.
Revenue collection
4.3Barter agreements	Not applicable

4.6Direct subnational payments
Trade tax payments to municipalities are reconciled. The MSG’s decision that trade taxes are the only material revenue stream paid to subnational government entities is justified.
4.7Disaggregation
Data is disclosed by company, revenue stream and government agency in the electronic data files published online.
4.9Data quality
The EITI Report is based on audited data and no discrepancies were identified. The Independent Administrator is considered credible and technically competent.
4.1Comprehensiveness
The MSG’s decisions on materiality are well documented. The overall comprehensiveness of reconciliation is over 80%, and all companies making significant payments submitted data.
4.2In-kind revenues	Not applicable

4.4Transportation revenues	Not applicable

4.5SOE transactions
In accordance with Requirement 4.5, Germany is required to ensure that Südwestdeutsche Salzwerke AG participates in future EITI Reports. Germany is encouraged to ensure that the company provides comprehensive disclosures through its mandatory payment reports.
4.8Data timeliness
The 2016 EITI Report was published within two years from the end of the reporting period. The MSG is seeking to further align the timing of EITI reporting with mandatory reporting deadlines.
Revenue allocation
5.1Distribution of revenues
The federal structure affects the collection and allocation of revenues, which involves a complex re-allocation mechanism. The distribution of extractive revenues is explained in the EITI Report and other public sources.
5.2Subnational transfers
Royalties are the only revenue stream generated solely by the extractive industries and they are included in the financial equalisation mechanism. Information about the basis of financial equalisation between states and the actual amounts transferred is comprehensively documented on the website of the Federal Ministry of Finance.
5.3Revenue management and expenditures	Not assessed
It is commendable that the EITI Report includes information about state subsidiesand tax concessions for extractive companies, as well as environmental compensation.
Socio-economic contribution
6.1Mandatory social expenditures	Not applicable

6.2Quasi-fiscal expenditures	Not applicable

6.3Economic contribution
The EITI Report includes all the information required in Requirement 6.3, including extractive sector contribution to GDP, an estimate of total government extractive revenues, export data and employment figures.
Outcomes and impact
7.2Data accessibility	Not assessed
The data of the report has been made available in machine-readable format.The open data concept has been put into practice and the website code is freely available. Systematic disclosure is being dicussed by the MSG.
7.4Outcomes and impact of implementation
The annual progress report captures activities and follow-up on recommendations and an evaluation of impact. A strategy working group has dealt with the question on how to increase impact of EITI implementation in Germany and internationally.
7.1Public debate
Germany EITI has brought the EITI Report content online, in different formats, and links to related information in the public domain. The 2016 EITI Report is comprehensible and accessible to the general public. The EITI has brought together information on the regulation and governance of the sector that is otherwise scattered due to the political landscape (federal system).
7.3Follow up on recommendations
Germany EITI has followed-up on recommendations from reporting and have included next steps in the work plan.