Philippine Extractive Industries Transparency Initiative Act

SBN-246 · 20th Congress · verbatim text↗ Official Senate PDF

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL -8 P5:09 First Regular Session SENATE Senate Bill No. Introduced by Senator JOEL VILLANUEVA AN ACT PROVIDING FOR THE CREATION OF THE PHILIPPINE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE AND FOR OTHER PURPOSES EXPLANATORY NOTE Extractive industries have the capacity to contribute to national growth and development, especially in resource-rich countries like the Philippines. They have the potential to provide livelihood opportunities, create jobs, and channel additional government resources to host communities. Nevertheless, the gains from the oil, gas, and mineral resources do not consistently yield tangible improvements and positive impact for the broader population. Across the globe, extractive industries are marred with various issues on environmental degradation, fiscal misconduct, poverty, and corruption. In response to these issues, the Extractive Industries Transparency Initiative (EITI) was launched to allow for full disclosure of, and public access to, information regarding the extractive industry. The EITI is an internationally recognized framework and practice that monitors revenue and public benefit from mining and other extractive resources. Composed of representatives from the government, extractive industry players, and civil society organizations, EITI provides a platform for regular and systematic reporting, review, and assessment of information. It also strengthens multi-sectoral participation in crafting and implementing regulatory policies governing extractive industries. In the Philippines, the EITI was established on 26 November 2013, pursuant to Executive Order No. 147 entitled "Creating the Philippine Extractive Industries Transparency Initiative." Since its inception, the Philippine EITI (PH-EITI) served as an effective platform for public disclosure of information on fees, taxes, and other payments made by mining companies. The later expansion of PH-EITI enabled the

coverage of oil and gas industries. Furthermore, regular reports published by the PH- EITI also later expanded to include publicly disclosed information on social and environmental impact of the extractive industries. Among the impacts of this initiative, the PH-EITI strengthened the capacity of local government units (LGUs), as well as other stakeholders such as community groups, civil society organizations, and indigenous people, in monitoring the mining activities in their respective areas through regular disclosure of the share of LGUs in the revenues from extractive industries. Over the years since its inception, PH-EITI data collection and reporting provided different stakeholders the instrument and proper platform to formulate real governance reforms on the ground. The passage of this measure is more urgent considering the impending enactment of the Enhanced Fiscal Regime for Large-Scale Mining Act. While the Enhanced Mining Fiscal Regime aims to ensure a fair government share, attract responsible investment through a predictable fiscal framework, strengthen environmental safeguards, and improve the ease of doing business in the extractive sector, its success depends on the public's ability to monitor whether the promised reforms under said Act are delivered. Institutionalizing the PH-EITI will complement the fiscal regime by reinforcing transparency in revenue flows, promoting data-driven oversight, and building public trust in extractive governance. It ensures that the fiscal gains from mining are not only collected but also disclosed, tracked, and utilized effectively for the benefit of the public. In view of the foregoing, the immediate passage of this bill is earnestly sought.

SECTION 1, Short Title. - This Act shall be known as the "Philippine

Extractive Industries Transparency Initiative Act."

SEC. 2. Declaration of Principles. - All natural resources are owned by

Filipinos represented by the State. It shall be the responsibility of the State to ensure that the present and future generations benefit from these finite resources. The State must then establish a mechanism by which the Filipino people are fully aware of how proceeds from their finite resources are being utilized.

SEC. 3. Definition of Terms. - As used in this Act:

Agreement refers to a contract between the Government and a Contractor, involving financial or technical matters; b) Contractor refers to a qualified person acting alone or in consortium who is a party to a mineral agreement or to a financial or technical assistance agreement.

c) Extractive Industries refer to the mining, oil, gas and coal sectors, and all other sectors that require the extraction of non-renewable natural resources for commercial use; Financial or Technical Assistance Agreement (FTAA) refers to a contract involving financial or technical assistance for large-scale exploration, development and utilization of mineral resources; Independent Firm refers to an accounting or auditing firm that has no existing relationship with either the Government or any of the companies that are part of the Philippine Extractive Industries Transparency Initiative (PH- EITI); Mineral Production Sharing Agreement (MPSA) refers to an agreement where the government grants to the contractor the exclusive right to conduct mining operations within a contract area and shares in the gross output. The contractor provides the financing, technology, management and personnel necessary for the implementation of the agreement; and Multi-stakeholder Group (MSG) shall have the meaning given to it under

Section 14 of this Act.

CHAPTER II Establishment of the Philippine Extractive Industries Transparency Initiative

SEC. 4. Creation of PH-EITI. - There is hereby created the Philippine

Extractive Industries Transparency Initiative (PH-EITI).

SEC. 5. Composition. - The PH-EITI shall be composed of a broad coalition

of stakeholders, including representatives from the government, the private sector, the indigenous community, and non-governmental organizations. The PH-EITI shall be governed by a multi-stakeholder body, which shall be constituted in accordance with the provisions of Chapter V of this Act. CHAPTER III Objectives of the PH-EITI

SEC. 6. General Objectives. - The general objective of the PH-EITI is to

improve governance and management of the natural resources in the country and ensure that all of what is due to the Filipino people and the Government on account

1 of the exploitation and/or extraction of the country's mineral, oil, gas and other 2 natural resources are (a) verifiably paid; (b) duly accounted for; and (c) judiciously utilized for the benefits of all Filipinos and on the basis of intergenerational equity and sustainability.

SEC. 7. Specific Objectives. - The specific objectives of the PH-EITI

shall include, but not be limited, to the following: 7 a) Ensure sustained political commitment for the initiative and mobilize resources to sustain its activities and goals; b) Require all companies engaged in the extraction of natural resources to participate in such initiative; Promote genuine participation of civil society in the design, implementation, evaluation, and modification of policies and actions of the Government associated with resource governance in the Philippines; d) Implement and ensure compliance to the standards and policies of the global initiative; e) Ensure that the initiative is effectively integrated in other related government reform agenda; and f) Promote better understanding of the public on the nature of extractive industries and the benefits of transparent and accountable governance of our natural resources. CHAPTER IV Scope and Focus of the PH-EITI

SEC. 8, Applicability. - This Act shall apply to all extractive industries,

government agencies at the national and local level in the country. National and local governments shall be mandatorily required to participate in reporting relevant data pursuant to this Act.

SEC. 9. Scope. - The scope of the PH-EITI shall include:

a) Revenue transparency, which means the timely disclosure, reconciliation or audit and publication of all data of material national and local payments and revenues sourced from the extractive activities covered by the scope of the PH-EITI;

b) Contract transparency, which means public accessibility of all concessions, contracts/licenses, agreements and joint ventures that the Government enters into related to the extractive sectors within the scope of the PH-ELTI including related documents and attachments to the contracts; and c) Accessibility of data, information and reports on the extractive industries, which means public release of data, documents, and information in a format that allows the public to freely use, re-use and redistribute them, for any purpose, without restrictions.

SEC. 10. Sectors Covered. - For the purpose of this Act, the following

sectors shall be covered by and within the scope of the PH-EITI: (a) the mining sector; (b) the oil and gas sector; (c) the coal sector; and (d) such other sectors as the multi-stakeholder group may subsequently determine and deem necessary. The covered sectors shall submit relevant data, including, but not limited, to the cost of their operations, amount of minerals sold, which shall be disaggregated per transaction, and include such information as the name of the buyer/s, country of destination, among others, and other related costs, which shall also be 17 disaggregated.

SEC. 11. Annual Report. - The PH-EITI shall submit an annual report to

the President and Congress, in any case not later than April 30 of each year. The annual report to be prepared, submitted, and published by the PH-EITI shall comply with the international standards of EITI and include additional reporting requirements as agreed upon by the PH-EITI MSG.

SEC. 12. Monitoring of Payments. - The payment and utilization of taxes,

fees, surcharges, and similar charges made by extractive companies and/or contractors shall be closely monitored by the PH-EITI. All fiscal payments and mandatory expenditures by contractors shall be disclosed to the PH-EITI MSG for the production of the annual EITI report. National and local governments shall also submit a report on how the proceeds from the extraction of resources were utilized. CHAPTER V Creation of a Multi-Stakeholder Group

SEC. 13. Composition. - In accordance with the EITI International

Standards and with due regard to the Philippine context, there shall be created a multi-stakeholder group (MSG) that will be in charge of the PH-EITI. The PH-EITI MSG shall be headed by a Chairperson, to be appointed by the President of the Philippines, who must be either: (1) a Cabinet secretary, (2) the head of the interagency coordinating council on the extractive sector, or (3) a presidential adviser. The functions of the Chairperson shall include convening the group and organizing a secretariat. The PH-EITI MSG shall likewise consist of representatives from the following sectors: a) Government Representatives. The government representatives shall be composed of (1) senior officials from concerned agencies appointed by the President of the Philippines, (2) representatives from local government units, which shall be the president of the leagues of various local government units; and (3) representatives from the Congress, to ensure that the findings of the EITI will be used for more effective and more responsive policies; b) Industry Representatives. The industry representatives shall be composed of officials from the extractive industries included in the ElTI; c) Civil Society Organizations (CSOs) Representatives. The civil society shall independently select their representatives in the EITI; and d) Indigenous Peoples (IPs) Representatives. The IP representative shall be selected by a caucus of IP organizations affected by mining operations. The Chairperson and the members shall designate a permanent and alternate representative to PH-EITI MSG. Each organization, upon the decision of its members and through its independent process, can replace their representatives in the MSG any time following their own governance mechanism.

SEC. 14. Regular Meeting of PH-EITI MSG. - The PH-EITI MSG shall

meet once a quarter, or as often as necessary. For urgent matters where decision is needed, necessary information shall be circulated through email so that decisions can be made electronically by consensus. Fifty percent (50%) of the members, with at least one representative from the government, CSOs, IPs, and business sector shall constitute a quorum for the

transaction of business of PH-EITI MSG. The MSG, shall, in good faith, make decisions by consensus.

SEC. 15. Annual Meeting of PH-EITI MSG Members. - The members

of PH-EITI MSG shall hold their annual meeting on the month of April of each year. The agenda of the meeting shall include, but not be limited to, the approval of the activities, reports, accounts and the activity plan of the PH-EITI, and any other acts or matters which may be brought to the attention of the PH-EITI in the pursuit of its mandate as provided under this Act and relevant regulations.

SEC. 16. Notice of Meetings. - The Chairperson shall call and preside over

the meetings. Notices shall be sent out by the PH-EITI secretariat at least one week before the date of the meeting. The secretariat shall handle the documentation and preparations of the minutes of the meeting.

SEC. 17. Review of the MSG. - The composition and number of

representatives shall be subject to regular review by the PH-EITI MSG. Other agencies may form part of the MSG, subject to the evolving needs and scope of the EITI implementation; Provided, That all sectors should be adequately represented in the MSG at all times; Provided further, That the existing PH-EITI created under Executive Order No. 147, s. 2013 shall be henceforth constituted under the provisions of this Act. CHAPTER VI Secretariat Office and Funding

SEC. 18. PH-EITI Office. - There is hereby created the PH-EITI Office

under the Office of the President, to be headed by a National Coordinator selected by the PH-EITI MSG. The staffing pattern, including the duties, qualifications, responsibilities and functions, and compensation scheme of the personnel of the PH-EITI Office shall be determined by the MSG, upon the recommendation by the National Coordinator. For this purpose, the creation of the corresponding plantilla positions is hereby authorized.

SEC. 19. Funding. - The Congress shall allocate adequate funding for the

implementation of PH-EITI in the General Appropriations Act: Provided, That the said amount shall not be less than the amount equivalent to one percent to two

percent (1% to 2%) of the gross proceeds of the sectors covered by and within the scope of the PH-EITI, as defined in Section 10 of this Act. The PH-EITI Office shall have the authority to receive, disburse, and manage financial aid or grants from foreign and domestic entities to be utilized for the implementation of the objectives of PH-EITI, subject to the usual accounting and auditing rules and regulations of the government. CHAPTER VII Exemption from Confidentiality Clauses

SEC. 20. Exemption from Confidentiality Clauses. - Confidentiality

provisions stated under applicable laws, including, but not limited, to the provisions 11 of Section 270 of the National Internal Revenue Code, Article 81 of the Omnibus Investments Code, among others, shall not be applicable to extractive companies insofar as their participation in the PH-EITI process is concerned. CHAPTER VIII Penalties

SEC. 21. Penalties. - Failure to participate in PH-EITI shall be a ground for

suspension of the contractor's permit to operate and blacklisting for future projects. A contractor that, without justifiable cause, unreasonably delays or causes the delay of submission of the reporting template within the deadline set by PH-EITI shall be imposed a fine of One Million Pesos (Php1,000,000.00). Sanctions provided under this Act shall be imposed by the responsible regulatory agency, as the case may be, pursuant to the concerned agency's internal rules and regulations. CHAPTER IX Transitory and Miscellaneous Provisions

SEC. 22. Implementing Rules and Regulations. - Within sixty (60) days

from the effectivity of this Act, the Secretaries of Finance, Budget and Management, Environment and Natural Resources, Interior and Local Government, and Energy, in consultation with relevant stakeholders, shall promulgate the necessary rules and regulations for the effective implementation of this Act.

SEC. 23. Separability Clause. - If any portion or provision of this Act is

2 declared unconstitutional, the remainder hereof or any provisions not affected 3 thereby shall remain in force and effect.

SEC. 24. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly: Provided, That nothing in this Act shall be construed as a diminution of local autonomy or in 8 derogation of ancestral domain rights under Republic Act No. 8371 or the Indigenous Peoples' Right Act of 1997.

SEC. 25. Effectivity. - This Act shall take effect fifteen (15) days after its

complete publication in the Official Gazette or in a newspaper of general circulation. Approved,

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