Report: Extractive industry's compliance in paying dues improves

MANILA, Philippines - Combined government earnings from mining, oil and gas sectors declined and barely accounted for a percent of economic output in 2013, but private sector compliance in paying the right dues improved dramatically.

In the latest report of the Extractive Industries Transparency Initiative (PH-EITI), a total of P40.7 billion in revenues were reconciled from state agencies, local government units and reporting companies.

The figure was down 23 percent from P52.763 billion in the same period the previous year.

It however represented 99.99 percent of revenues reported paid by companies to the government and that which the latter received from the former. This was up from 99.89 percent reconciliation rate in 2012.

“(This) should inform us how to best manage extractive resource revenues and answer the question whether we are indeed getting our fair share from extraction of our natural resources,” Finance Secretary Cesar Purisima said on his message in the report.

“The EITI report demonstrates how transparency contributes to the integrity of our revenue system,” he added.

Formed by virtue of Executive Order 147 in 2013, PH-EITI is a local affiliate of an international effort to promote transparency and accountability in state revenues from the extractive sectors of mining, oil and gas.

The report, uploaded on the PH-EITI website last December 29, is the sole compilation of earnings from these sectors. It tracks down money received by the state and those paid by firms and see if they match.

For 2013, a total of P2.66 million in revenues were unaccounted for by state agencies. This means participating companies reported that they have paid the amount, but was not reflected on official data.

The figure was down from P58.2 million in unreconciled revenues in 2012, figures showed.

“This is indeed a significant turnaround that demonstrates immediate action taken to address more common reasons of discrepancies during the first reconciliation exercise,” the report said.

“However, two recurring causes of discrepancies that were observed are as follows: delay in submissions (and weakening) consolidation of information,” it added.

As a proportion of economic output, extractive revenues accounted for 0.29 percent of gross domestic product. Finance Undersecretary and chief economist Gil Beltran said there is scope for improvement.

“Historically, that (figure) is low. Before that was higher. It is possible that some revenues were not reported. There are some that we still cannot capture like those from small-scale mining,” Beltran said in a phone interview.

Broken down, oil and gas sectors contributed bulk of revenues at P35.32 billion, while those from mining totaled P5.38 billion.