validation of mongolia report on initial data collection ... · validation of mongolia: report on...

ExtractiveIndustriesTransparencyInitiative(EITI)

ValidationofMongolia

ReportoninitialdatacollectionandstakeholderconsultationbytheEITIInternationalSecretariat

3September2016

2ValidationofMongolia:Reportoninitialdatacollectionandstakeholderconsultation

Abbreviations

ADB AsianDevelopmentBankASM Artisanalandsmall-scaleminingBO BeneficialownershipBOM BankofMongoliaCBL ConsolidatedBudgetLawCIT CorporateIncomeTaxCSO CivilSocietyOrganisationEBRD EuropeanBankforReconstructionandDevelopmentEGPS ExtractivesGlobalProgrammaticSupportEITI ExtractiveIndustriesTransparencyInitiativeEITIM EITIMongoliaETT ErdenesTavanTolgoiFDI ForeigndirectinvestmentGDT GeneralDepartmentofTaxationGFS GovernmentFinanceStatisticsGLDF GeneralLocalDevelopmentFundGoM GovernmentofMongoliaGTL GeneralTaxLawIA IndependentAdministratorIFC InternationalFinanceCorporationIFRS InternationalFinancialReportingStandardMDTF Multi-DonorTrustFundMECC MongolianEnvironmentalCivilCouncilMNAO MongolianNationalAuditOfficeMNMA MongolianNationalMiningAssociationMNT MongolianTugrikMoF MinistryofFinanceMRAM MineralResourcesAuthorityofMongoliaMSG Multi-StakeholderGroupMSWG Multi-StakeholderWorkingGroupNC NationalCouncilNDC MongoliaNationalDataCentreNGO Non-GovernmentalOrganisationNRGI NaturalResourceGovernanceInstituteNSO NationalStatisticsOfficeOSF OpenSocietyForumOT OyuTolgoiPAM PetroleumAuthorityofMongoliaPEP PoliticallyExposedPersonPSA Production-SharingAgreementPSFML PublicSectorFinanceandManagementLawPWYP PublishWhatYouPaySOE State-OwnedEnterpriseSPC StatePropertyCommitteeSPIA StateProfessionalInspectionAgencyToR TermsofReferenceUBTZ UlaanbaatarRailwayMongolian-RussianJointVentureUSD UnitedStatesDollarVAT ValueAddedTax

TableofContents

Abbreviations.................................................................................................................................................2

ExecutiveSummary........................................................................................................................................5Overallconclusions....................................................................................................................................5Recommendations.....................................................................................................................................7

Introduction.................................................................................................................................................10Briefrecapofthesign-upphase..............................................................................................................10Objectivesforimplementationandoverallworkplanprogress...............................................................10HistoryofEITIReporting..........................................................................................................................11Summaryofengagementbygovernment,civilsocietyandindustry......................................................11Keyfeaturesoftheextractiveindustry....................................................................................................12Explanationofthevalidationprocess......................................................................................................13

PartI–MSGOversight.................................................................................................................................171. OversightbytheMSG......................................................................................................................171.1 Overview......................................................................................................................................171.2 Assessment...................................................................................................................................17GovernmentoversightoftheEITIprocess(#1.1).....................................................................................17CompanyengagementintheEITIprocess(#1.2).....................................................................................21CivilsocietyengagementintheEITIprocess(#1.3).................................................................................24MSGgovernanceandfunctioning(#1.4)..................................................................................................27Workplan(#1.5).......................................................................................................................................37

PartII–EITIDisclosures...............................................................................................................................422. Awardofcontractsandlicenses.......................................................................................................422.1 Overview......................................................................................................................................422.2 Assessment...................................................................................................................................42Legalframework(#2.1)............................................................................................................................42Licenseallocations(#2.2).........................................................................................................................43Licenseregisters(#2.3).............................................................................................................................45Contractdisclosure(#2.4)........................................................................................................................47Beneficialownershipdisclosure(#2.5).....................................................................................................49Stateparticipation(#2.6).........................................................................................................................513. Monitoringandproduction..............................................................................................................563.1 Overview......................................................................................................................................563.2 Assessment...................................................................................................................................56Overviewoftheextractivesector,includingexplorationactivities(#3.1)...............................................56Productiondata(#3.2).............................................................................................................................56Exportdata(#3.3).....................................................................................................................................574. Revenuecollection...........................................................................................................................594.1 Overview......................................................................................................................................594.2 Assessment...................................................................................................................................59Comprehensiveness(#4.1).......................................................................................................................59In-kindrevenues(#4.2)............................................................................................................................64Barterandinfrastructuretransactions(#4.3)..........................................................................................65

Transportrevenues(#4.4)........................................................................................................................65TransactionsbetweenSOEsandgovernment(#4.5)...............................................................................66Subnationaldirectpayments(#4.6).........................................................................................................67Levelofdisaggregation(#4.7)..................................................................................................................68Datatimeliness(#4.8)..............................................................................................................................69Dataquality(#4.9)....................................................................................................................................705. Revenuemanagementanddistribution...........................................................................................815.1 Overview......................................................................................................................................815.2 Assessment...................................................................................................................................81Distributionofrevenues(#5.1)................................................................................................................81Subnationaltransfers(#5.2).....................................................................................................................81Additionalinformationonrevenuemanagementandexpenditures(#5.3)............................................836. Socialandeconomicspending.........................................................................................................856.1 Overview......................................................................................................................................856.2 Assessment...................................................................................................................................85Socialexpenditures(#6.1)........................................................................................................................85SOEquasifiscalexpenditures(#6.2)........................................................................................................87Contributionoftheextractivesectortotheeconomy(#6.3)..................................................................89

PartIII–OutcomesandImpact....................................................................................................................927. OutcomesandImpact......................................................................................................................927.1 Publicdebate(#7.1).....................................................................................................................927.2 DataAccessibility(#7.2)...............................................................................................................977.3 LessonsLearnedandfollow-uponrecommendations(#7.3)....................................................1007.4 Outcomesandimpactofimplementation(#7.4).......................................................................1037.5 Impactanalysis(nottobeconsideredinassessingcompliancewiththeEITIprovisions).........106

Annexes......................................................................................................................................................108

AnnexA-ListofMSGmembersandcontactdetails.................................................................................108ListofNationalCouncilmembersandcontactdetails(asof11July2016)...........................................108ListofMSWGmembersandcontactdetails(asof11July2016)..........................................................110

AnnexB-Listofstakeholdersconsulted(96)............................................................................................114

AnnexC-Listofreferencedocuments......................................................................................................118

AnnexD-DetailsofMongolia’sEITIandValidationReports.....................................................................125

AnnexE–Resultsofthe2013-2015IndependentAdministratortenders................................................128

AnnexF–GeneralLocalDevelopmentFundtransfers,2013-H1-2016....................................................129

ExecutiveSummary

ThegovernmentofMongoliacommittedtoimplementtheEITIinJanuary2006byissuingGovernmentResolution1of2006ontheEITI.AMulti-StakeholderWorkingGroup(MSWG)wasformedin2006,andthecountrywasacceptedasanEITICandidateinSeptember2007.FollowingtheirfirstValidationtheEITIBoarddesignatedMongoliaEITICompliantinOctober2010,makingitthefourthcountrytobecomecompliantwiththeEITIRules.

On2June2016,theBoardagreedthatMongolia’sValidationunderthe2016EITIStandardwouldcommenceon1July2016.ThisreportpresentsthefindingsandinitialassessmentoftheInternationalSecretariat’sdatagatheringandstakeholderconsultations.TheInternationalSecretariathasfollowedtheValidationProcedures1andappliedtheValidationGuide2inassessingMongolia’sprogresswiththeEITIStandard.WhiletheassessmenthasnotyetbeenreviewedbytheMSWGorbeenqualityassured,theSecretariat’spreliminaryassessmentisthatrequirements2.2,2.3,2.5,2.6,4.5,4.6,4.9,5.2,6.1,6.2and7.4areunmet.Oneofthese(Requirement6.2)isassessedas“unmetwithlimitedprogress”.

Themajorareasofconcernrelatetodataqualityassuranceandcomprehensivenessofreportingbybothgovernmentandindustryaswellasstate-ownedenterprises,includingquasi-fiscalexpenditures,financialrelationswithgovernmentandthird-partyfinancing.Correctiveactionsforeachsub-requirementaresuggestedbelow.

Overallconclusions

MongoliahasbeenapioneerinEITIimplementation,bothintermsofbeingoneofthefirstcountriestoimplementtheEITIaswellasinexpandingthescopeofreportingtoincludealargenumberofcompanies.Mongolia’sEITIReportscoverindustrycontributionstoenvironmentalfundsandreportingbysubnationalgovernments.MongoliahasestablishedsubnationalEITIcouncilsandmadesignificantstridesinmakingEITIdatamoreaccessiblethroughanewonlinedataportal.

SincethecountrybecameanEITIcandidatein2007,thegovernmenthassupportedtheEITIthroughpublicstatements,enablinglegislationandfundingforEITIreportingsince2010.RepresentativesfromagenciessuchastheMineralResourcesAuthorityandGeneralDepartmentofTaxationhaveactivelycontributedtodrivetheworkoftheMongolia’smulti-stakeholderworkinggroup(MSWG),provideddataforEITIReportsandsupportedembeddingEITIreportingingovernmentsystems.

AnotherkeystrengthofEITIimplementationinMongoliahasbeentheextensionofEITIreportingtoissuesnotrequiredbytheEITIStandard,butthathavebeenconsideredmeaningfultolocalstakeholders.Evenbeforetheenactmentofthe2013EITIStandard,theMSWGhasincludedinformationoncompanies’socialexpendituresandcontributionstoenvironmentalrehabilitationfunds.Ithasalsoconductedworkonbeneficialownershipandcontractdisclosure.

TheMSWGhasgraduallybuilttrustamongstthethreestakeholdergroups,butitprovidesmoreofanoversightfunctionthanadriverofimplementation.ThislatterroleisfulfilledbytheEITIMongolia(EITIM)Secretariat,whichcoordinatestheworkofadhocworkinggroupsestablishedbytheMSWG.WhiletheseinformalworkinggroupsperformkeytaskslikefollowinguponEITIReportrecommendationsand 1https://beta.eiti.org/document/validation-procedures2https://beta.eiti.org/document/validation-guide

updatingreportingtemplates,thelackofformalmandatesandtheonlyrecentintroductionofrecordkeeping3placesahighdegreeofresponsibilityontheEITIMSecretariat.TheNationalCouncilprovideshigh-leveloversighttheMSWG,butitsfunctioninghasoftenbeenaffectedbyfrequentpoliticalchangeandpoorattendance.ItwouldnowseemtimelytorevisittheinstitutionalstructureofEITIimplementationinMongoliatoimproveformalMSWGoversightandreducetheburdenontheEITIMSecretariat.

MongoliapresentsacomplexcasefortheEITI,givenitsfrequentlychangingminingtaxes,thepresenceofover1500companiesofwhichover400areproducing,andtheimpactofasharpeconomicslowdownsincemid-2012.Withdiligentattentiontorecord-keeping,theMSWGhasextendedthescopeofreportingtoover1100companiesinrecentyearsandmovedtoanonlinereportingsystem(eReporting),evenifonlyafifthofthecompanieshavetheirdatareconciledwithgovernmentdatabytheIndependentAdministrator(IA).

Thisattentiontodetailedreconciliationhasnotalwaysbeenmatchedwithconsiderationofthenon-revenueinformationnowrequiredundertheEITIStandard.TheMSWGappearsnottohaveconsideredindepththefullscopeofcontextualinformationrequiredundertheEITIStandard,thoughsuchissuesasSOEs,ifproperlyaddressed,wouldlikelybeofgreatinteresttoawiderangeofstakeholders.ThemaingapsinEITIreportinghighlightedinthisreportrelatetothequalityofdataanddisclosuresaroundstate-ownedenterprises(SOEs).TheMSWG’sengagementindraftingtheEITIReportappearstohavebeenlimited,withlittlereferencetotherequirementsoftheEITIStandard.

GivenMongolia’shighdependencyonmining,thereisavibrantnationaldebateaboutsectormanagement,stateparticipationandthefutureprospectsforthesector.TheEITI’scontributiontothisdebatehasmainlybeenthroughdisseminationeventsandworkshops,inparticularatdistrict(soum)andprovince(aimag)levels.ThenumberofEITIreportingcompanieshassteadilyincreased,buttheMSWGhassoughttocaterthisoftenoverwhelmingamountofinformationtoparticulargroups.SummaryEITIReportsfor12soumsandfouraimagswereproducedforeachofthelasttwoEITIReports(covering2013and2014),andtheEITIMSecretariathasalsomappedcompanies’licensesonaninteractivedataportal,allowinguserstoquerycompanypaymentsbasedonlocation.Civilsocietyorganisationsparticipateactivelyinthepublicdebateabouttheminingsector.WhileearlyEITIReportsexposedsignificantdiscrepanciesandledtoprosecutionofcorrupttaxcollectors4,thelevelofnetdiscrepancieshassteadilydeclinedovertime–fromMNT4billion(USD3.52million5)in2006toMNT581million(USD322,0006)in2014.

Duringpublicoutreachandconsultationevents,thereisparticularpublicinterestindirectpaymentstolocalgovernments,licenseallocationsandprovisioningforenvironmentalrehabilitation.FollowingaGovernmentResolutionin2012,allaimagsandsoumshostingextractiveindustriesarerequiredtoestablishMSGsalthoughtherehasbeennostatutoryfundingallocatedforthesecouncils.ThesesubnationalEITIcouncils,whileonlyroughlydefinedandnotyetestablishedineverysoum,haveinmanycasesbecomevenuesfortripartitediscussionsontheuseofthesoum’srevenues.TheEITIhasprovideda

3Since2016,withminutesofmeetingsrecordedbutnotpublished.4http://ph-eiti.org/document/nw-day-1/Philippines-Manila-Mongolia-EITI-2006-2013.pdf5UsingtheUSD1:MNT1134averageexchangeratefor2006providedonoanda.com6UsingtheUSD1:MNT1802averageexchangeratefor2014providedonoanda.com

tripartiteplatformfordiscussionsanddebatesaboutminingsectormanagement.Thishasenabledthepublictoraiseconcernsinparticulararoundtheidentityoflicense-holdersandhowtheminingrevenuesarespentaswellasprovidingachanneloffeedbacktogovernmentrepresentatives.

Vibrantdebatesatthesubnationallevelhavenotbeenreplicatedatthenationallevel,inUlaanbaatar.ThereappeartobefewlinksbetweenEITIdiscussionsandpolicy-making,despitethemembershipofhigh-leveldecision-makersontheNationalCouncil.Equally,industryandcivilsocietyseemtohavefocusedonreconciliationofcompanypaymentsandgovernmentrevenues,ratherthanotheraspectsoftheEITIStandardrelevanttokeypublicpolicychallenges.WhileEITIimplementationinMongoliaisameaningfulprocessinacountrywhereextractiveindustrygovernanceisatopicofhighinterestamongstthegeneralpublic,ithasnotyetrealiseditsfullpotentialinsupportinganevidence-baseddebateonextractiveindustrygovernance.

Lookingahead,thereissignificantscopeforentrenchingEITIreportingingovernmentandcompanysystems.WhilethesecondphaseofMongolia’seReportingsystemismeanttoautomateinformationsystemsbetweenEITIandkeygovernmentdepartments(coveringtaxationandmininginparticular),theMSWGandstakeholders,especiallyfromgovernment,shouldfocusonopportunitiestoensuringrobustqualityassuranceprocedures.ThereisalsoscopeforindustrytoconsideropportunitiestointegrateassuranceofEITIdisclosuresintheroutineauditandpublicfinancialreporting.

Recommendations

WhilethefollowingreportincludesrecommendationsforspecificreformstheMSWGmaywishtoconsiderimplementing,thefollowingisalistofstrategicrecommendationsthatcouldhelpMongoliamakegreateruseoftheEITI.

1. ThecompositionandstructureoftheEITIgovernanceinstitutionsshouldberevisited,withconsiderationgiventoreducingthenumberofrepresentativesontheworking-levelbody,increasingthefrequencyofworking-levelmeetingsandimprovingreportingonthesediscussions(includingthoseofadhocworkinggroups).

2. ThethreestakeholdergroupsshouldconsiderwhatissuesintheextractivesectortheEITIcanhelpaddressandhow.TheobjectivesofEITIimplementationcouldthenbemoreclearlyarticulated,andtheworkplanrevisedtoaddresstheseobjectives.

3. OutreachandstakeholderconsultationmechanismsshouldbereviewedandformalisedtoimprovetherelevanceofMSWGdiscussionstonationaldebatesandkeydemandsofstakeholdersnotdirectlyparticipatingintheMSWG.

4. TheMSWGisurgedtoconsiderrevisitingthematerialitythresholdforpayments(Includingin-kindrevenues,transportrevenuesandbarterandinfrastructuretransactions)tostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSWGshouldagreewiththeNationalStatisticsOfficetheproceduresforupdatingreportingtemplatesinconjunctionwiththeIA,andmaketheseprocedurespublic.TheMSWGshouldalsoensurethattheIAincludesaclearassessmentofthecomprehensivenessofthenextEITIReport.

5. InpreparingthenextEITIReport,coveringFY2016,theMSWGandIndependentAdministrator(IA)shoulddeveloparobustandpragmaticapproachforaddressingthequalityassuranceofEITIdisclosuresfrombothgovernmentandcompanies.TheMSWGshouldworkwiththeMongolianNationalAuditOffice(MNAO),theStateProfessionalInspectionAgency(SPIA),theIAandindustry

MSWGmembersinparticulartoestablisharobustqualityassuranceframework.TheMSWGshouldconsiderprocuringitsnextIAearlierintheyeartoallowforsufficienttimetoconsidertheseissuesbeforedatacollection.

6. InpreparingthenextEITIReport,theMSWGshouldclarifythenumberofmining,oilandgaslicensesawardedandtransferredintheyearunderreview,highlightinganynon-trivialdeviationsfromstatutoryprocedures.TheMSWGshouldalsoensurethatthedatesofapplicationforalllicensesheldbymaterialcompaniesarepubliclyavailableaheadofpublicationofthenextEITIReport.Thegovernmentmaywishtoconsidermakingthisdatapartoftheonlinelicensesystem.

7. InpreparingthenextEITIReport,theMSWGshouldensurethegovernment’spolicyonbeneficialownershipisclearlystatedandincludeinformationonthelegalownership.

8. InpreparingthenextEITIReport,theMSWGshouldclarifythepracticesrelatedtoSOEs’retainedearningsandreinvestment,anychangesingovernmentownershipinSOEsortheirsubsidiariesduringtheyearunderreview,andprovideacomprehensiveaccountofanyloansorloanguaranteesextendedbythestateorSOEstomining,oilandgascompanies.TheMSWGshouldconsidertheexistenceofsubsidiesintheminingsectorandofotherquasi-fiscalexpendituresundertakenbySOEsintheextractiveindustries.

9. InpreparingthenextEITIReport,theMSWGshouldensurethattheIAprovidesanassessmentofcomprehensivenessandreliabilityofthe(financial)datapresented,includinganinformativesummaryoftheworkperformedbytheIndependentAdministratorandthelimitationsoftheassessmentprovided.

10. InpreparingthenextEITIReport,theMSWGshouldclarifythedistinctionbetweenSOEs’directsubnationalpaymentsandsubnationaltransferspriortodatacollection.TheMSWGshouldensurethattheReportincludestherevenuesharingformulausedtocalculatetransferstoindividualaimagsandsoums,tosupportanassessmentofdiscrepanciesbetweenbudgetedandexecutedsubnationaltransfers.

11. InpreparingthenextEITIReport,theMSWGshouldagreeacleardistinctionbetweenmandatoryandvoluntarysocialexpenditurespriortodatacollection.Itshouldalsoclarifythetreatmentofanynon-governmentalbeneficiariesofmandatorysocialexpendituresasreportingofin-kindmandatorysocialexpenditures.

12. GiventheprevalenceofsocialmediausersinMongolia,theMSWGcouldconsideralternativemeansofengagingalargersectionofthepopulationinitsdebates.MoreoutreachonlinethroughsocialnetworkingtoolscouldfacilitategreaterpublicparticipationinEITI-relateddebates,swifterdisseminationofEITIinformationandinputtokeyMSWGdocumentssuchastheworkplanandannualprogressreport.

13. Inpreparingthenextannualprogressreport,theMSWGshouldconductanassessmentoffollow-uponEITIrecommendationsandimpactofimplementationbasedonconsultationswithabroadrangeofstakeholders.

14. TheMSWGshouldconsiderwhethertotakeamoreactiveroleindevelopingrecommendationsfromEITIReports,andmonitoringimplementationoftheserecommendations.

15. TheMSWGisencouragedtofurtherentrenchextractivesectortransparencyingovernmentsystems,andtakestepstomovetowardsmorefrequentpublicationofEITIinformationonaroutinebasis.As

partofthesecondphaseoftheeReportingproject,theMSWGshouldconsiderundertakingastudytoidentifywhatinformationrequiredtobedisclosedundertheEITIStandardisalreadypubliclyavailableandwhatinformationisnotyetroutinelydisclosed.OpportunitiesforprovidingmoreEITIdatainopendataformatsshouldalsobeexplored.

Figure1–assessmentcard

Introduction

Briefrecapofthesign-upphase

InOctober2005,ajointsessionofstandingcommitteesoftheStateGreatHural(theMongolianParliament)onthebudgetandeconomysupportedMongoliainsigninguptotheExtractiveIndustriesTransparencyInitiative(EITI),andinstructedtheGovernmentofMongolia(GoM)tojointheinitiative.TheGoMapprovedMongoliasigninguptotheEITIataCabinetmeetingon4January2006andissuedaresolutioninwhichtheGoMofficiallycommittedtoimplementtheEITIandsetoutthebasicinstitutionalframeworktodoso.ResolutionNo.1(2006)stipulatesthataNationalCouncilforEITIshouldbeestablishedastheoversightbodyfortheEITIandindicatesitscomposition.TheformerPrimeMinister,SanjaagiinBayar,alsomentionedtheEITIinvariousspeechesandinterviews,andResolutionNo.1hasbeenpublishedinvariousnewspapers.

ResolutionNo.1fromthePrimeMinister’sofficeindicatedthatcivilsocietyshouldberepresentedontheEITIMNationalCouncil.TheTermsofReferenceoftheNationalCouncilstatesthatthereshouldbe“equalrepresentationofGovernment,extractiveindustriesandcivilsociety”.Furthermore,theMemorandumofUnderstanding(MoU)betweentheGoM,companiesandcivilsocietyfirmlyestablishesthegovernment’scommitmenttocooperation,listingninesharedresponsibilitiesofallthreestakeholdergroupsinEITIimplementationandfourresponsibilitiesspecifictoeachstakeholdergroup(government,civilsocietyandcompanies).

Article4oftheTermsofReferenceoftheNationalCouncilstatesthattheChairmanoftheNationalCouncilshallbethePrimeMinisterofMongolia.TheSeniorAdvisorofthePrimeMinister,Mr.B.Erdenesuren,wasappointedastheSecretaryoftheNationalCouncil.Article10oftheMoUalsoestablishesanindependentsecretariattosupportEITIimplementationandtheMSWG.TheSecretariatwasestablishedin2007.AcostedworkplanwithmeasurabletargetsandatimetableforimplementationwassubmittedandapprovedattheNationalCouncilmeetingon30January2008.Theworkplanwasplacedonthewebsitesofsixorganisations,includingministries,agenciesandNGOs.

Objectivesforimplementationandoverallworkplanprogress

Thefourobjectivesofthe2016workplan7arealignedwiththeEITIRequirements,whilethoseofthe20158and20149workplanswereidenticaltothesevenEITIRequirements.The2016objectivesalsoappeartobealignedwithnationalpriorities,includingintegratingextractiveindustryinformationacrossgovernmententities,contributingtonationaldebateandimprovingtrustbetweenstakeholders.ItincludesactivitiesaimedataddressingspecificcapacityconstraintsidentifiedintheEITIReportsandotherassessments,suchastheMongolia’sNovember2015pilotValidationandtheMonitoringReportontheImplementationofEITIRecommendations.10Thisincludestrainingactivitiesforvariousstakeholders,auditingofgovernmentEITIdisclosuresandintegratingtheEITIdataportalwithothergovernment

7EITIMongolia2016workplan,http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf8EITIMongolia2015workplan,http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf9EITIMongolia2014workplan,http://www.eitimongolia.mn/sites/default/files/uploads/en/EITIM_POA_2014en.pdf10Unpublished,providedbytheEITIMSecretariat.

databases.11The2016workplanalsocontainsactivitiesrelatedtothescopeofEITIreporting,includingexpandingthenumberofreportingcompanies,auditinggovernmentEITIdisclosures,sourcingdatesofapplicationformininglicensesandundertakingstudiesofstate-ownedenterprisesintheextractiveindustries.Section10.2ofthe2016workplanfocusesonenactingthedraftLawonTransparencyintheMineralResourcesSector,whichaimstoovercomeregulatoryobstaclestofullEITIreporting.

The2013,2014,2015and2016workplansincludecleartimeframesforcompletionofeachactivity.In2013,theNationalSecretariatreportedthat33ofthe42activitiesplanned(80%ofthetotal)werecompleted,withthemainactivitiesnotcompletedbeingthepassageofthedraft“EITILaw”andthedevelopmentoftelevisionserials.12In2014,theNationalSecretariatreportedthat42ofthe65plannedactivities(65%ofthetotal)werecompleted,withthemainshortfallsbeingenactmentofthedraft“EITILaw”,theorganisationofregionalconferencesandthebroadcastingoftelevisionprogrammes.13In2015,47ofthe50activitiesplannedinthe2015workplanwerecompleted.14TheactivitiesnotyetcompletedincludedValidationundertheEITIStandard,activitiesplannedtofollowtheenactmentofthedraft“EITILaw”anddiscussionsofdonationsandinvestments.

HistoryofEITIReporting

MongoliahasproducednineEITIreportscoveringthefiscalyears2006-2014andiscurrentlypreparingits10threportcoveringfiscalyear2015.Whilethe2006EITIReportcovereddatafrom35miningcompanies,1198oil,gas,coalandminingcompaniesreportedinFY2013.Between2008and2011,MongoliaproducedEITIReportswithatwo-yearlag(e.g.2009EITIReportin2011).However,in2012theMSWGproducedtwoEITIReports,covering2010and2011,andhassinceproducedEITIReportswithaone-yeartimelag(the2014EITIReportwaspublishedinDecember2015).AdditionaldetailonthesereportsisprovidedinAnnexD.

TheoriginalfourEITIreportingtemplateswereendorsedbyjointorderoftheChairmanoftheNationalStatisticalCommitteeandtheMinisterofFinanceinApril2007,reviewedinMarch2008andsubsequentlyupdatedandexpandedtoseventemplatesinJanuary2011,andagainrevisedinJanuary2014andDecember2015inordertocoverallmaterialpaymentsandrevenuesfromtheextractiveindustriesinMongolia.

Summaryofengagementbygovernment,civilsocietyandindustry

ThecurrentMSWGandNationalCounciloperateunderTermsofReferencethatwereinitiallyapprovedinMay2006,andwhichhavesubsequentlybeenupdated(lastversionisdated28November201215).MembersoftheMSWGmeettwotothreetimesannuallyandthoseoftheNationalCouncilmeetoncea

15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)15TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf)

year.MinutesofthesemeetingsarepublishedontheEITIMongolia(EITIM)website.TheMSWGhasconstitutedseveraladhocworkinggroups,althoughthesedonothaveTermsofReferenceandminutesoftheirmeetingsarenotpublished.AlistofcurrentMSWGandNationalCouncilmembersisincludedinAnnexA.16

TheearlystagesoftheEITIinMongoliawerecharacterisedbymomentumandinclusiveness.Morerecently,particularlysince2012,attendancebydesignatedMSWGandNationalCouncilmembershasbeenlessconsistent.Inparticular,civilsocietyandgovernmentrepresentativeshavetendedtodesignatealternatestoattendmeetings,withlittleconsistencyintheadhocnominationofalternates.FrequentpoliticalchangehasalsoimpactedtheholdingofNationalCouncilmeetings:successivePrimeMinistersandMinistersofFinancehavenotattendedaNationalCouncilmeetingsince2011.TheNationalCouncildidnotmeetin2014(althoughitmadeupforthisbymeetingtwicein2015)becausetheChairoftheMSWGwasleftvacantforsixmonths.Nonethelessthemaingovernmentagencies,(mostlylarge)companies,andcivilsocietygroupsworkingonextractiveissuesareengagedintheworkofEITIM.

Keyfeaturesoftheextractiveindustry

AccordingtotheWorldBank17,Mongoliahostsover6000depositsofroughly80minerals.Thisincludestheworld’ssecondlargestcopperreservesandfourth-largestcoaldeposits.Mongoliaalsoholdslargereservesofgold,ironore,zinc,uranium,fluorsparandoil.Thecountryremainsunder-exploredwithonly400depositsdefined,ofwhich160areinproduction.Theminingsectorisamajorcontributortothenationaleconomy:in2014itrepresented17.1%ofGDP,25.8%ofbudgetrevenueand89%ofexportearnings.19Majorexportsincludecopper,gold,molybdenum,coal,ironore,fluorsparconcentratesandcrudeoil.

Burgeoningcoking-coalexportstoChinafrom2009exposedMongoliatovolatilecommoditypricesatthesuper-cycle’speak.CopperhadlongbeenMongolia’smainexport,withtheRusso-MongolianErdenetcopper-mineopenedin1974accountingforroughly40%ofGDPuntil2006.Whileoutputofthermalcoalfrompart-state-ownedminesatBaganuurandShiveeOvoosupplyfourmajorpowerplants,andover100,000informal‘ninja’(informalsmall-scale)minerssupplylow-incomeger-dwellers,fromthemid-2000sMongolianminerslikeMongolynAlt(MAK)andMCSstartedexportingunprocessedcokingcoaltoChina,andironorefollowedin2009.Copperexportsslippedtosecondplaceasoutput,mainlyfromtheageingErdenetmine,declinedslightlyto517,000tonsin2012whilegoldproductiondeclinedto5703kgbetween2009and2011,constrainedbylawsbanningalluvialanddecliningoutputatthesolematuringBoroomine.

Coalproductiontripledfrom2008to2011,withmostexportedtoChina.This,combinedwiththeUSD6.2billiondevelopmentoftheRioTinto-backedOyuTolgoicopperandgoldminefrom2009,droveworld-leadingeconomicgrowthto17.3%in2011and12.3%in2012.Newlawsdeemedtobeanti-foreigndirect

17Seefootnote34(p.20)inWorldBank(November2007),GrowthDiagnosticsforaResource-RichTransitionEconomy:TheCaseofMongolia-http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1206974166266/4833916-1206974192224/IanchovichinaGooptuwps4396.pdf17Seefootnote34(p.20)inWorldBank(November2007),GrowthDiagnosticsforaResource-RichTransitionEconomy:TheCaseofMongolia-http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1206974166266/4833916-1206974192224/IanchovichinaGooptuwps4396.pdf19Mongolia2014EITIReport.

investment(FDI)inMay2012coincidedwithcrashingcommoditypricesandslowingChinesedemand,leadingfallingFDIandslowinggrowth.MongoliahassentmixedmessagesovercoalminingpolicyinitstreatmentofthemassiveTavanTolgoideposit,oneoftheworld’slastuntappedcoalreserveswith7.42bntonsofcoaland1.4bntonsofcokingcoalaccordingtostate-ownedErdenesTavanTolgoi(ETT).Attheheightofcoking-coalexportstoChinain2011-2012thegovernmentmadekeypolicyreversalsthatrattledinvestorsentiment.Inlate2011itcancelledtherecentconcessiontodeveloptheWestTsankhipartofTT,awardedtoaconsortiumoftheUS’sPeabody,ShenhuaandRussianRailways,followingJapaneseandKoreancriticismsatbeingexcluded.Thishasleftthestate-ownedETTasthesoleoperatoronmostofEastandWestTsankhiusingcontract-miners.Farlessinfrastructure-constrainedexportsofcopperaregrowingroughly30%annually,asOTovertakesErdenet’straditionaldominance.Explorationactivityismostlyfocussedoncopperlicenses.Despitedepressedprices,exportsofmetallurgicalmineralslikeironoretoChinahavesurged.

Thegovernmentsustainedgrowththroughgovernmentspendingbutwithonly2.3%GDPgrowthandtightbudgetconstraintsin2015(andlessthan1%GDPgrowthin2016)20,Mongolia’seconomyfacesstrongheadwinds.InJanuary2014,theStatePolicyonMiningwasagreed,aswerecertainamendmentstotheMineralsLawandtothePetroleumLawinJune-July2014.Theseregulationsfocuson,forexample,awardinglicencesandenvironmentalaspectsofmining.IntheJanuary2014amendmenttothe2006MineralsLawParliamentreplacedthe5%royaltyongoldandtheslidingscaleof0%-5%surtaxdependingonpriceswithaflat2.5%-royaltyongoldsoldtoBankofMongolia(BOM),inabidtobolsterreserves.LegislativeelectionsinJune2016broughtalandslidevictoryfortheMongolianPeople’sParty(MPP)(formerMongolianPeople’sRevolutionaryParty),whohadheldpoweruntil2012.21

Explanationofthevalidationprocess

TheEITIInternationalBoardagreedatits33rdBoardmeetinginOslo,Norwaythatfifteencountries,includingMongoliawillundergoValidationsstarting1July2016.

1.ValidationisanessentialfeatureoftheEITIprocess.ItisintendedtoprovideallstakeholderswithanimpartialassessmentofwhetherEITIimplementationinacountryisconsistentwiththeprovisionsoftheEITIStandard.TheValidationreportwill,inaddition,addresstheimpactoftheEITIinthecountrybeingvalidated,theimplementationofactivitiesencouragedbytheEITIStandard,lessonslearntinEITIimplementation,aswellasanyconcernsstakeholdershaveexpressedandrecommendationsforfutureimplementationoftheEITI.

TheValidationprocessisoutlinedinchapter4oftheEITIStandard22.Validation

2.Validationprocedure.InFebruary2016theEITIBoardapprovedarevisedValidationsystem.Thenewsystemhasthreephases:

1. DatacollectionundertakenbytheInternationalSecretariat

2. IndependentqualityassurancebyanindependentValidatorwhoreportsdirectlytheEITIBoard

20http://www.adb.org/countries/mongolia/economy21FT(30June2016),“Mongoliaoppositionscoreslandslideelectionvictory”,http://www.ft.com/cms/s/0/fc03c8c8-3e66-11e6-8716-a4a71e8140b0.html#axzz4DRX5OA7M22Seealsohttps://eiti.org/validation

3. Boardreview.

InMay2016,theBoardagreedtheValidationGuide,whichprovidesdetailedguidanceonassessingEITIRequirements.TheBoardalsoestablisheddetailedValidationprocedures,includingastandardisedprocedurefordatacollectionandstakeholderconsultationbytheEITIInternationalSecretariatandstandardisedtermsofreferencefortheValidator.Aspreviously,thereareextensiveopportunitiesforstakeholderparticipation,assetoutbelow.

TheValidationGuideincludesaprovisionthat:“WheretheMSGwishesthatValidationpaysparticularattentiontoassessingcertainobjectivesoractivitiesinaccordancewiththeMSGworkplan,theseshouldbeoutlinedupontherequestoftheMSG”.TheEITIMMSWGrequestedthatparticularconsiderationbegiventoitsworkoneReportingandsubnationalimplementation.

3.DatacollectionbytheInternationalSecretariat.InaccordancewiththeValidationprocedures,InternationalSecretariat’sworkwasconductedinthreephases:

1.DeskReview.Intheperiod4to17June2016andinearlyJulytheSecretariatconductedadetaileddeskreviewoftheavailabledocumentationrelatingtothecountry’scompliancewiththeEITIStandard,including:

• TheEITIworkplanandotherplanningdocumentssuchasbudgetsandcommunicationplans;

• Themulti-stakeholdergroup’sTermsofReference,andminutesfrommulti-stakeholdergroupmeetings;

• EITIReports,andsupplementaryinformationsuchassummaryreportsandscopingstudies;

• Communicationmaterials;

• Annualprogressreports;and

• OtherinformationofrelevancetoEITIimplementationandValidation.

Thisworkincludedinitialconsultationswithstakeholders,whowereinvitedtosubmitanydocumentationtheyconsideredrelevant.InaccordancewiththeValidationprocedures,theSecretariatdidnottakeintoaccountanyactionsundertakenafterthecommencementofValidationon1July2016.

2.Countryvisit.Thecountryvisittookplacefrom6-8July2016.ThevisitcoincidedwiththeAsiaEuropePeople’sForum23,theCSOmeetingaheadofthe11thAsia-EuropeMeeting(ASEM)on15-16July2016inUlaanbaatar.24Whilethisaffecteddevelopmentpartners’abilitytoparticipateinstakeholderconsultationsinperson,itwasalsoanopportunitytoengagewithabroaderrangeofMongoliancivilsocietyorganisations.Thevisitalsofollowedthelegislativeelectionson29June2016.AllmeetingstookplaceinUlaanbaatar.Thesecretariatmetwiththemulti-stakeholdergroupanditsmembers,theIndependentAdministratorandotherkeystakeholders,includingstakeholdergroupsthatarerepresentedon,butnotdirectlyparticipatingin,themulti-

23http://www.aepf.info/24http://www.aseminfoboard.org/events/11th-asem-summit-asem11

stakeholdergroup.

InadditiontomeetingwiththeMSGasagroup,theSecretariatmetwithitsconstituentmembers(government,companiesandcivilsociety)eitherindividuallyorinconstituencygroups,withappropriateprotocolstoensurethatstakeholderswereabletofreelyexpresstheirviews.Requestsforconfidentiallyhavebeenrespected.

ThelistofstakeholderstoconsultwaspreparedbyEITIM,withinputsandsuggestionsfromtheInternationalSecretariat.TheInternationalSecretariatattemptedtomeetwithallrelevantstakeholders,howeversomegovernmentandcompanyrepresentativeswhoaremembersoftheEITIMMSWGdidnotattendthemeetings.Inaddition,theInternationalSecretariat’srequesttomeetwiththeEITIChampionwasnotgranted.Nevertheless,theInternationalSecretariat’sviewisthatthereportcoversviewsofthekeystakeholdersengagedintheEITIprocess.

Atranslator,MrsNurgulAldanish26,wasengagedforthevisitinJuly.TheuseoftranslatorsappearstohavebeenapprovedbyallthreestakeholdergroupsrepresentedontheNationalCouncilandMSWG.

3.Reportingonprogressagainstrequirements.Basedontheseconsultations,theInternationalSecretariathaspreparedthisreport-makinganinitialevaluationofprogressagainstrequirementsinaccordancewiththeValidationGuide.InaccordancewiththeValidationproceduresthereportwilldoesnotincludeanoverallassessmentofcompliance.Thereportwillbemadeavailabletomulti-stakeholdergroupforcommentpriortoqualityassurancebytheIndependentValidator.

TheInternationalSecretariat’steamcomprised:SamBartlett,DyvekeRogan,TatianaSedovaandAlexGordy.

4.IndependentValidation.InaccordancewiththeEITIStandard,theEITIBoardwillappointaValidator27,whowillreporttotheBoardviatheValidationCommittee.TheValidatorwillassesswhethertheSecretariat'sinitialdatagatheringhasbeencarriedoutinaccordancewiththeValidationGuide.Thiswillinclude:adetaileddeskreviewoftherelevantdocumentationforeachrequirementandtheSecretariat’sinitialevaluationforeachrequirement,andarisk-basedapproachforspotchecks,andfurtherconsultationswithstakeholders.TheBoardmayrequestthattheValidatorundertakespotchecksonspecificrequirements.TheValidatorwillamendorcommentontheSecretariat’sreportasneeded.TheValidatorthenpreparesashortsummary(theValidationReport)forsubmissiontotheBoard.ThiswillincludetheValidator’sassessmentofcompliancewitheachprovision,butnotanoverallassessmentofcompliance.Themulti-stakeholdergroupwillbeinvitedtocommentontheValidationReport.

5.BoardReviewanddecision.ThefinalstageintheprocessisthereviewbytheEITIBoard.TheValidationCommitteewillreviewtheValidator’sassessmentandanyfeedbackfromthemulti-stakeholdergroup.TheValidationCommitteewillthenmakearecommendationtotheEITIBoardonthecountry’scompliancewiththeEITIRequirements.TheEITIBoardwillmakethefinaldeterminationofwhethertherequirementsaremetorunmet,andonthecountry’soverallcomplianceinaccordancewithprovision8.3.a.iioftheEITIStandard.Thereisanappealprocess,asperrequirement8.8.

26Contactdetails:M:+97699187463,E:Jltka2002@yahoo.com27Atthetimeofwriting,theprocurementprocesswasongoing,seehttps://eiti.org/node/7118

PartI–MSGOversight

1. OversightbytheMSG

1.1 Overview

ThissectionrelatestogovernmentoversightoftheEITIprocess,stakeholderengagementandtheenvironmentforimplementationofEITIincountry,thegovernanceandfunctioningofthemulti-stakeholdergroup(MSG),andtheEITIworkplan.

1.2 Assessment

GovernmentoversightoftheEITIprocess(#1.1)

Documentationofprogress

Mongoliawasoneofthefirst15countriestobeacceptedasEITICandidatesatthe3rdEITIBoardmeetinginOsloon27September2007.32TheGovernmentofMongoliahasbeensupportiveofEITIsinceitannounceditsintentiontoimplementtheEITIinResolution1on3January2006.ThegovernmenthaspubliclyreiterateditscommitmenttoimplementtheEITIonseveraloccasions,mostrecentlyattheEITINationalForumon3November2015whenMinisterofMiningRentsendooJigjidstated:“MongoliaiscommittedtotheEITIasitisimportanttoensuringthesustainabilityofthesectorandattractinginvestment.”33ThePrimeMinisterofMongolia,HEChinediinSaikhanbileg,wroteintheNationalForumbrochure:“MongoliahasrecognisedtheEITI’svalueandbenefits,andgovernmenthasdraftedalaw,withfulllegalmandates,whichwassubmittedtotheStateGreatKhural.”34ThenewSpeakeroftheGreatKhural(Parliament)appointedon8July2016,MiyegombynEnkhbold(whoisalsoChairmanoftheMPP35),chairedtheEITIMNationalCouncilin2006-2007whenhewasPrimeMinisterandisseenasakeysupporterofEITI,particularlybycivilsociety.

TheMemorandumofTripartitecooperationforEITIinMongolia,signedon25April2006,providesguidelinesforallstakeholderstocooperatefortheimplementationofEITIinMongolia.36In2006thePrimeMinisterofMongolia,MiyeegombynEnkhboldatthetime,wasappointedChairoftheEITINationalCouncilandoverallleadofEITIimplementation.HistwodeputychairsontheNationalCouncilaretheMinisterofFinanceandtheMinisterofMining,whilethesenioradvisortothePrimeMinister,D.Batbayar,wasnamedsecretaryoftheNationalCouncilandchairoftheMSWG.

SeniorgovernmentofficialsarerepresentedontheNationalCouncil,ahigh-levelsteeringgroupinchargeofoverallgovernanceoftheEITIprocess,andontheMSWG,aconsultativebodyinchargeof

32https://eiti.org/node/717133TheminutesoftheEITIMNationalForum,3November2015,http://www.eitimongolia.mn/en/node/4879.34SeebrochureforEITIMNationalForum,3November2015.35LeeCashell(6July2016),‘Mongolia’selection–aprotestvoteforgood’,http://blogs.ft.com/beyond-brics/2016/07/06/mongolias-election-a-protest-vote-for-the-good/36TheMoUisavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/MoU_Mongolia_EITI.pdf).

implementationoftheEITIStandardandthehighestcoordinatingbodywithdecision-makingpowers.GovernmentmembersoftheNationalCouncilincludethePrimeMinister,theMinisterofMining,theMinisterforFinance,theMinisterforTourism,EnvironmentandGreenDevelopment,theChairmanofStandingCommitteeonStateBudgetofParliament,theGeneralAuditorofMongolia,theChairmanofNationalStatisticalCommittee,theChairmanofIndependentAuthorityAgainstCorruptionandtheGovernorofTuvaimag.37GovernmentmembersoftheMSWGincludetheSenioradvisortothePrimeMinisterofMongolia,theChiefofGeneralDepartmentofTaxation,theChairmanofGeneralAgencyforSpecializedInspection,theChairmanofMineralResourcesAuthority,theChairmanofPetroleumAuthorityofMongolia,theSeniorOfficerofCabinetSecretariatofGovernmentofMongolia,theHeadofEnlightenmentandPreventionDepartmentoftheIndependentAuthorityAgainstCorruption,theHeadofAccountingPolicyDepartmentattheMinistryofFinance(MoF),theHeadofStrategicPolicyandPlanningDepartmentoftheMinistryofMining,theHeadofNaturalResourcesDepartmentoftheMinistryofTourism,EnvironmentandGreenDevelopmentandtheDeputyGovernorofSelengeaimag.38

TheearlystagesoftheEITIinMongoliawerecharacterisedbymomentumandinclusiveness.Morerecently,particularlysince2012,attendancebydesignatedMSWGandNationalCouncilmembershasbeenlessconsistent.Inparticular,civilsocietyandgovernmentrepresentativeshavetendedtodesignatealternatestoattendmeetings,withlittleconsistencyintheadhocnominationofalternates.Althoughdecision-makingandoversightremaintheresponsibilityoftheMSWG,frequentpoliticalchangehasalsoimpactedtheholdingofNationalCouncilmeetings:successivePrimeMinistersandMinistersofFinancehavenotattendedaNationalCouncilmeetingsince2012.TheNationalCouncildidnotmeetin2014(althoughitmadeupforthisbymeetingtwicein2015)becausetheChairoftheMSWGwasleftvacantforfivemonthsduetodelaysintheformationofanewgovernment(inNovember2014)andappointmentofanewMSWGChair.NonethelessthemaingovernmentagenciesareengagedintheworkofEITIM.

ThegovernmenthascomealongwayinembeddingthetransparencyadvocatedbytheEITIingovernmentsystems.Governmentresolution80,28March2007clarifiesthefunctionsofgovernmententitiesintheimplementationoftheEITI.ThisresolutionwasupdatedinaccordancewithEITIRules,2011editionandreplacedbyGovernmentResolution222on4July2012,whichclearlyspecifiedgovernmentbodies’functionsandtasks.KeylegalreformsincludetheLawonTransparencyofInformationandFreedomtoObtainInformation,enactedon16June201139,theLawonGlassAccounts,on1July201440,andtheLawonSupportingEconomicTransparency,on7August2015.41

CertaingovernmentagenciesdiscloseinformationrequiredundertheEITIStandardonaroutinebasis.Forexample,theMinistryofFinance(MoF)BudgetDepartmentmaintainsastandalonewebsite42that 37SeefulllistofNationalCouncilmembersandcontactdetailsinAnnexA.38SeefulllistofMSWGmembersandcontactdetailsinAnnexA.39http://unpan1.un.org/intradoc/groups/public/documents/un-dpadm/unpan047231.pdf40http://www.iaac.mn/pdf/law_en/8_on_glass_accounts.pdf41Summaryofthelawavailableonhttp://www.ashidadvocates.mn/files/publications/tranparency%20law%20implementation%20rules.pdfandhttp://www.ey.com/Publication/vwLUAssets/EY-mongolia-tax-amnesty-law-alert-2015003/$FILE/EY-mongolia-tax-amnesty-law-alert-2015003.pdf42http://www.iltod.gov.mn/,availableonlyinMongolian.

publishesinformationonaggregatecorporateincometaxandroyaltyrevenuesonaquarterlybasis.TheMoFalsomaintainsane-reportwebsite43aswellasatransparencysectiononitswebsite44.SinceQ22013,theMineralResourcesAuthorityofMongolia(MRAM)haspublishedmonthlyreportsonaggregateproductionpercommodity,exportsandrevenues.In2014theymovedtoreportingonaweeklybasiswithregularpressbriefings.TheGeneralDepartmentofTaxationnotedthatthemajorityofEITIdisclosureshadneverbeenpublishedpriortotheEITI.

From2007to2010,EITIimplementationinMongoliawasentirelyfundedthroughagrantfromtheWorldBankMulti-DonorTrustFund(MDTF),coveringtheEITIReportsforfiscalyears2006-2009.From2010onwards,theMongoliangovernmentallocatedarelativelyconstantamounttofundingtheEITIReport:MNT201.1millionin2012,MNT183millionin2013,MNT220.1millionin2014andMNT260millionin2015.InpracticeonlyMNT169million,theallocationtotheIA,wasdisbursedin2015however,duetorevenueconstraints.MDTFfundswereusedtocovernon-reconciliationoperatingexpenses,withthe2015grantofUSD280,000disbursedinFebruary201545.AbridgegrantofUSD46,450wasdisbursedinAugust2014fromtheAustraliangovernment.ThiswasnecessarybecausetheMDTFgrantofUSD250,000wasusedbyFebruary2014,whilethenextMDTFgrantwasonlydisbursedinFebruary2015.Morerecently,followingtheclosureoftheMDTFgloballyinDecember2015,EITIimplementationhasfacedafundinggapuntilJuly2016duetodelaysinfinalisationofanewgrantagreementofUSD450,000(to31December2018)undertheWorldBank’sExtractivesGovernanceProgrammaticSupport(EGPS).Asaresultofthisfundinggap,EITIMSecretariatstaffsalarieswereunpaidforsevenmonths,untilAugust2016.

TheIAfoundthatthemajorityofthegovernmententitiesprovideddataforreconciliation,buttwocentralandlocalgovernmententitieseitherdidnotrespondtorequestsforinformationinthereconciliationphase,ordeclinedtoprovideinputtothe2014EITIReport,includingtheStateProfessionalInspectionAgency(SPIA)andKhovdAimag.Inthe2013EITIReport,sixgovernmententitiesdidnotprovidetherequestedinformation,includingtheMongolianCustomsAuthorities,thetaxationdepartmentsofSukhbaatarandBayangoldistricts,thedepartmentsofsocialinsuranceofChingelteiandSukhbaatardistrictsandthedepartmentofpropertyandlandrelationsofSonginohairhandistrict.

TheMinistryofMiningandMRAMarethemaingovernmententitiesengagedinoutreachanddisseminationactivitiesandregularlyparticipateinEITIOpenDaysatbothcentralandprovinciallevels.

Stakeholderviews

Severalgovernmentrepresentativesnotedthatthegovernment’simplementationoftheEITIwas“brave”givenCSOdemandsfordisclosureofinformationthatwasconsideredsensitivefornationalsecuritypurposes.AlthoughthegovernmenthasmadeseveralpublicstatementsofsupportfortheEITI,afewindustryrepresentativesquestionedthelevelofgovernmentcommitmenttotheEITIgivenofficialsreferredtotheEITIasa“project”.SeveraldonorsnotedthattheEITIwasnevermentionedintheirinteractionswithgovernmentrepresentatives,includingintheMinistryofMining.TheirperceptionwasthatMongolianauthoritiesviewedtheprocessasabox-tickingexercise,althoughCSOstooktheprocess

43http://119.40.100.204/EReport/,onlyinMongolian.44https://www.mof.gov.mn/%D1%88%D0%B8%D0%BB%D1%8D%D0%BD-%D0%B4%D0%B0%D0%BD%D1%81%D1%88%D0%B8%D0%BD%D1%8D/?lang=en452014annualactivityreport

seriously.OnedonornotedhisimpressiongovernmentcommitmentwasstrongerundertheMongolianPeople’sParty(MPP)administrationin2008-2012thanundertheDemocratPartyin2012-2016.TheEITIMSecretariatnotedthefive-monthgapinthegovernment’snominationofanewMSWGChair,butexplainedthiswasduetothegovernment’sfallinAugust2014.GiventhatnonewgovernmentwasformeduntilNovember2014,thesecretariatsawtheAugust-DecemberdelayasreasonableanddidnotseeinthisanyreasontodoubtgovernmentcommitmenttoEITIimplementation.

ACSOMSWGmembernotedthatthefactthattheEITIMSecretariatwasreferredtoasaprojectimplementationunit,combinedwiththeword‘initiative’inEITI,contributedtoanoverallimpressionthatthegovernmentdidnotconsidertheEITItobeformalorpermanent.AllCSOrepresentativesconsultedexpressedconcernsabouttheattitudeandcommentsoftheMSWGChair,MrBat-ErdiinBatbayar(Baabar),atthe4May2016workinggroupmeeting.46Minutesofthe22April2016MSWGmeetingshowthatMrBaabarcalledCSOs“thevillain”andnottransparent,whileannouncingthathispostassenioradvisortothePrimeMinisterwouldonlylastuntiltheendofASEMandthathewasthusnotinterestedinengagingfurtherwiththeEITI.47

AgovernmentrepresentativeontheMSWGnotedthatfundingforEITIimplementationhadbeenarecurringchallengeinrecentyears.NonethelesshenotedthatthegovernmentremainedfullycommittedtoEITIimplementationandthatMongoliawasdeterminedtobeopen.Politicalchangewasnotseenasachallengeaccordingtothegovernmentrepresentative,giventhattherealdecision-makingpowerrestedwiththeGreatKhural,whichensuredstability.

TheimpactoffrequentpoliticalchangeongovernmentengagementinEITIwasnotedbyseveralCSOs,whonotedthatthefrequentchangesinPrimeMinistersimpactedthechairingofNationalCouncilandMSWGmeetings,sincethesenioradvisortothePrimeMinisterselectedtochairtheMSWGchangedasfrequently.TheCSOsalsoemphasisedthattheyconsideredtheMSWGChairfromJanuarytoJuly2016,MrBaabar,asbeinghostiletoCSOparticipationandreferredtominutesoftheMSWG’s22April2016meetingasevidence.OneCSOalsoraisedconcernsoverthefactthatPrimeMinisterJ.ErdenebatwasknowntoownagoldmineinSelengeaimagandquestionedwhetherthiswouldcreatedaconflictofinterestinhischairingoftheNationalCouncil.

MostgovernmentrepresentativesconsultedconceivedoftheirparticipationintheEITIprocessintermsofsubmittingreportingtemplates,ratherthanshapingtheEITIprocess.HoweveronegovernmentMSWGmembernotedthat,giventhatthePrimeMinisterofMongoliachairedtheNationalCouncilandhissenioradvisorchairedtheMSWG,theymadesurethatEITIoutreachtoallrelevantgovernmententitieswasundertaken.

SomegovernmentmembersoftheMSWGnotedtheydidnotparticipateinoutreachanddisseminationeventsorconferences,althoughtheyhadattendedtheNationalForumon3-4November2015.HowevertheEITIMSecretariatnotedthatwhiletherewasatendencytodelegateparticipationinoutreachanddisseminationevents(particularlyoutsideUlaanbaatargiventhelengthoftrips)tootherrepresentativesthanMSWGmembers,allstakeholdergroupswerealwaysinvolved.LineagencieslikeMRAMandGDTwereparticularlyinvolved,whileministrieswerelessinvolvedaccordingtothesecretariatandseveralgovernmentrepresentatives.OneCSOrepresentativestatedthatwhilecertaingovernment

46Unpublished,providedbytheEITIMSecretariat.47Unpublished,providedbytheEITIMSecretariat.

representativesparticipatedinoutreachanddissemination,theirparticipationtendedtobepassiveandappearedtobeaconsequenceoftheirobligationtoparticipate.AnotherCSOMSWGrepresentativearguedthatthegovernmentcouldprovidemoresupportforoutreachanddissemination,forinstancethroughthestate-ownedMongolianNationalBroadcaster(MNB).

SeveralgovernmentrepresentativesnotedthatwhiletheMoFplayedacentralroleincollating(mostlypaperbased)EITIreportingfromthe35governmententitiesparticipatingintheEITI,thelaunchoftheeReportingsystemin2015meantallreportingentitiesenteredtheirinformationonthesystemdirectly.AfewgovernmentrepresentativesrecommendedthateachgovernmentdepartmentshouldnominateanofficertaskedwithEITIReportingandthatsinglecompanyidentificationnumbersshouldberolledoutacrossallgovernmentagenciestofacilitatereporting.OneindustryrepresentativenotedrepresentativesfromCustomshadneverattendedameetingofeitherMSWGorNationalCouncil.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Thegovernmentisactivelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Stakeholdersaretakingpartinsomeoutreachandeffortstopromotepublicdebate.Governmenthasprovidedfundingtoimplementation.However,thelackoffullgovernmentparticipationinoutreachanddisseminationeventsandtherecurrentgapsinfundingforEITIimplementationareaconcern.GovernmentrepresentativesontheMSWGshouldconsiderenhancingtheirparticipationinthedisseminationofEITIinformationandoutreachevents.ThegovernmentisencouragedreviewthefinancingoftheEITIimplementationtoensuresustainabilityoverthelongerterm.

CompanyengagementintheEITIprocess(#1.2)

AnumberoflegalprovisionshavebeenpassedtounderpinEITIreporting,requiringcompaniestoreporttogovernmentthetaxesandfeestheypaytocentralandlocalgovernmentsaswellastheirproductionbytheendofthefirstquarterfollowingtheendofthefiscalyear.Theseinclude:

- Article48.10ofthe2006MineralLaw48requiresalicenseholderonextractiveindustriestopublishtheamountofsalesofproductsandtaxesandfeespaidtostateandlocalgovernmentsonanannualbasisbeforetheendofthefirstquarterofthefollowingyear.

- Article48.9ofthe2006MineralLaw49requireslicenseholderstosubmitareportonroyaltiestothetaxofficeonthe20thofthecalendarmonthfollowingtheendofthequarter.

- Article28.6.4ofthe2009NuclearEnergyLaw50requiresuraniumlicenseholderstopublicallydiscloseproductsales,taxesandpaymentspaidtotheStateandlocalbudgetsannually.

- Article36.1ofthe2014PetroleumLaw51requirescontractorstosubmitinformationontheamountofinvestment,incurredcosts,paidroyalties,theamountofextractedandsold

48http://www.charltonsmining.com/images/stories/Overseas_Law/Mongolia/minerallawsofmongolia.pdf49http://www.charltonsmining.com/images/stories/Overseas_Law/Mongolia/minerallawsofmongolia.pdf50http://legal-policy.mn/uploads/files/1437032892-85658440.pdf51http://english.pam.gov.mn/content/11370.shtml

petroleum,taxespaidintotheStateandlocalbudgets,andthefees,bonuses,andservicefeestotherespectivestateagenciesandthePetroleumAuthoritybythefirstquarterofthesucceedingyear.Contractorsarealsorequiredtonotifythepublicofthisinformationthroughmassmedia.

- Article66.1.2oftheamendedMiningLaw(passedinJuly2014)providesforsanctionsforcompaniesthatdonotreportaccordingtoArticles48.1-48.10thereof.Thefinesare20timestheannualminimumwageforindividualsandbetween30and50timesforcompanies.

- TheStatePolicyfortheMineralResourcessector2014-202552,passedinJanuary2014,encouragestransparentandresponsiblemining.

- TheInvestmentLaw53,enactedon3October2013,requirescompaniestomakepublictheirregistrationswithMongolianInvestmentAgency.

ThegovernmenthasalsoinitiatedthedraftingofaTransparencyLawtogivetheEITIlegalbackingandtoensuretransparencyprovisionsrelatedtootherprocessesinthemanagementoftheextractivesectorsuchaslicensing,contracts,procurementetc.AdraftlawwasapprovedbytheMinistryofJusticeinMay2014andsubmittedtoParliamentinOctober2014,buttheCitizens’RepresentativeKhuralhasnotpassedthebillasofJuly2016.

Companieshaveplayedanactiveroleinthedesign,implementation,monitoringandevaluationoftheEITIprocessoftheEITIthroughtheMSWG,withtheMongolianNationalMiningAssociation(MNMA)playingakeyrole.AdditionalinformationonindustryengagementontheMSWGisprovidedintheassessmentofMSGgovernanceandfunctioning(Requirement#1.4),below.

Themajorityofcompaniesholdingmining,oilandgaslicensesinMongoliaparticipateinEITIreporting.Althoughonly236companieswereincludedinthescopeofreconciliationinthe2014EITIReport,988ofthe1573companiesthatheldlicensesin2014reportedtheirmaterialpaymentstogovernment.54Allbutsevenofthecompaniesincludedinthescopeofreconciliationfor2014submittedtheirreportingtemplates.Thesignificanceofthisnon-participationonthecomprehensivenessofEITIreportingisaddressedinPartIIofthisreport.

Article66.1.2oftheamendedMiningLaw(2014)providesforsanctionsforcompaniesthatdonotreportaccordingtoArticles48.1-48.10oftheMiningLaw.HoweverthelegalprinciplethatacompanycanonlybefinedonceforlackofcompliancewithanyoftheArticles48.1-48.10hasmeantthatcompanieshaveoftennotbeenfinedfornon-reportingunderEITI,astheyhavealreadybeenfinedforanotherreason.HoweversomecompanieshadbeenfinedforfailuretoreportintheEITIprocess.Forthe2014EITIReport,theEITIMSecretariatalsopublishedthenamesofreportingandnon-reportingcompaniesindailynewspapers.

Stakeholderviews

SeveralindustryrepresentativesnotedtheydidnothavethepowertoforcecompaniestoreportbutwereendeavouringtoworkwithcompaniesthatwerenotmembersoftheMNMAtofullparticipation.TheEITIMSecretariatnotedthattheMSWGhaddecidedtopublishthenamesofnon-reporting

52http://en.mongolianminingjournal.com/content/54797.shtml53http://www.mram.gov.mn/pdac/law/en/2.pdf54SeeSection2.3.1.2(p.18)ofthe2014EITIReport.

companiesandthatthishadhadsomeeffect.Followingpublicationofthecompanies’names,severalcompaniescompliedwithEITIreportingrequirements.Theynotedthechallengethatmanysmallercompaniesacquiredmininglicensesinapassivemanner,toholduntiltheycouldfindlargercompaniestopartnerwith.Assuch,accordingtothesecretariat,thesecompaniestypicallywerenotawareoftheneedtoparticipateinEITIreporting,norwiththeMineralsLawitself.SeveralindustrymembersnotedthatenforcementofArticle48ofthe2006MineralsLawrequiringcompaniestopubliclydisclosepaymentstogovernmentwasnoteffective,althoughthenumberofreportingcompanieshadincreasedovertheyears.SeveralCSOrepresentativesnotedthiswasduetothefactthatcompaniescouldnotbefinedtwiceforbreachingprovisionsoftheMineralsLaw,whichmeantthatcompanieshadneverbeenfinedfornon-reportingintheEITI.AlloilandgascompaniesconsultednotedthattheirEITIreportinghadbeenpurelyvoluntaryuntil2015giventhattheMineralsLawonlycoveredminingcompanies,butthatthe2014PetroleumLawhadintroducedrequirementsforoilandgascompaniestopubliclydisclosepaymentstogovernment.Allindustryrepresentativesconsultednotedtherewerenolegalbarrierstocompanies’EITIreporting.

AnumberofindustryrepresentativesrecommendedthattheMNMAconsiderestablishingaworkinggrouponEITItoensuregreaterconsultationwithcompaniesnotontheMSWGorNationalCouncil.AconcernfromUlaanbaatar-basedcivilsocietywasovertheperceivedlackofcompanyengagementintheEITIprocessbeyondprovidingdataforEITIreporting.SeveralminingindustryrepresentativesnotedthatcompaniesconsideredtheirEITIengagementfulfilledoncetheyhadreportedtheirpaymentstogovernment.However,largercompaniessuchasOyuTolgoiandCenterraGoldtendedtoparticipateinoutreachdependingonthelocationofactivities,accordingtotheserepresentatives,whiletheMNMAdidnotgivencapacityconstraints.SeveralCSOsnotedtheydidnotconsiderindustryMSWGmemberstoactasrepresentativesoftheirconstituency,whichwaslargelyconstitutedofsmallerminingcompanies.TheEITIMSecretariatnotedthatwhiletherewasatendencytodelegateparticipationinoutreachanddisseminationevents,particularlyoutsideUlaanbaatar,tootherrepresentativesthanMSWGmembers,industrystakeholderswerealwaysrepresentedatoutreachanddisseminationevents.Bothmining,oilandgascompanieswereengagedinsuchevents,althoughparticipationdependedonwhichcompaniesheldlicensesintheareahostingtheoutreachevents.SeveraloilandgascompanyrepresentativesnotedthattheypreferredtoleaveoutreachanddisseminationactivitiestotheEITIMSecretariat,particularlygivencompanyofficials’needformanagementclearancetoparticipate.Therewasalsoareputationalriskforoilcompaniestobeassociatedwiththenegativepopularviewofminingcompaniesbyparticipatinginsuchevents,accordingtotheserepresentatives.However,therehadbeeninstancesofoilandgascompanyparticipationinsuchevents,whentheywereheldinareaswhereoilcompaniesheldPSAs,accordingtotheEITIMSecretariat.

ACSOrepresentativenotedthatcompaniestendedtofollowgovernment’slead,whichmeantthattheyonlytendedtoparticipateonaparwiththeirgovernmentcounterpartsontheMSWG.AllCSOsconsultedarguedthatEITIreportingshouldbemadecompulsoryandautomatic,asaregularelementofgovernmentreporting.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Companiesareactivelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Industryrepresentativesaretakingpartinoutreachandeffortstopromotepublicdebateespeciallyonregionallevel.Theredonotappeartobeanylegal

obstaclespreventingcompanyparticipationintheEITI.

CivilsocietyengagementintheEITIprocess(#1.3)

ThereisavibrantandactivenetworkofNGOsworkingonminingissuesinMongolia,including:

- theOpenSocietyForum55,anassociationsupportedbytheNewYork-basedOpenSocietyFoundation;

- StepsWithoutBordersNGO56,agrassrootsorganisationfocusingonlocalcommunities’engagementinMongolia’sdemocraticdevelopment;

- theNaturalResourceGovernanceInstituteofficeinMongolia,aninternationalnon-profitinstitute(NRGIprovidedsupportthroughitsUlaanbaatarofficefocusingin2015onprovidingtraininganddevelopinganopencontractsportal);

- Khongornutgiinduudlagamovement,agrassrootsNGO;

- theResponsibleMiningInitiativeforSustainableDevelopment,aMongoliannon-profitinstitute;

- theMongolianEnvironmentalCivilCouncil,acoalitionofoverMongolian700NGOsfocusingonenvironmentalissues;

- theTransparencyFoundation57,aMongolianNGOfocusingonbudgetmonitoring;

- theZorigFoundation58,aMongoliannon-profitinstitute;

- thePublishWhatYouPay(PWYP)Mongolia59coalition,whichcounts29NGOsasmembersincludingallentitieslistedabove.

Expression:Thereisnoevidenceofself-censorshiporself-imposedrestrictionsrelatedtofreedomofexpressiononEITIissues.Mongoliaishighlyrankedintermsoffreedomofexpressionintheregion.Ithasconsistentlybeenranked“free”byFreedomHouse’sFreedomintheWorldrankings:itwasranked1.5foroverallfreedom,2forcivillibertiesand1forpoliticalrightsin2015(with1beingthebestand7theworstrankings),asitwasinthetwopreviousyears60.WhiletheUnitedStates’StateDepartmentnoteshumanrightsproblemsinits2014HumanRightsReportonMongolia61,includingcorruption,externalinfluenceoverthejudiciaryanddomesticviolence,itappearsfromstakeholderconsultationsthatthesehavenotinterferedinCSOs’abilitytoopenlydiscussextractiveindustrygovernanceissues.IndiscussionswiththePWYPcoalition,anumberofinstancesofpubliccriticismsrelatedtoEITIwerenoted.Forinstance,duringthespringof2015,thePWYPmadeapublicannouncementcriticisingthegovernment’sattempttoconcludeanagreementoverTavanTolgoiwithChineseandJapaneseinvestors(ShenhuaandSumitomo)

55http://www.forum.mn/56https://swbm.wordpress.com/57http://www.ilzasag.mn/58http://zorigfoundation.org/59http://www.publishwhatyoupay.org/members/mongolia/60https://freedomhouse.org/report/freedom-world/2015/mongolia61http://www.state.gov/j/drl/rls/hrrpt/2014/eap/236460.htm

justbeforepublicholidays62,arguingthatundertheEITIthegovernmentwasrequiredtoconcludesuchnegotiationsinatransparentmanner(althoughthisisnotarequirementoftheEITIStandard).Partlyasaresultofthiscampaign,thegovernmentdidnotproceedwiththeagreement.Ingeneral,itwasnotedthatcriticismsoftheEITIprocessitselfweremadeatMSWGandNationalCouncilmeetings.WhiledefamationisacriminaloffenceinMongolia,evenincaseswherestatementsaretrue,wewerenotprovidedanyconcreteexamplesof(successfulorunsuccessful)defamationchargesagainstNGOsfortheirparticipationintheEITI.SeveralPWYPmembersnotedthatmediatendedtobehighlycriticalofCSOsandthatCSOsoftensuffered“defamation”,butitwasadmittedthatsuchpublicdebatedidnothinderCSOs’freedomofexpression.

Operation:Therearenoindicationsoflegal,regulatory,administrativeandactualbarrierstocivilsocietyoperationpreventingparticipationinEITI,noranyrestrictionsoffundamentalrights.TheFreedomHouserankingnotesthatfreedomsofassemblyandassociationareobservedinlawandinpracticeandthatNGOsoperatewithoutgovernmentinterference.ConsultationswiththePWYPcoalitionnotedthattherewerenothreatstofundamentalhumanrightsandthatMongoliahadarobusttraditionofdemocraticliberties.TheCSOProtocol,theValidationGuideandproceduresandtheconstituencyguidelinesweretranslatedintoMongolianin2016,followingarequestfromCSOsinNovember2015.

Association:CivilsocietygroupsengagedintheEITIprocessarefreelycollaboratingwitheachotheraswellaswithotherlocalNGOsnotdirectlyrepresentedontheMSWGorNationalCouncil,andwithinternationalgroups.Launchedin2006andcounting29membersasofNovember2015,thePWYPCoalitioninMongoliamovedfromablog63toawebsite64(inMongolianonly)in2013andcommunicatestoitsmembersmainlyviaemail.Itsboardiscomprisedofsevenmembers,ofwhichonethirdrotateeveryyear.Thecoalitionnormallyholdsfourmeetingsayear.Launchedin2008andcountingroughly700members,theMongolianEnvironmentalCivilCouncil(MECC)65movedfrombeinganNGOnetworktoafee-basedmembershipstructurein2015.WhiletheMECCmaintainsawebsite66itsmaincommunicationschannelwithmembersisviaemail.RelationsbetweenPWYPandMECCarecloseandthereareseveralinstancesofdual-membership.PWYPprovidescapacitybuildingtoMECCmembersatthesubnationallevel.PWYPhasconductedoutreachtoNGOsnotpartofeither(PWYPorMECC)coalitiontoencouragesuchNGOstoseekmembershipoftheNationalCouncilorMSWG,althoughthishasnotledtonominationsofNGOsoutsidethetwoorganisations.

Engagement:Civilsocietyisinvolvedinthedesign,implementation,monitoringandevaluationoftheEITIthroughparticipationinMSWGmeeting,CSOforums,disseminationeventsetc.TheminutesfromMSWGandNationalCouncilmeetings67pointtoactiveengagementovertheyearsanditisclearthatthereiscapacityamongstwidercivilsocietytoengageinquestionsrelatedtotheextractivesector.

62CSOscomplainedthatParliamenttypicallyattemptstopasslegislationrightbeforepublicholidaystominimizepublicscrutinyofthebills.63https://sites.google.com/a/eiti.mn/tan-evsel/info-in-english-1/info-in-english64http://pwyp.mn/65TheMECCwebsiteishttp://www.mecc.mn/buthasnotbeenoperationalsinceOctober2015,duetoDNSlookupfailure.66http://www.mecc.mn/67Seeforinstancethediscussionofthecommunicationsstrategyandworkplanon11March2014anddebatesoverthe2013EITIReporton10October2014.

ThePWYPcoalitionhighlighteditsoutreacheffortsforNGOsthatarenotmembersofeitherPWYPorMECCcoalitions.ItwasnotedthatinrecentyearsthePWYPcoalitionhadinvitedotherNGOs(likewomens’NGOs,democracyNGOsandothers)totakeseatsontheMSWGandNationalCouncil,whichwasseenasnecessarygiventhebreadthofdisclosuresundertheEITIStandard.HoweveritappearsthattheseNGOswerenotinterestedandthatthiswasthereasonwhyPWYPcontinuedtoholdeightseatsontheNationalCouncilsandnineontheMSWG.

Accesstopublicdecision-making:Despitethefactthatsomecivilsocietyrepresentativescomplainedthatnotalloftheirrecommendationswerefullyacceptedbylegislators,theyhavetheabilitytoensurethattheEITIprocesscontributestopublicdebateandtoinfluencepublicdecision-making.ThePWYPcoalitionnotedthattheydidhaveaccesstoinfluencedecision-makingandthattheirfocuswasparticularlyonthekeyareasoflicenseallocationandthenegotiationsofproductioncontracts.Specificexampleswerecited,suchasPWYP’scontributiontosuccessfullyhaltingtheTavanTolgoidealinearly2015(seeabove).CSOsalsomentionedtheirroleinlobbyingfortheinclusionofArticle48.10inthe2006MineralsLawasanexampleofsuccessfulinputtodecision-making.TheJuly2015LawonPublicHearingswasseenasenhancingaccesstodecision-makingbyCSOs,givenitsrequirementsforpublicconsultationsonalldecisionstakenbypublicadministrationentitiesatbothcentralandsubnationallevels.TheyalsoactivelyparticipatedindevelopingthemodelToRforthesubnationalcouncils(seebelow),.Morerecently,CSOsprovidedinputtothemodelCommunityDevelopmentAgreements(CDAs).WhilethesewerenotinitiallyincludedinreviseddraftsofthemodelCDA,ajointcomplaintwiththeMNMAtotheMinistryofJusticeledtotheinclusionofsomeoftheircommentsinthefinalversionapprovedbythegovernment.TheMECCalsooperatesashadow“green”parliamentthatprovidespublicinputtoparliamentarydiscussions.

Stakeholderviews

AlthoughseveralindustryrepresentativesnotedthattheMECChadconductedpaidworkforgovernmentministriesinthepast(around5yearsago),PWYPrepresentativesnotedthishadnotinterferedinCSOs’sindependencefromotherstakeholdersontheMSWG.ManyCSOsarguedthattheproposedNGOTransparencyLawunderdiscussionintheGreatKhuralin2015representedadoublestandardcomparedtothetaxamnestyprovidedtonon-compliantcompaniesundertheEconomicTransparencyLawenactedinAugust2015.TheproposedNGOlawwoulddissolveanyNGOthatdidnotprovidefinancialstatementstotheGeneralDepartmentofTaxation(GDT)annuallytojustifytheirtax-exemptstatus.ThiswascriticisedasadoublestandardcomparedtotheEconomicTransparencyLaw,whichprovidedamnestytocompaniesthatcameforwardtotheGDTforfailureofpayingtaxes.However,itcouldbearguedthatsuchcompanieswouldonlyreceiveretroactiveamnestyfromprosecutionandwouldberequiredtopaytaxesinfuture,whileitwouldseemnormalthatNGOsberequiredtojustifytheirtax-exemptstatus,asseveraldonorsnotedinourconsultations.AnotherprovisionofthedraftNGOlawwouldrequireCSOstogathersignaturesfromallfoundingmemberstoavoiddissolution,whichwouldposechallengesforolderNGOswhosefoundingmembersmaynotallstillbereachable.Somestakeholdersconsultedestimatedthatsome50%oftheestimated11,000NGOsinMongoliariskeddissolutionifthedraftlawispassed.OtherestimatesofthenumberofNGOsinMongoliaareashighas27,000.68NonethelessmostdonorsnotedthatthespaceforCSOexpressionwasgood,butthatanumberofCSOsandmostmedia

68AccordingtoMrBat-ErdiinBatbayar(‘Baabar’),MSWGChair,atthe22April2016MSWGmeeting.Seeminutesof40thMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup22April2016,unpublished(asof9July2016).

organisationswerelinkedtopoliticiansandbusinessmen.TheonecaveatwasthatdefamationwasconsideredacriminaloffenceinMongolia,evenincasesoftruestatements,andthatthiscouldhaveanimpactonself-censorship.Itwasnotedthatthereweremanydefamationcases,butnospecificcaseswerehighlightedasbeingrelatedtotheEITI.

ArepresentativefromapastEITIMIAnotedthatCSOsappearedabletoinfluencedecision-makingrelatedtoEITIimplementationinparticular,giventhattheyhadsucceededinrequestingthedisclosureof120ofanestimated250environmentalspecialpermitsbytheMinistryofEnvironmentandGreenDevelopmentaspartofpreparationsforthe2014EITIReport.

TheEITIMSecretariatnotedthatwhiletherewasatendencytodelegateparticipationinoutreachanddisseminationevents,particularlyoutsideUlaanbaatar,tootherrepresentativesthanMSWGmembers,CSOstakeholderswerealwaysrepresentedandwereamongstthemostactiveparticipants.However,severalPWYPmemberslamentedthelackofinvolvementoftheMECCinoutreachanddisseminationactivities.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Civilsocietyarefully,activelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Stakeholdersaretakingpartinoutreachandeffortstopromotepublicdebateespeciallyonregionallevel.ThereisanenablingenvironmentforcivilsocietyparticipationintheEITI.ThetwoCSOcoalitionsactivelyengagedinEITIimplementationmaywishtoconsidermeansofstrengtheningtheiroutreachonEITIissuestoenhancetheinclusivenessoftheEITIprocess.ThePWYPCoalition’snewwebsite69(inMongolianonly)waslastupdatedinMay2016andcontainsthe2013,2014and2015PWYPworkplans.WhileitwasreportedthattheMECChadconductedpaidworkonbehalfofthegovernment(MinistriesofMiningandofEnvironment)inthepast,thisdoesnotappeartohaveinterferedwithCSOs'independence.

MSGgovernanceandfunctioning(#1.4)

MSWGcompositionandmembership:Mongolia’sEITIimplementationisgovernedbytwobodies,theNationalCouncilandtheMSWG.Mostoftheday-todayworkisundertakenbytheNationalSecretariatandapprovedbytheMSWG,whiletheNationalCouncilplaysmoreofapoliticalsupportandgeneraloversightrole.AnalysisofmeetingminutesforbothbodiesandconsultationswithstakeholdersshowthattheMSWGisinchargeofreachingdecisions,whicharethenapprovedbytheNationalCouncil.ThefollowingassessmentofMSGgovernanceisthusfocusedontheMSWG.

TheEITIMNationalCouncilwasestablishedon4January2006andcomprises30membersasofJuly2016,listedinAnnexA70.ItincludestengovernmentmembersincludingPrimeMinisterHEChinediinSaikhanbileg,whoisalsoitsChair,andrepresentativesfromtheMinistriesofMining,Finance,Tourism,EnvironmentandGreenDevelopment,theStandingCommitteeonStateBudgetofParliament,theGeneralAuditorofMongolia,theNationalStatisticalCommittee,theIndependentAuthorityAgainstCorruptionandtheGovernorofTuvaimag.

69http://pwyp.mn/70TheInternationalSecretariatunderstandsthatgovernmentrepresentativesarelikelytobereshuffledinSeptember2016.

TheEITIMMSWGwasestablishedon31March2006andcomprises33membersasofJuly2016,listedinAnnexA.71Itincludes11governmentmembersincludingSeniorAdvisertothePrimeMinisterMr.Bat-ErdeniinBatbayar(knownas‘Baabar’),whoisitschairandSecretarytotheNationalCouncil,andworking-levelrepresentativesfromallgovernmentdepartmentssittingontheNationalCouncil.Article25oftheNationalCouncil’sToR,originallypublishedon12May2006,establishestheNationalCouncilundertheauthorityoftheCabinetandCabinetSecretaryoftheMinistryofMining.72

ThecompositionoftheMSWGissetoutintheTermsofReference(ToR)fortheEITIMMSWG,approvedbytheNationalCouncilon12May2006,amendedmostrecentlyon9November2012.73GovernmentResolution80enactedon28March2007establishesthefunctionsandresponsibilitiesofgovernmentrepresentativesinvolvedinEITI.74TheTripartiteMemorandumofUnderstandingoneffectiveimplementationofExtractiveIndustriesTransparencyInitiativeandpartnershipbetweentheGovernmentofMongolia,companiesandNGOcoalitionissuedinApril2007alsosetsouttheparticipatingpartiesinvolvedintheEITI.75WhilethemembersofbothbodieswereinitiallynominatedbyorderofthePrimeMinisteruntil201276,GovernmentResolution222allowedthePrimeMinistertonominatethegovernmentrepresentativesbuttransferredauthorityfornominationstotheMNMAforindustryandthePWYPandtheMongolianEnvironmentalCivilCouncilforcivilsociety.Article4oftheMSWG’sToRrequiresequal“tri-partied”representationofthethreeconstituenciesconfirmedbygovernmentresolution.77ThegovernmentconstituencyincludestheChair,DeputyChair,andSecretaryoftheEITIMNationalCouncil.TherearenoclausesintheMSWG’sToRcoveringcriteriaforNGOmembership,orofseniorityofrepresentationbygovernmentorcompanies.WhileArticle7oftheNationalCouncil’sToRspecificallyrequirescivilsocietyrepresentativestocomefromthemeetingofthePWYPcoalitionortheMongolianEnvironmentalCivilCouncil,andforindustryrepresentativestocomefromminingandoilcompaniesortheirsubcontractors,theMSWG’sToRonlynamestheseniorrepresentativesfromeachstakeholdergroupasthechairoftheNationalTaxationAuthority,theexecutivedirectoroftheMNMAandthe“CoordinatorofCoalitionofNGOs”.EachoftheseseniorrepresentativesisresponsibleforthenominationofMSWGmembers.

Forthegovernment,GovernmentResolution222onlynamestheagenciesandpositionsof

71ThenamesandcontactdetailsofallmembersoftheNationalCouncilandtheMulti-StakeholderWorkingGroupareavailableontheEITIMongoliawebsite(http://www.eitimongolia.mn/en/national-councilandhttp://www.eitimongolia.mn/en/working-group).TheyarealsoavailableinAnnexA.72TheToRfortheNationalCouncilareavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf).73TheToRfortheMSWGareavailableontheEITIMongoliawebsite(http://www.eitimongolia.mn/sites/default/files/uploads/en/ToR_of_MSWG_Mongolia_EITI.pdf)74AvailableinMongolianlanguageontheEITIMongoliawebsite(http://www.eitimongolia.mn/sites/default/files/uploads/80%20-%202007.03.28.pdf).75TheMoUisavailableontheEITIMongoliawebsite(http://eitimongolia.mn/sites/default/files/uploads/en/MoU_Mongolia_EITI.pdf)76Forfurtherinformationontheinitialnominationsprocess,seeSections3-7(pp.6-10)ofMongolia2010ValidationReport-https://eiti.org/files/Mongolia%20Final%20Validation%20Report.pdf77http://www.eitimongolia.mn/sites/default/files/uploads/en/ToR_of_MSWG_Mongolia_EITI.pdf

representativesonthetwoEITIbodies.Article5ofResolution222,whichisavailableonline78,definesthePrimeMinisterofMongolia’sresponsibilitiestoappointrepresentativesfromgovernmentandtheGreatKhural(Parliament)onboththeNationalCouncilandtheMSWG.Thustheindividualrepresentativeschangewhennewappointmentsaremadetothesepositions,withouttheneedtoformallynotifytheEITIMSecretariat(incontrasttoagreedproceduresforindustryandcivilsocietyrepresentatives).

ThepresidentoftheMNMA,anassociationwitharound120membersofexploration,productionandcontractingcompanies,isresponsibleforindustrynominationsontheMSWG.Whilethismembership,ofwhichroughlyhalfarecontractingcompanies,issmallerthantheroughly1000companiesholdingactivelicensesinMongolia,theMNMAhasconductedoutreachtocompaniesbeyonditsmembershiptoimproveparticipationinEITIreportingbynon-membercompanies.Until2012theMNMAretainedfullauthorityfornominatingindustryrepresentativesontheNationalCouncilandMSWG,butthereaftertheSecretariat,inconsultationwiththePetroleumAuthorityofMongolia(PAM)invitedtwooilandgascompanies(PetroChinaDaqingTamsagandPetromatad)tobecomemembersoftheNationalCouncilandMSWGrespectively.TherearenowrittenrulesgoverningthenominationsprocessbyindustrybeyondArticle6ofDecree22279thatdefinestheroleofthepresidentofMNMAinappointingrepresentativesfromcompaniesandprofessionalassociationsintheminingandoilandgassectors.AtitsannualgeneralmeetingonthelastWednesdayofJanuary,theMNMAsolicitsexpressionsofinterestfrommembers.Duetolackofsufficientsubmissionshowever,theMNMAtypicallyselectspotentialcandidatesandseekstostrikeabalancebetweenlargeandmedium-sizedcompaniesandacrossdifferentminerals.However,itdoesnotappearthatMNMAundertakesoutreacheffortstocompaniespriortonominations,accordingtoconsultationswithindustrystakeholders.WhentheMNMA,togetherwiththeEITIMSecretariat,witnessrepeatedlackofattendanceatmeetingsbyspecificmembers,theymovetoreplacethem.Themostrecentrefreshofminingindustryrepresentativeswereasfollows(theoilandgasrepresentativeshavenotchangedsince2012):

- September2012:allnineminingcompaniesonbothNationalCouncilandMSWGwerereplaced.

- February2014:allnineminingcompaniesonbothNationalCouncilandMSWGwerereplaced.

- June2014:onechangeeachontheNationalCouncilandMSWG,whenMrN.AlgaawaspromotedfromexecutivedirectoroftheMNMAtopresidentandthusmovedfromtheMSWGtotheNationalCouncil.

- December2014:onememberchangedontheNationalCouncil.

TheMSWGrepresentativefromtheMongolianGoldProducersAssociation,Mr.S.Burentogtoh,lefthisassociationpositionin2015butremainsontheMSWGuntilhisreplacementisappointedinJanuary2016.

Withrespecttocivilsocietyparticipation,thePWYPandMECCcoalitionsareresponsiblefornominatingCSOrepresentativesontheMSWG.ThereisnoclauseintheToRprovidingformaximumduration,ortermlimits.GovernmentResolution222issuedbyPrimeMinisterSükhbaatarynBatbold’sofficestatesthata“civilsocietycoalition”(whichhasalwaysbeenPWYPinpracticeevenifitisnotnamedintheDecree)controlseightseatsontheNationalCouncilandnineontheMSWG,whilean“environmentNGO

78http://www.eitimongolia.mn/sites/default/files/uploads/en/Government_Resolution_222_English.pdf79http://www.eitimongolia.mn/sites/default/files/uploads/en/Government_Resolution_222_English.pdf

coalition”(MECCinpractice,evenifnotnamedintheDecree)controlstwooneach.TherearenowrittenruleswithinMECCforselectionofCSOrepresentativestotheNationalCouncilortheMSWG.ThePWYPcoalitionboardcharterstatesthatnominationstoEITIbodiesmustbediscussedatthemembers’meetingandthatthePWYPMongoliaBoardmustberevisedeverytwoyears,witharequirementthatthreeofthesevenPWYPmemberschangeeverytwoyears.80ThenominationofnewMSWGandNationalCouncilwaslastagreedbyanonymousvoteatthePWYPMongoliaCoordinatingCommitteemeetingon31March2015.81ThediscussioncoveredthedesiredskillsofEITIrepresentativesfromtheCSOconstituency(includingobjectivity,researchandanalysiscapacity,debatingskillsandabilitytoexpresstheiropinions).HoweveritdoesnotappearthatMECChasundertakenoutreachtoNGOsbeyondtheirownmembersaheadofthenominationsprocess.PWYP’soutreachtoNGOsaheadofnominationsappearstobefocusedoninvitingthemtojointhePWYPcoalition,inlinewiththePWYPworkplan’saimtoexpandthecoalition’smembership,ratherthanparticipatinginEITIassuch.

PWYPoperatesadoubleselectionprocess:thecoalitionappointscertain“peopleknowledgeableabouttheextractiveindustries”82inparalleltoaninformalelectionprocess,withnosetsplitbetweenthetwotypesofmembers.TheMECCnominationsproceduresaredecidedbydiscretionoftheCEOoftheMECC,outoftheNetworkBoardmembers,electedeverythreeyears,buttherearenoformalnominationsproceduresbeyondArticle6ofDecree22283specifyingtheresponsibilitiesofthePWYPMongoliaandMECCBoardsfornominationsoftheirrespectiveMSWGandNationalCouncilmembers.WhilePWYPfieldsdifferentmembersontheNationalCouncilandontheMSWG,thetwoMECCrepresentativesoneachbodyarealwaysinthesamepositionsontheMECC,althoughtheindividualshavechangedfrequently.ThePWYPcoalitionhaschangeditsrepresentationonthetwobodiesroughlyeverytwoyears:

- May2013:alleightmembersontheNationalCouncilwerereplaced,allnineontheMSWGaswell.

- July2015:threememberswerereplacedoneachthetwobodies.

TheMECCrepresentativesonbothEITIMbodieshavechangedmorefrequently.WhiletheCEOisrequiredtoformallynotifytheEITIMSecretariatofchangeinrepresentatives,theletterannouncingthelatestchange(inNovember2015)wassignedbythePresident(adifferentpositionthantheCEO),whichrepresentsaminordeviationfromagreedprocedures.Thelatestchangeswere:

- November2014:changeinbothmembers.

- December2014:changeinbothmembers.

- January2015:changeinbothmembers.

- November2015:changeinonememberonMSWGandNationalCouncil.

- April2016:changeinonememberonMSWGandNationalCouncil.

80https://drive.google.com/file/d/0B-z15B6VRn2jQk5EX3RJVjFqVFU/viewandminutesfromtheMarch2016PWYPgeneralassembly(unpublished).81PWYPMongoliaCoordinatingCommittee,31March2015,providedbythePWYPcoalition.82FromourmeetingwiththePWYPcoalition.83http://www.eitimongolia.mn/sites/default/files/uploads/en/Government_Resolution_222_English.pdf

Thetwocoalitionsappeartohaveconsultedonlytheirownmembersviaemailaheadofthenominationsprocess.

Termsofreference:TheMSWG’sToRwerelastreviewedinQ42012andapprovedbytheMSWGon9November2012.84ThekeyrevisiontotheToRwastheprovisionforrotationinthechairingofMSWGmeetingsandforMSWGmeetingstobeheldelectronicallyifrequired.Whilethechairrotationcontinuedin2014,whentheMSWGwaschairedbyMrN.AlgaafromtheMNMAinMarchandbyMr.D.Nergui,thenchiefoftheminingdepartmentoftheStrategyPlanningandPolicyDivisionoftheMinistryofMininginOctober.FollowingMrsB.Delgermaa’sappointmentasadvisertothePrimeMinisterandChairoftheMSWGinDecember2014however,therotationstoppedatsubsequentMSWGmeetings(inMayandOctober2015),allchairedbyMrsDelgermaa,followingherdecisiontostopthispracticeuponassumingtheposition.OnlyoneMSWGmeetingtookplaceunderMrsDelgermaa’sreplacementasMSWGChair,MrBaabar,inApril2016,whichhechaired.

Article8-44oftheMSWG’sToRprovidedetailsoftheinternalgovernancerulesandprocedures.Article9oftheMSWG’sToRstatesthatmeetingsareconvenedupontheconsentoftheChair,butthereisnoprovisionrelatedtothefrequencyofmeetings,ortominimumadvancenoticeperiodsofmeetings.MeetingsareconvenedupontheChair’sconsentand,intheirabsence,adesignatedpersonwhoismemberofboththeMSWGandtheNationalCouncil.TheSecretaryoftheNationalCouncilprovidesforpreparationofthemeeting.NeithertheMSWG’snortheNationalCouncil’sToRspecifythefrequencyofmeetings,asbothrefertomeetingsbeingheld“whenrequired”.

Article13oftheMSWG’sToRrequiresthattheagendaandrequiredmaterialsbecirculatedatleastfourdayspriortothemeeting.Article16oftheMSWG’sToRincludesquorumrequirements.Meetingscanonlystartwhenthemajorityofmembersareinattendance.Article18oftheMSWG’sToRrequiresthatthemeetingminutesbepreparedandvalidatedwiththesignatureoftheMWSGSecretaryoramemberoftheEITIMSecretariat.Articles3and8.4oftheMSWG’sToRprovidesforinclusivedecision-making:itprovidesforthewaysinwhichtheMSWGmayconsenttodecisions,includingagreementbetweentheheadsoftherepresentatives,orrequiringissuestobestudiedfurtherbyexpertadhocworkinggroups.Thereisnoclauseallowingfordecisionsbyvotewhererequiredduetolackofconsensus,whichimpliesunanimityisrequiredforalldecisions.Article8.4oftheMSWG’sToRstatesMSWGmemberscanmakeproposalsforadditionaltopicsfordiscussioninadvanceofmeetingsinwritingandmustcanvasstheirconstituenciesforviews.

Articles12and25to28oftheMSWG’sToRdetailtherole,responsibilitiesandrightsofthemulti-stakeholdergroupandincludesrequirementsfortheMSWGtooverseethereportingprocess,whichincludesagreeingtheTermsofReferencefortheIndependentAdministrator,overseeingtheappointmentoftheIndependentAdministratoranddraftingannualworkplans.ThereisnoclauseintheMSWG’sToRrequiringthattheMSWGundertakeoutreachactivitieswithcivilsocietygroupsandcompanies.However,theEITIMwebsiteindicatesthatoutreachisaregularpartofEITIMactivities.TheToRdoesnotcontainanyexplicitsafeguardstoensurethatthenominationprocessforrepresentativesofeachstakeholdergroupbeindependentandfreefromanysuggestionofcoercion.Thereisnoprovisionforensuringapluralityofrepresentation.

84TopicV(pp.15-17)MinutesofEITIMongolia10thNationalCouncilMeeting(28November2012),http://eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf

ThereisnospecificmentionofanyclausetoensurethatMSWGmembershavethecapacitytocarryouttheirduties.

AlthoughitisnotarequirementoftheEITIStandard,theMSWG’sToRdoesnotincludeacodeofconduct,orreferencetoone,orclausesrelatedtoconflictofinterest,inanyofthegovernancedocuments.Finally,thereisnoclausegoverningthetreatmentofconfidentialinformationbygroupmembers.

WhiletheMSWG’sToRdoesnotspecificallymentiontheexistenceofadhocworkinggroupsthatreportbacktotheMSWGonspecifictopics,minutesfromthe13January2015NationalCouncilmeetingindicatethatfiveworkinggroupsdedicatedtospecificrecommendationsofthe2013EITIReportoperatedin2015.TherearehowevernoToRforthesead-hocworkinggroups,norpublicallyavailablelistoftheirmembers.Inpractice,minutesfortheseworkinggroupsareonlyavailableonrequestfromtheEITIMSecretariat,andtheInternationalsecretariatunderstandsthattheyhaveneverbeenrequested.

TheMSWGhastakenstepstodisclosethepolicygoverningpaymentofperdiemstocoverMSWGmembers’travel.InApril,itpublishedtheMoFguidelinesonperdiempayments,whichalsogovernsEITIMofficialtravel,ontheEITIMwebsite.85Theseappeartobefollowedinpractice.TherearenoothertypesofpaymentstoMSWGmembers.

Attendance:TheNationalCouncilhasmet14timesbetween2006andJuly2016andtheMSWGhasmet40timesinthesameperiod,includingthreetimesin2013,twicein2014,threetimesin2015andonceinthefirsthalfof2016.86TheMSWGmeetingswereinitiallyheldattheMNMAofficethefirstyearofimplementation,butfollowingCSOs’reluctancetoattendmeetingshostedbyindustrythelocationwasmovedtotheMinistryofMining.IthasbeennotedbyCSOsinseveralNationalCouncilmeetingsthatgovernmentrepresentativesontheNationalCouncilhadatendencytodelegateattendancetootherrepresentativesortendedtobepoorlybriefedwhenattendinginperson.87

InpracticeCSOattendanceatNationalCouncilandMSWGmeetingsalsotendstochangefrequently:thePWYPcoalitionhighlightsitsflexibilityandnotesthatallPWYPrepresentativesagreetheirpositionsaheadofmeetings,whichensuresconsistencyindiscussions.ThereisagenerallackofunderstandingoftheneedtonotifytheEITIMSecretariatofanysuchdelegationsaheadofEITIMmeetings,asisstatedintheNationalCouncil’sToR:allthreestakeholdergroupsstatedcategoricallythatsuchnotificationwasnotrequired.InpracticetheEITIMSecretariatcallsallNationalCouncilandMSWGmembersthedaybeforemeetingstoconfirmattendance.

AlthoughseveralNationalCouncilmeetingsdiscussedthepotentialforpublishingattendancesheetsforbothNationalCouncilandMSWGmeetingspubliclyontheEITIMwebsite(mostnotablyatthe10thNationalCouncilmeetingon28November2012),thiswasneverimplemented.TheSecretariatmaintainsattendancesheetsforallmeetingsinexcelformat.

Translations:TranslationfromEnglishtoMongolianposessomeuniquechallenges.Thesamewordin

85http://eitimongolia.mn/en/regulations86Asof1July2016.87Forinstance,duringthediscussionoftherevisedNationalCouncilToRatthe10thNationalCouncilmeetingon28November2012.TopicV(pp.15-17)MinutesofEITIMongolia10thNationalCouncilMeeting(28November2012),http://eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf

MongoliancandenoteseveralmeaningsinEnglishdependingonthecontext,suchasencouragement/support,promote/advertise,accountability/responsibility.Thusaccountabilitycanbeequatedwithcorporatesocialresponsibility(CSR)attimes.TheUNproducedaglossaryforgovernancetermsin2014thatassignedaMongolianwordforaccountability.However,thiswordisseldomusedandremainsbroadlyunfamiliartomostMongolians.Likewise,thewordtransparencyistranslatedbythreewordsinMongolian.MorebroadlythereisalackofconsensusinMongoliagiventherapidinfluxofnewwordsinMongolianandthegovernmenthasestablishedaspecialcommitteetoclarifythespellingandmeaningofkeywords.AdamSmithInternationalundertookthetranslationofthe2013EITIStandardintoMongolianandGiZundertookthetranslationofthe2016EITIStandardinMarch2016,includingthecivilsocietyprotocolandvalidationprocedures.

Stakeholderviews

Severalrepresentativesfromallthreestakeholder-groupsinvolvedintheEITIMnotedthattheNationalCouncilwaslargelyasymbolicbody,withpoorattendancefromhigh-rankingofficialsotherthantheMinisterofMining.ItwasnotedthatneithertheMinisterofFinancenorthePrimeMinisterhadattendedaNationalCouncilmeetinginthepastfouryears.TheEITIMSecretariatnotedthattherotationofMSWGmeetingchairinghadstoppedinpracticeunderMrsDelgermaa’sleadership,althoughthiswasnotformallyannounced.ItwasnotedbyallstakeholdersconsultedthattheMSWGwaseffectivelythedecision-makingbodygoverningEITIMimplementation.AllCSOsagreedthatdecisionsweretakenbytheMSWGandsimplyconfirmedbytheNationalCouncil.Whiledocumentsarealwayssentoutinadvance,itwasnotedbyseveralgovernmentrepresentativesthattheywerenotalwaysabletoprovideinputduetotimeconstraintsandworkloads.InpracticetheEITIMSecretariattypicallyschedulesmeetingsoneweekinadvance,sendingviaemailthedraftagendaanddocumentsfordiscussionatleastfourdaysinadvance.DraftEITIReportsmusthoweverbesentinhardcopyatleastfourdaysaheadofmeetings,whichisupheld.AfewCSOsarguedthataddingitemstothedraftagendaofmeetingswaschallenging,althoughitwasagreedthatthiswaspossible.Themainreasonwasthatagendasweresentoutthreedaysinadvanceandthatthisdidnotallowsufficienttimeforgatheringallmaterialrequiredforthediscussionofitemsproposed.SomeCSOsrepresentativesnotedthatCSOscouldpreparedocumentsaheadofthemeetingagendabeingsentout,butthatCSOs’capacityconstraintsmadethischallenging.IndustryandgovernmentrepresentativesdidnotexpressanyparticularconcernsovertheircapacitytocarryouttheirEITI-relatedduties.

SeveralindustryrepresentativesnotedthatneithertheNationalCouncilnortheMSWGoperatedefficiently,withconsensus-baseddecision-makingparticularlychallenging,duetothehighnumberofmembersoneach(tenand11respectively)andthatthenumbershouldbereduced,withtheemphasisonrepresentationbygovernmentimplementingagencieslikeMRAMandtheGeneralDepartmentforTaxation.BecausetheToRprovisionsonconsensus-baseddecision-makingfortheNationalCouncilandMSWGwerenotrespectedinpractice,manyCSOscomplainedofadefactoallianceofgovernmentandindustryagainstthem.ArepresentativefromoneoftheEITIM’spastIAsnotedthatminingcompaniesappearedtobemostactiveinshapingthedevelopmentofEITIReports,forinstanceprovidingmostinputtokeyscopingdecisions.Thesamerepresentativenotedwhatwasconsideredanexcessivefocusonpost-reconciliationdiscrepanciesbyallstakeholdersontheMSWG,NationalCouncilandEITIMSecretariat,tothedetrimentofabroaderfocusoncontextualinformationintheEITIReport.OneminingcompanyrepresentativenotontheMSWGnotedthatoverall,companyengagementintheEITIwasquitelowandtheMNMArepresentativesrepresentedindustryinpractice.TheytendedtoengageinEITImainlyduringthedatacollectionphase.

Inpractice,despitethelackofprovisionsforvotingontheNationalCouncil,representativesfrombothIndustryandCSOsnotedthatvotingdidtakeplaceinpracticewithouttheneedforvotesinfavourfromallthreestakeholdergroups.SeveralindustryrepresentativesstatedtheyrarelyraisedobjectionsatMSWGmeetings,astheyfeltthiswouldslowtheprocessdown.ThereisevidenceofvotingbothinMSWGandNationalCouncilmeetings.Fromananalysisofmeetingminutes,theMSWGvotedontheallocationofsavingsonbudgetedexpenditureforIndependentAdministratorservicesatits11March2015meeting.88Mostrecentlyatits12December2015meeting89,theMSWGreferredtoitspatternofvotingonkeydecisionsandnotedthat,giventhelackofquorumattheendofthatmeetingwithonly13ofthe33MSWGmemberspresent,itwasimpossibletoproceedtoavoteinthatinstance.HowevertheMSWGproceededwithits22April2016meeting,despitethefactonly16ofthe33memberswereinattendance.90ThereisevidenceofNationalCouncilvotesatitsmeetingson28November201291,23December201392,13January201593and4June201594.Inallinstancesthemeetingminutesreportthegeneraloutcomeofvotes,includingthenumberofdissentingvotes.ArepresentativefromapastEITIMIAnotedthatvotingappearedtobethenormatMSWGmeetings,withtwostakeholdergroupsoftenabletopromptMSWGdecisionsthatdonotappeartobebackedbyconsensus.Forinstanceminutesofthe13January2015NationalCouncilmeetingshowthattheNationalCouncildeemedtheimplementationofthe2014EITIworkplanassufficientdespiteoppositionfromCSOs.Startingin2016,minuteshavebeenrecordedforalltechnicalworkinggroupmeetings,althoughthesewerenotpublishedonlineaccordingtotheEITIMSecretariat.

Severalindustryrepresentativescalledforimplementationofthechangesproposedaspartofthedraft“EITILaw”,includingthemergeroftheNationalCouncilandMSWGintoasinglebodyandanexpandedrolefortheSecretariat,withhighercapacity.AgovernmentMSWGrepresentativenotedthattheEITIlawcontinuedtoprogressthroughtheGreatKhuraldespitetheJune2016legislativeelections.Havingundergoneafirstparliamentaryreading,whichruledthattheGreatKhuralcouldconsiderthelaw,aparliamentaryworkinggrouphadbeenestablishedandthenewmembersoftheGreatKhuralwouldcontinuethework.HoweveraCSOrepresentativenotedthatthenewlyelectedmembersoftheGreatKhuralcouldeasilydecidetodiscardthedraftlaw.However,itwasnotedthatthenewSpeakeroftheGreatKhural(appointedon8July2016),MiyegombynEnkhbold,whoisalsoChairmanofthemajorityMongolianPeople’sParty(MPP)95,hadbeenhighlysupportiveoftheEITIduringhistimeasPrimeMinisterandChairoftheEITIMNationalCouncilin2006-2007andwasseenasapotentialkeysupporteroftheEITIlaw.

88http://www.eitimongolia.mn/sites/default/files/uploads/en/AH_35_2015.03.11_en.pdf89http://www.eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf90Minutesof40thMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup22April2016,unpublished(asof9July2016).91http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf92http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_11_2013.12.23.pdf93http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_12_20150113_en.pdf94http://www.eitimongolia.mn/sites/default/files/uploads/en/NC_13_20150604_en.pdf95LeeCashell(6July2016),‘Mongolia’selection–aprotestvoteforgood’,http://blogs.ft.com/beyond-brics/2016/07/06/mongolias-election-a-protest-vote-for-the-good/

SomeCSOrepresentativeshighlightedtheimpactoffrequentpoliticalchangeontheconsistencyofgovernmentrepresentatives’attendanceatEITImeetings.Therewasfrustrationoverthelackofcontinuityinattendance,particularlybygovernmentofficials,althoughthefrequentchangeinCSOattendeeswasalsonoted.SeveralCSOscommentedthatgovernmentandcompanyparticipationinMSWGmeetingsin2015and2016hadbeenlow,withlessthan60%ofmemberspresentatmeetings.MSWGmeetingsincreasinglyfeltlikemeetingsofCSOs,accordingtotheserepresentatives.SeveralindustryrepresentativesnotedthatCSOstendedtorotateattendanceatEITImeetingsfrequently,whichdidnotencourageinformeddiscussion.HoweverseveralCSOrepresentativesnotedthattheparticipationofCSOshadimprovedconsiderablyinthepastfewyears.TheEITIMSecretariatnotedthattherewerecasesofMSWGandNationalCouncilmembersdelegatingparticipationatmeetingstorepresentatives,oftenwithoutconsistencyintheproxiesselectedtoattend.HoweverthesecretariatnotedthatgenerallythegovernmentwaswellrepresentedatMSWGandNationalCouncilmeetings,althoughtheynotedthattherepresentativefromtheStateProfessionalInspectionAgency(SPIA)typicallydidnotattendmeetings.ThesecretariatnotedthedifficultyincommunicatingwiththeSPIAgiventhelackofasingleconsistentpointofcontact.AgovernmentMSWGrepresentativenotedthatattendanceatMSWGandNationalCouncilmeetingwasstrongestonthepartofagencieslikePAM,MRAM,Customs,GDT,NSOaswellastheMinistryofMining.OveralltherepresentativenotedthatmostcapablegovernmentrepresentativeswerepresentatMSWGandNationalCouncilmeetings.

StafffromtheEITIMSecretariatnotedthattheywereconfusedbyMECC’sfrequentchangesofMSWGandNationalCouncilmembers,sometimesonamonthlybasisandwithletterssignedbydifferentMECCofficials.Whiletheyalwayschangedthemembersonthewebsiteandinvitedtherightonestoactivities,theywereconfusedaboutthereasonsforthesefrequentchanges.SecretariatstaffnotedtheirimpressionthatfrequentchangesinMECCrepresentationwerecausedbyinternalfrictions,althoughtheyemphasisedthattheirwishtostayoutoftheinternalaffairsofanyonestakeholdergroup.SeveralCSOsnotedthatwhiletheEITIMongoliaSecretariathadbeennotifiedthroughaPWYPletterdated10July2015ofthechangeofthreeCSOseachontheMSWGandtheNationalCouncil,thePrimeMinisterandChairoftheNationalCouncilhadnotapprovedthesenominationsasofJuly2016.NonethelesstheseCSOsnotedthatthesixnewCSOsmembershadconsistentlybeeninvitedtoMSWGandNationalCouncilmeetingssinceJuly2015regardlessofthePrimeMinister’sformalapproval.SeveralCSOsnotedthattherehadbeenanunderstandingfollowingthe2006DecreeestablishingMongolia’sEITIthatthePrimeMinisterwouldneedtoacceptnominationsfromallthreestakeholdergroupsbeforetheybecameeffective,butconcededthatthe2006DecreedidnotexplicitlyrequirethisandhadbeensupersededbyDecree222in2012.TheEITIMSecretariatnotedthatPrimeMinisterialapprovalwasnotrequiredforMSWGandNationalCouncilmembernominationsbyCSOsandthatthenewmembershadconsistentlybeentreatedasfullmembersassoonastheEITIMSecretariatwasinformedofthechangeofmembers.ACSOMSWGmembernotedthatfollowingseveralyearsofoutreach,theNGOWomenforReformhadfinallyjoinedthePWYPcoalitioninJuly2016.

OilandgascompanyrepresentativesonthetwoEITIbodiesdidnotrecallthereasonsfortheiroriginalnominations,althoughtheyassumedthattheinclusionofacompanyattheproductionstageandoneattheexplorationstagewastoensurerepresentativenessoftheindustry’sstructureinMongolia.ArepresentativefromanoilcompanyopinedthattheinclusionofPetroChinaDaqingTamsagin2007wasduetothefactitwasthefirstoilproducerinMongolia.

SeveralindustrystakeholdersrecommendedthatthesizeofboththeNationalCouncilandtheMSWGbereducedtoensureeffectivedecision-makingandfollow-up.SeveralCSOandindustryMSWGmembers

notedthattheMSWGdidnottendtoengageintechnicaldiscussionsrelatedtoEITIreporting.SeveraldonorsnotedthatthereappearedtobeavacuumintermsoftheMSWG’soversightofEITIimplementationonmoretechnicalEITIreportingissues.SeveralindustryrepresentativesnotedthattheMSWG’sdiscussionswerefocusedonthefinancialreconciliationratherthanbroaderissues,suchasthoserelatedtolegalinconsistencies.TherepresentativesnotedthatcompaniesweremoreinterestedintheresultsofEITIimplementationthanintheprocessitself.

AgroupofcivilsocietyrepresentativesthatserveonavarietyofsubnationalcouncilsstatedthatCSOrepresentativesontheNationalCouncilortheMSWGdidnottendtoconsultthem.SeverallocalCSOsnotedthatthemainmeansofcommunicationbetweenUB-basedandruralCSOswasviaemailandphone.AseniormemberofbroadcastmediastatedthattherewerenorealconsultationsmechanismsinplacebetweenmembersoftheMSWGandNationalCouncil,andthemediaandgeneralpublic.SeveralindustryrepresentativesnotedthattherewasnoconsultationmechanismforindustryengagementinEITIoutsideofNationalCouncilandMSWGmeetings.ThereisnocanvassingofindustrystakeholdersbeyondoccasionaldisseminationofinformationviaemailtotheMNMA’smembership,accordingtotheserepresentatives.OilandgascompaniesconsultednotedthatindustryrepresentativesneverconsultedthemaboutEITIissues.SeveralCSOsnotedthatindustrymembersoftheNationalCouncilandMSWGrepresentedtheirowninterestsratherthanthoseoftheirconstituency.

MostCSOsexpressedconcernoverthehostingofMSWGmeetingsbytheMinistryofMining,giventhetimeconstraintsthisplacedonthediscussions,andnotedmeetingscouldbeheldattheOpenSocietyFoundation.SeveralCSOsnotedthatNationalCouncilmeetingsweredefactochairedbytheSecretarytotheNationalCouncil,SeniorAdvisortothePrimeMinisterMrsB.Delgermaa,ratherthanbythePrimeMinister.Thiswascontrastedwiththeprevioussituation(overthreeyearsago)whenthePrimeMinisterwouldopenNationalCouncilmeetingsandthendelegatedchairingtohisDeputyChair,theMinisterofMining.

Initialassessment

TheMSWGhasbeenformedandincludesself-appointedrepresentativesfromeachstakeholdergroupwithnosuggestionofinterferenceorcoercion.AlthoughthemechanismforcivilsocietynominationsontheMSWGrestrictsselectionofmembersoutsidethePWYPandMECCcoalitions,thereisnoevidencethatnon-memberNGOsthatwouldhavelikedtoparticipatehavebeenconstrainedfromdoingso.

TheToRfortheMSWGaddressestherequirementsoftheEITIStandard,butstakeholdershavehighlightedcertaindeviationsinpractice,particularlyrelatedtovoting.CertainMSWGdecisionsappeartobepasseddespiteobjectionsofoneofthestakeholdergroups,forinstanceinrelationtodataqualityassuranceprocedures.AttendanceofMSWGmembersisalsoinconsistent,withdelegationofattendancetodifferentrepresentativesbeingcommon.TheinconsistentparticipationoftheSPIAisaconcern,particularlygivenitsresponsibilitiesforverifyinggovernmentrevenueattheleveloflineagenciesandministries(seebelow,ondataquality).IntheInternationalSecretariat’sview,theseweaknesseshaveaffectedEITIimplementationandcontributedtoinconsistentmulti-stakeholderoversightofthetechnicalaspectsofEITIreporting,inparticularwithrespecttodataquality.Whileadhocworkinggroupshavebeenconstitutedtooverseetechnicalaspectsofreporting,theoutcomeoftheirdiscussionsanddecisionsremainunclear,forinstanceinrelationtothedefinitionofquasi-fiscalexpenditures(seeRequirement6.2),dataqualityassurance(seeRequirement4.9)andthereconciliationofsubnationaldirectpayments(seeRequirement4.6).

Inlightoftheseconcerns,theInternationalSecretariat’sinitialassessmentisthatMongoliahasmade

meaningfulprogressinmeetingthisrequirement.TheMSWGshouldtaskeachstakeholdergrouptoclarifytheirinternalnominationsandrepresentationprocedurestoimprovethetransparencyandparticipationintheprocess.TheMSWGandNationalCouncilareencouragedtoconsidercombiningtheNationalCouncilandMSWG(asenvisagedinthedraft“EITILaw”),andagreeanappropriatemembershipandmeetingschedulethatwillensureeffectiveoversightoftheEITIprocess.EnsuringsupportandparticipationfromSPIAisaprioritygivensomeoftheconcernshighlightedbelow.

Workplan(#1.5)

TheEITIMSecretariattypicallyproducesadraftworkplan,whichisthendiscussedbytheMSWGandapprovedatthesamemeetingfollowingamendments.The2016EITIworkplan,availableontheEITIMwebsite96,wasdiscussedbytheMSWGatitsmeetingon11December201597andapprovedbytheNationalCouncilatitsmeetingon18December201598.

ThefourobjectivesofEITIimplementationarelinkedtotheEITIPrinciples,butalsoappearalignedwithnationalprioritiesinaimingtoimprovetransparencyintheextractiveindustriesforinstance.Therationaleforthefourobjectivesisexplained.Althoughtheworkplan’sfourthplannedoutcomeisthattheEITIReportbeusedatthepolicylevel,theworkplandoesnotincludeexplicitlinkstodocumentsorpoliciesrelatedtonationalreformprioritiesforthesector.Howeverthismarksanimprovementonthe201599and2014100workplans,whoseobjectiveswereidenticaltothe7EITIRequirementsandthusdidnotreflectnationalprioritiesfortheextractiveindustries.

AddressingoneofthechallengesofMongolia’sEITIimplementation,the2016workplanincludesactivitiesaimedatincreasingthecomprehensivenessofEITIreporting,includingworkshopstoencouragemorematerialcompaniestoreportandupgradestotheeReportingsystem.Morebroadly,theworkplanincludesactivitiestofollowuponspecificrecommendationsfrompreviousEITIreportsandValidations,withSections10.1-10.5coveringdisclosureofdatesofapplicationformininglicenses,studiesonstateparticipationintheextractiveindustries,consultationswithgovernmentstakeholdersoninformationgapsidentifiedduringthepilotValidationandareviewofMongolia’sEITIgovernance.Theworkplanincludestime-boundandmeasurableactivitiesaswellasplanstoaddresscapacityandlegalconstraints,suchastrainingworkshopsforcompanies,subnationalEITIcouncilsandcivilsociety(activities2.4,2.5and5inthe2016workplan).Italsoincludesactivities(number1.4)aimedatmonitoringcompliancewithArticle48oftheMiningLaw(requiringcompanydisclosureofpaymentstogovernment)andactivities(numbers10.1-10.3)involvingoutreachtoParliamenttofacilitatepassageoftheEITILaw.TheworkplanactivitiesdesignedtoimprovestakeholderengagementarerelatedtoparticipationinEITIreportingand

96AccessibleontheEITIMongoliawebsite:http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf97Minutesofthe39thMongoliaEITIMSWGmeeting,11December2015,http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf98Minutesofthe15thMongoliaEITINationalCouncilmeeting,18December2015,http://eitimongolia.mn/sites/default/files/uploads/en/NC_15_20151218_en.pdf99EITIMongolia2015workplan,http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf.100EITIMongolia2014workplan,http://www.eitimongolia.mn/sites/default/files/uploads/en/EITIM_POA_2014en.pdf

donotseemtoaimatimprovingstakeholderoversightofandengagementintheEITIprocess.

The2016workplanincludesclearcostsandsourceoffunding(primarilyWorldBank,EBRDandgovernment)forallactivitiesnotcoveredunderspecificprojects(suchasthesecondphaseofeReporting).ItalsoincludesactivitiestoextendEITIreportingtoareasonlyencouragedundertheEITIStandard,includingdevelopmentofanonlinecontractswebsite(Activity10.4.2)andintegrationoftheonlineEITIdataportalwithothergovernmentdatabases(Activities3.1-3.3).

ApprovedbytheMSWGatits10October2014meetingandbytheNationalCouncilatits12thmeetingon13January2015101andavailableontheEITIMwebsite102,theEITIM2015PlanofAction(workplan)includedmeasurableandtime-boundactivitiesaswellasactivitiesaimedataddressingspecificcapacityconstraintsidentifiedintheEITIReportsandotherassessments.103Whileactivitiesgenerallylinkedtobuildingcapacityinspecificstakeholdergroupswereincluded,onlygeneralreferencetorecommendationsinpreviousEITIReportswereincluded.104

The2013,2014and2015workplansincludedcleartimeframesforcompletionofeachactivity.In2013,theSecretariatreportedthat33ofthe42activitiesplanned(80%ofthetotal)werecompleted,withthemainactivitiesnotcompletedbeingthepassageofthedraft“EITILaw”andthedevelopmentoftelevisionserials.105In2014,theSecretariatreportedthat42ofthe65plannedactivities(65%ofthetotal)werecompleted,withthemainshortfallsbeingenactmentofthedraft“EITILaw”,theorganisationofregionalconferencesandthebroadcastingoftelevisionprogrammes.106Thereviewof2015workplanactivitiespublishedon31December2015notesthatall50activitiesplannedinthe2015workplanhadbeencompleted,evenifthedesiredobjectivewasnotreached.107Theactivitiescompletedwithouttheobjectivebeingmetincludeenactmentofthedraft“EITILaw”andsuccessfulValidationundertheEITIStandard.Stakeholderviews

TheEITIMSecretariatnotedthattheelaborationofthe2016workplanfollowedtheusualprocedures:itpreparedafirstdraftinNovember2015,circulatedittoMSWGmembersforcomment,theMSWGdiscussedandapproveditatits12DecembermeetingandsubmittedittotheNationalCouncil,whichapproveditatits18Decembermeeting.SeveralCSOrepresentativesnotedthatadditionalinputtothe2016workplanhadbeenmadeviaemailbetweentheMSWGandNationalCouncilmeetingsinDecember2015.

CommentsonthedraftworkplanhadbeenreceivedviaemailaheadoftheMSWGmeetingprimarilyfromCSOs,accordingtothesecretariat,althoughindustryhadmadecommentsduringtheMSWGmeetingitself.Commentshadfocusedoncapacitybuildingactivities,subnationaloutreachactivitiesand

101Minutesof12thmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency,13January2015,(onlyavailableinMongolianonthewebsite,http://eitimongolia.mn/sites/default/files/uploads/UZ_12_2015.pdf)102InEnglish(http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf)andinMongolian(http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015mn.pdf).103EITIMongolia2015workplan(p.1),http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf.104EITIMongolia2015workplan(pp.2-3),http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf.109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf

activitiesrelatedtocorporatesocialresponsibility.CommentsfromgovernmenthadfocusedonthetimingofactivitiesandintegrationofgovernmentdatabasesandstrengtheningsubnationalEITIcouncils,accordingtothesecretariatandgovernmentrepresentativesconsulted.SeveralminingindustryrepresentativesstatedtheywouldonlycommentonaspectsoftheEITIworkplanrelateddirectlytocompanies,sincetheyconsideredmoregeneralcommentsasapotentialbreakonfinalisingthedraftworkplan.Oilandgascompaniesconsulteddidnotrecallreviewingthedraft2016workplanandstatedthatCSOswerethemostengagedinprovidinginputsincetheyhadaninterestinsteeringfundingtowardstheiractivities.

CSOswelcomedthe2016workplanasamarkedimprovementonpreviousworkplans,giventhestrongfocusonuseofEITIdataandcapacitiesofsubnationalEITIcouncils.ThesecretariatnotedPWYP’sstrongapprovalofthe2016workplangiventhatCSOshadbeengiventheleadinorganisingruraloutreachactivities.Severalindustryrepresentativesalsowelcomedthe2016workplan,notingthatitwasmorerealisticthanpreviousworkplans,whichhadseemedlikeunattainablewishlists.Thearguedthatachievableobjectivesshouldbesetinfuture,ratherthanabstractobjectivesandachecklistmentality.

SeveralCSOrepresentativesnotedthatthe2016workplanwasanimprovementonpreviousworkplanssinceitreflectedmoreofthenationalprioritiesatacriticaltimefortheminingsector.TherepresentativesnotedthattheEITIMongoliaNationalForuminNovember2015hadbeenawaytocanvassstakeholdersregardingprioritiesandrecommendations,whichweresubsequentlyincludedinthe2016workplan.APWYPrepresentativenotedthatthecoalitionhadsentthedraft2016workplantotheirmembersandsoughtinput,althoughshealsonotedthateffortstoseekinputfrombroaderstakeholdersbeyondtheirmemberNGOshadnotbeensufficient.

AMECCrepresentativenotedthatthe2016workplanwasrelativelygood,butthatimplementationhadbeenweakgivenbudgetconstraintsinQ1-2016.WhileseveralCSOMSWGmembersnotedtheconstraintsonimplementingthe2016workplaninthefirsthalfoftheyear,theyalsonotedthatallworkwasnotnecessarilylinkedtotheavailabilityoffunds,citingactivitiessuchasworkinggroupmeetings,developingtheToRfortheIAandfollowinguponEITIrecommendations.Despitebudgetconstraints,theMSWGshouldhaveseizedopportunitiesforsuchactivitiesastheyarose,accordingtotherepresentatives.CSOrepresentativesalsonotedthattheabsenceofclearindividualresponsibilitiesforeachworkplanactivitywasachallenge,giventhatMSWGmembersseemedtoconsiderallactivitieswereultimatelytheresponsibilityoftheEITIMSecretariatratherthanofspecificMSWGmembers,whothusdidnottakeresponsibilityforactivitiesnotbeingcompleted.TheworkoftheEITIMSecretariatwaspraisedbyseveralCSOMSWGmembers,particularlygiventhefactthatsecretariatstaffsalarieshadnotbeenpaidforsixmonths.SeveralCSOMSWGrepresentativesnotedthattheyhadcontinuedworkrelatedtoEITIinthefirsthalfof2016,includingtrainingsandworkontheOpenSocietyForum’scontractsportal.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.The2016EITIworkplanispubliclyaccessibleandproducedinatimelymanner,withworkplanobjectivesalignedwithnationalpriorities.TheworkplanalsoincludesspecificactivitiestofollowuponrecommendationsfromEITIreportingandValidation.ItappearsthatconsultationsaroundMongolia’sfirstEITINationalForuminUlaanbaatarinearlyNovember2015weretakenintoaccountintheworkplan’sdevelopment,evenifformulationofalonger-termplanto2020discussedattheNationalForumremainsoutstanding.Thelackofbroaderconsultationswithineachofthethreeconstituenciesisaconcern.TheMSWGshouldensurethatpreparationsforthe2017workplanincludecanvassingofthe

viewsofthethreestakeholdergroups’broaderconstituencies.Delaysinworkplanimplementationappearreasonablegivenlegislativeandfundingconstraints.

Table1-Summaryassessmenttable:MSGoversight

EITIprovisions Summaryofmainfindings

InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)

GovernmentengagementintheEITIprocess(#1.1)

ThegovernmentiscommittedtoandengagedintheEITIandrelevantgovernmentrepresentativesarepartoftheMSWG.

Satisfactoryprogress

IndustryengagementintheEITIprocess(#1.2)

Companiesareengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Industryrepresentativestakepartinoutreachandeffortstopromotepublicdebate.TheredonotappeartobeanylegalobstaclespreventingcompanyparticipationintheEITI.

CivilsocietyengagementintheEITIprocess(#1.3)

Civilsocietyisengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.CSOrepresentativestakepartinoutreachandeffortstopromotepublicdebate.ThereisanenablingenvironmentforcivilsocietyparticipationintheEITI.

MSGgovernanceandfunctioning(#1.4)

TheMSWGcomprisesrelevantactorsandallstakeholdersfeeladequatelyrepresented.TheTORfortheMSWGaddressestherequirementsoftheEITIStandardandappearstobelargelyfollowedinpractice,evenifdecision-makingsometimesincludesvotinginpractice.HoweverthereisevidenceofkeydecisionsbeingtakenwithoutsupportfromallthreestakeholdergroupsontheMSWGandNationalCouncil.WhiletheMSWGmeetsatmostthreetimesayear,severaladhocworkinggroupsundertakespecificwork,althoughrecordsarenotkeptforthesemeetings.Theoutcomeofdiscussionsbythese

Meaningfulprogress

adhoccommitteesandtheMSWG’sdecisionsonkeyscopinganddatareliabilityquestionsremainsunclear.ThereisnoclauseintheMSWG’sToRrequiringthattheMSWGundertakeoutreachactivitieswithcivilsocietygroupsandcompanies.

Workplan(#1.5)

TheMSWGhasincludedinits2016workplanspecificactivitiestofollowuponrecommendationsfromEITIreportingandValidation.Implementationoftheworkplanappearsbroadlyontrackandspecificdelaysappearreasonable.

Recommendations:1.TheMSWGinencouragedtoconsiderhowmoremeaningfuldiscussionsthroughtheEITI,linkingtonationaldiscussionsandpriorities,couldencouragemoreactiveparticipationbyallstakeholdergroups.2.TheMSWGshouldtaskeachstakeholdergrouptocodifytheirinternalnominationsandrepresentationprocedurestoensureindustryandcivilsocietystakeholdersnotmembersoftheMNMA,PWYPorMECCareempoweredtoseekrepresentation.3.TheMSWGisencouragedtoconsidercombiningtheNationalCouncilandMSWG(asenvisagedinthedraft“EITILaw”),andagreeanappropriatemembershipandmeetingschedulethatwillensureeffectiveoversightoftheEITIprocess.4.TheMSWGshouldensurethatpreparationsforthe2017workplanincludecanvassingoftheviewsofthethreestakeholdergroups’broaderconstituencies.5.TheMSWGisencouragedtoconsultwithgovernmententitiesonthefeasibilityofassigninganofficerineachdepartmenttaskedwithEITIreporting,toensureconsistencyandcapacitybuilding.6.TheMNMAisencouragedtoconsiderestablishingaworkinggrouponEITItoensuregreaterconsultationwithcompaniesnotontheMSWGorNationalCouncil.7.TheMSWGshouldreviewitsToRtoensurethataquorumisachievednotonlywhenamajorityofrepresentativesareinattendance,butalsoseveralrepresentativesfromeachstakeholdergroup.TherevisedToRcouldalsobetterdefinetherespectiverolesandresponsibilitiesoftheMSWGandtheEITIMSecretariat.8.TheMSWGshouldconsiderincludingaclauseinitsToRencouragingMSWGmemberstoparticipateinoutreachactivitieswithcivilsocietygroupsandcompanies.TheMSWGisalsoencouragedtoconsideracodeofconductand/oramendingtheMSWGToRstoaddressconflictsofinterestandthetreatmentofconfidentialinformationbyMSWGmembers.9.TheMSWGshouldclarifythemandateandgovernanceofadhocworkinggroups.10.ThegovernmentisencouragedtoreviewthefinancingforEITIimplementationtoensuresustainabilityoverthelongerterm.

PartII–EITIDisclosures

2. Awardofcontractsandlicenses

2.1 Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtothelegalframeworkfortheextractivesector,licensingactivities,contracts,beneficialownershipandstate-participation.NotethatallpagenumbersrefertotheEnglish-languageversionofthe2014EITIReport109andthe2013EITIReport110.

2.2 Assessment

Legalframework(#2.1)

The2014EITIReportprovidesanoverviewofthelegalenvironmentofextractiveindustries,includingdescriptionsoftherelevantlawsandgovernmentresolutions.Italsonotesrecentreforms,suchasthe2014PetroleumLaw,andplannedreformssuchasthedraftLawonTransparencyintheExtractiveIndustries.Thebriefdescriptionofthefiscalframeworkonlyappearstocoverroyaltyandwindfallsurchargeratespermineral,notthelevelsofotherapplicabletaxesandfees.Whilethedegreeoffiscaldevolutionisnotaddressedinthenarrative,thetwochartsinSection2.2.1(p.16)providethesplitbetweencentralandsubnationalgovernmentrevenues.Section5.1.3.1(pp.61-63)providesadescriptionofgovernmentinstitutionsintheextractiveindustries.

Thelegalandregulatoryframeworkisdescribedinthe2013EITIReport,includingrelevantgovernmentactionplansandlawsformining(pp.28-29,pp.57-58,andpp.58-60),althoughanumberofimportantlawssuchasthe“LawonProhibitingMineralExplorationandExtractionNearWaterSources,ProtectedAreasandForests”(popularlyknownasthe‘LongNameLaw’)arenotdescribed.Relevantlawsandregulationsforoilandgasaredescribed(onpp.59-60,pp.64-65).Thedegreeoffiscaldevolutionandtherolesandresponsibilitiesoftherelevantgovernmentagenciesaredescribed(pp.54-55),althoughthereportdoesnotincludeanexplanationoflocalgovernments’entitlementsto30%ofroyaltiesdirectlyforallcommoditiesasidefromgoldandcopper,asdescribedinsecondarysources111.DespitethesignificantroleoftheNationalSecurityCouncil(NSC),itisonlyreferredtoonce(p.64)anditspowersofvetoonallnewPSAawardsandawardspertainingtomineralstrategicdepositsarenotdescribed.112ThesepowerswerehighlightedinconsultationswithoilandgasrepresentativesontheMSWGandPAMThe2013EITIReportalsoincludedinformationonreformsimplementedin2014(p.58,pp.63-64).

109http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf110http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202013%20en.pdf111Seep.13,WorldBank(2011),“ImplementingEITIattheSubnationalLevel”,http://siteresources.worldbank.org/INTOGMC/Resources/EITI-WBMiningSectorWEB.pdf112Seeforinstancep.86of“AnanalysisofminingsectoreconomicsinMongolia,”ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/gjbres/gjbr-v4n4-2010/GJBR-V4N4-2010-8.pdf

Stakeholderviews

Industryrepresentativesfromboththeminingandoilandgassectorsconsideredthedescriptionofthelegalenvironmentandfiscalframeworkinthe2014EITIReporttobebroadlyaccurate.Upondiscussion,therewasstronginterestfromallindustryrepresentativestoincludemoreinformationondeviationsinpracticefromthelegalframework,giventhefrequentchangesinthepastthreeyears.SeveralCSOsnotedtheyhadaskedformoreinformationontheregulatoryframework,andtheLongNameLawinparticular,tobeincludedinthe2014EITIReportandexpressedsatisfactionthatthedescriptionsincludedweremoreaccuratethaninpastEITIReports.SeveralgovernmentandindustryrepresentativesnotedtheyhadnotactivelyparticipatedinpreparingthedescriptionofthelegalframeworksectionandthatthishadbeenlefttotheIA.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheEITIReportcouldbenefitfrommoreextensivediscussionofpracticalchallengesanddeviationsintheimplementationofrelevantlaws.TheMSWGmaywishtoconsiderincludingamorecompletedescriptionofdeviationsinpracticefromthelegalandfiscalframeworks,andtousetheEITIReporttoraisecommunityandindustryawareness..

Licenseallocations(#2.2)

The2014EITIReportclearlyindicatesthat171newmininglicenseswereawardedin2014(p.65),followingtheliftingofamoratoriumonnewmininglicensesinJuly.TheEITIReportdoesnotprovideinformationabouttherecipientsofthesenewmininglicenses,althoughthisinformationcanbeaccessedthroughMRAM’sonlineminingcadastre114ortheEITIMongoliadataportal115.Thereportalsoprovidesalistofallmininglicensestransferredin2014inthetableinSection5.2.1.1(pp.96-97),includinglicensename,area,nameoftransferorandnameofrecipient.Mininglicenseapplicationprocedures,includingthestandardprocessforawardingandtransferringlicensesandthestandardtechnicalandfinancialcriteriausedforassessingapplications,aredescribedinSection5.2.1(pp.92-98).Theprocessforbiddingformininglicenses,incaseswheremininglicensesareawardedthroughbidding,arealsodescribed,includingbidcriteria.Thesectionassessespracticaldeviationsfromtheproceduresforonlyonespecificlicenseapplication.Thereisnocommentaryonanynon-trivialdeviationsfromstatutoryproceduresforalllicensesallocatedortransferredin2014.

The2014EITIReportalsoprovidesinformationontheprocessofoilandgaslicenseawards.Asoilandgaslicensescanbeawardedthroughbidding,bidcriteriaaredescribedinSection5.1.5.2(p.85).Section5.2.2(pp.99-103)describesthelicenseallocationproceduresforoilandgas,includingadescriptionoftheprocessaswellastechnicalandfinancialcriteriausedforassessingapplications.Italsoassessesdeviationsfromtheproceduresinpractice,usingonelicenseapplicationprocessasacasestudy.However,itisunclearfromtheEITIReportwhetheranynewoilandgasproduction-sharingagreements(PSAs)wereconcludedin2014.Section5.1.5.2(p.85)notesthatSansrynGeologiKhaiguulLLCtransferred

114https://cmcs.mram.gov.mn/cmcs115http://e-reporting.eitimongolia.mn/portalMap/

responsibilitiesofitsPSA(‘NomgonIX’)toUmnudMongolynPetroleum(UMP)companybutdoesnotclarifywhentheoriginalPSAwithSansrynGeologiKhaiguulLLCwasconcluded.FrompressreportshoweveritappearsthattheoriginalPSAwassignedbetweenSansrynGeologiKhaiguulLLCandthegovernmentinFebruary2014.116BasedonproceduresforotherPSAs,117itappearslikelythattheawardofNomgonIXwasthroughcompetitivebidding,althoughthisisnotclarifiedinthe2014EITIReport.NolistofbiddersforthisPSAisincludedinthe2014EITIReport.Itisalsounclearwhy,inSection5.2.2(pp.99-103),theMSWGdescribedtheprocessfortheallocationofDongShengJonggongPetroleumDevelopmentGroup’spetroleumproducinglicenseawardedin2010andnottheNomgonIXPSAconcludedin2014.ThereportdoesnotindicatewhetheranyoilandgasPSCswereawardedortransferredin2014.

Therewerenomininglicenseallocations(eitherforexplorationorproduction)awardedin2013giventhemoratoriumonnewlicensesfrom2010to2014,butoneoilandgasPSAwasawardedin2013.Equally,therewerenolicensetransfersin2013sincetransferswerenotallowedunderthe2006MineralsLaw(whichwasonlyamendedinJuly2014).The2013EITIReportdoesnotnotetheexistenceofamoratoriuminnewlicensing.Whileitdescribesthelicenseallocationproceduresformining(pp.58-59)andforoilandgas(onp.65),itdoesnotcontainanyinformationonthetechnicalandfinancialcriteriausedinallocatinglicensesineithersector.ItdoesnotprovideanydetailsrelatedtotheoilandgasPSAawardedin2013.

Thereisnoadditionalinformationonlicenseallocations,suchascommentaryontheefficiencyandeffectivenessofthesystemsorcommentaryonlicensesawardedpriortothefinancialyearcoveredbytheEITIReport,althoughthisisnotrequiredundertheEITIStandard.

Stakeholderviews

ArepresentativefromapastEITIMIAnotedthattheMSWGhadnotdiscussedthenumberofnewmininglicenseawardsortransfersin2014priortodatacollectionforthe2014EITIReport.TheIAhadreceivedcadastralinformationfromMRAMandcomparedittoinformationinthe2013EITIReporttodeterminethenumberofnewlicenseallocationsin2014.TheIAdidnotreceiveanyinformationfromtheMSWGregardingwhetheranynewoilandgasPSCshadbeenawardedin2014.TheIAincludedinthe2014EITIReportinformationonPSCsreceivedfromPAM.

SeveralCSOandindustryrepresentativesnotedthatthenumberofnewexplorationlicenseallocationsquotedinthe2014EITIReportappearedincorrect.WhilethemoratoriumonnewexplorationlicenseswasliftedinJuly2014,itwasonlyeffectivefromJanuary2015.Therepresentativesnotedthatthe56newexplorationlicenseswereinfactlicensesthathadbeenreturnedtotheiroriginalownersthroughcourtorder,ratherthannewlicenseallocations.Itwasnotedthatthemoratoriumonnewexplorationlicensesdidnotcoverreturnsofsuchlicensestotheiroriginalowners.IndustryandgovernmentrepresentativesdidnotcommentonwhetheranynewoilandgasPSAhadbeensignedin2014.

ACSOrepresentativeprovidedadditionalinformationabouttheapplicationproceduresforexplorationlicenses,whichwerenotincludedinthe2014EITIReport,notingthatincaseswheretwocompaniesappliedforlicensesonoverlappingareas,theholderofthelowestapplicationnumberwasgiven 116InfoMonglia(February2014),‘ProductionsharingcontractbetweentheGovernmentofMongoliaand“SansrynGeologiKhaiguulLLC”wasapproved’,http://www.infomongolia.com/ct/ci/7396117SeePetroleumAuthorityofMongoliawebsite-http://english.pam.gov.mn/content/14192.shtml

preference,highlightingthearbitrary(butnotdiscretionary)natureoflicenseallocations.Itwasalsonotedthattheweeklyuseofapplicationnumbersonafirst-come-first-servedbasisbenefittedthosewithfasterinternetconnections.AccordingtotheCSOrepresentative,the2014EITIReportdoesnotmentionedthe30-dayconsultationperiodfortheaimagandsoumgovernmenttoobjecttoalicenseawardonceMRAMhadapprovedalicense,northeprovisionforcompaniestoappealavetooftheaimagorsoumgovernment.

GovernmentrepresentativesandsomeCSOrepresentativesarguedthattherehadbeennosignificantdeviationsfromthelicenseallocationandtransferregulationsinpracticein2014.Severalminingindustryrepresentativesquestionedhowtheywouldknowofpracticaldeviationsinlicenseallocations,statingthattheybelievedthegovernment’sopiniononthis.Deviationswouldonlybeevidentifacompanyfiledaclaimagainstthegovernmentrelatedtolicenseallocations,accordingtotheserepresentatives.StakeholdersdidnotcommentontheproceduresforawardingthePSAin2014.OilandgascompaniesconsulteddidnotknowwhytheallocationprocessforDongSheng’s2010PSAwasselectedfordescriptioninthe2014EITIReport.ThisPSAwasinfactnotanewaward,butratheraPSArenewalaccordingtotheserepresentatives.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogresswithmeetingthisrequirement.Althoughthe2014EITIReportclearlystateshowmanymineralexplorationandproductionlicenseswereawardedandtransferredin2014,itappearstomiscategoriseexplorationlicensesthatwerereturnedtotheiroriginalownersin2014afterseveralyearsofbeingsuspended,asnewexplorationlicenseawards.

Thereportincludesanoverviewoflicenseallocationprocedures,thetechnicalandfinancialcriteriausedforassessingmininglicenseapplicationsandthebidcriteriaforoilandgasPSAs.TheEITIStandardrequiresinformationon“anynon-trivialdeviationsfromtheapplicablelegalandregulatoryframeworkgoverninglicensetransfersandawards”.TheReportincludesanassessmentforonemininglicenseallocationandoneoilandgasPSC,butnotforalllicensesawardedortransferredin2014.TheStandardisclearthattheinformationshouldcover“alllicenseawardsandtransferstakingplaceduringtheaccountingyearcoveredbytheEITIReport”.TheMSWGshouldalsoensurethatfutureEITIReportsclarifythenumberofoilandgasPSAsconcludedandtransferredandanynon-trivialdeviationsfromtheallocationproceduresforalloil,gasandmininglicensesawardedduringtheyearunderreview.

Licenseregisters(#2.3)

The2014EITIReportprovidesmorecomprehensiveinformationonlicensesthanpreviousEITIReports.Section5.1.4.1(pp.65-67)andAppendix14(pp.207-264)provideanoverviewofactivemininglicensesin2014,includinglicense-holdername,licensenumber,mineralscovered,areaname,areasize,province,district,dateofawardanddateofexpiry.Section5.1.6(pp.87-89)providesanoverviewoftheuraniumminingsector,includinganoverviewof57uraniumlicenses.Theinformationprovidedincludeslicensenumber,license-holdername,areaname,areasize,aimag/province,district/soum,dateofawardanddateofexpiry.Thereisnodataonthedateofapplicationorlicensecoordinatesintheoverviewofmininglicensesnorintheuraniumlicenses.Section5.2.1.3(p.98)describestheMRAMonlinecadastreandprovidesalink.Whilebasicinformationisavailablefromthecadastrefreeofregistration,specialaccess

(throughregistrationfreeofcharge)providesaccesstoalmostallinformationrequiredunderRequirement2.3,includingcoordinates,butnotdateofapplication.

Section5.2.2.3(p.103)providesanoverviewofthepubliclicenseregisterfortheoilandgassector.ItincludesalinktoPAM’spublicregisterof22PSAs(accessiblefreeofcharge)andnotesthattheinformationincludeslicenseareanames,areacodesthatcorrespondtothemaponPAM’swebpageandlicenseholders,butitdoesnotincludecoordinatesofthelicensearea,dateofapplication,dateofaward,durationofthelicenseandcommodityproduced.ThereportalsonotesthatMEITI’seReportingsystemmakes20petroleumlicenseinformationpubliclyavailable,includinglicensenumber,areaname,areasize,licenseholder,licenseissueddateandexpirationdatesontheirwebpagefreeofcharge,althoughthisdoesnotincludedateofapplication,commoditiesbeingproducedorlicensecoordinates.

The2013EITIReportincludesdisclosureoflicenses.Appendix13118containsalistoflicenseholdersinthecountry(all250companiesreconciledaswellasalllicenseholders;radioactivemineralslicenseholders;petroleumlicenseholders).Section6.5.3(p.100)providesanoverviewofchangesinlicense-holdingsin2013andsomegeneralreasonsforthelapsing/withdrawaloflicenses.Table19(p.36)includesdetailsofthe21activePSAs,includingnamesoflicense,dateofaward,GovernmentofMongoliaresolutiongoverningthePSA,license-holdername,countryoforiginoflicenseholderandtypeoflicense(exploration/production).Theinformationcovers3029licenses,whichismorecomprehensivethanthe250companiesincludedinthescopeofreconciliation.However,Chart17(p.62)notesthattherewereatotalof3118activelicensesin2013(1815explorationlicensesand1303mininglicenses).The2013EITIReportincludesanoverview(pp.63-64)oftheWorldBankfundedprojecttodevelopacomputerizedminingcadastresystem,whichwascompletedin2014.

Stakeholderviews

Governmentrepresentativesnotedthatthedateofapplicationisnotdisclosedonthecadastre,butthatthisinformationwasavailableinternally(butnotavailabletothepublic)andthatworkwasplannedinthe2016EITIworkplantodisclosethesedates(underActivity10.4.1).Thecadastreisupdatedeverytimealicenseisawarded,butnotforeveryapplication.Theplanistopubliclylistthedateofapplicationonthecadastreinfuture,althoughnospecificdatehasbeensetandthiswouldrequireanewtechnicalassistanceagreementwiththeWorldBankinordertorevisethestructureofthecurrentcadastre.

OilandgascompaniesconsultedwerenotawareofanyconfidentialityclausescoveringPSAcoordinates,whichwereconsistentlyincludedineachPSA’sannexes,althoughtheynotedtheremaybenationalsecurityconcernsrelatedtothisissuetheywerenotawareof.However,theynotedthattheyconsideredthePSAstobeconfidential,asofJuly2016(seebelowoncontractdisclosure).Since2006,atleast,theprocesswasthatPAMwouldissueapressreleaseonitswebsiteeverytimetheyreceivedanapplicationforanopenoilandgasblock,invitingotherinterestedbidderstoexpressinterestbyaspecificdate,accordingtotheoilandgasrepresentatives.Whilethedateofapplicationwasnotprovidedassuch,itwaspossibletocalculateitsincethedeadlineforexpressionsofinterestprovidedoneachpressreleaserepresented30daysfromtheinitialdateofapplication.However,therepresentativesnoteditwouldnotbepossibletoreconstitutethedatesofapplicationforolderPSAs,particularlythoseinproductionphasethatwereawardedinthe1990spriortoPAM’swebsite. 118Appendix13ispublishedseparatelyfromthe2013EITIReportontheEITIMongoliawebsite(http://www.eitimongolia.mn/sites/default/files/uploads/final-reports/2013%20Report%20annex%20EN.zip)becauseitishundredsofpageslong.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.Whilemostinformationonmininglicensescanbefoundinthe2014EITIReportandtheMRAMonlinecadastre,datesofapplicationforthelicensesaremissing.The2016MSWGworkplanincludesactivitiesrelatedtodisclosingdatesofapplicationforallmininglicenses.TheMSWGshouldworkwithMRAMtoensurethatdatesofapplication,awardandexpiryforalllicensesisfreelyavailableonthecadastreandharmonizethelicensedatabasesmaintainedbydifferentgovernmentagencies.

InformationonoilandgasPSAsisprovidedthroughtheMEITIeReportingportal,althoughdatesofapplicationandlicensecoordinatesarenotprovided.WhilePSAs’coordinatesareavailableinthefulltextofPSAsexpectedtobepublishedontheOpenSocietyForum’sonlinecontractsportaltobelaunchedinAugust2016,todatethisinformationremainsinaccessibletothegeneralpublic.WhileitispossibletoreconstitutethedatesofapplicationforPSAssignedsince2006,thoseforPSAsawardedpriortothisdate(andinparticulartheproducingPSAsawardedinthe1990s)arenotpubliclyavailableatthistime.WhilethecommoditiescoveredbyeachoilandgasPSAisnotprovided,itisimplicitthatthesecoverbothoilandgas.

Contractdisclosure(#2.4)

The2014EITIReportincludesastatementofthegovernmentpolicyoncontractdisclosureandreviewsactualpractice.Section5.5.2.1(pp.122-123)providesanoverviewofgovernmentpolicyoncontractdisclosure,notingfourrelevantlaws(thePetroleumLaw,MineralLaw,NuclearEnergyLawandConcessionLaw).TheStatePolicyontheMineralsSectorrequirespublicationofallinformationonstate-andprivately-fundedgeologicalresearch,exploration,andprocessingactivitiesatalllevelsunlessthereareanylegalbarrierstosuchdisclosures.Italsorequiresthatthetermsoflocaldevelopmentagreementsconductedbetweenaninvestingcompanyandlocalself-governingbodiesmustbetransparent.IntheLawonGlassAccountsadoptedin2014,itisstipulatedthat"Stateandlocal-governmentownedentitiesmustdiscloseinformationonconcessionagreementsandjointventureagreementspublicly”,butthisonlyrequirestheprovisionofinformationabouttheagreement,notthewholeagreementitself.However,Article21oftheLawontheRighttoInformationandInformationTransparency,andArticle3.2oftheOrganizationalConfidentialityLawprovideprotectionforentitieswhichdonotwishtodiscloseinformationonthegroundsofthatdisclosuremightbeharmfultothelawfulinterestsoftheentityanditscompetitiveadvantageinthemarket,orthatinformationrelatestouniqueandconfidentialactivitiesoftheorganizationorbusinessentity.

Section5.5.2.2(pp.123-124)describesactualpracticeofdisclosureofcontracts.Todate,12agreementshavebeenmadepublic,ofwhich11arebetweenlocalauthoritiesandminingcompanies.The12thdisclosedagreementistheOyuTolgoiinvestmentagreement.Inordertoencouragecontractdisclosure,theIAincludedarequestfordisclosureofthecontractssignedwithstateandlocalgovernmentdepartmentsthroughtheEITIreportingtemplates.42ofthe236materialcompaniesreportedbackandprovidedinformationon167contracts(includedinAppendix32(pp.317-325),althoughonlytwocompanies(NoyonGariLLCandAndiinTemuulelLLC)actuallydisclosedtheircontractsinfull.Theothertenpublicly-availablecontractshadbeendisclosedpriortothe2014EITIReport.ThereportalsonotesthatconfidentialityclauseshavebeenremovedfromthenewmodelPSAandminingcontractssince2014.

The2013EITIReportincludesadetaileddescriptionofinconsistenciesingovernmentpolicyoncontractdisclosures,althoughasinglegovernmentpolicyoncontractdisclosureisnotincluded.Sections2.4.3(p.14)and8.4(p.112)refertocontractdisclosureandtotheconfusionbetweenvariousgovernmentbodies(MinistryofMines,PetroleumAuthority)andcompaniesongovernmentpolicyoncontractdisclosure.The2013EITIReportalsoincludesdetailsofcommunityagreements.Appendix14(p.114)includesdetailsof153agreementswithlocalgovernments,concludedby250companiesinthescopeofreconciliation.

Theinformationoncontractdisclosureinthe2013EITIReporthasbeenfolloweduponbytheMSWG.AspartoftheworkinggrouponcontractdisclosuresestablishedinJanuary2015,collaborationwithPAMsuccessfullyremovedtheconfidentialityclausefromnewmodelPSAsdevelopedfollowingtherevisedPetroleumLawin2014.ThethreePSAssignedsincethestartof2015followedthetemplateandarethusrequiredtobedisclosed.ThePAMhasstatedthatitiscommittedtocontractdisclosurebutthatconfidentialityclausesinoldPSAsstoppedthegovernmentfromdisclosingthem.TheAuthorityalsoexpressedconcerntotheWorkingGroupoverthepotentialimpactofdisclosingthetermsoftheoldestPSAsconcludedinthe1990s,whichitstatedincludedfiscaltermsthatweredisadvantageoustoMongolia,andthepotentialforapplicantsfornewerPSAstodemandequivalentterms.TheMSWGworkinggrouponcontractdisclosurehasmetallcompaniesholdingexistingoilandgasPSAsinMay2016toseektheirwrittenagreementtodisclosetheirPSAcontracts.

Stakeholderviews

AgovernmentMSWGrepresentativethatthegovernmentwasgenerallysupportiveofcontractdisclosure.Therepresentativenotedanumberoflegalrequirementsforcontractdisclosure,includingtheneedfornegotiationsrelatedtocontractnegotiationsonlargeminingprojectsthataresubjecttoparliamentaryscrutiny,andtheprovisionsoftheGlassAccountLawrequiringallgovernmentexpenditurecontractstobepublishedwithinfivedaysofsignature.

SeveralindustryandCSOrepresentativesnotedthatonlythelargestminingprojectsheldcontractswiththegovernment,intheformofstabilisationorinvestmentagreements,whilethemajorityofminingprojectsweregovernedonlybymininglicenses.CSOsnotedthatsincetherewereonlyahandfulofminingcontracts,theyhadaskedforagreementsbetweenminingcompaniesandlocalcommunitiestobedisclosed.Theintroductionofcommunitydevelopmentagreements(CDAs)in2016washighlightedbyCSOs,includingtheirclausesrequiringpublicdisclosureoftheseagreements.

StakeholdersnotedthatithadorganisedtwomeetingsoftheMSWG’scontractdisclosureworkinggroupin2016.Thefirst,on18March,wasaninternalmeetingtodiscussdevelopmentoftheOSF’scontractsportal,whilethesecond,on11May,washeldtogetherwiththeMinistryofMiningandoilandgasPSA-holderstodiscussdisclosureofallactive24PSAsasof2016.Whileoilandgascompaniesagreedtodisclosetheircontractsinprinciple,albeitwithoutsensitiveinformationsuchasfiscaltermsandfeasibilitystudiesinthePSAs’annexes,theEITIMSecretariatnotedthatthe15June2016deadlineforcompaniestosendtheircontractshadpassedwithnocompanieshavingprovidedcopiesoftheircontractsasof1July2016.WhileoilandgasrepresentativesconsultednotedthatholdersofnewerPSAswouldagreetopublishtheircontracts(albeitwiththeredactionsabove),holdersofPSAssignedinthe1990swouldlikelywaituntilthenegotiationsaroundconvertingtheirPSAstothenewmodel.TheoilandgasrepresentativesconsultednotedthatPAMintendstoconvertallexistingPSAstothenewmodelbytheendof2016,whichwouldrequiretheirdisclosure,althoughtheyexpressedreservationsaboutthistimeframe.Itwasnotedthatmuchwoulddependonwhethertherewouldbealegalobligationto

disclose.

SeveralCSOsnotedthatdevelopmentofthecontractsportalhadbeenincludedinthe2014,2015and2016workplans.Itwasnotedthatwhileacommonunderstandingofthedesirabilityofdisclosingcontractswasreachedduringmeetingswithgovernmentandcompaniesin2014,onlytwominingcontractshadbeendisclosedtodateandnoPSAhadbeendisclosedasofJuly2016.Itwasnotedthatmorecapacitybuildingandpublicitycampaignswereneededtopressurecompaniestodisclosetheircontracts.OneCSOrepresentativenotedthat,attheMay2016meeting,governmentandindustryrepresentativeshadgonebackonthecommonunderstandingaboutthebenefitsofcontractdisclosureandraisedconcernsregardingtheconfidentialityofcontracts.However,therepresentativesnotedthatconfidentialityclausesinPSAsonlyreferredtospecificsectionsofthecontract,suchasfiscaltermsandfeasibilitystudies,ratherthanthewholecontract.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheEITIReport’srecommendationonclarifyinggovernmentpolicyoncontractdisclosureisbeingactivelyfollowedup,andconfidentialityprovisionshavebeenremovedfromthenewmodelPSAdevelopedin2015.AnewcontractsportalisduetobelaunchedinAugust2016,withover100contractsofvarioustypes(investmentagreements,production-sharingagreements,sustainabilityagreementsandlocaldevelopmentagreements).TheMSWGisencouragedtoworkwithPAMtoclarifythetimelineforconversionofexistingPSAstothenewmodelPSAandthelegalimplicationsintermsofcontractdisclosure.

Beneficialownershipdisclosure(#2.5)

MEITIhasundertakenworkonbeneficialownership(BO)disclosuresince2014.AsafirststageinexaminingBO,thescopeforthe2013EITIReportincludedarequirementtoaskcompaniesfordetailsoftheirlegalownership.TheMSWGmeetingon11March2014agreedonthedefinitionofBOtoreflectarticle4.1.26oftheMongolianLawonSecurities.The2013and2014EITIReportsdisclosedinformationonthelegalownershipof215companiesand26companiesrespectively,whichincludedinformationontheBOofcertaincompanies.FollowingextensivediscussionofthenewBOrequirement(#2.5)ofthe2016EITIStandardatits22April2016meeting,theMSWGagreedtoestablishaBOtechnicalworkinggroupchairedbyEnkhbayarNemekhbayar,headoftheFinanceandAccountingDepartmentoftheMinistryofMiningandmemberoftheMSWG.119Its20membersincluderepresentativesfromtheMinistryofJustice,theFinancialandRegulatoryCommission,theNationalStatisticalOffice,theMongolianStockExchange,MRAM,thePetroleumAuthority(PAM),theStateRegistrationBureau,Customs,theGeneralDepartmentofTaxation,ErdenesMongol,twominingcompaniesandfourCSOs.TheOpenSocietyForum(OSF)ispreparingaresearchstudyonBOintheMongoliancontext,whichshouldbepublishedbyAugust2016.TheNaturalResourceGovernanceInstitute(NRGI)planstoincludepreparationsoftheBOroadmapaspartofaweek-longtrainingwiththeMSWGinAugust2016.

Whilethe2014EITIReportdoesnotdefinethegovernment’spolicyonBOdisclosureintheextractive 119Minutesof40thMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup22April2016,unpublished(asof9July2016).

industries,thereportingprocessincludedrequeststoall236materialcompaniestodiscloseBOinformation.Thisincludedinformationonthreelevelsoflegalownershipaspartofthereportingtemplatesforbothoilandgasandminingcompanies.TheIAagreedwiththeMSWGduringtheinceptionworkshopon7July2015tolookintothreelevelsofownershipincorporatingaminimumof5%shareowningbeneficiariesatthefirstlevel,aminimumof25%shareowningbeneficiariesatthesecondlevelandaminimumof51%shareowningbeneficiariesatthethirdlevel.120Theprevious“supplementaryinformation”sectionofthereportingtemplatehavebeenupdatedforthe2014EITIReporttocompriseschedulesandinstructionstoprovide:

(i) thedefinitionofBO

(ii) theEITIpilotreportingtemplate

(iii) definethe3-layersofequityownershipthresholds(whereapplicable)

(iv) linktothewebpage(whereapplicableforpublicly-listedcompanies)

Ofthe236materialcompanies,30companiesdiscloseddetailsoftheirlegalowners,asdescribedinAppendix21.a(pp.305-314),althoughnocompanydiscloseddetailsoftheirultimateBO.ThenewLawonRegistrationofLegalEntities,passedbytheGreatKhuralinMay2015,didnotincludeprovisionforapublicregistryofBOinformationthathadappearedinearlydrafts.Informationisonlyavailableuponspecificrequestandtherearegroundsforwithholdinginformation.ThedraftLawonTransparencyintheMineralResourcesSector(theso-called‘EITILaw’)includesprovisionsrequiringcompaniesinthesectortodisclosetheirBO.

Stakeholdersview

AgovernmentmemberoftheMSWG’sBOworkinggroupnotedthatthegovernment’spolicyonbeneficialownershipdisclosurewasclearforpublicly-listedcompanies(throughtheLawonSecurities)andforpublic-sectoremployees(throughtheAnti-CorruptionLaw),butthepolicyforothercompanieswasstillevolving.SeveralgovernmentrepresentativesnotedthatwhilethedisclosuresrequiredbytheEITIStandardhadexpanded,therewasinsufficientlegalbasisforthesedisclosures.Theneedforparticipationfromhigh-levelgovernmentofficialswasnotedinordertoestablishaclearlegalframeworkforEITI.RepresentativesoftheMNMAnotedthattheirmemberswerelargelysupportiveofdisclosingtheidentityofrealownersofminingcompanies,butthatimplementationwouldbechallenging.Whilelargercompanieswouldbebroadlysupportive,smallercompaniesthatformthemajorityofminingcompaniesinMongoliawouldprovehardertoreach.

Initialassessment

Implementingcountriesarenotyetrequiredtoaddressbeneficialownership.NonethelesstheMSWGhasundertakensomeworkonBO,includingrequestsforBOdisclosureinreportingtemplatesforboththe2013and2014EITIReports.TheresultswereconvertedintoaninteractiveinfographicontheEITIMwebsite.TheMSWGhasalsoestablishedaBOworkinggrouptosteerpreparationsofMongolia’sthree-yearBOroadmapby1January2017,inlinewithRequirement2.5.b.iiofthe2016EITIStandard.WhiledisclosureofBOinformationhasbeenincomplete,withinformationpertainingtolegalownershipinmostcases,theMSWGhasclearlyconsideredtheissueofBOandundertakenworktodisclosesuchinformationinaphasedapproach.InpreparationforenforcementofRequirement2.5ofthe2016EITI 120SeeTopic3.4ofAppendix1and5oftheKPMG2014EITIMongoliaInceptionReport.

StandardanddrawingonthefindingsoftheOSFstudyinAugust2016,thegovernmentisencouragedtoclarifygovernmentpolicyonBOdisclosure.

Stateparticipation(#2.6)

Section5.4(pp.110-115)inthe2014EITIReportdescribesstateparticipationintheextractiveindustriesandnotesthatitgivesrisetomaterialrevenues.

Section5.4.2 (p.111)providesdetailsof the21SOEsoperating intheminingsector.Section5.4 (p.115)explainsthattherearenoSOEsoperating intheoilandgassector,butthatPAMrepresentsthestate’sinterestsinthesector,includingthelevelofstateownershipineachproject.

The2014EITIReportnotesthatthefinancialrelationshipbetweenthestateandSOEsis“primarily”governedbytheHumanDevelopmentLaw(p.110).Itstatesthatincomefromdividendsandfromsalesofsharesoflegalentities,includingSOEs,withproductionlicensesforstrategicallyimportantmineraldepositsarerequiredtobetransferredtoHumanDevelopmentFund.ThelawalsodictatesthatacertainpartofloansandprepaymentsreceivedwithregardtotheusageofstrategicallyimportantmineraldepositsaretobetransferredtotheHumanDevelopmentFund.AccordingtotheArticle21ofthe1996LawonStateandLocalGovernmentProperty,companiesownedbythenationalorlocalgovernmentarenottotakeloansfromthirdpartiesorraisecapitalbyissuingsharesofstockwithoutpriorapprovalfromeitherthestatecentraladministrativebodyinchargeofbudgetandfinance,ortheaimagorCitizen’sRepresentativeKhuralrespectively.

TheMRAMdisclosedgovernmentownershipinatotalof21SOEsintheextractiveindustries(pp.111-112),buttheseSOEswerenotaskedtodisclosetheirlevelofownershipinoil,gasandminingcompanies.Equally,Section5.4(pp.110-115)doesnotclarifydetailsofanychangesinownershipinanySOEorSOEsubsidiaryin2014.ThisinformationisnotprovidedintheIA'sinceptionstudyorinminutesofMSWGmeetingsonscopingdecisionsorduringtheinceptionphase.TheEITIReportdoesnotdescribeanypoliciesrelatedtoretainedearningsorreinvestment.Equally,thetermsassociatedwiththegovernment’sequitystakeinlicense-holdingcompaniesarenotdisclosed.

Section5.4.5(p.119)providesadescriptionofloansandloanguaranteestoSOEs.TwoSOEs(ErdenesTavanTolgoiandShiveeOvoo)reportedloanswithinformationincludingloanname/number,debtcontractdate,useofloan,amountandinvolvedparties.ItalsonotesthatwhiledetailedinformationonloanandloanguaranteeswasrequestedduringdatacollectionfromallSOEsincludedinthereconciliationscope,allbuttwoSOEseitherreportedthattherewerenoloansfromthegovernmentordidnotdiscloseanyinformationpertainingtoloansandguaranteesfromthegovernment.The2014EITIReportdidnotspecificallynametheSOEsthatdidnotreportanydetailsofloansorloanguarantees,althoughthiscanbeinferred.

The2013EITIReportexplainsthatthegovernmentholdsownershipin99companies(p.45),butitonlydisclosesthelevelandchangeofownershipduring2013for11ofthe99companies.Itisunclearhowmanyofthe99SOEsoperatedintheextractiveindustries.ThefinancialrelationshipbetweenSOEsandgovernmentisonlypartiallydescribed.TherulesandpracticesgoverningtransfersoffundsbetweentheSOE(s)andthestate,retainedearnings,reinvestmentandthird-partyfinancingarenotdescribed.Itdoesnotincludedetailsofloansandloanguarantees.ThereisnoinformationaboutloansorloanguaranteestoSOEsorothercompaniesintheextractiveindustries.ThereisnomentionofDevelopmentBankof

Mongolia’sUSD200milliondebtinjectionintoErdenesTavanTolgoiin2013.121Onpp.47and49thereisnomentionofthemannerinwhichthegovernmentfinances/exercisesa34%stakeinstrategicdeposits.

Stakeholderviews

GovernmentrepresentativesnotedthattheStatePropertyCommittee(SPC),responsibleforadministeringstateproperty,wastheagencythatwouldholdinformationonSOEs,inparticularontherulesandpracticesgoverningthefinancialrelationshipbetweenSOEsandgovernment.Nolegalbarrierstodisclosureofthisinformationwerenoted.SeveralgovernmentrepresentativesnotedthattheCompanyLaw,theHumanDevelopmentFundLawandtheStateandLocalPropertyLawwouldcovertherulesandpracticesgoverningthefinancialrelationship,althoughtheywereunsurewhethertherewereanydeviationsinpractice.ThishadnotbeendiscussedbytheMSWGaccordingtostakeholdersconsulted.

TheUSDepartmentofStatehighlightedthelackofclaritysurroundingthestate’sroleasequityowner,intermsofmanagementofrevenuesandoperationofmines,inits2015InvestmentClimateStatement.122ItnotedthatSOEsthatsoughtinternationalfinancing“tended”tofollowstatutoryrulesgoverningtheirfinancialrelationswiththestate,butthat,giventhatinternationalbestpracticewasnotinstitutionalisedin–andattimesatoddswith–Mongolianlaw,“many”SOEs“tended”tofollowMongolianrulesbydefault.Thereportalsorelatedconcernsfrominvestorsoverthegovernment’sabilitytoexecuteitsfiduciaryresponsibilitiesasownerandoperatorsofminesandtheriskthatthegovernmentwoulddivertfutureminingrevenuesforunrelatedexpenses.123

TheIAnotedtheomissionofinformationonstateparticipationwasduetothebureaucracyofgovernment,whichpresentedbarrierstoaccesstoinformationonSOEsinpractice.In2014,theSPCcontrolledmostSOEsasidefromOyuTolgoi,TavanTolgoi,“certainminingproperties”anduraniumpropertiesaccordingtotheUSDepartmentofState.124ACSOrepresentativenotedthattheownershipofSOEswassplitbetweenvariousgovernmententities(includingtheSPC,theStateSecretary,theMinistryofFinanceandErdenesMongol),particularlyduringthe2012-2016periodofcoalitiongovernment.TheCSOrepresentativenotedthiswaslikelylinkedtothepoliticsofcoalitiongovernment,wheregovernmententitiescontrolledbydifferentpartiessoughtcontrolofrevenue-generatingSOEs.ACSOnotedthatthelevelofgovernmentownershipinETTwasunclear:while10%ofitsstockwasdistributedtoMongoliancitizensin2011125,thegovernmenthadsubsequentlyboughtbacksomeoftheseshares,mostrecentlytheweekbeforetheJune2016legislativeelections126,meaninggovernmentownershipinETThad

121Seeforinstanceslide6of“AneconomicassessmentofErdenesTavanTolgoi”bytheEconomicResearchInstituteinMay2014,availableonhttp://eri.mn/ERI_TT.pdf.SeealsoIMF(March2014),ArticleIVConsultations,(p.6),availableonhttps://www.imf.org/external/pubs/ft/scr/2014/cr1464.pdf.122USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf123USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf124USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf125FT(24January2013),‘Mongoliacokingcoalminetroublesmount’,http://www.ft.com/cms/s/0/1883afe8-6622-11e2-b967-00144feab49a.html#axzz4Dp84CvFQ

changedsince2011.TherepresentativenotedthelackofclarityontheamountofsharesboughtbackfromMongoliancitizensbythegovernment,whosubsequentlysoldsomeoftheacquiredsharesbacktoMongoliancompanies.127

SeveralgovernmentandCSOstakeholdersconsultednotedrecentreformsinJanuary2016thatdisbandedtheSPCandtransferreditsresponsibilitiestoErdenesMongol,aspartoftherestructuringofSOEswithsupportfromtheInternationalFinanceCorp.andtheAsianDevelopmentBank(whichagreedUSD35millionloansupportforstrengtheningErdenesMongolinMarch2016128).

ArepresentativefromapastEITIMIAandMSWGmembersconsultednotedthattherehadbeennodiscussionbytheMSWGofloansorguaranteesextendedbygovernmentorSOEstoextractivescompaniesinMongoliapriortodatacollectionforthe2014EITIReport.IndustryandgovernmentrepresentativesconsultedwerenotawareofanyotherloansfromthestateorSOEstoextractivescompanies,althoughtheynotedtheirimpressionthattherewouldbenowayofknowingiftherehadbeenadditionalloansorguarantees.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadeinadequateprogressinmeetingthisrequirement.Whilethe2014EITIReportaddressesstateparticipationintheextractiveindustries,itdoesnotdiscloseallinformationrequiredunderRequirement2.6.Itlists21extractivescompaniesinwhichthestateholdsmajorityequity,someoftherulesandpracticesgoverningfinancialtransfersbetweenSOEsandgovernment,includingrelevantlawsandpracticesrelatedtodividendsandthird-partylending,andsomedetailsofloansandloanguarantees.However,itdoesnotclarifywhethertherewereanychangesinownershipofextractivesSOEsortheirsubsidiariesin2014anditremainsunclearwhetherdisclosuresofloansorloanguaranteesarecomprehensive.Thetermsassociatedwithgovernmentequityineachcompanyarenotdisclosed,andtherulesandpracticesgoverningSOEs’retainedearningsandreinvestmentarenotdescribed.

TheMSWGdoesnotappeartohavediscussedtheissueofgovernmentorSOElendingtocompaniesintheextractiveindustrieswiththeMoFortheBankofMongoliatoascertainthetotaluniverseofgovernmentdirectloans,state-ownedbanks’loansorthird-partyloanstoSOEs.TheInternationalSecretariat’sunderstandisthatwhollygovernment-ownedStateBank129hadextendedloansworthroughlyMNT2.6billiontominingcompaniesin2014,althoughthisaccountedforlessthan1%ofitstotallendingthatyearaccordingtoitsannualreport.130TheUSDepartmentofStatehasestimatedtotalthird-partydebtatETTalonewasUSD700millionin2015,althoughthisincludedobligationstobothpublicand

126TheUBPost(13June2016),‘CabinettobuybackErdenesTavanTolgoisharesfromthepublic’,http://theubpost.mn/2016/06/13/cabinet-to-buy-back-erdenes-tavan-tolgoi-shares-from-the-public/127Forbes(25February2015),‘Mongolia’sendlesslegalflexibility’,http://www.forbes.com/sites/jonspringer/2015/02/25/day-828-mongolias-endless-legal-flexibility/#7a64a3f943ed128USDepartmentofTreasury,MonthlyMDBVotingRecord,March2016,https://www.treasury.gov/resource-center/international/development-banks/Documents/March%202016.pdf129StateBankwebsite,https://www.statebank.mn/w/en/m285130Seep.80,StateBank,2014AnnualReport,https://www.statebank.mn/w/content/2015/11-26/Statebank%20Annual%20report%202014%20Eng_baga.pdf

privatecreditors.131DBMhasstartedpublishinginterimfinancialstatementsontheGlassAccountswebsitesincelate2015132,providingsomeinformationonitsloanportfolioandcreditratingagenciesexpectthegovernmenttocontinueusingthebankasitsmaincreditpolicyvehicletoprovideloanstosectorssuchasinfrastructure,transportandmining.133DevelopmentpartnershaveraisedconcernsoverthefiscalrisksassociatedwithlimitedoversightofSOEs,suchasDBM.134

AcomprehensiveassessmentofstateparticipationisparticularlyimportantforMongoliagiventhestate’sextensiveroleinthesectorandthesignificantoff-budgetstatefundingforSOEs,includingintheextractiveindustries.TheMSWGshouldconsiderclosercollaborationwithongoingtechnicalassistancetoSOEreformasameansofenhancingtheimpactoftheEITIandsupportingbroaderreforms.

Table2-Summaryassessmenttable:Awardofcontractsandlicenses

Legalframework(#2.1)The2014EITIReportaddresstherelevantlaws,regulationsandfiscalregime.

Licenseallocations(#2.2)

Whilethe2014EITIReportprovidessomeusefulinformationonlicenseawardsandtransfers,theexactnumbersoflicensesthatwereallocatedortransferredremainsunclear.Thereportalsofailstodisclosewhethertherewereanydeviationsfromthelicenseallocationprocedures.

Meaningfulprogress

Licenseregisters(#2.3)

Mostaspectsof2.3areaddressedintheEITIReportand/orarepubliclyavailablethroughtheMRAMcadastreandtheeReportingsystem.Howeverinformationondatesofapplicationisnotavailableformininglicenses.Intheoilandgassector,thereisnoinformationondatesofapplication,

Meaningfulprogress

131USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf132WorldBank(November2015),MongoliaEconomicUpdate,http://pubdocs.worldbank.org/en/920971447119845335/meu-nov2015-en.pdf133Moody’s(3November2015),SupportforDevelopmentBankofMongoliatoremainstrong,https://www.moodys.com/research/Moodys-Support-for-Development-Bank-of-Mongolia-to-remain-strong--PR_337354134WorldBank(2015),MongoliaPublicFinancialManagementPerformanceReport,http://www.adb.org/sites/default/files/linked-documents/49210-001-sd-02.pdf

commoditiesproducedandlicensecoordinates.

Contractdisclosures(#2.4)

The2014EITIReportclarifiesgovernmentcontractdisclosurepolicyandprovidesareviewofactualdisclosurepractice.TherehasbeenfollowupbytheMSWGtodevelopacontractsportal,amendthemodeloilandgasPSAstoremoveconfidentialityclausesandtodiscloseallPSAs.

Beneficialownershipdisclosure(#2.5)

TheMSWGhasconsideredbeneficialownershipdisclosureindetailatseveralMSWGmeetingsandhasconductedinitialworkondisclosureoflegalownershipinformation(whichincludessomebeneficialownershipdisclosures)inthe2013and2014EITIReports.

State-participation(#2.6)

The2014EITIReportlists21extractivescompaniesinwhichthestateholdsmajorityequity,someoftherulesandpracticesgoverningfinancialtransfersbetweengovernmentandSOEsandsomedetailsofloansandloanguarantees.HowevertherulesandpracticesrelatedtoSOEs’retainedearningsandreinvestmentarenotdescribed.ThereportdoesnotclarifyanychangesinownershipofextractivesSOEsortheirsubsidiariesin2014anditremainsunclearwhetherdisclosuresofloansorloanguaranteesarecomprehensive.

Inadequateprogress

Recommendations:1.TheMSWGisencouragedtousethedescriptionoftheregulatoryframework–anddeviationsinpractice–intheEITIReportsasameansofclarifyinganymisunderstandingsbetweengovernmentandindustry.Clarifyingtheapplicationoflawsinpracticewouldalsosupportthegovernment’sinvestmentpromotionefforts.2.TheMSWGshouldseekinformationandtheEITIReportshoulddescribeanydeviationsinpracticefromthestatutorylicenseawardprocess.3.TheMSWGshouldworkwithMRAMandPAMtoensurethatdatesofapplication,awardandexpiryforalllicensesisfreelyavailableonthecadastre.TheMSWGcouldalsoconsideropportunitiestoharmonisedatabasesofextractiveindustrycompaniesacrossdifferentgovernmententities.4.TheMSWGshouldreviewtherulesandpracticesgoverningfinancialrelationsbetweenthestateandSOEs(includingloans).TheEITIReportcouldplayausefulroleinimprovingoversightofoff-budgetliabilities,whichhavegrownsignificantlysince2012.5.TheMSWGisencouragedtoworkwithPAMtoclarifythetimelineforconversionofexistingPSAstothenewmodelPSAandthelegalimplicationsintermsofcontractdisclosure.

6.InpreparationforenforcementofRequirement2.5ofthe2016EITIStandardanddrawingonthefindingsoftheOSFstudyinAugust2016,thegovernmentshouldconsiderclarifyinggovernmentpolicyonBOdisclosure.

3. Monitoringandproduction

3.1 Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtoexploration,productionandexports.

3.2 Assessment

Overviewoftheextractivesector,includingexplorationactivities(#3.1)

The2014EITIReportprovidesanoverviewoftheextractiveindustries(Section5.1,pp.47-91).Thisincludestheabsoluteandrelativevalueoftheextractiveindustries,adescriptionofkeyregionsformining(Section5.1.4.3,pp.71-73)andoilandgas(Section5.1.5,pp.84-86)aswellasanoverviewofexplorationinmining(Section5.1.4,p.65,andSection5.1.4.2,pp.68-70)andoilandgas(Section5.1.5,pp.84-86).Appendix15(pp.265-287)providesinformationonthemining,oilandgaslicenseswhereprivately-fundedexplorationactivitiestookplacein2014.Anoverviewofartisanalandsmall-scaleminingisincludedinSection5.1.4.5(pp.79-83),whileAppendix17(pp.296-297)providesmoreinformationbysoum/district,includingthenumberofartisanalminerspersoum,althoughthereisnoestimateofthevalueoftheseactivities.

Stakeholderviews

IndustryandCSOstakeholdersconsultedconsideredtheoverviewoftheextractiveindustriesinthe2014EITIReporttobecomprehensive.CSOsinparticularwelcomedtheexpandeddescriptionofartisanalandsmall-scalemininginthelatestEITIReportandthedisaggregationofinformationbysoum,whichwasseenasparticularlyrelevantgivensubnationalEITIcouncils’demandsforinformation.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.

Productiondata(#3.2)

The2014EITIReportprovidescomprehensiveproductiondata.Section5.1.4.4(pp.74-78)providesinformationonproductionvolumes,valuesandshareoftotalproductionvaluebymineralforall23ofthemineralsMongoliaproduces.Section5.1.4.3(pp.71-73)providesanoverviewofproductionfromthe110companiesthatreportedsuchfiguresdisaggregatedbybothprovince/aimaganddistrict/soum,althoughnotfromallproducingcompanies.Notallmineralproductionisdisaggregatedbyprovince/district,particularlyforcoal.

Sections5.1.5.3and5.1.5.4(pp.86-87)alsoprovideanoverviewofcrudeoilproduction,including

productionvolumesforcrudeoil.WhileitisnotexplicitlystatedthatthereisnocommercialnaturalgasproductioninMongolia,theoverviewofsignificantexplorationactivitiesinSection5.1.5.2(p.85)indicatesthatonlynon-commercialquantitiesofnaturalgashavebeendiscovered.Whiletheprovinceanddistricthostingeachofthethreeproducingoilfieldsarenotdisclosed,itispossibletoreconstitutethegeographiclocationofoilproductionusingthenamesofPSCsprovidedinSection5.1.5.3(p.86)andthelow-definitionmapofoilblocksinSection5.1.5.1(p.84).Whiletheoilproductionvalueisnotprovided,itcaneasilybecalculatedgiventheprovisionofaverageprice.Appendix16(pp.288-295)providesinformationonproductionandsalespermineral,includingproductionvolumesandvalue.

Stakeholderviews

Severalindustryandgovernmentrepresentativesnotedinconsistenciesbetweenvarioussourcesofproductiondata,dependingonthemethodologyusedandthetimingofdatacollection,butsupportedtheinclusionoffiguresfromMRAMinthe2014EITIReport.SeveralgovernmentrepresentativesnotedthatMRAMproducedweeklydataforproductionvolumesandvalueofthe15commoditiesMongoliaproducesandthatitmustthushavebeenamistakeifthe2013EITIReportdidnotincludethisdata.Duringdiscussionsregardingthedefinitionofproductionvalue,itwasnotedthattheproductioncostsofmineralswasconfidentialbutthatthesalepricewaspublicallyavailable.From2015onwardsroyaltiesforcoalandironorearecalculatedonthecontractprice,whileroyaltiesforallothercommoditiesaredeterminedonthebasisofbenchmarkprices.Therewouldthusnotseemtobeanyobstaclestodisclosureofproductiondata.Itwasagreedthattheuseofinternationalbenchmarksforthecalculationofproductionvaluewasproblematic,giventhelowersalepriceofMongolia’skeycommodities(inparticularcoal,whichsellsatlessthanhalfofAustralianfobprices).

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.The2014EITIReportdisclosesvolumesandvaluesofmineralsandcrudeoilproduced,disaggregatedbycommodity,andbystate/regionwhereavailable.Whiletheoilproductionvalueisnotprovided,itcaneasilybecalculatedgiventheprovisionofvolumesandpricingbenchmarks.

Exportdata(#3.3)

The2014EITIReportprovidesmorecomprehensiveinformationonmineralexportsthanpreviousEITIReports.Thesalesvolumes,valuesandshareoftotalsalesvalueareprovidedinSection5.1.4.4(pp.74-78)forall23mineralsproduced,disaggregatedbycommodity.Howeveraccordingtofootnote2inSection5.1.4.4(p.74)thesesalesvolumesandvaluesarerecordedwhenmineralsareshipped,regardlessofwhethertothedomesticorexportmarkets.Allcopper,coal,ironore,zinc,molybdenum,fluorspar,tungsten,silver,tinandleadsalesareexported(meaningthatsalesfiguresrefertoexports),accordingtoFootnote4inSection5.1.4.4(p.74),whichmeansthatsalesvolumesandvaluesofcoal,gold,cement,crushedrock,bricks,chalk,gravel,clinker,limestone,gypsum,zeolite,sand,gravelmix,sandandsiltstone,whicharealsouseddomestically,donotrepresentexports.Thusexportvolumesandvaluesarenotprovidedforcoal,gold,cement,crushedrock,bricks,chalk,gravel,clinker,limestone,gypsum,zeolite,sand,gravelmix,sandandsiltstone.VolumesandvaluesofMongolia’sfivelargestexportedmineralsareprovidedinthetableinSection5.1.4.4(p.75).CrudeoilexportvolumesandvaluesarealsoprovidedinSections5.1.5.3and5.1.5.4(pp.86-87).Whiletheexportfiguresprovideddonotaccountforallmineralexports,itisinferablefromthepiechartinSection5.1.1.3(p.49)thatthefivemineralsfor

whichexportvolumesandvalueswereprovidedaccountformorethan90%ofMongolia’sextractiveindustryexports.Mineralandcrudeoilexportvolumesandvaluesarenotdisaggregatedbyprovinceordistrict.

Stakeholderviews

IndustryrepresentativesconsulteddidnotrecalltheMSWGdiscussingtheissueofmineralexportfigures.GovernmentrepresentativesconsultedconfirmedthatMRAMhadstatisticsformineralexportvolumesandvaluesbutthattheEITIreportingtemplateshadonlyrequestedtheyprovidesalesfiguresinthe2014EITIReport.SeveralindustryandgovernmentrepresentativesnotedthelargediscrepanciesbetweenMRAMandCustomsexportdata,giventhatMRAMdatacoveredproductionintheyearunderreviewthatwasexported,whileCustomsdataincludedadditionalexportssuchasstockpiledmineralsfrompreviousyears’productionandnon-commercialexportssuchassamples.AMRAMrepresentativequestionedthereliabilityofCustomsexportfigures,giventhatthesewerebasedonexporters’self-declarationsandwerenotverified.IndustryrepresentativesconsultednotedthatMongolia’stop-fivemineralexportsneverchanged,althoughthereweresignificantfluctuationsinthesmallermineralexports.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.Whilethe2014EITIReportdoesnotincludeexportvolumesandvaluesforallmineralcommoditiesexported,itprovidesfiguresforthefivelargestcommodityexportsaccountingforover90%oftotalextractiveindustryexports.MRAMpublishesexportvolumeandvaluefiguresforallmineralsexportedinitsannualinformationcirculars,withlessthanone-yeartimelag.135ItisrecommendedthattheMSWGexplores,inconsultationwithMRAM,optionsforincludingexportvolumeandvaluefiguresforallcommoditiesexportedbyMongolia,inadditiontothesalesfiguresalreadyprovided,ontheEITIMdataportalandinfutureEITIReports..TheremayalsobeopportunitiestousetheEITItoreconcileproductionfiguresacrossrelevantgovernmententitiestoimprovethereliabilityofMongolia’sexportstatistics.

Table3-Summaryassessmenttable:Monitoringandproduction

Overviewoftheextractivesector,includingexplorationactivities(#3.1)

The2014EITIReportincludesadetaileddescriptionoftheextractiveindustries,includinginformalactivities,andofsignificantexplorationactivities.

Productiondata(#3.2) The2014EITIReportincludes Satisfactoryprogress

135SeeTable6(p.25),MRAM(2015),MRAMInformationCircular2015,http://www.bgr.bund.de/DE/Themen/Zusammenarbeit/TechnZusammenarbeit/Downloads/1094_Circular2015.pdf?__blob=publicationFile&v=2

volumesofproductioninminingandcrudeoil.Whilethelocationofminingproductionisprovidedforonlysomemininglicenses,itispossibletoreconstitutethelocationofproductionusingtheEITIMdataportal.

Exportdata(#3.3)

The2014EITIReportprovidesexportvolumesandvaluesforonlythefivelargestcommodityexports.MRAMpublishesexportvolumeandvaluefiguresforallmineralsexportedinitsannualinformationcirculars,withlessthanone-yeartimelag.

Recommendations:1.TheMSWGisencouragedtoconsultwithMRAMandtheBankofMongoliatosourcethevolumesandvaluesofallcommodityexports.ThiswouldbeparticularlyrelevanttoinformingthedomesticpolicydebateonMongolia’stermsoftradeandtheimpactoflowerglobalcommoditypricesonMongolia’sbalanceofpayments.2.TheMSWGmaywishtoconsideropportunitiestousetheEITIprocesstoreconcileproductionfiguresacrossrelevantgovernmententitiestoimprovethereliabilityofMongolia’sexportstatistics.

4. Revenuecollection

4.1 Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtorevenuetransparency,includingthecomprehensiveness,qualityandlevelofdetaildisclosed.ItalsoconsiderscompliancewiththeEITIRequirementsrelatedtoproceduresforproducingEITIReports.

4.2 Assessment

Comprehensiveness(#4.1)

Forthe2014EITIReport,theMSWGandtheIArespondedtoarecommendationfromthe2013EITIReport(Section8.2.2,p.109)torevisethemethodforselectingwhichcompaniesshouldberequiredtoreport.The2014EITIReportprovidesadefinitionofmaterialityandajustificationforadoptingatwo-tierapproachtoreconciliationasdefinedinSections2.3.1.1(p.18)and3.1(pp.20-21),3.3.1and3.3.2(pp.28-29).TheMSWGagreedatwo-tierapproachtoreconciliationwiththeIA,includingindividualreconciliationforthelargestcontributorstogovernmentandarisk-basedapproachforsmallercompanies.Italsoagreedtwodistinctmaterialitythresholdsforpaymentstonationalgovernmentandsubnationalgovernments.The2014EITIReportreferstotheoptionsconsideredindeterminingthe

materialitythresholdduringtheinceptionworkshopinJuly2015andreferstotheneedtobalancebenefitsofexpandingcoveragewithcostandcomplexity(p.20).136

Allmaterialrevenueflowswereincludedinthescopeofreconciliationinthe2014Report,whichprovidesarationaleforselecting24revenuestreams,coveringallstreamslistedinRequirement4.1.b.ItdescribestheselectioncriteriaforrevenuestreamstobeincludedinreconciliationinSection3.3.2(pp.28-29).WhileEITIM’seReportingsystemrequiresreportingofatotalof40revenuestreams(atbothnationalandsubnationallevels),theMSWGagreedwiththeIAtoonlyreconcilethelargest24revenuestreams,asdescribedinSection2.3.1.2(p.18).Byselectingthe15largestrevenuestreamsatthenationalleveland9largestsubnationalrevenuestreams,the2014EITIReportprovidesacoverageofreconciliationof99%ofthevalueofbothnationalandsubnationalrevenuestreams.AsnotedinSection4.4(p.16)ofthe2014InceptionReportdated4August2015,thesamereportingtemplatesoriginallyagreedon3January2014wereusedfortheoriginaldatacollectionthrougheReportingandforthe2014Report.ThelistofmaterialrevenuestreamsisprovidedinSection3.4.1.3(pp.33-34)andtheprocessforselectingthemisdescribedinSection3.4.1.2(pp.32-33).WhileAppendix3(pp.152-153)providesalistofthe28revenuestreamsincludedinreconciliation,the2014EITIReportdoesnotincludeadescriptionofeachmaterialrevenuestream,althoughthisinformationisreadilyavailableelsewhereonline.

Atthenationallevel,thematerialitythresholdforindividualreconciliationswassetatMNT250million.CompanieswithtotalpaymentsofmorethanMNT100millionbutlessthanMNT250millionagainsttherevenuestreamsidentifiedasmaterial,wereincludedinsampledreconciliationsunderariskbasedapproach.Atsub-nationallevel,thematerialitythresholdforindividualreconciliationswassetatMNT100million.CompanieswithtotalpaymentstolocalgovernmentsofmorethanMNT30millionbutlessthanMNT100millionwereincluded.Thisapproachyieldedatrancheof242companiesselectedforindividualreconciliation(including183identifiedthroughthenationalmaterialitythresholdand59throughthesubnationalone),aswellasasecondtrancheof66companiesforarisk-basedreconciliation(including44throughthenationalmaterialitythresholdand22throughthesubnationalone).Afterprovidingforcompaniescountedtwice,atotalof236companieswereselectedforreconciliation,covering98.8%ofgovernmentrevenuein2014.The2014EITIReportreferstotheoptionsconsideredindeterminingthematerialitythresholdduringtheinceptionworkshopinJuly2015.137ThematerialcompaniesarelistedinseveralplacesintheEITIReportincludingAppendix7(pp.170-176).

ResultsofreportingbycompaniesisdetailedinSection6.2.3(pp.142-143).Sevencompaniesdidnotreport.Thenon-reportingcompaniesarelistedinSection4.2.2(p.43).Allsevencompanieswerenamedandinclude:

- ErdenesshashirtminingresourceLLC- OyushengmingLLC- UlgazanTsamkhagLLC- MongolBolgarGeoLLC- SpecialMinesLLC- GangarInvestLLC- Gan-IlchLLC

WhiletheiraggregatecontributionisstatedasMNT1.051billion(USD582,377),theircombinedshareof

136SeeInceptionpresentationfromKPMG,7July2015,notpublishedonthewebsite.137SeeInceptionpresentationfromKPMG,7July2015,notpublishedonthewebsite.

totalgovernmentextractivesrevenueisnotprovided,althoughitcanbecalculatedas0.064%oftotalgovernmentrevenues.

Inadditiontothesesevencompanies,fivemorecompaniesinitiallyreportedbutdidnotprovideadditionaldetailswhencontactedtoreconcileinitialdiscrepancies,asdescribedinSection4.2.3.4(p.44).

ThetableinSection4.2.1(p.41)alsoprovidesthevalueofpaymentsfrom23companiesthatreturnedreportingtemplatesinitiallybutdidnotprovideadditionalinformationforresolutionofdiscrepancies:theyaccountedforacombinedMNT2,974billion(USD1.65billion),or0.182%oftotalgovernmentrevenues(althoughthisshareisnotprovidedinthe2014EITIReport).The23companiesarenamedinAppendix4(pp.154-162).

Althoughthe2014Reportincludesasection,4.1.3(p.41),oncomprehensivenessandreliabilityofdatapresented,theIAdoesnotincludeanassessmentofthecomprehensivenessofdatapresented.Inaddition,thematerialityofnon-reportingcompaniesisnotassessedasashareoftotalgovernmentextractiveindustryrevenue.TotalgovernmentextractivesrevenueswereMNT1632billionandthecoverageofreconciliationwas96.57%.138

The2014Report,inSection3.3.3(p.30),clarifiesthematerialitythresholdfordiscrepanciesatMNT100,000(USD55)“foreachreceiptscategory”.Sections4.1.1(p.35)and4.2(p.41)presenttheresultsofreconciliation,includingtheMNT581million(USD322,000)innetdiscrepancies(disaggregatedbetweennational-levelandsubnationaldiscrepancies).Thisaccountsfor0.03%ofgovernment’sinitiallyreportedrevenue.TheinitialgrossdiscrepanciesofMNT271billion(USD150.2million)werereducedtoMNT581million(USD322,000)afterreconciliation,asdescribedinSection2.1(p.13).ThetableinSection4.2.1(p.41)providestheinitialandfinaldiscrepancies,disaggregatedbyrevenuestream:thethreelargestsourcesoffinaldiscrepanciesare,inorderofsize,corporateincometax,employers’socialandhealthinsurance,andlicensefeesfortheexploitationandexplorationofmineralresources.

The2014EITIReportidentifiesthegovernmententitiesreceivingextractiveindustryrevenuesinSection3.4.1.1(p.32).Appendix5(pp.163-164)providesanoverviewoftheinformationprovidedbyeachreportinggovernmententity:itappearsthattwogovernmententities,theStateProfessionalInspectionAgency(SPIA)andKhovdAimag,didnotprovideanyinformationtotheIA.The2014EITIReportdoesnotincludeanassessmentofthematerialityofomissionsbygovernmententitiesnoradescriptionofthereasonsfornon-reporting.FromSection3.4.1.1(p.32)itappearsthatSPIAisonlyresponsibleforcollectingpenalties,whichaccordingtoAppendix3(pp.152-153)amountedtoatotalofMNT30million(USD16,600),whichcouldbeconsiderednonmaterial.WhilepaymentstoKhovdAimagarenotknown,itislikelythesewerealsonon-material.FullunilateralgovernmentdisclosureforallmaterialrevenuestreamsisincludedinAppendix3(pp.152-153).

The2014Reportprovidesseveralrecommendationsrelatedtothecomprehensivenessofreporting.SeveralrevisionstotheEITIMeReportingsystemarerecommendedinSections6.2.1(p.142)and6.2.7(p.144),includingaddressingITcontrolweaknessesthatcouldaffecttheintegrityofthedataandprovidingclearinstructionsforreporting.

TherecommendationinSection6.2.3(p.143)isforgreateroutreachtoandcapacitybuildingofreportingcompanies.Section6.2.4(p.153)notesthelackofdisaggregationinkeyrevenuestreams,suchas 138Whilethisreconciliationcoveragewasnotprovidedinthe2014EITIReport,itcouldbecalculatedfromfiguresprovidedonp.17andp.48.

corporateincometax,andtheimpactonselectionofcompaniesforreconciliation.Largetaxpayersmayhaveonlymarginalactivitiesintheextractiveindustriesbutbeincludedinreconciliationasmininglicense-holdersgiventheirmaterialaggregatepaymentstogovernment.Thesectionthusrecommendsthegovernmentreviseitsrevenuemanagementsystemstodistinguishextractiveindustryrevenuesfromotherincome.

Stakeholderviews

RepresentativesfromtwopastEITIMIAsnotedthattheinceptionphaseofthe2014EITIReportmarkedthefirsttimeanIAhadconsultedtheMSWGonscopingdecisionsandhighlightedthelackofevidenceofpastMSWGdiscussionsonkeyscopingdecisions.OneoftherepresentativesnotedthatthiswasduetothefactthattheToRforthe2014EITIReportwereasignificantimprovementonpreviousToRs,giventhattheyrequiredadistinctinceptionphase.OnepastIArepresentativenotedthatpriortothe2014EITIReport,theEITIMSecretariatandMSWGundertookthescoping,whichtheIAtookasagivenoncecontracted.Forthe2014EITIReport,severalCSOMSWGmembersandtheEITIMSecretariatnotedthattheIAhadproposedonlyoneoptionforkeyscopingdecisionssuchasmaterialityandqualityassurance,onwhichafewmembersprovidedlimitedcommentsandeventuallyapproved.

Twogovernmentrepresentativeswerecriticalofthecurrentmaterialitythresholdadoptedforsettingthescopeofreconciliation.Itwasuncleartothesestakeholderswhy,ifinformationwascollectedfromover1300companies,thisdatawouldnotbereconciledwithgovernmentdisclosures.Severalindustryrepresentativesnotedthataproposalhadbeenputforwardtorevisethematerialitythresholdonseveraloccasions,mostrecentlyattheNationalForumon3November2015.Theproposalwasthattherebetwodifferentthresholds(forexplorationandproductionlicenseholders)sothattheIAwouldnotspendtimechasingexplorationcompaniesmakingsmallpayments.Allstakeholdersconsultedconsideredtheapproachtoselectingmaterialcompaniesforthe2014EITIReportwasanimprovementonpastEITIreporting,particularlygiventhetwo-tierapproach,andnotedthattheMSWGhadapprovedthismaterialitythresholdforcompaniesviaemailfollowingthe7July2015inceptionmeeting.Itwasnotedbyseveralindustryrepresentativesthatrelativelyinactiveexplorationcompaniesonlypaidlicensefeesandthatthelicensesweresuspendedinanycaseifsuchpaymentswerenotmade.Upondiscussion,onegovernmentrepresentativeconsultedrecognisedthatthenumberofcompaniesforwhichgovernmentdiscloseditsrevenuesdidnotmatchwiththetotalnumberofcompaniesholdinglicenses,althoughthishadnotbeendiscussedbytheMSWG.Therepresentativenotedtherewerenopracticalbarrierstogovernment’sdisclosingofinformationonalllicense-holders.

Thereappearstobeconfusionrelatedtothedefinitionofthematerialitythresholdforselectingrevenuestreams.IndustryandCSOstakeholdersconsultedandrepresentativesfromseveralpastIAsconceivedoftheMNT10,000thresholdasapplyingtoindividualtransactions,ratherthantheaggregateannualrevenueperpaymentstream.AllstakeholdersconsultednotedtherehadnotbeenanMSWGdiscussionofthematerialitythresholdforselectingrevenuestreamsforthepastthreeEITIreportingcycles.

ArepresentativefromtheNationalStatisticsOffice(NSO)notedthatthatlastrevisiontoEITIreportingtemplatesagreedinDecember2015includedrequirementstoreportsector-specificfeesonaproject-levelbasis,althoughcommontaxes(suchasCorporateIncomeTax)werestillreportedonacompanybasis.GiventhatproposalsforrevisionstoEITIreportingtemplateswerealwaysvettedbyseveralcommittees,theNSOhadalwaysincorporatedtheNationalCouncil’sandMSWG’ssuggestedamendmentstothetemplates.ItwasalsonotedthatthefinalreportingtemplateswereapprovedjointlybytheNSOandtheMoF.

Thenumberofcompaniesreportinginthe2014EITIReportthroughtheeReportingsystemdroppedto987.InourdiscussionswithgovernmentagencieslikeMRAM,itwasnotedthatthereasonforthelowerlevelofreportingbycompaniesfor2014wasduetothefactthatmanycompanieshadstoppedoperatingorhadgoneintoreceivership.Itwasnotedthatofthemorethan1500companieswithlicenses,380hadsubmittedminingplanstoMRAM,ofwhich300wereapprovedand78wereoperationalandproducing.Yeteveniflicenseholderswerenotproducing,theystillmadematerialpaymentstogovernmentintheformofannuallicensefees.

Twogovernmentrepresentativescalledfortheintroductionofsinglecompanyidentificationnumberstobeusedconsistentlyacrossallgovernmentdepartments,asthiswouldfacilitateidentifyingcompanypaymentsacrossvariousentities.

IndustryandCSOsdidnotexpressanyparticularviewsonthecomprehensivenessofrevenueflowsincludedinreconciliation.Onegovernmentrepresentativenotedthatallrevenuestreamshadbeenincludedandthat,giventhelowmaterialitythresholdofMNT10,000perpayment,theMSWGhadclearlydemonstrateditsdesiretoincludeallrevenueflowsinthescopeofreconciliation.Severalgovernmentrepresentativesexpressedfrustrationatthislowmaterialitythresholdandarguedformorediscussionontheselectionofrevenueflowstobeincludedinthescopeofreconciliation,sothateffortscouldfocusonadequatelydisclosingallinformationrelatedtomaterialrevenueflows.

MSWGmembersconsultedwerenotawareoftheneedfortheIAtoprovideanassessmentofthecomprehensivenessofEITIreporting,notingthattheMSWGtendedtofocusonthesizeofunreconcileddiscrepanciesratherthantechnicaldiscussionsrelatedtothescopeofEITIreporting.TheIAnotedithadnotbeeninstructedtoprovideanassessmentofthecomprehensivenessoftheEITIReport,despitetheprovisionsoftheToR.

Initialassessment

The2014EITIReportincludesadefinitionofthematerialitythresholdforpaymentsandcompaniestobeincludedinreconciliation,includingajustificationforwhythethresholdwassetatthislevel.TheMSWGwasinvolvedinsettingthematerialitythresholdforpaymentsandforcompaniesinJuly2015,althoughtherewassomeconfusionaboutwhetherthematerialitythresholdsappliedtoaggregatepaymentsorindividualrevenueflows.Whileallmaterialrevenuestreamsarelisted,the2014EITIReportdoesnotincludeadescriptionofeachrevenueflow.

Thecompaniesthatdidnotreportarenamedandthevalueoftheircombinedpaymentstogovernmentisprovidedinabsoluteterms.Whilethe2014EITIReportdoesnotincludeanassessmentoftheshareoftotalrevenuesthatnon-reportingcompaniesamountto,noranassessmentbytheIAofthematerialityoftheomissions,thiscanbeeasilyinferredwithavailablefigures.Theshareofnon-reportingcompaniesappearstobeinsignificant.Similarly,theEITIReportnamesthetwonon-reportinggovernmententitiesbutdoesnotprovideanassessmentofthematerialityofomissions,althoughtheseappearstobein-significant.WhilethecommentaryfromtheIAonthecomprehensivenessoftheEITIreportislimitedtoastatementoftheirworkonrepresentinglimitedassurance,itispossibletocalculatethematerialityofomissions.Giventhattheseappearimmaterial,andinlightofthelowmaterialitythresholdadoptedforselectingmaterialrevenuestreams,theInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.However,theMSWGisurgedtoclarifywhetherfuturethresholdsapplytototalpaymentsorindividualrevenuestreams,andtoensurethattheIAincludesaclearerassessmentofthecomprehensivenessofthenextEITIReport.Concernsregardingdatareliabilityareaddressedseparatelyinsection4.6,below.

In-kindrevenues(#4.2)

The2014EITIReportclarifiesthestructureofoilandgasPSAsinSection5.5.7(pp.139-140).Thegovernmentisentitledtoashareofin-kindrevenue(ProfitOil),whichisvariabledependingonthePSA.ForthethreeproducingPSAs,thestate’sshareofin-kindrevenueiscommercializedbythetworespectiveoperators,withtheproceedsthenremittedthroughPAMtotheTreasury.The2014EITIReportreferencesMSGdeliberationsonthesubject:“Duringtheinceptionworkshop,arepresentativefromPAMstatedthatcompaniespayincashfromthesaletotheGovernmentforitsshareundercurrentarrangement.Inthefuturethereareplanstopaysuchprofit-oilshareinoilbarrels.100%ofoilextractedbythecompaniesisexported.ThegovernmentdoesnotselloilinMongolia.”(p.139)Adescriptionofin-kindrevenueflowsundertheproducingPSAsisincludedinSection5.5.7(pp.139-140),alongsidethevalueofcashproceedsofthesaleofthestate’sshareofin-kindrevenues,inaggregateforeachofthetwooperatorsfor2014.

Stakeholderviews

AgovernmentrepresentativeontheNationalCouncilwithjurisdictionovertheoilandgassectorexplainedtheprovisionsforin-kindrevenueunderMongolia’sPSAsystem.Oilandgasoperatorsarerequiredtotransferashareofproductioninkindtothegovernment(theshareisvariableaccordingtothePSA,whicharealldifferent).ForthethreeproducingoilandgasPSAs,thetwooperatorstakecareofcommercialisingthegovernment’sshareofprofitoilandthentransfertheproceedstoPAM(netofmarketingfees).Thegovernment,throughPAM,monitorsthevolumesofcommercialisedoilwiththreeseparatechecksbyacustomsofficeratthewell-head.Thelegalframeworkforminingdoesnotprovideforin-kindpayments.Oilandgascompaniesconsultedconfirmedthattherewerenoin-kindpaymentstogovernmentintheoilandgassectorandthattheproceedsofthesalesofthestate’sshareofProfitOilwerepaiddirectlytothePAMaccountatUlaanbaatarCityBank.

OnegovernmentrepresentativeraisedtheissueofthesaleofETT’sproductionasanexampleofin-kindrevenues,althoughthiswouldnotstrictlycountasin-kindrevenuegiventhattheETTandotherminingSOEsmakematerialpaymentstogovernmentinlinewiththosefromprivately-heldcompanies,suchastaxes,licensefees,etc,aswellasdividends(eithertoErdenesMGL,whichisapartoftheHumanDevelopmentFund,forfourSOEsandtotheStatePropertyCommissionforallotherSOEs)butthisdoesnotincluderevenuesderivedfromthesaleofin-kindrevenue.State-ownedminingcompanieslikeETTselltheirproductionandpayfees,taxesanddividendstogovernmentonthebasisoftheirsales.DespitetheabsenceoflegalbarrierstodisclosingsalesofETT’scoalproduction,inpracticethesewerenotdisclosedasgovernmentrepresentativeswereconcernedovertheinformationbeing“misinterpreted”byNGOsgiventhepubliccriticismofETT’scokingcoalpre-salesagreementwithChalcoin2011.139

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicable.The2014EITIReportexplainsthatthestate’sshareofin-kindrevenueunderthethreeproducingoilandgasPSAsiscommercialisedbythetworespectiveoperators,andthegovernmentreceivestherevenueincashrather

139SeeforexampleNews.mn(9March2015),“TavanTolgoistalledbyErdenesTavanTogloi’sChalcodebt”,http://www.news.mn/r/206199

thanin-kind.Thevalueofcashproceedsofthesaleofthestate’sshareofProfitOilisdisclosedandreconciled.Therearenostatutoryprovisionsforin-kindrevenueintheminingsector.WhilenotrequiredundertheEITIStandard,theMSGmaywishtoincludethevolumesofthestate’sentitlementofin-kindrevenuesunderthethreeproducingPSAs.ThiswouldbeparticularlyrelevantgiventheongoingdebateonoversightofthetwocurrentPSAoperators.

Barterandinfrastructuretransactions(#4.3)

Section5.5.3(pp.125-126)ofthe2014EITIReportdescribestheapproachadoptedtoinfrastructureprovisionandbarteragreements,settingthematerialitythresholdatMNT1billion(USD554,100).However,itnotesthatnocasesofinfrastructureprovisionsorbarterswerereportedoridentifiedbyreportingcompaniesorgovernmententities.Threecompanies(TerraEnergyLLC,UsukhZoosLLCandOyuTolgoiLLC)reportedinfrastructureinvestmentsindependentofanygovernmentconcession.Thestate-ownedErdenesMongolLLC,whichmanagesstateparticipationinfiveextractivesSOEs,reporteditsownpublicinfrastructureinvestments.

Stakeholderviews

TheInternationalSecretariatunderstandsfromdiscussionswithindustryandgovernmentstakeholdersthatbarteragreementsexist,particularlyusedbylicense-holdersforpayingtheircontractorsinkind(minerals),andthattheirusehasincreasedastheavailabilityofUSDhasdeclinedinMongoliaduringtheeconomicdownturnsincemid-2012.SeveralindustryrepresentativesnotedthatSOEsinparticularusedpaymentsinkindtocoverthecostsofcontractminingbyprivateserviceproviders.However,neitherindustrynorgovernmentstakeholdersnotedtheexistenceofanybartersforthepaymentoftaxesorfeestogovernment.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicable.The2014EITIReportadequatelycoversinfrastructureprovisionsandbarters,demonstratingthatthesewerenotrelevantinMongoliain2014.

Transportrevenues(#4.4)

Section5.5.8(p.140)ofthe2014EITIReportprovidesanoverviewoftheMSWG’sapproachtotransportationrevenues,althoughnospecificmaterialitythresholdisprovided.TheIAnotesthatitdidnotidentifyanysignificanttransportationrevenuestreamduringtheinceptionworkshop140.Havingincludedarequestforsuchinformationinthereportingtemplates,theinformationreceivedfromErdenesMongolonrevenuefromthetransportofcoalthrougharoadfeeisprovided.Whilethereisnoadditionalinformationsuchasadescriptionofthetransportationarrangements,thisisonlyencouragedunderRequirement4.4.

Stakeholderviews

140ConfirmedinSection4.2.7(p.14)inthe2014InceptionReport.

Mostindustryandgovernmentstakeholdersconsultednotedthatthegovernmentdidnotreceiveanymaterialrevenuesfromthetransportationofmineralsoroilandgas.CSOsconsulteddidnotexpressanyviewontheissue.HoweveroilandgascompaniesconsultednotedthatDongShengPetroleumexportedcrudeoilexclusivelybyrail,whilePetroChinaexportedexclusivelybyroad,subcontractingtransporttotruckingcompanies.Mongolia’srailwayisoperatedbytheUlaanbaatarRailwayMongolian-RussianJointVenture(UBTZ),50%-ownedbyeachgovernment.ArepresentativefromDongShengexplainedthatthecompanypaidUBTZdirectly,notthroughafreight-forwarder,andthatfixedtransportratesweresetaccordingtoweight.

Initialassessment

OurinitialassessmentisthatthisMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.The2014EITIReportdisclosesthevalueoftransportationrevenueslinkedtotheextractiveindustries,evenifitdoesnotsetamaterialitythresholdforsuchrevenues(implyingamaterialitythresholdof0).Whileadescriptionofsuchtransportationarrangementsisnotprovided,sucheffortsareonlyencouragedandarenottakenintoaccountinassessingcompliance.WhiletheMSWG’slackofconsiderationofrailtransportrevenuesfromcrudeoilexportsisaconcern,UBTZwouldnotbeconsideredaSOEunderthedefinitionprovidedinRequirement2.6ofthe2016EITIStandard,whichdefinesanSOEas“awhollyormajoritygovernment-ownedcompany”.ThesignificanceoftransportrevenuesmaygrowinfutureEITIReports,giventhegovernment’stake-overoftheownershipofcoal(roadandrail)transportinfrastructurein2014,withprovisionsguaranteeingaccesstotheinfrastructuretoprivatethird-parties.141GiventheimportanceofroadandrailbasedtransportationofextractivesproductsinMongolia,itisrecommendedthattheMSWGadoptsacleardefinitionofSOEsforfutureEITIreportingandconsidersamoredetaileddescriptionoftransportationarrangementsinfutureEITIReports.Thisshouldincludeappropriatedefinitionsofmaterialityfortransportationrevenues,anddisclosureofstateandSOErevenuesfromthetransportofcrudeoilifmaterial.

TransactionsbetweenSOEsandgovernment(#4.5)

The2014EITIReportclarifiesthatnoSOEcollectsrevenuesonbehalfofthestate,asnotedinSection5.5.7(pp.139-140).Section5.3.1(p.104)disclosesthedividendspaidbyextractivesSOEstogovernment.Whilethegovernmentisentitledtoashareofin-kindrevenuefromthethreeproducingoilandgasPSAs(ProfitOil),theTreasuryreceivestheproceedsfromthesaleofthisprofitoilincash,throughPAM,sincetheoiliscommercializedbytheprivateoperatorsonbehalfofthestate.ThedividendsofstateinvestmentsintheextractiveindustriesareprovidedinAppendix10(pp.192-200)fornationalgovernmentandAppendix11(pp.201-203)forsubnationalgovernments,bothdisaggregatedbycompany.

SOEsmakepaymentstolocalgovernments,equivalentto0.26%oftotalgovernmentextractivesrevenue142,withthesubnationaldirectpaymentsbyeightSOEstovarioussoumsdescribedinSection5.4.3ofthe2014EITIReport(pp.116-117).TheEITIReportdoesnotaddresswhetheranySOEsfailedto

141USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf142ThesumofSOEs’quasi-fiscalexpenditurescanbecalculatedasMNT4167.369million.

reportsuchsubnationalpayments,implying(butnotclearlystating)thatthislistiscomprehensive.WhilemostofthepaymentsreportedinSection5.4.3representfeesandtaxestosubnationalgovernmentsleviedonallextractivescompanies,paymentscategorisedasstateandlocaldividendsareonlyapplicabletoSOEs.

Section5.4.4(p.118)thenlistsdetailsof“subnationaltransfers”byfourSOEstovarioussubnationalgovernments(soumsandaimags)in2013.ThedistinctionbetweenSOEs’“directsubnationalpayments”and“subnationaltransfers”isunclear.TheSOEs’“subnationaltransfers”listedinSection5.4.4appeartoconsistofsocialexpendituresthathavebeenmiscategorised.Inaddition,theIAnotesinfootnotetothetablesinSections5.4.3and5.4.4that“KPMGnotedthatsomeofthesub-nationalpaymentsaboveasreportedbytheentitiesappearhigh.Noverificationofthesereportedfigureshasbeenperformed.”

Section5.4.4(p.118)alsodescribesdetailsofpasttransfersfromSOEstogovernmentin2011-2013,butdoesnotmentionanyfor2014.ItdoesnotappearfromMSWGmeetingminutesandstakeholderconsultationsthattheMSWGconsideredthisdistinctionpriortodatacollectionforthe2014EITIReport.

Stakeholderviews

AgovernmentrepresentativefromErdenesMongolnotedtherewerenolegalbarrierstodisclosingthefinancingstructureofSOEs,northetotaluniverseofcompanydividendspaidtoeitherErdenesMongolortotheStatePropertyCommission.AllMSWGmembersconsultedagreedtherehadbeennoconsiderationofthedefinitionofSOEs’directsubnationalpaymentsand“subnationaltransfers”priortodatacollectionforthe2014EITIReport.

Initialassessment

WhiletherearemanydifferenttransactionsbetweenSOEsandgovernment,theassessmentofRequirement4.5isfocusedontransactionsspecifictoSOEs(suchasdividends).Transactionsthatareapplicabletoallextractivescompanies,includingSOEs,arecoveredunderRequirement4.6below.

TheroleofSOEsoperatingintheextractiveindustriesisdisclosedintheEITIReport.The2014EITIReportprovidesdetailsofpasttransferstotheHumanDevelopmentFundin2011-2013.Nodetailsofanysuchtransfersareprovidedfor2014andtheInternationalSecretariat’sunderstandingisthattherewerenoHDFtransfersthatyear.TheEITIReportdisclosesdetailsofdividendspaidbythe21SOEsoperatingintheextractiveindustries,butdoesnotclearlyaddresswhetherthesedisclosuresarecomprehensive.AsnotedinRequirement2.6,thereisaneedforacomprehensiveassessmentofstateparticipationintheextractiveindustries.Inaddition,theIndependentAdministratorhighlightsconcernsaboutthereliabilityofSOEs’disclosures.Inaddition,the2014EITIReportappearstomiscategoriseSOEs’socialexpendituresas“subnationaltransfers”.Inlightofthis,theInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.TheMSWGshouldconsultErdenesMongol,theSPCandtheMoF,tobetterdefineSOE’stransferstogovernmentdirectsubnationalpayments,determinetheirmaterialityandensurefulldisclosure.ImprovingthetransparencyofcurrentpracticeswouldseemparticularlyrelevanttocurrentreformsofErdenesMongol’scorporategovernance,supportedbytheIFCandtheADB,withaviewtoeventuallytransformingitintoacommerciallyorientedstateassetmanagemententity(similartoTemasek).

Subnationaldirectpayments(#4.6)

The2014EITIReportcomprehensivelylistsanddisclosescompanies’directsubnationalpayments.Section3.3.2(pp.28-29)describestheselectioncriteriaforrevenuestreamstobeincludedinthe2014reconciliation.Byselectingtheninelargestsubnationalrevenuestreams,outofatotalof12subnationalrevenuestreams,the2014EITIReportprovidescoverageof99%ofthevalueofsubnationalrevenuestreams.Totalsubnationaldirectpaymentsaccountedfor5.16%oftotalgovernmentextractivesrevenue.ThelistofmaterialrevenuestreamsisprovidedinSection3.4.1.3(pp.33-34)andtheprocessforselectingthemisdescribedinSection3.4.1.2(pp.32-33).Appendix11(pp.201-203)providesdetailsofsubnationaldirectpaymentsasreportedbycompanies.

Section5.4.3(pp.116-117)describessubnationaldirectpaymentsby8SOEstovarioussoums,andSection5.4.4listssubnationaltransfersfromfourSOEstovarioussoums,withthreeSOEsreportingtransactionsunderbothcategories.However,the2014EITIReportappearstoconfusetheterms“subnationaldirectpayment”and“subnationaltransfer”forSOEs.ThetaxesandfeespaidbySOEstosubnationalgovernmentslistedinSection5.4.3areapplicabletoallextractivescompanies,whilestateandlocaldividendsareapplicableonlytoSOEsandarethuscoveredunderRequirement4.5above.TheIAhasnotedinfootnotestothetablesinSections5.4.3and5.4.4that“KPMGnotedthatsomeofthesub-nationalpaymentsaboveasreportedbytheentitiesappearhigh.Noverificationofthesereportedfigureshasbeenperformed.”

Stakeholderviews

CSOstakeholdersplaceparticularimportanceondirectsubnationalpayments,givendisseminationeventsandsubnationalMSGmeetingshaveshownstrongdemandforthisinformation.Industryrepresentativesalsoseetheinclusionofsuchinformationasdesirable,toensurebetterunderstandingfromlocalcommunitiesofthedegreeofcontributionsbycompaniesoperatingintheirrespectivesoums.SeveralgovernmentrepresentativessawtheestablishmentofsubnationalMSGsashelpfulinimprovingEITIreportingbysoumsandaimags.NoneoftheMSWGmembersconsultedcommentedonthedistinctionbetweensubnationaltransfersanddirectpaymentsbySOEs,notingthatthishadnotbeenconsideredbytheMSWG.

Initialassessment

TheMSWGhastakenconsiderablestepstoincludesubnationalpaymentsinEITIreporting.Companypaymentstosubnationalgovernmentshavebeendisclosed,disaggregatedbypaymentstream.However,whiletheMSWGhasassessedthematerialityofthesetransfersandsetaspecificmaterialitythresholdfordirectsubnationalpayments,thereisconfusionoverthedefinitionofSOEs’“subnationaldirectpayments”and“subnationaltransfers”,andwhilebotharedisclosed,theyarenotreconciledwithsubnationalreceipts.AsnotedinRequirement2.6,thereisaneedtoclearlydefinethescopeofSOEsforthepurposesofEITIreporting.Finally,wenotetheIA’sreservationsoverthereliabilityofSOEs’disclosuresoftheirdirectsubnationalpaymentsandthelackofanassessmentfromtheIAonthecomprehensivenessofthesedisclosures.TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.

Levelofdisaggregation(#4.7)

WhileSection3.2.4(p.26)notesthatEITIdataispresentedbycompany,revenuestreamandreceivinggovernmententity,andfurtherdisaggregatedbynationalandsubnational-levels,the2014EITIReport

doesnotactuallypresentthedatadisaggregatedbyreportingcompanyandrevenueflow.HoweverthisdataisaccessiblethroughtheSummaryDataTemplateforthe2014EITIReportaswellasthroughtheEITIMdataportal.143Section3.2.4(p.26)alsonotesthatthe2014EITIReportdoesnotincludereportingdisaggregatedatproject-level.

TheNationalCouncilconsideredtheissueofproject-by-projectreportingwhenitconstitutedaworkinggrouptoassessthefeasibilityofdisaggregatingcorporateincometaxinformationintheextractiveindustriesatitsmeetingon13January2015.Thiswasseenasafirststeptoreportingdisaggregatedbyproject.

Stakeholderviews

CSOconsultedexpressedsatisfactionatthelevelofdatadisaggregationavailablethroughtheEITIMDataPortal.However,theissueofproject-levelreportinghadyettobediscussedbytheMSWG,accordingtoMSWGmembersconsulted.AgovernmentMSWGrepresentativenotedthatthemajorityofminingcompaniesinMongoliaoperatedasinglemine,whichmeanttheydefactoreportedminingtaxesandfeesonaproject-levelbasis.OneCSOrepresentativeconsultednotedthatwhiletheMSWGhadconstitutedaworkinggroupin2015ondisaggregatingcommontaxeslikecorporateincometaxtodistinguishextractivesfromnon-extractivesactivities,henotedthatthegrouphadmetonlyonceandthatworkstreamwasinactive.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressthisrequirementismet.Ratherthanpresentingalldatainthe2014EITIReportdisaggregatedbycompanyforallrevenuestreams,thisdatawasmademoreaccessiblethroughtheEITIMdataportal,withEITIdatafortheperiod2006-2015available(andsearchable)online.

Datatimeliness(#4.8)

The2014EITIReportwaspublishedinDecember2015,havingbeenapprovedbytheNationalCouncilon18December2015.ReportingcompaniesandgovernmententitiesarerequiredtosubmittheirreportsthroughtheEITIMeReportingsystemwithinthreemonthsoftheendofthefiscalyear(i.e.by31March)annually.BothcompaniesandgovernmententitiessubmittedtheiroriginalreportsontheeReportingsystem(partoftheEITIMdataportal)by31March2015,whichwereaccessibleonlineimmediately,althoughadditionalreportingtemplatesweresubmittedoverthedatacollectionperiodofAugust-November2015.By31March2015,atotalof987companieshadreportedthroughtheeReportingsystemdatausedforthe2014EITIReport.

Stakeholderviews

SeveralCSOMSWGrepresentativesnotedthatpre-reconciliationEITIdatathroughtheeReportingplatformwasverytimely,butthatthereweredifferencesofopiniononwhetheritwaspossibleforCSOstouseit.TheEITIMSecretariatclarifiedthatitwaspossibletousethisdata,aslongasitwasmadeclearthatitwasunreconciled.AMECCrepresentativenotedthatgovernmentminingdatawasavailableona 143Historicaldataover2006-2015isaccessibleontheEITIMdataportal.Itcanbequeriedbynameofcompanyorbylicensenumber.http://e-reporting.eitimongolia.mn/reportList

monthlybasisbutthattheEITIReportwasproducedlessfrequently,whichcausedadilemmaforpeopledecidingonwhichdatasettouse.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheeReportingsystemhashadasignificantimpactontimelinessofreportingandreconciliationofpaymentsnowtakesplacewithin12monthsoftheendofthefiscalyearunderreview,onanannualbasis.

Dataquality(#4.9)

ToRfortheIA:InMarch2015,theMSGusedthetemplateToRforIndependentAdministratorsfromtheEITIinternationalwebsiteasthebasisforprocurementofthe2014EITIReport.HoweveritpublishedthisdrafttemplatewithouttailoringittoMongoliancircumstancesinitscallfortendersontheEITIMongoliawebsite.148IndeedtheMongoliantranslationofthetemplateToRincludesthe[bracketblue]placeholders,thereforeomittingsomeessentialdetails.WhileanumberofunsuccessfulbidderslodgedcomplaintsthroughtheMoF’stenderdepartment,thecontractwassignedinJune2015.

Whiletheinitialreportingtemplatessubmittedbefore31March2015weredesignedaspartoftheeReportingsystem’sdevelopment,andthusbasedonreportingtemplateslastagreedinDecember2013,theMSWGagreedwiththeIAasetofadditionalreportingtemplatesforsupplementalinformationforthefinancialreconciliationaswellaskeycontextualinformation.ThesewerediscussedattheInceptionworkshopon7July2015andagreedaspartoftheInceptionReportinAugust.TherearehowevernoMSWGortechnicalworkinggroupmeetingminutespublishedtoreflectthesediscussions.149

Inaddition,inSection2(p.7)ofthe2014Reportondatacollection,whiletheMSWGhasagreedanalternateapproachtodatacollection(usingtheeReportingplatform),itdidnotincludeprovisionsforconsultationswiththeIndependentAdministratortoensuretheintegrityoftheinformationtransmittedtotheIndependentAdministrator,asrequiredunderSection2.1(p.7)oftheStandardToRforIndependentAdministratorsapprovedbytheEITIBoard.The4August2015InceptionReportdidnotincludeareviewofthequalityassuranceproceduresoftheeReportingsystem,butratherexplained(Section4.5(p.18))theproposedscopeoftheIA’sworkforthe2014Report,whichconsistedofareviewbytheIAoftherepresentationlettertemplateusedtocertifyentities’eReportingsubmissionsandmakerecommendationsforimprovementifrelevant.

InSection3(pp.7-8)ofthe2014Report,theMSWGalsoomittedreferencetoamaterialitythreshold,definedinproportiontototalgovernmentrevenues,asrequiredunderSection3.4(p.7)ofthetemplateToR.ItshouldalsobenotedthattheapprovedToRdidnotcontainanyprovisionsforensuringtheconfidentialityofEITIdisclosurespriortoreconciliation.WhileSection4.6(p.18)ofthe4August2015InceptionReportandSection3.2.5(p.27)ofthe2014ReportdescribetheIA’sprovisionsforpreservingtheconfidentialityofEITIinformation,thisdoesnotcoverdisclosuresforreconciliationgiventhatsubmissionswerethroughtheeReportingsystem,priortotheIA’sappointment.Anumberofsmaller

148http://www.eitimongolia.mn/en/node/4858149SeetheInceptionReportandInceptionWorkshopPresentationbyKPMG,unpublished.

discrepanciesfromthestandardToRforIAsapprovedbytheEITIBoardaredescribedinSection4(pp.8-9)oftheIA'sToRapprovedbytheMSGforthe2015EITIMReport.150TheapprovedToRalsoomitsthetemplate’srequirementforconsultantstohaveexpertiseandexperienceintheoil,gasandminingsectorsinSection4(pp.9-10)onconsultantqualifications.Whilethestatementsofmateriality,relatedtorevenuestreams,unilateralgovernmentdisclosuresandreportingentities,werenotincludedintheapprovedToR,theMSWG’srequirementthattheIndependentAdministratorprepareascopingstudyimpliesthatthesematerialitydecisionswouldbetakenduringthescopingphase.

On3February2016151theMSWG’sevaluationcommitteeissuedacallfortendersforthe2015EITIReport’sIndependentAdministrator,havingapprovedtheToRon1February2016.152Theevaluationcommitteeiscomposedofsevenmembers(twofromeachstakeholdergroupandonefromtheEITIMSecretariat,whoallhavetoundergotrainingintheMoF’sprocurementprocedures).However,followingcomplaintsregardingthetechnicalandcommercialselectionproceduresbythreeofthefourlosingbidders(seestakeholderviewsbelow),theMinistryofFinancerequiredtheEITIMworkinggrouptore-issuethetenderon19April2016153,basedonthesameToR.InJune2016,the2015IAcontractwasawardedtoUlaanbaatarAuditCorp.,itssixthIAcontracthavinglastpreparedthe2013EITIReport.Inmostrespects,theapprovedToRfollowstheStandardToRforIndependentAdministratorsapprovedbytheEITIBoard.TheMSWGalsoincludedprovisionsfortheIndependentAdministratortopreparebothascopingstudyandtheactual2015EITIReport,inSection2(p.3)oftheToR.

TheapprovedToRincludessimilardataqualityassuranceproceduresasinpreviousEITIReports,includingrequirementsformaterialcompaniesand,whererelevantandapplicable,governmententitiestosubmitlettersfromtheirexternalauditorscertifyingthereliabilityofEITIdisclosures.TheMSWGincludedtheBoard-approvedtemplate’slanguageinSection1.2.3(p.6)ofthe2016ToR(“TheMSGmaydecidetophaseinanysuchproceduresothattheconfirmationlettermaybeintegratedintotheusualworkprogrammeofthecompany’sauditor.”)withoutclearlydefiningtheapproachselected.ThisprovidesflexibilityfortheMSWGtodiscussthephasinginofqualityassuranceprocedureswiththeIAduringtheinceptionphaseforthe2015EITIReport.

Reviewofauditandassurance(companies).TheIAdidnotundertakeareviewofmaterialcompanies’auditingpracticesduringtheinceptionphaseforthe2014EITIReport.Howeverthe2014EITIReportintroducesmorecomprehensivequalityassuranceproceduresforcompanies.TheIAconductedareviewofauditingpractices,requestingcopiesofmaterialcompanies’auditedfinancialstatementsfor2013,asdescribedinSection3.3.4(p.30).Appendix12(p.204)containsreferencesto15companies’websiteswheretheIAwasabletoidentifythattheauditedfinancialstatementsarepubliclyavailable.

Sections2.3.2(pp.18-19)and3.3.4.2(p.30)describethequalityassuranceproceduresforcompanydata:arepresentationletter,signedonbehalfoftheboardofdirectorsorseniorexecutive,acopyofaudited2014financialstatementsunderIFRS(InternationalFinancialReportingStandards,currentinMongolia),andattestationsbyexternalauditorsofEITIMsubmissions.Giventhatareviewofauditingpracticeshad

150http://eitimongolia.mn/sites/default/files/uploads/ToR_for_Mongolia_EITI_2015_Report_IA_English_Updated.pdf151http://eitimongolia.mn/en/node/4883152EITIM(February2016),TermsofReference,IndependentAdministratorforthe2015EITIReport-http://eitimongolia.mn/sites/default/files/uploads/ToR_for_Mongolia_EITI_2015_Report_IA_English_Updated.pdf153http://eitimongolia.mn/en/node/4894

notbeenconductedpriortodatacollection,theIAagreedwiththeMSWGtorequirecopiesoftheauditedfinancialstatementsaspartofthequalityassuranceproceduresforEITIreporting.Section2.3.2(p.19)providestheresponsesfromcompaniesandAppendix4(pp.154-162)providesdetailedinformationregardinginformationprovidedbyeachcompany.Ofthe236materialcompanies:

- 173companiessubmittedamanagementrepresentationletter,63companiesdidnot.

- 143companiesprovidedtheirauditedfinancialstatements.

- NocompanyprovidedaISAE3000limitedassurancereportsfromexternalauditors

- TwocompaniesprovidedagreeduponproceduresreportsverifyingamountsreportedtoEITI.(thesecompaniesareallnamedinAppendix4(pp.154-162)

Section4.2.4(p.45)describesthelimitationstotheIndependentAdministrator’swork:“TwocompaniesprovidedagreeduponproceduresreportsverifyingamountsreportedtoM.EITI.Bothannualauditreportsandfinancialstatementswereprovidedby143companiesoutofthe236includedinthereconciliation.”(p.45)Howevernoassessmentofthematerialityofomissions(i.e.asashareofgovernmentextractivesrevenue)isprovided,thereisonlyanestimateintheshareofnon-complyingcompanies:“6outofthe96respondedcompaniespresentedqualifiedauditopinionsontheirfinancialstatements,whichmeansover90%ofcompaniessentunqualifiedauditopinions.”(Section4.3(p.45)).Thestatementalsoimpliesthat140materialcompaniesdidnotprovideauditopinionsontheirfinancialstatements.Finally,thereisnogeneralassessmentbytheIAofthereliabilityofcompanyEITIdata,althoughitraisesconcernsovertheintegrity,confidentialityandreliabilityofdatadisclosedthroughtheeReportingsysteminSection3.2.1.2(p.24).

Reviewofauditandassurance(government).Section5.1.3.1ofthe2014EITIReport(p.63)providesadescriptionoflegislativerequirementsfortheMongolianNationalAuditOffice(MNAO)toundertakeauditsofallofthegovernment’srevenueaccounts.EnactmentoftheGlassAccountsLaw,effectivefromJanuary2015andrequiringdisclosureofallgovernmentexpenditure,isalsoreferencedinSection5.1.3.2(p.63).However,the2014EITIReportdoesnotstatewhethertheMNAOauditreportsarepubliclyavailable.

Thequalityassuranceproceduresforreportinggovernmententitiesreflectthedatacollectionapproach:theMoFistheinitialreporterofallgovernmentdata,withsupplementaryrequestsforinformationsentdirectlytogovernmentagencies.ThequalityassuranceproceduresforgovernmentreportingtemplatesaredescribedinSections2.3.2.3(p.19)and3.3.4.3(pp.30-31):representationletterstobesignedbytheheadofeachgovernmententitytoconfirmthecompletenessandaccuracyoftheinformationpresentedwithintheadditionalinformationtemplates.TheMoFwasalsoaskedtoprovideacertificationletterconfirmingcompletenessandaccuracyofdatainitiallyreported,asdescribedinSection3.3.4.3(pp.30-31).WhiletheMNAOandsubnationalauditofficesdidnotprovideanyassuranceforEITIdisclosures,the2014EITIReportappearstomarktheMSWG’sfirstattempttoengagewiththemonEITIreporting.Section3.3.4.3(pp.30-31)describestheengagement:

“CurrentlytheMNAOandlocalgovernmentauditofficesdonotprovideanyassuranceorreportingontheM.EITIreporteddatabygovernmententities.However,theMNAOexpresseditisopentoperformsucharoleinthefuture,subjecttonecessaryresourcesandtimingoftheprocedures,indicatingthatlateMaytoearlyJulyisthemostsuitableperiodforthem.TheMNAOhasanannualactionplanpreparedforeachyear,andideallyinvolvementintheEITIprocesswouldformpartoftheactionitems.Therolemightfallunderthescopeoftheperformanceaudit

departmentoftheMNAOratherthanthefinancialauditdepartment,whichtheMNAOwouldconsiderafterarequesttobeinvolved.”

CompliancewiththeseproceduresisdetailedbygovernmententityinAppendix5(pp.163-164).Intotal,24ofthe41materialgovernmententitiesdidnotproviderepresentationlettersasrequestedbytheIA.,theMoFprovidedonlyasignaturefromahighofficialwiththereportingtemplates,withnodescriptionofthemeaningofthissignaturegiventhat“nospecificrepresentationorattestationwasincludedfromtheMoF.”(Section2.3.2.3,p.19)Whenaskedtoprovidetheconfirmationofcompletenessandaccuracyofdatainitiallyreported,theMoFreplied“itisnotabletoprovidethisletterbecauseitdoesnothavedetailedoversightofeachrevenuestreaminthereporteddata.”(Section3.3.4.3,p.31)TheIAalsoreceivedasummaryofpaymentsreceivedfromextractiveindustrycompaniesgroupedbyreceiptcategoryandsignedbyaMoFrepresentative,describedinSection4.2.3.1(p.43):nosignificantdifferenceswerenotedwiththedatafromtheeReportingsystem,confirmedthroughadditionalcertifiedreportingtemplatestogovernmententities.

ThelimitationsoftheIA’sworkarenotedinSection4.2.4(p.45),butthe2014EITIReportdoesnotincludeanassessmentofthematerialityofomissionsinqualityassuranceprocedures,inshareoftotalgovernmentextractivesrevenue.GiventhattheMoFdidnotprovidetheagreedqualityassurancesforgovernmententities’EITIdisclosures,theimplicationisthattherearenoassurancesoveranyofthegovernmentdatainthe2014EITIReport.

Itisnotpossibletocalculatethisshare,eitherfromthe2014ReportorfromtheEITIMDataPortal,giventhatthetotalpaymentsfromtheseentitiesisnotprovided.Finally,althoughtheIAincludescommentaryonthecomprehensivenessandreliabilityofthedatainSection4.1.3(p.41),noclearassessmentofthelevelofcomprehensivenessandreliabilityoftheEITIReportisprovided.

Onthereliabilityofgovernmentdisclosures,Section2.4.1.2(p.11)ofthe2013EITIReportnotesthat“therewasnoformalassuranceprocess(see2.3.2.4),andthattheinformationcontainedsomeinaccuracies(seenextsection),althoughthesewerenotmaterial.”InSection2.4.2.4(pp.13-14)theIAnotes:“ThegovernmentspreadsheetofreceiptsissignedbyStateSecretaryoftheMoF.Thereis,however,norepresentationorassurancegiveninrespectofthegovernmentreceiptsdeclaredtotheIAforEITI,andthereisnoindicationofwhatthegovernmentsignaturesignifies.”

Section8.3(pp.110-111)providesanoverviewofauditproceduresforgovernmententities,eitherbyNationalAuditOfficeoraqualifiedauditingfirm.Thereisnoassessmentofwhetherthereweredeviationsfromtheseauditrequirementsforgovernmententitiesinpractice.

ThemismatchintimeframeswasmentionedasakeychallengeinpreviousEITIReports,includingthe2013EITIReport.TheMoFwasrequiredtosubmitreportsforthe2013EITIReportonbehalfofthegovernmentinmid-February2014andthisinformationwasthenstoredbytheEITIMSecretariatbeforebeingtransmittedtotheIAinQ32014.HowevertheStateAuditAgencyonlyauditedaccountsofsoumsandaimagsby20April,beforeaconsolidatedauditofgovernmentaccountswasundertakenthereafter.ItwouldthereforenothavebeenpossibletoprovideacertificationofcompliancewithStateAuditsbymid-February2014.

Confidentialityofinformationpre-reconciliation:WhileprovisionsforthesafeguardingofinformationbytheIAhavebeenstrengthenedinthe2014EITIReport,anumberofconcernsareraisedinSection3.2.1.1(p.22-23)aboutlackofsafeguardsintheeReportingsystem,usedfortheinitialdatacollection.Thekeyconcern,accordingtotheIA,focuseson‘root’(Superuser)accounts,whichallowforhumaninterference

inthedatabetweencollectionandreconciliation.

TheeReportingprocessanditsinputtotheIA’sworkisdescribedindetailinSection3.2.1.1(p.22-23):

“ThecurrentE-Reportingdatacollectionprocessisinitiatedbyreportinggovernmententitiesandcompaniesoncetheyaregrantedwithloginaccess.ThereporteddataisthencollectedinanE-Reportingdatabase.Atthedatacollectioncut-offdate,theITconsultantattheM.EITISecretariatpreparesreconciliationdatafromthedatabaseandprovidesittotheIndependentAdministratorinMicrosoftExcelformat.OncetheIndependentAdministratorperformsthereconciliation,itreportsbacktotheE-Reportingsystemthereconciledfigures.Attheend,usersareabletoviewboththeinitialandreconciledfiguresateachcompany’sindividualrevenuelevel.”

ThefirstrecommendationinSection6.2.1(p.142)isforafullreviewoftheeReportingsystemtoensuretheconfidentiality,integrityandreliabilityofthesystem.

TheIAdetailsinSection3.2.5(p.27)thesafeguardsimplementedtoensuretheconfidentialtreatmentofinformationwithintheIA’swork.Safeguardsincluded:

- ElectroniccorrespondencewithcompaniesandgovernmententitieswasconductedviaaspecialemailaddresscreatedonlyfortheEITIproject,andthelistofemployeeswithaccesstothisemailaccountwasrestricted.

- Allelectronicinformationreceivedfromentitieswassavedinafolderwithrestrictedaccess.

- Physicalsecuritytopaperdocumentswasprovidedforbykeepingthedocumentslockedupwhennotinuse.

- Allphonecallswithentitieswereperformedfromarestrictedaccessarea.

- AllemployeesinvolvedintotheEITIprojectwereinstructedontheimportanceofnon-disclosureofconfidentialinformation.

- KPMGpolicies,professionaldutiesandethicsrequireconfidentialityofallsuchdatabyallstaff.

Provisionsforsafeguardingtheconfidentialityofinformationpriortoreconciliationarenotrobustinthe2013EITIReport.Theflowchartinthe2014handbookforreportingentitiesclearlyrevealsthecentralroleplayedbytheEITIMSecretariatincollectinginformationfrombothcompaniesandgovernmententities,whothemselvescentralisetheirdisclosuresthroughtheGeneralDepartmentofTaxationandtheMoF.Thishashoweverbeenresolvedinthe2014EITIReport,wherereportingentities(bothgovernmentandcompanies)inputtheirinformationdirectlyintotheeReportingsystem.However,disclosuresontheeReportingsystemarepublisheddirectlyonthewebsitebeforereconciliation,althoughnomemberoftheMSWGandnoreportingentityseemstohaveraisedanyconcernoverthisprocedure.

SummarydatatemplateshavebeenpostedonthewebsiteforallEITIReports,withgovernmentreports154andcompanyreports155.ThestandardisedsummarydatatemplatewascompiledonthisbasisbytheEITIInternationalSecretariat156,formingthebasisofthedatavisualisationsontheEITIcountry

154http://www.eitimongolia.mn/en/government-reports155http://www.eitimongolia.mn/en/companies-reports156https://drive.google.com/folderview?id=0B7tEEAf2PsWEUjllV1g2Zy02MFE&usp=sharing&tid=0B7tEEAf2PsWEaF84YkN2MUl4Y0U

pageforMongolia.157

Sourcesfornon-financial(“contextual”)informationareconsistentlyprovidedinthe2014EITIReport,whilethisinformationwasnotconsistentlyprovidedfornon-financialfiguresinthe2013EITIReport.

Stakeholderviews

OnlytwogovernmentrepresentativesnotedthattheyhadprovidedinputtotheToRfortheIAforboththe2013and2014EITIReports.SeveralCSOsnotedthattherehadbeenemailexchangesontheToRfortheIA,butthattheyfeltthatMSWGmembersdidnottakesuchrequestsforinputseriouslyandtendednottocomment.TherewereseldomanyMSWGcommentsonthedraftToRfortheIA,buttherewererelativelyminorcommentsfrommembersoftheevaluationcommittee,accordingtoseveralindustryrepresentatives.Biddershadrespondedtothecallforexpressionsofinterestforthe2014EITIReportin2015basedonaToRthatappearedincomplete,accordingtoseveralbidders.

Regardingthetenderforthe2015EITIReportin2016,representativesfromseveralpastEITIMIAsnotedthatallunsuccessfulbiddershadcomplainedfollowingthefirstselectionround.158SeveralCSOsexpressedconcernoverallegationsrelatedtotheIAprocurementprocess,whileindustryrepresentativesdidnotcommentotherthanexpressingsatisfactionthattheprocurementwasweightedtowardsthetechnicalscoresandthatthequalityoftheEITIReportsdependedonthequalityoftheIA.SeveralCSOsquestionedthebasisforcancellingthefirstIAround,statingthiswasonlyanexcuseforsomethingelsegoingon.

Areviewofauditingpracticesbyallmaterialentitiesdoesnotappeartohavebeenundertakenduringtheinceptionphaseofeitherthe2013orthe2014EITIReports,accordingtoMSWGmembersandpastIAsconsulted.GovernmentrepresentativesconsulteddidnotrecalladiscussionofauditpracticesattheMSWGandhadnotrealiseditwastheirresponsibility.OneCSOemphasisedthetimingchallengesposedbytheEITIreportingcycleinMongolia,whereannualgovernmentauditswerefinalisedinJunewhenEITI

157https://beta.eiti.org/implementing_country/7158Theroundwascancelledduetothefactthattwoofthefourbiddershadsubmittedbidswiththewrongdateforthebankguaranteecertificate,accordingtoseveralbiddersandtheEITIMSecretariat.Whiletheinitialcallforexpressionsofinterestincludedthiswrongdate,amemberoftheEITISecretariathadsubsequentlyfollowedupwithaseparateemailcorrectingthedate,accordingtooneofthebidders.However,oneofthebiddersconsultedclaimednottohavereceivedthissecondemailandquestionedwhytwoofthefourbiddersclearlyhadnotreceivedit.OnebidderalsoraisedconcernsovertheinclusionbyoneofthebiddersofaMoFstaffaspartofthebidteam,whichcreatedtheappearanceofaconflictofinterest.TwobiddersconsultedraisedconcernsoverapotentialconflictofinterestgiventhattheheadoftheevaluationcommitteewaspreparingfortheCertifiedPublicAccountant(CPA)testwhenapartneratoneofthebiddingfirmswasthesittingpresidentoftheMongolianInstituteofCertifiedPublicAccountants.Thebidderinquestiondeniedsuchclaims.

Inthesecondround,allbidderseffectivelykneweachothers’commercialoffersandtechnicalscores(althoughnotthetechnicalproposalsthemselves)accordingtoseveralbiddersconsulted,whichmeantthesecondtenderwaseffectivelyapricewarbetweenbidders.Twobiddersnotedthattheevaluationcommitteetookonlyonedaytoconsiderthefourdetailedtechnicalproposals,whichwerehundredsofpageslong,providinginsufficienttimetoassessproposalsindetail.OneofthebidderssuggestedthattheMSWGconsidermovingtoatenderbasedwhollyonthetechnicalproposaltoavoidwhatwasconsistentlycompetitiononpricingalonegiventhatallbiddersweregivensimilartechnicalscores.TheIAcontracthadalwaysbeenbelowtheamountbudgetedbythegovernment,withunspentfundsreturnedtotheMoFeveryyearaccordingtotheEITIMSecretariat.Thesecretariatalsonotedthatthecompositionoftheseven-memberevaluationcommitteehadchangedonlyslightlyoverthepastfiveyears,withanewrepresentativefrombothgovernment(outoftwo)andthesecretariatappointedin2016.RepresentativesfromallpreviousEITIMIAsconsultednotedthatcomplaintshadnotcausedsignificantdelaystotheIAprocurementprocessinpreviousyears.

reportingtendedtoalreadybecompleted.ThequalityassuranceproceduresforcompanyEITIreportingwereagreedfollowingtheinceptionreport,accordingtoMSWGmembersconsulted.

OnegovernmentrepresentativenotedthatanofficialletterhadbeensentfromtheMoFtotheMongolianNationalAuditOffice(MNAO)duringthespringof2015requestingtheagencyundertakeauditsofthegovernment’sEITIdisclosures.Theagencyhadrespondedthatthiswouldbepossible,butonlyifincludedinitsfutureworkplanandapprovedbytheGreatKhuralaspartofthenationalbudget.Thiswasnotincludedthisinthedraft2016NationalBudget.TheMNAOalsonotedthattheywouldonlyprovidefullassurance,whichwouldentailafirstauditofgovernmentsubmissionsandasecondauditofthefinalEITIReport.GovernmentrepresentativeswereawarethiswouldposechallengesatValidationgiventhatithasconsistentlyfeaturedasarecommendationofpastEITIReports.ArepresentativefromtheMNAOnotedthatMongoliawasanactivememberofINTOSAI(andhavebeenpartoftheirWorkingGroupontheAuditofExtractiveIndustriessince2014)andthatMongoliawasdirectlyapplyingatranslatedversionofInternationalStandardsofAccounting.WhilenotingtheopportunitiesofEITIforimprovingextractivesrevenuesauditingstandards,therepresentativenotedthattheMNAOhadprimarilyengagedwithEITIbyattendingdisseminationevents,ratherthanthroughconsultationsonEITIreporting.ItwouldberelevanttoincludetheMNAO’sinputindraftingtheIA’sToRandinselectingtheIAaccordingtotherepresentative,whohighlightedthepotentialfortheMNAO’smandatetoexpandfromfinancialauditstoprocessaudits,assessingimplementationofextractiveindustrylaws.

AgovernmentrepresentativeandpastIAsnotedthatacertificationofqualityassuranceforgovernmentdisclosureswasonlyintroducedinreportingtemplatesusedforthe2014EITIReport.Previously,theIAreceivedqualityassuranceproceduresfromtheMSWG’sscopingandwasnotconsulted.HoweverarepresentativefromapastEITIMIAstatedthattheMoFshouldnotbeinvolvedincertifyingEITIreportinggivenitsfunctionasanimplementationagency;abetterchoicewastheMNAO,whowasstatutorilyindependentandreporteddirectlytotheGreatKhural.AllpastIArepresentativesnotedtheconsistentEITIrecommendationsthatgovernmentdisclosuresbeadequatelyauditedtointernationalstandards.ANSOrepresentativenotedthatthenewmanagementrepresentationletterinthereportingtemplatesagreedinDecember2015includedreferencetoanaudit,butnottointernationalstandardsorcash/accrualbasisofaccounting.Forgovernment,theNSOrepresentativeexplainedthattheMoFhadbeenselectedforcertificationofgovernmentdisclosuresbecauseitwasthefinalrecipientofthedatabeforesubmissiontotheeReportingportal.

Severalgovernmentrepresentativesexplainedthatfortheirpurposesasimplesignaturefromahigh-levelofficialwassufficienttoprovidedataqualityassurance.ThechallengewithcertificationstatementsthatrefertoauditedfinancialstatementswasthattheMNAOonlyperformedfinancialauditsongovernmentexpenditure,notrevenues.TheGDTisgivenarevenuetargetannuallyandtheMNAOonlyreconcilesthereportsfromtheGDTwiththosefromthesingleTreasuryaccount.GovernmentrepresentativesandpastIAsexplainedthattheRevenueDepartmentreconciledrevenueswithfinancialstatement,whiletheMoF’saccountingandeconomicdepartmentauditedrevenuefromlargetaxpayersthroughthelargetaxpayersoffice.Attheprovincialanddistrictlevels,aMoFrepresentativewastaskedwithreconcilingrevenues,whiletheMNAOperformedonlyauditofgovernmentexpendituresandconsolidatedrevenues.AccordingtooneCSO,theclosesttoanauditorforallgovernmententitiesincludinglineagencieswastheSPIA,whichanswerstotheStateSecretary,responsibleforinspectionoflegalcompliance,including‘validating’governmentrevenuesagainstreceipts.

TheUSDepartmentofStatehashighlightedthedeviationsfrominternationalbestpracticesof

governanceandaccountingamongSOEsthatdonotseekinternationalfinancing.Ithighlightstheinconsistenciesincorporategovernance,management,disclosureandaccountingbetween“some”SOEsandforeign-investedfirmsthatfollowtheinternationalrules.160

Largercompanies,whopaytaxtotheGDT’slargetaxpayers’office,tendedtobeauditedbyreputablecompanies,whilethequalityofsmallercompanies’auditsvariedsignificantlyandwasnotconsistentlyinlinewithinternationalstandards,accordingtoapastIA.Therepresentativenotedthatmostsmallercompaniesproducedonlyshortauditopinions,ratherthandetailedauditreports,whichwerenotnecessarilyreliable.IndustryrepresentativesclaimedqualityassuranceofEITIreportingwasatrustissue,citingthetaxdisputesoverOyuTolgoiandSouthGobiSandsasevidenceofthegovernment’slackofunderstandingofinternationalauditingstandards.

ArepresentativefromapastIAnotedthatitconsideredthereviewoftheeReportingqualityassurancetobepartofthescopeofworkforthe2014EITIReport.SeveralgovernmentrepresentativesnotedthattheeReportingsystemstillposedchallengesforMRAMandCustomsinparticular,giventhattheydidnotmaintainsingleidentificationnumbersforcompanies.SeveralgovernmentrepresentativesalsonotedthatthequalityofdatadisclosedtoEITIwouldbeimprovedifthenumberofcompaniesincludedinreconciliationwasreduced.GovernmentrepresentativesandpastIAscouldnotfullyconfirmthereliabilityofgovernment’sEITIreporting,giventhelackofqualityassuranceforgovernmentreporting.However,theyarguedthatreconciliationoffiguresprovidedsomedegreeofqualityassuranceinitself,albeitnotthatofaninternationalaudit.AnMNAOrepresentativehighlightedthedifferencesinfiguresproducedbydifferentgovernmententities,betweenMRAMandSPCfiguresforinstance,callingforsystemisationofgovernmentfiguresacrossallpublicentities.

CSOandindustryMSWGmembersconsultedstatedtheydidnotconsidertherecommendationsintheEITIReportstobetheirown,butratherthoseoftheIA,althoughtheydidfeelliketheycouldcommentontheIA’sdraftrecommendations.SeveralindustryrepresentativesnotedthattheirinputtoEITIrecommendationshadonlyfocusedonstrengtheningEITIreportingratherthanonbroaderreforms.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.TherehasbeensignificantimprovementintheMSWG’sapprovedToRfortheIA.Whilethe2013ToRdifferssignificantlyfromthetemplateapprovedbytheEITIBoardandthe2014ToRwasnottailoredbeforebeingpublished,the2015ToRreflectsactiveinputfromtheMSWG’sworkinggroup.ThereportingtemplateswererevisedinconsultationsbetweentheadhoctechnicalworkinggroupoftheMSWGandtheIAattheInceptionworkshopon7July2015,althoughitisunfortunatethatthereisnopublicrecordofthesedeliberations.

WhiletheproceduresforagreeingrevisedreportingtemplatesdiffersfromthatrequiredundertheEITIStandard,withfinalapprovalfromtheNationalStatisticsOfficeandtheMinistryofJustice,thesetwogovernmentinstitutionsdonotappeartohaveactedagainstthewishesoftheMSWGandhavenotamendedthereportingtemplatesapprovedbytheMSWG.

Boththe2013and2014EITIReportsincludeareviewofauditandqualityassuranceprocedures,althoughthereisnoassessmentofdeviationsinpractice.Basedonthisreview,theIAforthe2014Reportagreed 160USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf

assuranceprocedureswiththeMSWGduringtheinceptionphase(July2015)andaredescribedinSection3.3.4.2(p.30).Howevertheinceptionofthe2014EITIReportdidnotprovideareviewofthequalityassuranceoftheeReportingplatformnorproposealternativesystemsforfinancialdatacollection.The2014EITIReportincludesanassessmentofwhetherthequalityassuranceprocedureswerefollowed,wheretheIAnotedthattherewasformalassurancefromonly24ofthe41reportinggovernmententities(Appendix5,pp.163-164)andthat63ofthe236materialcompaniesdidnotprovidetherequiredassurancecertifications(Appendix4,pp.154-162).However,theEITIReportdoesnotassessthematerialityoftheseomissions,eventhoughitdoesnamethecompaniesthatdidnotprovidetherequiredassurances,anddoesnotincludeageneralassessmentofthereliabilityoftheEITIReport.

Theprovisionsfortheconfidentialityofinformationpre-reconciliationwerenotrobustforthe2013EITIReport.AlthoughtheuseoftheeReportingsystemforthe2014EITIReporthavepartlyaddressedthisgap,theIAraisedconcernsovertheuseof‘root’(administrator)accounts.DespitetheimprovedqualityassurancerequirementsbuiltintotheeReportingsystemusedforthe2014EITIReport,weunderstandasignificantnumberofcompaniesandgovernmententitiesdidnotcomplywiththeseinpractice.Asignificantnumberofcompaniesdidnotprovidetheagreed-uponqualityassurancecertificationsfortheirdisclosuresinthe2013and2014EITIReports,accordingtoAppendix4(pp.154-162)ofthe2014Report,whiledisclosuresofoverathirdofgovernmententitiesinthe2014EITIReportwerenotcertifiedatallaccordingtoSection6.2.9(pp.145-146)andAppendix5(pp.163-164)ofthe2014Report.TheMSWGmaywishtorevisitthequalityassuranceproceduresbuiltintotheeReportingsystemtoconstrainreportingentities’abilitytoalterqualityassurancecertifications.

The2014EITIReportprovidesmoreconsistentsourcingofallcontextualinformationthaninthe2013EITIReport,whichdidnotconsistentlysourceallcontextualinformation.InpreparingitsnextEITIReport,theMWSGneedstoensurethattheprocessforpreparingtheEITIReportcomprehensivelyaddressesalloftherequirementsandreportingobligationsassetoutintheToRfortheIA.

Table4-Summaryassessmenttable:Revenuecollection

Comprehensiveness(#4.1)

TheMSWGhasagreedadefinitionofmaterialityandmaterialitythresholds.AlthoughtheIAdoesnotprovideanassessmentofthecomprehensivenessofthe2014EITIReport,itispossibleforreaderstoassessthematerialityofomissionsandreachconclusionsabouttheoverallcomprehensivenessoftheEITIReport.

Satisfactoryprogress.

In-kindrevenues(#4.2)

The2014EITIReportstatesthatthetwoproducingoilandgasPSAoperatorscommercialisethestate’sshareofin-kindrevenues(ProfitOil).Therearenoin-kindrevenues

Notapplicable.

inmining.Thevalueofcashproceedsfromthesaleofthestate’sProfitOilisprovided.

Barterandinfrastructuretransactions(#4.3)

The2014EITIReportdetailsinfrastructureprovisionsandnotesthatnobartersexist.

Notapplicable.

Transportrevenues(#4.4)

TheMSWGhasconsideredwhethergovernmentreceivestransportationrevenuesintheminingsectoranddisclosedrevenuescollectedbyErdenesMongol,evenifamaterialitythresholdforsuchrevenuesisnotexplicit(itisonlyimpliedas0).TheMSWGdoesnotseemtohaveconsideredtheexistenceoftransportationrevenuesinoilandgashoweveralthoughweunderstandthatnoSOEs(undertheEITIStandard’sdefinition)collectedtransportationrevenues.

TransactionsbetweenSOEsandgovernment(#4.5)

TheMSWGhasconsideredthetransactionsbetweenSOEsandgovernmentanddiscloseddividendsfromthe21SOEsoperatingintheextractiveindustries.Whilethe2014EITIReportincludesSOEs’paymentstosubnationalgovernment,thereisconfusionbetween“subnationaldirectpayments”and“subnationaltransfers”.

Meaningfulprogress.

Subnationaldirectpayments(#4.6)

TheMSWGhasconsideredsubnationaldirectpayments,disclosedandreconciledtheminthe2014EITIReport,disaggregatedbypaymentstream.However,thereisconfusionbetweenSOEs’“subnationaldirectpayments”and“subnationaltransfers”:whilebotharedisclosed,theyarenotreconciledwithsubnationalreceipts.

Meaningfulprogress.

Levelofdisaggregation(#4.7)

Whilethe2014EITIReportdoesnotpresentalldatadisaggregatedbyrevenuestreamandbycompany,theEITIMdataportalprovidesaccesstothislevelofdisaggregatedinformation.

Datatimeliness(#4.8) TheeReportingsystemhashada Satisfactoryprogress.

significantimpactontimelinessofreportingandreconciliationofpaymentsnowtakesplacewithin12monthsoftheendofthefiscalyearunderreview.

Dataquality(#4.9)

TheMSWGhasneverundertakenareviewofauditingpracticespriortoagreeingqualityassuranceprocedures.Issuesofdataqualityassurance(forbothcompaniesandgovernment)aresignificantin2014EITIReport.WhiletheeReportingsystemusedforthe2014EITIReporthasaddressedconcernsovertheconfidentialityofEITIfinancialinformationpre-reconciliation,itdoesnotappeartohaveresolveddataqualityassurancechallenges.Whilethe2014EITIReportprovidesoverviewofqualityassurances,thematerialityofomissionsbyreportingcompaniesandgovernmententitiesisnotassessed.

Meaningfulprogress.

Recommendations:1.TheMSWGisurgedtoconsiderrevisitingthematerialitythresholdforpayments(Includingin-kindrevenues,transportrevenuesandbarterandinfrastructuretransactions)tostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSWGshouldagreewiththeNationalStatisticsOfficetheproceduresforupdatingreportingtemplatesinconjunctionwiththeIA,andmaketheseprocedurespublic.TheMSWGshouldalsoensurethattheIAincludesaclearassessmentofthecomprehensivenessofthenextEITIReport.2.TheMSWGshouldrevisitthequalityassuranceproceduresbuiltintotheeReportingsystemtoconstrainreportingentities’abilitytoalterlettersofcertificationrequired.3.WhilenotrequiredundertheEITIStandard,theMSGmaywishtoincludethevolumesofthestate’sentitlementofin-kindrevenuescommercializedbythetwooperatorsofthethreeproducingoilandgasPSAs.ThiswouldbeparticularlyrelevanttotheongoingdebateonoversightofthetwoPSAoperatorsandthecommercializationprocessforMongolia’sshareofProfitOil.

4.TheMSWGmaywishtoengagewithErdenesMongol,theSPCandtheMoF,ondeterminingthematerialityofSOEs’transferstogovernmentandbetterdefinedirectsubnationalpayments.ImprovingthetransparencyofcurrentpracticeswouldseemparticularlyrelevanttocurrentreformsofErdenesMongol’scorporategovernance,supportedbytheInternationalFinanceCorporation,withaviewtoeventuallytransformingitintoacommerciallyorientedstateassetmanagemententity(similartoTemasek).

5.Singlecompanyidentificationnumbersacrossallgovernmentagenciescouldalsobeconsideredtoimprovetheefficiencyofdatacollectionwithingovernmentreportingentities.6.GiventheimportanceofroadandrailbasedtransportationofextractivesproductsinMongolia,theMSWGmaywishtoconsideramoredetaileddescriptionoftransportationarrangementsrelatedtotheextractiveindustriesinfutureEITIReportsandconsidertheexistenceoftransportationpaymentsinthe

oilandgassector.

5. Revenuemanagementanddistribution

5.1 Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtorevenuemanagementanddistribution.

5.2 Assessment

Distributionofrevenues(#5.1)

The2014EITIReportprovidesadescriptionofthebudgetprocess(pp.104-105).Anoverviewofsomeextractiveindustryrevenuesincludedinthenationalbudget(royalties,licensefees)isalsoprovided(pp.105-106),includingearmarkedrevenuesfortheGeneralLocalDevelopmentFund,theFundforCityandAimag,theFundforDistrictandSoumandtheHumanDevelopmentFund.TheEITIReportalsoclarifies,onthebasisofinformationprovidedbytheMoFtotheEITIMSecretariat,thatallothertaxesandfeesfromextractivescompaniesarerecordedintheannualbudget,inlinewiththeGeneralTaxLaw(p.105).

Stakeholderviews

AMinistryofFinancerepresentativenotedthattheworkofcentralisingallrevenuesthroughthesingletreasuryaccountwasstillongoing,althoughshedidnotspecifywhetheranyextractivesrevenuesflowedtootheraccounts.IndustryandCSOrepresentativesconsulteddidnotexpressviewsonthedescriptionofrevenuedistributioninthe2014EITIReport,notingthattheMSWGhadnotconsideredthisduringtheinceptionphaseofthe2014EITIReport.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.

Subnationaltransfers(#5.2)

MongoliaoperatesasystemofsubnationaltransferslinkedtoextractivesrevenuesundertheGeneralLocalDevelopmentFund(GLDF)aspertherevised2011BudgetLawand,since2016,aseparatesystemofsubnationaltransfersofroyaltiesandlicensefees.Ashareofroyalties,licensefeesandtheoilresourcelevycollectedbythenationalgovernmentistransferredonamonthlybasistotheGLDFaccordingtoasetformulabasedonfourvariables(notlinkedtowhethersubnationalgovernmentshostextractiveindustries),whichthenexecutessubnationaltransferstoaimags,whointurntransferseachsoum’sshareforwhichtheyareresponsible.TheGLDFreceives5%ofminingroyaltiesand,followingtheamendedBudgetLawinJuly2014,30%ofoilroyalties(forthosePSAsthatincluderoyalties)accordingtoSection5.3.3(p.105),while20%ofoilexplorationandproductionlicensesarenowtransferredtoCityandAimag

fundsand10%todistrict/soumfundssinceJuly2014.Followingsurveysofneedsatthesoumandaimaglevels,between60%and100%oftheGLDFfundsarethenallocatedtosoumandaimagleveldevelopmentfunds.Thefourgeneralcriteriafordeterminingsubnationaltransferstosoumsandaimagsare:developmentindexoflocalgovernment;population;populationdensity,remotenessandsizeofterritory;andtaxinitiativesoflocalgovernment.

The2014EITIReportprovidesadescriptionofstatutorysubnationaltransfers,includingtheformulafordeterminingsubnationaltransferstoaimagsandsoumsinaggregate,butnotthespecificformulausedfordetermining2014subnationaltransferstoindividualaimagsandsoums(pp.106-107).Thedisclosedsubnationaltransfersaccountedfor1.17%oftotalgovernmentextractivesrevenues.Thesourcesusedforeachofthefourvariablesarenotprovidedanditisthusnotpossibletocalculatethetransfersthatshouldhavebeenreceivedin2014byindividualaimagsandsoums.The2014Reportdoesnotrefertoadefinitionorthresholdformaterialityofsubnationaltransfers,whileSection4.3.6(p.16)ofthe4August2015InceptionReportonlyreferstotheEITIStandard’srequirementfortheMSGtodefinematerialityforsubnationaltransfersandtheIA’ssuggestiontoincludesubnationaltransfersinreportingtemplates.Basedonanalysisofmeetingminutesandstakeholderconsultations,nomaterialitythresholdforsubnationaltransfersseemstohavebeenconsideredbytheMSWGinthe2014EITIReport.Section5.3.3.1(p.107)includesdatafromMoFontheactualtransfersmadetoeachaimag’sGeneralLocalDevelopmentFundandtheHumanDevelopmentFundin2014,butnottheactualtransfersfromtheaimagstothesoumsGiventhatthereportdoesnotprovidethelevelofsubnationaltransfersthatwerecalculatedundertheformulafor2014,itisnotpossibletoascertainanydiscrepanciesbetweenthecalculatedtransferandtheactualtransfer.Inaddition,Section5.3.3.1(p.107)notesthattherevenuesharingformulafortransfersmadefromaimagtosoumswasn’tprovidedbyanyoftheaimags,despitebeingincludedinthereportingtemplates.

Section5.3.4.2(p.107)describestheGLDFandtherevenuesourcesandgeneralprocessofallocationstosoumsandaimags.

ThereisnoevidencefrommeetingminutesorotherdocumentsreviewedthattheMSWGdecidedtoreconcilesubnationaltransfers,althoughtheIAdescribesattemptsmadetoreconcilesubnationaltransfers,whichwerebroadlyunsuccessful.TheIAdescribeditsattemptstocontactallprovincial(aimag)governmentsthatreceivedsubnationaltransfersassociatedwithextractiveindustryrevenueinSection5.3.3.1(p.107)butnotesonlythattwoaimags,Bayan-UlgiiandKhentii,reportedtheserevenues.Thereasonsforotheraimags’non-reportingarenotexplained.Thetwoaimags’reportingisdisclosedinAppendix19(p.302)).TheEITIReportdoesnotcommentonthematerialityofsubnationaltransfers,inparticulartransfersfromaimagstolocalfunds.TheMSWGshouldtoconsiderthematerialityofsuchsubnationaltransfersinthenextEITIReport,assessingthepotentialforvoluntaryunilateraldisclosuresinthecaseoftransfersassessedasnon-material.

Stakeholderviews

TheMSWGdidnotdiscussamaterialitythresholdforsubnationaltransfersduringtheinceptionphaseofthe2014EITIReportaccordingtoboththeIAandMSWGmembersconsulted.

SeveralgovernmentrepresentativesnotedthattheMSWGhadnotdiscussedincludinginformationontheactuallevelofsubnationaltransfersandanydiscrepancieswiththeamountssoumsandaimagsshouldreceiveaccordingtotheformula.However,theynotedthatinformationonsubnationaltransferstoindividualaimagsandsoumswaspubliclyavailableinbudgetexecutionreportsandthattheMoF’sFiscalAuditCommitteeconductedmonthlyassessmentsoffiscalperformance.ACSOrepresentative

notedthatwhiletheMoFexecutiveorderestablishingtheGLDFprovidedthegeneralformulaforcalculatingtransferstoaimagsandsoums,itwasunclearwhethertheformulaforcalculatingGLDFtransferstospecificaimagsandsoumswaspubliclyavailable.OilandgascompanyrepresentativesnotedthatoneofPetroChina’stwoproducingPSAsprovidedforroyalties,whileDongSheng’sPSAalsoincludedroyalties,meaningthatashareofroyaltiesfromtwoofthethreeproducingPSAsistransferredtotheGLDF.

AgovernmentMSWGrepresentativehighlightedthesecondtypeofsubnationaltransfersrelatedtoextractiverevenueseffectivefrom2016,wherebyaimagsandsoumsreceive30%ofminingandoilroyaltiesand50%oflicensefees,whichwerepaidtothenationalgovernmentbeforebeingtransferredtothesubnationalgovernmentsonaquarterlybasis.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.The2014EITIReportprovidesthegeneralformulaforcalculatingsubnationaltransfers,butnottheactualformulausedforcalculatingtransferstoindividualaimagsandsoums.Furthermore,discrepanciesbetweenactualandcalculatedtransfersarenotdisclosedintheEITIReport.WhiletheEITIReportincludesadetaileddescriptionoftheGeneralLocalDevelopmentFund,itdoesnotmakereferencetotheMSWG’sdiscussionofthematerialityofsubnationaltransfers.

InformationonactualtransferstoindividualaimagsappearstobeavailablefromtheMoF,basedonsecondarysources.162FiguresforbudgetedandactuallyexecutedGLDFtransfersfromcentralgovernmenttoaimagsareavailablefromtheMinistryofFinance,withinonemonthoftheendofthehalf-year(seeAnnexFforsuchfiguresfortheperiod2013toH1-2016).The‘Ороннутгийнхөгжлийнсан’website163providesunreconcileddataonbothbudgetedandexecutedGLDFtransferstoaimagsandsoums,sourcedfromtheMoF,from2013onwards(whenthe2012BudgetLawcameintoeffect)andincludesfiguresonexpendituresfundedbyGLDFtransfersaswellasafunctionforbrowserstocommentonthedata.Finally,the‘Төсвийнилтодбайдал:СангийнЯам’website164providesinformationonaggregateGLDFtransferstoallaimagscombined.However,detailsabouttheformulausedforthesecalculationsarenotpubliclyavailablefromsecondarysources.

Additionalinformationonrevenuemanagementandexpenditures(#5.3)

The2014EITIReportdescribesrevenueearmarks,withSection5.3.4(pp.107-109)notingearmarksforspecificprogrammesincludingtheFiscalStabilityFund,theGeneralLocalDevelopmentFund,theHumanDevelopmentFundandtheFutureHeritageFundDraftLaw.Theoverviewofthebudget-makingprocessinSections5.3.1,5.3.2(pp.104-105)and5.3.5(p.109)includelinkstotheMNAOperformancereportsfor2014aswellasnationalbudgetplanningandperformanceassessmentsfor2014.Governmentforecastsforthenationalbudgetto2018areincludedinSection5.3.5(p.109). 162Seeforinstancesubnationaltransferstoaimagsin2013,inFigure3(p.16),GovernmentofMongolia(30June2015),DecentralisationPolicySupport,Component3ofGovernanceandDecentralisationProgramme,phaseII,2015-2018,http://cabinet.gov.mn/files/fileres/16010002.pdf163http://tusuv-oronnutag.mn/164http://www.iltod.gov.mn/

Stakeholderviews

MoststakeholdersconsulteddidnothaveanyviewsonincludingadditionalinformationonrevenuemanagementandexpendituresandnotedtheyhadexpectedtheIAtoprovidethisinformationwithouttheneedforMSWGinvolvement.SeveralCSOsnotedthatstakeholdersatthesubnationallevel–bothlocalgovernmentsandcivilsociety–hadexpressedinterestingainingmoreinformationonhowrevenueswereusedatthesoumandaimaglevel.HoweveritwasnotedthattheMSWGhadnotconsideredmeansofextendingEITIreportingtoincludemoreinformationontheuseofrevenuesorbudgetexecution.Thegovernmentproducesadditionalrevenuemanagementinformationonanannualbasis,suchasannualminingrevenueforecastsbasedonreportedplansbythe100largestminespreparedaspartoftheannualbudget,whichcouldbeincludedinfutureEITIReportsaccordingtoaMoFrepresentative.

Initialassessment

ItisencouragingthattheMSWGhasmadesomeattempttoincludeinformationonrevenuemanagementandexpendituresinthe2013and2014EITIReports.Sucheffortsareonlyencouragedandarenottakenintoaccountinassessingcompliance.Wenotetheexistenceofthe‘Төсвийнилтодбайдал:СангийнЯам’website165,whichprovidesdetailedinformationontheapprovedannualgovernmentbudget,andtheMoFwebsite166,whichprovidesmonthlybudgetexecutionreportsthatcoverrevenue,disaggregatedbyrevenuestreamforbothcentralandaimaggovernments.

Table5-Summaryassessmenttable:Revenuemanagementanddistribution

Summaryassessmenttable:

Distributionofrevenues(#5.1)

The2014EITIReportdiscloseshowrevenuesareallocated.

Sub-nationaltransfers(#5.2)

Thegeneralformulaforcalculatingsubnationaltransfersisdisclosedinthe2014EITIReport,althoughtheformulaforcalculatingtransferstoindividualaimagsandsoumsisnotprovided.Discrepanciesbetweenactualandcalculatedtransfersarenotdisclosed.

Meaningfulprogress.

Informationonrevenuemanagementandexpenditures(#5.3)

The2014EITIReportdisclosesthemanagementofearmarkedrevenues.

Recommendations:1.TheMSWGshoulddisclosetheformulaforcalculatingtransferstoindividualaimagsandsoumsinfutureEITIReport. 165http://www.iltod.gov.mn/166http://mof.gov.mn/

2.TheMSWGmaywishtodiscloseanydiscrepanciesbetweenthefundsthatshouldbetransferredundertheformulaandtheactualtransfers,asabasisforassessingtheefficiencyofthecurrentsystemoffiscaldevolution.3.TheMSWGmaywishtoconsidertheefficiencyofbudgetexecutionbytheHumanDevelopmentFundandtheGeneralLocalDevelopmentFund.4.TheMSWGmaywishtoconsiderthematerialityofsuchsubnationaltransfersinthenextEITIReport,assessingthepotentialforvoluntaryunilateraldisclosuresinthecaseoftransfersassessedasnon-material.5.InordertoaddresspublicdiscussionsaroundMongolia’sdependenceontheextractivesector,theMSWGmaywishtoobtainfurtherinformationrelatedtothebudgetcycle,productionandcommoditypriceassumptionsandrevenuesustainability,resourcedependence,andrevenueforecasting.

6. Socialandeconomicspending

6.1 Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtosocialandeconomicspending(SOEquasi-fiscalexpenditures,socialexpendituresandcontributionoftheextractivesectortotheeconomy).

6.2 Assessment

Socialexpenditures(#6.1)

The2014EITIReportincludesdisclosureofbothmandatoryandvoluntarysocialexpenditure.AsdescribedinSection6.3(p.56)ofthe4August2015InceptionReport,miningcompaniesarerequiredtoundertakemandatorysocialexpendituresunderLocalDevelopmentFundregulations,whileMinisterofFinanceOrder45of2010167requiresthattheseexpendituresbeclassifiedasdonations.Underthe2006MiningLaw,miningcompaniesarerequiredtoconcludeLocal-LevelAgreementssettingsocialexpenditurerequirementswiththesoumandaimaggovernmentsinwhichtheyoperate.168Inaddition,somecompaniesmakevoluntarysocialexpenditurestosoumsandaimags.Howeverthedelineationbetweenmandatoryandvoluntarysocialexpendituresinthe2014ReportappearstohavebeendefinedbythereportingentitiesthemselvesratherthanbytheMSWG.Cashandin-kindexpendituresareclearlydistinguished,withthenatureofin-kindexpendituresindicatedforeach.

AccordingtoSection5.5.4(pp.127-128),sevenofthe236materialcompaniesreportedsocialexpendituresfor2014.MandatorysocialexpenditurestotalledMNT11,295million(USD6.3million)whilevoluntaryexpenditurereachedMNT670,826million(USD371.7million),meaningthat98.3%ofsocialexpenditureswasvoluntaryaccordingtocompanies’unilateraldisclosures.However,itisuncleariftheMSWGconsideredwhetheranyoftheother229materialcompaniesmadeanymaterialsocialexpenditurein2014.TheEITIReportshoulddescribetheframeworkforsocialexpenditures,giventhatcontractsforkeyprojectslikethoseofOyuTolgoi169orEnergyResourcesLLCincludeprovisionsfor

167http://www.eitimongolia.mn/sites/default/files/uploads/en/Order_45_en.pdf168SeedescriptioninUniversityofQueensland(2015),‘Mining,“sociallicense”andlocal-levelagreementsinMongolia’-http://socialsciences.hawaii.edu/conference/demr2015/_papers/byambajav-dalaibuyan.pdf169Forexampleclauses7.13-7.15oftheOyuTolgoi2009InvestmentAgreementcovertheprovisionofsocialandeconomic

mandatorysocialexpenditure.Whilethemandatoryandvoluntarysocialexpendituresareclearlydelineatedinthedescriptionofcompanies’individualprogrammesinSection5.5.5(pp.129-132),thebasisfordistinguishingbetweenthetwotypesisnotclearlyexplained.Itisimpliedthatcompanieswereaskedtocategorisetypesofexpenditurethemselvesincompletingthereportingtemplates.

Thecashandin-kindexpendituresareclearlydistinguishedforbothmandatoryandvoluntarysocialexpendituresreportedinAppendix9(pp.188-191),includingadescriptionofthetypeanddeemedvalueofin-kindsocialexpenditure.Finally,whilethemajorityofrecipientsofmandatorysocialexpendituresaregovernmententities(predominantlyaimagsandsoums),thereisnoadditionalinformationprovidedaboutthefunctionofonerecipientlistedonlyasanon-governmentalorganisation(recipient#56inAppendix9(p.188)),thatreceived2%ofallmandatorysocialexpendituresaccordingtothetableinSection5.5.5(p.131).

Stakeholderviews

PriortotheamendedMineralsLawofJuly2014,therewerenoprovisionsinthelawrequiringcompaniestomakesocialexpendituresaccordingtoseveralgovernmentrepresentativesconsulted.Inmostcaseslocalcommunitiesappliedpressuretocompaniesoperatingintheirareatomakedonations,althoughtherepresentativesnotedthisoftenledtoseeminglyendlessdemands.However,largerminingcompanies(MongolianEnergyCorp.,Centerra,Erdenet,Baganuur,ShiveeOvoo)thatheldoperatingcontractswiththegovernment(intheformofstabilisationorinvestmentagreements)wererequiredtoundertakemandatorysocialexpendituresinlinewiththeircontracts.MostoilandgasPSAsincludedmandatorysocialexpenditures,accordingtoseveralgovernmentandoilcompaniesconsulted.OilandgascompaniesconsultedclarifiedthatwhileallofthemorerecentPSAsincludedmandatorysocialexpenditures,whichwereoneofthekeytermsfornegotiatingtheoriginalPSAwiththegovernment,olderPSAssignedinthe1990sdidnot.However,itwasnotedthatthetwooilproducingcompanieshadsubsequentlysignedadditionalprotocolscoveringsocialexpenditures(PetroChinawiththelocalgovernment,DongShengwithPAM),althoughitwasnotclearwhethertheseadditionalprotocolsrepresentedmandatorysocialexpenditures.ThenewerPSAsthatincludedmandatorysocialexpendituresclarifiedthattheseexpenditureswerenotcostrecoverable,accordingtooilcompaniesconsulted.Allmandatorysocialexpendituresweremadeincash,notinkind,accordingtogovernmentrepresentativesconsulted.

ApastIAnotedthattherehadbeennodiscussionoftypesofmandatorysocialexpendituresundertakenbyextractivescompaniesinMongoliabytheMSWGpriortodatacollectionforthe2014EITIReport.SeveralCSOsclarifiedthatwhiletherehadbeendiscussionofthedistinctionbetweenmandatoryandvoluntarysocialexpendituresduringtheinceptionphaseforthe2014EITIReport,theMSWGhadnotreachedafinaldecisiononthedistinctionpriortodatacollection.ThepastIAnotedthatthecategorisationoftypesofsocialexpendituresduringEITIreportingwasthuslefttothediscretionofreportingentities.Severaloilandgascompaniesnotedthatthedistinctionbetweenmandatoryandvoluntarysocialexpenditureswereparticularlyrelevanttothem,despitetheirrecollectionthatthishadnotbeendiscussedbytheMSWG,sincetheirinvestorsonlywantedtopaymandatorysocialexpenditureswhilethecompanymanagementconsideredsomeformsofvoluntarysocialexpenditureseffectivelymandatory,giventheimportanceofdemandsfordonationsbylocalcommunities.

Severalgovernmentandindustryrepresentativesnotedthatthemis-categorisationofsocialexpenditures

infrastructuretothirdparties.See:http://www.turquoisehill.com/i/pdf/Oyu_Tolgoi_IA_ENG.PDF

wasoneofthemaincausesofdiscrepanciesinEITIreconciliations.Thiswasbecausecompaniesdidprovidesocialinfrastructurelikewatersupplybut,giventhatdonationsfromcompaniestogovernmentwereillegalunderMongolianlaw,localgovernments(atbothsoumandaimaglevels)reclassifiedthesereceiptsasconstructionorfees.

AgovernmentMSWGrepresentativenotedthatfollowingtheamendmenttotheMineralsActinJuly2014(underArticle42.1),allcompanieswerenowrequiredtoconcludeCommunityDevelopmentAgreements(CDAs)withlocalgovernments,whichcoveredprocurementoflocalhumanresources,infrastructuredevelopmentandenvironmentalprotectionandthusincludedmandatorysocialexpenditures.AmodelCDAwasapprovedbythegovernmentinearly2016.

Regardingvoluntarysocialexpenditures,severalgovernmentandCSOrepresentativesnotedthatgovernmententitieswerelimitedintermsofthetypesofdonationstheycouldaccept,withonlythreetypesofdonationsallowed(education,healthandculture),whileprivatebeneficiarieswerenotlimited.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.InMongoliathereisacleardistinctionbetweensocialexpendituresthatarecontractualobligationsandthosethatarenot:forinstance,theOyuTolgoiInvestmentAgreementclearlymandatescertainsocialexpenditures170whilemostPSAsalsoincludemandatorysocialexpenditures.AlthoughtheEITIReportdisclosescompanies’socialexpenditure,thedistinctionbetweenmandatoryandvoluntarysocialexpenditureappearstohavebeenmadebyeachreportingentityratherthansetbytheMSWGpriortodatacollection.Itisthusunclearwhetherthesepaymentshavebeenfullydisclosedgiventhelackofclarityonwhetheranyoftheother229materialcompaniesmadeanymaterialsocialexpenditurein2014.Thus,thereportdoesnotclearlyascertainwhichsocialexpendituresaremandatoryandwhichonesarenot.Equally,whilegovernmentrepresentativesnotedthatallmandatorysocialexpenditurestookplaceincashratherthaninkind,itappearsfromthe2014EITIReportthatin-kindmandatoryexpendituresexistalthoughthenatureandbasisforreportingin-kindsocialexpendituresisnotclearlydescribed.TheMSWG,andcivilsocietyinparticularasabasisfortheiradvocacy,maywishtoclearlydelineatemandatoryfromvoluntarysocialexpendituretobetterassesscorporatecontributionsthatarediscretionaryandthoserequiredbylaw,andensurethatthesearecomprehensivelydisclosed.

SOEquasifiscalexpenditures(#6.2)

Thereisevidenceofsubstantialquasi-fiscalexpenditures,particularlyin2014whentheDevelopmentBankofMongoliaaccountedforoff-budgetspendingof6.75%ofGDPinsectorsrangingfromsocialhousingtoinfrastructureaccordingtotheIMFandADB.171Thereisalsoevidencethatatleasttwostate-ownedcoalproducerssellsub-marketpricedcoaltostate-ownedpowerplants172,withonlyashareof 170ChapterfouroftheOyuTolgoiInvestmentAgreement(pp.14-15),http://www.turquoisehill.com/i/pdf/Oyu_Tolgoi_IA_ENG.PDF171SeeADB(2015),Mongolia:SocialWelfareSupportProgram,http://www.adb.org/printpdf/projects/49210-001/mainandIMF(2015),MongoliaArticleIVConsultation:DebtSustainabilityAnalysis,https://www.imf.org/external/pubs/ft/dsa/pdf/2015/dsacr15109.pdf172SeeforinstanceAsianDevelopmentBank(September2013),“Mongolia:UpdatingtheEnergySectorDevelopmentPlan”(p.15),http://www.adb.org/sites/default/files/project-document/81826/43079-012-tacr-01f.pdf

thissubsidycoveredbythenationalbudget.

Section5.4.6(p.119)ofthe2014EITIReportdescribesSOEs’quasi-fiscalexpenditures,butonlyfor13SOEsincludedinthescopeofreconciliation(listedinSection5.4.2(pp.110-111)),outofatotalof21SOEsoperatingintheextractiveindustries.WhilefiveoftheeightSOEsexcludedfromreconciliationoperatedinconstructionmaterials,threeoperatedinhardminerals(uranium,coalandtungsten).Allbutoneofthe13SOEsincludedinthereconciliation(ShiveeOvooprovideddetails)eitherdidnotlistanyquasi-fiscalexpendituresintheirreportingtemplatesorstatedthattheydidnotundertakeanyquasi-fiscalexpenditures.The2014EITIReportdoesnotclarifyornamewhichSOEsdidnotdiscloseanyinformationhowever.TheMSWGdoesnotappeartohaveconsideredtheissueofsubsidiesaheadofdatacollection,northeexistenceofotherquasi-fiscalexpendituressuchas(potentially)thelackofpenaltiesforlatepaymentsforstate-ownedminingcompanies’salesoftheirproductionandpaymentsforsocialinfrastructuredevelopmentbysubnationalgovernments.WhileitisnotedthatsomeSOEssoldcoalatbelowmarketpricestostate-ownedpowerplants,thecostofthesesubsidiesisnotprovided.AlthoughthetableinSection5.4.4(p.118)providesalistofSOEpaymentstosubnationalgovernments,itisunclearwhetherthesepaymentsshouldbecategorizedasquasi-fiscalexpenditures,mandatoryinfrastructureprovision,mandatorysocialpayments,voluntaryinfrastructureprovisionorvoluntarysocialexpenditures.

Stakeholderviews

Agovernmentrepresentativeclaimedthattheannualgovernmentbudgetincludedquasi-fiscalexpendituresunderstabilisationprogrammesfundedbytheDevelopmentBankofMongolia,whichincluded,forinstance,thesaleofsub-marketpricedthermalcoaltopowerplants.However,severalCSOrepresentativesnotedthatwhilestate-ownedBaganuursoldthermalcoaltopowerplantsataUSD2,500/tondiscountonproductioncosts,itwasunclearhowmuchofthiswascoveredbyfiscalsubsidiesfromthestatebudget.

ApastIAandMSWGmembersconsultednotedthattherehadbeennodiscussionoftypesofquasi-fiscalexpendituresundertakenbySOEsinMongoliabytheMSWGpriortodatacollectionforthe2014EITIReport.SeveralgovernmentrepresentativesnotedthattherewerenolegalbarrierstodisclosingSOEs’quasi-fiscalexpenditures.Twogovernmentrepresentativesnotedthatwhilesubsidiesforstate-ownedcoalproducerswererecordedintheannualStateBudget,thisaccountedforonlyashareofthecostofsubsidisedcoalsalestostate-ownedpowerproducers.Itwasnotedthatthegovernmentfixedthedomesticsalespriceofthermalcoalbutthatthesubsidiestransferredtostate-ownedcoalproducersonlyapartofthissubsidyandthecoalproducerswereforcedtoacceptlowermarginsduetoregulationoftheirsalesprices.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadeinadequateprogressinmeetingthisrequirement.The2014EITIReportprovidesdetailsofonlyoneSOE’squasi-fiscalexpenditures,butthisdoesnotappeartobeacomprehensiveoverviewofquasi-fiscalexpendituresintheminingsector.Therealsoappearstobeconfusionaboutthedistinctionbetweenquasi-fiscalexpenditures,SOEs’socialexpendituresandtheirdirectsubnationalpayments,giventheMSWG’slackofdiscussionofthistopicaheadofdatacollection.ItislikelythatanumberofSOEs’paymentstosubnationalgovernmentsaremiscategorisedandcouldbeconsideredasquasi-fiscalexpenditures.Thisisaparticularlyimportantissueinrelationtothermalcoalsalestostate-ownedpowerplants(althoughitmayalsoinvolveothermineralproducers)andgiventhesubstantialoff-budgetcreditsupportextendedbythecentralbanksince2013.TheMSWGshouldexaminethisissueingreaterdetailandincludeamore

detailedexplanationofquasi-fiscalexpendituresintheminingsector.Thisinformationcouldproveparticularlyusefulgiventhegovernment’sreformplansforthepowersector.

Contributionoftheextractivesectortotheeconomy(#6.3)

The2014EITIReportprovidesacomprehensivedescriptionofthecontributionoftheextractiveindustriestotheeconomy,providing:

- thesizeoftheextractiveindustriesinabsolutetermsandasashareofGDPinSection5.1.1.1(p.47),

- keyareaswhereproductionisconcentrated,formininginSection5.1.4.3(p.71)andforoilinSection5.1.5.3(p.86),

- theircontributiontogovernmentrevenuesinabsolutetermsandasashareoftotalgovernmentrevenuesinSection5.1.1.2(p.48),

- thevalueofextractiveindustryexportsinabsolutetermsandasashareoftotalexports,inSection5.1.1.3(p.49),

- extractiveindustryemploymentinabsolutetermsandasashareoftotalemploymentinSection5.1.1.4(p.50).Appendix13(pp.205-206)providesfurtherdetailsof79companies’employmentfigures,disaggregatedbynationality,employmenttypeandlocalsoum/districtemployees,

- estimatesoftheinformalsector,includingadescriptionofartisanalandsmall-scalemininginSection5.1.4.5(pp.79-83).Appendix17(pp.296-297)providesfurtherdetailsofASMproductionreportedbyaimags,butonlyforthreeaimags.

Stakeholderviews

IndustryandCSOstakeholdersconsultedconsideredthedescriptionofthecontributionoftheextractiveindustriesinthe2014EITIReporttobecomprehensiveandaccurate,notingthatthesamenumbersappearedusedinotherpublicationsontheextractiveindustriessuchastheUNDPCorruptionRiskAssessmentintheMiningSectorreportpublishedinJune2016.CSOsinparticularwelcomedtheexpandeddescriptionofartisanalandsmall-scalemininginthelatestEITIReportandthedisaggregationofinformationbysoum,whichwasseenasparticularlyrelevantgivensubnationalEITIcouncils’demandsforinformation.SeveralCSOsalsoconsideredtheinclusionofemploymentfiguresdisaggregatedbylocationtobeparticularlyimportant,givensubnationalcouncils’demandsforthistypeofinformation.Nostakeholdersconsultedexpressedviewsonanybarrierstodisclosingthelocationofoilproductionandexports.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogress.The2014EITIReportexpandsonpreviousEITIReports’descriptionofthecontributiontotheeconomy.Itincludes,inabsoluteandrelativeterms,thesizeoftheextractiveindustries,theircontributiontogovernmentrevenue,exportsandemployment.Adescriptionoftheinformalsectorandofthemainareasofproductionisalsoprovided.ThisisalsonowprovidedthroughtheEITIMdataportal.TheMSWGhasalsogonebeyondthebasicEITIRequirementsindisclosingdetailedinformationonemploymentbymineandnationality,althoughnotforoilandgas.ThisisanexampleofhowtheEITIReportcanbeusedtodiscloseinformationthatismeaningfulandrelevanttonationaldebates.

Table6-Summaryassessmenttable:Socialandeconomicspending

Socialexpenditures(#6.1)

AlthoughtheMSWGhasconsideredsocialexpendituresindetailanddisclosedtheseinthe2013and2014EITIReports,thedistinctionbetweenmandatoryandvoluntarysocialexpendituresseemstohavebeenmadebyreportingentitiesthemselves.Thecomprehensivenessofdisclosuresofmandatorysocialexpendituresisunclear.Thenatureandbasisforreportingin-kindexpendituresisnotdescribed.Nodetailsontheidentityofnon-governmentalrecipientsareprovided.

Meaningfulprogress.

SOEquasifiscalexpenditures(#6.2)

The2014EITIReportprovidesdetailsofonlyoneSOE’squasi-fiscalexpenditures,butthecomprehensivenessofassessmentsofquasi-fiscalexpendituresisunclear.TherealsoappearstobeconfusionabouttheclassificationofanumberofSOEs’“paymentstosubnationalgovernments”.TheMSWGdoesnotappeartohaveconsideredwhethersuchexpendituresexist,despitethewidespreadknowledgeofsubsidisedstate-ownedcoalsalestopowerplants.

Inadequateprogress.

Contributionoftheextractivesectortotheeconomy(#6.3)

The2014EITIReportexpandsonpreviousEITIReports’descriptionofthecontributiontotheeconomy.Itincludes,inabsoluteandrelativeterms,thesizeoftheextractiveindustries,theircontributiontogovernmentrevenue,exportsandemployment.

Recommendations:1.TheMSWGshouldconsidertheexistenceofsubsidiesintheminingsectorandofotherquasi-fiscal

expendituresundertakenbySOEsintheextractiveindustries.Givengovernmenteffortsrelatedtopowersectorandpublicfinancemanagementreforms,theMSWGcouldusetheEITIReportasameansofclarifyingthedifferentdirectandindirectstatesubsidies.2.TheMSWGshouldagreeadistinctionbetweenmandatoryandvoluntarysocialexpenditures.

PartIII–OutcomesandImpact

7. OutcomesandImpact

ThissectionprovidesdetailsontheimplementationoftheEITIRequirementsrelatedtotheoutcomesandimpactoftheEITIprocess.

7.1 Publicdebate(#7.1)

Communications:ThegapinfundingforEITIimplementationfromJanuary-May2016constrainedtheEITIMSecretariat’scommunicationsactivities,althoughanumberhavecontinued.ThreedisseminationeventswerehostedinUlaanbaatarinlateDecember2015,basedonthe2014EITIReport.Thisincludedaneventforjournalistson21December(withroughly15journalistsinattendance),aneventforCSOson23December(withroughly15CSOsinattendance)andalargereventon25DecembertargetingcompaniesattheMiners’Day,organisedbyMRAMandtheMinistryofMining.Apressconferenceforthe2014EITIReportwasorganisedatGovernmentHouseon18January2016,bringingtogetherroughly15mediaorganisations.TheEITIMsecretariatdevelopedandpublishedasummary2014EITIReport.WithsupportfromGiZ,EITIMhasalsoproducedfoursummaryreportsbasedonthe2014EITIReportfocusedonspecificaimags(Bayankhongor,Övörkhangai,UvsandSelenge)inQ2-2016,althoughthesehadyettobepublishedontheEITIMwebsiteasofJuly2016.

TheEITIMSecretariathasproducedinfographicsbasedonthe2014EITIReport174,usingtheservicesofIcon.mn,andupdatedthevisualisationsbasedonthe2014EITIdataontheEITIMdataportal.175OutreachanddisseminationhasalsofocusedontheEITIMeReportingsystemanddataportal.TheSecretariathostedseveraljournalisttrainingworkshopsinNovember2015andApril2016.MeanwhileupdatesinEITIM’ssocialmediaoutreachhaveacceleratedin2015and2016,withmorefrequentpostsparticularlyontheEITIMopendataeffortsandglobalEITIdevelopmentssuchasthe7thEITIGlobalConference.Atthe7thGlobalConference,Mongoliadistributedsummary2014EITIReports,infographicsandpromotionalmaterialssuchascalendars.TheEBRDisplanningtoincludesupportforEITIMcommunicationsinitsrevisedcountryprogramme,withaparticularfocusonuseofEITIdatainpolicy-makingatnationalandsubnationallevels.

Inlinewithitscommunicationsstrategy,theEITIMSecretariatcontractedMongolMassMediaLLCinlate2013toimplementamediacampaigntoincreasepublicawarenessabouttheEITI.Underthecontract12TVserialsandfiveinterviewswerebroadcastandfivearticleswerefeaturedonthewww.news.mnwebsite,threeeventswerefeaturedliveonTV.InterviewsontheEITIwerebroadcastonkeyTVchannelssuchasBloombergMongoliaTV,TV9,TV8,EagleTVandEcoTV.TheEITIMSecretariatalsore-organizedthewww.eitimongolia.mnwebsitetomakeitmoreuser-friendly,toincreasetheuseofEITIReportsandtoimprovepublicawareness,andlaunchedanentirelynewwebsiteinFebruary2016,aheadofthe7thEITIGlobalConferenceinLima,Peru.Itcreatedseveralinfo-graphicsusing2012EITIReportandpublishedthesebothontheEITIMwebsiteandonthewww.ikon.mnnewswebsite.

174http://eitimongolia.mn/en/infographics175http://e-reporting.eitimongolia.mn/

In2015theEITIMSecretariatcontractedMongolian-languagenewspaperNationalPosttopublishfivearticlesonthefindingsofthe2013EITIReport(oneamonthfromJanuarytoJuly).Aninteractiveinfographiconbeneficialownershipdisclosuresinthe2013EITIReportwasalsodevelopedinearly2015.Amonthlynewsletterisalsosentouttoadatabaseof400contactsmaintainedbytheSecretariat,sinceSeptember2014.

EITIMhasalsopursuedasocialmediacommunicationstrategy.AccordingtoconsultationswiththeEITIMSecretariat,theEITIMtwitterandFacebookaccountsaretypicallyupdatedatleastonceamonth,whileupdatestotheEITIMYoutubeandFlickraccountsdependedonthefrequencyofpublicevents.Asof5July2016,theEITIMFacebookpage176launchedinOctober2014had398followers,itsTwitteraccount177launchedinJune2014had210followers,itsYouTubepage178featured15videosanditsFlickraccount179featured20photoalbums.WhileitsFlickraccounthasonlythreefollowers,theEITIMSecretariatprimarilyusesthismediumforuploadingpicturesandsubsequentlyalertsitscontactsviaemail,sothenumberoffollowerlikelyunder-estimatestheimpactofthismedium.TheEITIMSecretariatplanstocontractlocalmediaadvisoryfirmMaximaMediatotrackthemediaexposureofEITIcommunicationsandanalysetheimpact.

Asurveyonimprovingcommunicationsactivities,requestedbySecretariatandNationalCouncilanddiscussedattheMSWG’s34thmeetingon13December2013,foundthatmoreeffortswereneededfordisseminationofEITIinformation.Thesubnationaloutreachandimplementationstrategyhasengagedabroadersectionofmine-affectedcommunities.(seebelow,onsubnationalimplementation).On10November2015,theEITIMSecretariatandtheMongolianMiningJournalconductedatrainingworkshopfor52localjournalists,includingasessiononhowtoreadandinterpretEITIreports.

Outreach:TheEITIMSecretariathasledregulartrainingandoutreacheventsinrecentyears.Despitefundingconstraintsinthefirsthalfof2016,outreachcontinuedwithaparticularfocusontheonlinedataportalwork.TheMinistryofMining,togetherwiththeSecretariat,theEBRDandAdamSmithInternational,hostedaworkshopforaround30journalistsonthenewEITIMdataportalon20April2016.TheEITIMSecretariathasalsocontinuedprovidinginputtoacademicandotheranalyticalstudies,mostrecentlyprovidinginputtotheUNDPandMinistryofMining’sCorruptionRisksAssessmentintheMiningSectorreportpublishedinMay2016.

In2013,theSecretariatandtheMSWG,withsupportfromAdamSmithInternationalandtheEuropeanBankforReconstructionandDevelopment(EBRD),heldeventsinUlaanbaatarandfouraimags(Darkhan-Uul,Khovd,Govi-Altai,Khentii)reachingroughly700peoplefrom20ofMongolia’s21aimags.InalltheSecretariatestimatesittrained25trainersand20journalistsattheseevents.ItisnoteworthythatMongoliaisacountrywiththeadvantageofwidespreaduseoftheMongolianlanguage,withnowidespreadregionaldialectorlanguageused.Whilethisshouldfacilitatedisseminationofinformationandstimulationofnationalpublicdebateontheextractiveindustries,themajorityoftheMongolianpopulationresidesinthecapitalUlaanbaatar,withtraveltoregionalcentrescomplicatedbyinfrastructurechallenges.

176https://www.facebook.com/EITIMongolia/177https://twitter.com/eitimongolia178https://www.youtube.com/user/eitimongoliamn/videos179https://www.flickr.com/photos/123397335@N02/albums

In2014theMSWGandtheEITIMSecretariatundertookoutreachanddisseminationeventsandroadshowsinninesoums,reachingatotalof619peopleinruralareas.Thisinvolvedtheproductionofaimagandsoum-levelsummaryEITIReportsforthefirsttime.In2014and2015combined,theSecretariatproducedfouraimag-levelsummaryEITIReportsand12soum-levelreports,distributingatotalof4800copies.180In2016theSecretariatisplanningsummaryEITIreportsforfouraimagsandsixsoums.TheGermandevelopmentcooperationagencyGiZdevelopedthreesoumandaimaglevelsummaryreportsbasedonthe2013EITIReport,contractingtheMongolianMiningJournaltoimprovetheaccessibilityofpublications.Itproducedfourmorein2016(Bayankhongor,Övörkhangai,UvsandSelenge),basedonthe2014EITIReportandisplanningoutreachevents(EITIOpenDays)inthesefouraimagsinJuly-August2016.

TheEITIMSecretariatalsocarriedoutsurveysin2014infiveoftheseninesoums(120respondents),andin2015inthreesoums(102respondents)askingresidentswhatinformationontheextractiveindustriesisalreadyavailableandwhatwouldbeofmostinterest.Respondentshighlightedthefollowingtopics:environmentalrehabilitation(20%),donations(25%),jobcreation(15%),communitydevelopmentagreements(15%),tax(10%),reserves(10%),licenses(5%)andbeneficialownership.In2015,theEITIMSecretariatandMSWGhaveconductedfoursubnationalEITIOpenDays(inthreedistrictsandoneaimag)andthreeregionalEITIconferencesintheWest,NorthandSouthin2015,withplansforanotherregionalconferenceinEastin2016.Theconferencesweredesignedtofosterpeerlearningandsharingofinformation,whiletheOpenDaysweredesignedtobemoredetailedinprovidingMongolian-languageinformationaboutminingactivityinthesoumsandaimagshostingtheevents.

DebateatthesoumandaimagOpenDaysin2015focusedonthreekeyareas,accordingtotheSecretariat,withdemandsformoreinformation:

- Timeframeforspecificminingactivitiesandtheimpactonemployment

- Licenseallocationprocedures

- Environmentalimpactsofmining(especiallyintermsofwaterusesandtheimpactonlocalagriculture)andthegovernment’sresponsetoenvironmentaldegradation.

TheEITIMSecretariathasalsoparticipatedinanddeliveredpromotionalmaterialsatseveralinternationalanddomesticconferencesinboth2014and2015includingthe“CoalTrans”Forum,“DiscoverMongolia”InvestmentForum,“OpendayofMinistryofMining”.TheSecretariathasalsoheldtrainingworkshopsforeachstakeholdergroupin2015.InAprilitheldaworkshopforCSOs(thePWYPandMECCcoalitions)onhowtoextractinformationfromthe2013EITIReport,usingexcelspreadsheets.InFebruaryandMarchitheldtwoworkshopsforgovernmententitiesandoneforcompanies,whichincludedabriefingonthe2013EITIReportandtrainingonhowtoimprovethequalityofdisclosures.

AlthoughGovernmentResolution222of2012requiresEITIReportstobepresentedtoParliament’sStandingCommitteeonEconomicAffairsonceayear,thishasneverbeendoneinpractice.TheEITIMSecretariatclaimsthatthisstemsfromlackofclarityoverwhowouldbetaskedwithpresentingtheEITIReporttoParliament(StateSecretary,MinisterofMining,etc),althoughsomeCSOswespoketoarguedthatthePrimeMinisterwasclearlyempoweredtodosoasChairoftheNationalCouncil.TheNaturalResourceGovernanceInstitute(NRGI)ranatrainingprogrammeforparliamentariansfromDecember 180InterviewwithMrsDelgermaa,communicationsofficeratEITIMongoliaSecretariat,andproceedingsoftheNationalForum,3November2015.

2014toMarch2015onextractiveindustriesgovernance,whichfeaturedonemoduleongeneralEITIimplementation.

Sub-nationalimplementation:GovernmentResolution222on4July2012requiresallprovinces(aimags)anddistricts(soums)thathostextractiveindustriestoestablishEITIsub-councils.All21ofMongolia’saimagshostextractiveindustryactivities,asdo103ofits329soums.Giventheinfrastructurechallengestotraveltoprovincialcentres,thecreationofsubnationalEITIcouncilsisofparticularsignificanceinstimulatingpublicdebateabouttheextractiveindustriesinruralareas.Asofmid-2015,some20aimagsand14soumshadestablishedoperationalsub-councilsaccordingtoPWYP,althoughtheSecretariathadnotreceivedofficialnotificationofalldirectivesestablishingthesecouncils(all20aimagsbutonlysevensoums).TheResolutionclearlydefinestherolesandresponsibilitiesoflocalgovernmentsinestablishingthesesub-councilsandprovision11.2statesthatrepresentationofthethreestakeholdergroupsshouldbeequalinnumber.Theroleofthesub-nationalcouncilsatbothaimagandsoumlevelsistoassistinEITIreporting,advancingEITIatlocallevelandpromotingconsultationsbetweenlocalauthorities,communityandcompanies,withaparticularfocusonresolvinglocaldevelopmentissues.TheResolutiondoesnotspecifythefunctionsofthesubnationalcouncils,ortherelationbetweensubnationalcouncilsandtheNationalCouncilandMSWG,aswellassourcesoffunding.Howeveritdoesregulatedisclosuresofinformationbeyondthatdefinedinthereportingtemplatesandincludesenvironmentalreclamationfundsandexpenditure.Themeetingpracticesdifferaccordingtothesoumandaimag.Somesub-nationalcouncilsmeetmonthly,othersfarlessfrequently,althoughthe20sub-nationalcouncilrepresentativeswemetnotedtheeaseoforganisingsuchmeetingsgiventhesmallsizeofthecommunitiesinvolved.

Despitetheorganisationalchallengeshowever,the20representativesofbothlocalgovernmentsandlocalcivilsocietywemetspokeofachangeinattitudesofcentralgovernmententitiesandcompanies.Whiletheywerepreviouslyperceivedasnotcaringabouttheimpactonlocalcommunities,itwasnotedtherewasnowmorerespectandattentionpaidtotheneedsandinterestsoflocalcommunities.Localresidentsnowhadaccesstoinformationonthenumberoflicensesactiveintheirsoumandaimag,wherepreviouslyonlythelocalgovernorhadaccesstothisinformation.Therepresentativesnotedthekeyareasofdiscussionandinterestonthesub-nationalcouncils,whichweresimilartothoserelatedbytheEITIMSecretariat:

- Licenseallocationprocedures

- Localcooperationagreementsbetweencompaniesandlocalgovernments

Inits2016workplan,EITIMplanstofocuscapacitybuildingeffortsonfouraimagsandsixsoumsbutalsoaimstoimprovethelegaldistinctionbetweenfunctionsofaimag-andsoum-levelEITIcouncils.TheEBRDisplanningtosupportapilotprojectonaselectionofEITIsubnationalcouncilsaspartofitsrevisedcountryprogramme.Inthe2016workplan,CSOsweregiventheleadinorganisingruraloutreachanddisseminationactivitiesandagreementwasreachedtoprovidefundingtothePWYPcoalitionforspecificactivitiesinruralareas.

Stakeholderviews

Ahigh-levelgovernmentofficialcloselyinvolvedintheEITInotedthatEITIReportsweresystematicallydistributedtoallmembersofparliamentbutthatitwasnotformallypresentedatparliament.ThusitwasseenasunlikelythatmembersofparliamentactuallyreadtheEITIReportbecauseoflackoftimeandthefactitwassobig.ItwasarguedthatEITIReportsdidnotgeneratedebate.ItwasrecommendedthattheEITIMSecretariatshouldextracttheinformationfromEITIReportsbycontractingtheservicesofathink

tank,butthatthiswasnotpossibleduetolackoffunds.TwoindustryrepresentativesnotedtheproposalthateithertheSecretariatortheMSWGshouldprovideaprioritisationoftheinformationcontainedinEITIReportsandmakemoreuseofinfographics,inorderagreatersectionofthegeneralpublictoaccessanduseEITIinformation.SeveralCSOsnotedthestrongerfocusonuseofEITIdatainthe2016workplan.OneCSOrepresentativearguedthatthegovernmentcoulddemonstrateitscommitmenttoEITIimplementationbyfacilitatingdisseminationofEITIinformationandoutreachthroughthestate-ownedMongoliaNationalBroadcaster,althoughthishadneverbeendone.TherepresentativenotedthatEITIoutreachwouldbemoreefficientthroughadvertising,ratherthanthroughpublicdisseminationevents.

IndustryrepresentativesnotedtheMNMAdidnotusetheEITIReportsitselfgivenitslackofcapacity,notingitsstaffhadbeendownsizedtofourasaresultoftheminingdownturnsince2012.IndustryrepresentativeassumedthatsincecompaniesreporteddatathroughtheEITI,theywouldbecuriousabouttheresultsandthatpublicrelationsstaffwouldatleastconsulttheEITIReports.SeveralindustryrepresentativesnotedwhattheysawasariskifcompaniesactivelyengagedindisseminatingEITIinformation:giventhelackofpublictrustinminingcompaniesinparticular,theyworriedthatthepublicwouldnothaveconfidenceinEITIfiguresiftheyweredisseminatedbycompanies.ItwasnotedthattheOyuTolgoiquarterlybrochureslaunchedin2014usedsomeEITIdataalongsidethecompany’sown“scorecard”disclosures.Oilandgascompaniesconsultednotedthatwhiletheyorganisedtheirownbilateralmeetingswithlocalcommunitiesinwhichtheyoperated,theydidnottendtouseEITIinformationandonlyreliedontheirowndisclosures.TherewasaperceptionofexcessivefocusintheEITIontheprocessofreportingandthenumbers,ratherthananalysisoftheinformation.Inthefaceoflongtablesofdata,theimpressionamongstthegeneralpublicwasthattheminingindustrywasstillopaque.ThereneededtobebetteranalysisoftheEITIdataandmorevisuallyappealingsummaryreportsandbrochures.

CSOsconsultednotedtheirimpressionthatthemainusersofEITIinformationwereCSOs,ratherthantheotherstakeholdersorjournalists,highlightingtheeffectivenessofsubnationaldisseminationoflocation-specificsummaryreports.OneCSOrepresentativestatedthatpublishingonebigreportwasinefficient,giventhatpeoplenevertendedtoreadit,andthatEITIMshouldfocusonpublishingonlylocation-specificreportsforaimagsandsoums,wheretheyweremostindemand.

Representativesofsub-nationalcouncilsconsultednotedthattheonlytimetheyreceivedinformationontheEITIwasduringtheEITIOpenDayoutreachevents.MembersofthemediaconsultedstatedthatmostmediadidnotconsulttheEITIMwebsiteunlessspecificallyinstructedtodoso.ItwasnotedthattherewerefewchannelsofdisseminationofEITIinformationtothepublic,beyondsummaryreportsforspecificaimagsandsoums,theEITIMwebsiteanddataportalandthedifferentsocialmediachannelsusedbytheEITIMSecretariat.AlthoughEITIReportswerepublishedandpublicisedonceayeartherewaslittlefollowup.Mongoliahadoneofthehighestpercapitamediauseintheworld,particularlyonlinesocialmedia.ItwasnotedthiscouldbeusedmoreactivelythanthecurrentmonthlyupdatestodisseminateEITIinformationandengagethepublicindebatingEITIdisclosures.ItwasalsonotedthatnetworksofjournalistsexistedinvariousfieldsanditwasrecommendedthattheEITIandPWYPshoulddevelopsuchanetworktofeedthroughEITIinformationtothepublic.Severalmembersofcivilsocietyhighlightedthedifferencebetweenthepublic“frenzy”surroundingtheannualpublicationofassetdeclarationsbypoliticallyexposedpersonsinFebruaryeachyeartothelackofpublicdiscussionoftheEITIReportswhenpublished(despitethefactthatonly200oftheroughly10,000assetdeclarationsbyPEParedisclosedtothepublic).

AnumberofCSOrepresentativeslamentedthelackofcivilsocietyrepresentationonsomesoum-levelcouncils.However,representativesofsubnationalcouncilsnotedthatinsomecasesnodedicatedCSOsexisttotakepartinthesub-nationalcouncil.Insuchcases,itwasnotedthatalternativeCSOs(notpartofthePWYPorMECCcoalitions)wereinvitedtoparticipate,suchasassociationsoftheelderly,youthandwomen.SeveralCSOmembersofsubnationalcouncilsnotedthattherewasnocompanyrepresentationontheirsoum-levelEITIcouncilandonlytendedtomeetcompanieswhenEITIreportsweredisseminated.MembersofthemediaconsultednotedthatthereweresignificantdiscussionsanddebatesatthelocallevelandrecommendedthatmoreeffortsshouldfocusonthelocalCitizensRepresentatives’Khurals(subnationalparliaments).UndertheMineralsLawapprovalfornewmininglicenseswasrequiredtobegrantedinconsultationwithlocalKhurals,whichmetinfrequently.ThiswasseenasanopportunityforlocalKhuralstousetheEITIinconsultationswithcompaniesovermininglicenseapplications,whichrarelyhappened.SeveralruralCSOrepresentativesnotedthatthemainfocusoftheirEITIcouncilswasonlocalhiring,environmentalimpactsofmining,licenseallocationsandtheownershipofexplorationlicenses.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.TheMSWGhastakenstepstoensurethattheEITIreportiscomprehensible,activelypromotedandpubliclyaccessible.Throughtheorganisationofsubnationaldisseminationeventsandworkshops,aswellastheestablishmentofsubnationalMSGs,EITIMhasensuredthattheEITIhasalsocontributedtopublicdebate,particularlyattheaimagandsoumlevels.PublicdebatehasbeengeneratedbyspecificdatafromEITIReports,suchasinformationonlicenses,socialexpenditureandenvironmentalprovisions,buttheEITIhasalsoprovidedaplatformfordiscussionsanddebatesabouthowtheminingsectorismanaged.TheMSWGmaywishtoconsiderestablishingmoreformalmechanismsforsubnationalMSGstoprovideinputtonationalEITIdiscussions,toensurediscussionsatthelocallevelarereflected.

7.2 DataAccessibility(#7.2)

TheEITIMSecretariathasmadeexcelspreadsheetsofEITIdataavailableonitswebsiteforseveralyears.SummarydatatemplatesforallEITIReportsareavailableforbothgovernmentreports181andcompanyreports182.Summaryreportsbasedonboththe2013and2014EITIReporthavealsobeenproducedforfouraimagsand12soumseach(seeabove).

TheOpenSocietyForumisalsoworkingwithNRGItoestablishacontractsportal,hostedontheOSFwebsitebutusingthesourcecodefromNRGI’swww.resourcecontracts.orgportal,tohostthe20PSAsintheoilandgassectorthatareexpectedtobedisclosedasaresultofworkbytheMSWGworkinggrouponcontracts.ThecontractsportalisexpectedtobelaunchedinAugust2016andNRGI’scontractsportalwillincludecopiesofthesecontractsonitswww.resourcecontracts.orgportal.ThePWYPcoalitionalsoorganisedatrainingseminarforjournalistsonusingEITIdatainNovember2015.184 181http://www.eitimongolia.mn/en/government-reports182http://www.eitimongolia.mn/en/companies-reports184http://www.publishwhatyoupay.org/pwyp-news/big-data-ready-set-go/

TheEITIMhasalsobeensupportedbytheEBRDindevelopinganeReporting185platformaimedatautomatingEITIdisclosuresandimprovingaccessibilityofthedatatothegeneralpublic.Inturn,thisismeanttoempoweruserswithmoreaccessibleinformationtoengagewithminingcompaniesandthegovernment.ThefirstphaseoftheprojectwasundertakenbyAdamSmithInternationalincooperationwithlocalsoftwaredeveloperInteractiveLLCandwascompletedinAugust2014,beforebeingpubliclylaunchedinJanuary2015.Theaimoftheprojectwastoimprovetheefficiencyofthereportingprocess,inparticularcompilationandsubmissionbybothcompaniesandgovernmententities.Thesystemstoresdatainacodified,electronicformatinasinglesecurelocation.TheeReportingsystemprovidesforthefollowing:

• OnlinesubmissionofEITIReportsbothcompaniesandgovernment

• CadastralmapoflicensesonGooglesatelliteimage

• Onlinesubmissionmoduleforextractivecompanies

• Onlinesubmissionmoduleforgovernmententities

• ReconciliationmodulefortheIAtocomparereportsandinputadjustments

• PubliclyaccessibledataportaltoshowandanalyseEITIMdata

TheeReportingsystemwasusedforthefirsttimeinforthe2014EITIReport,with987companiesand35governmententitiessubmittedtheirreportsviatheeReportingsystembythedeadlineof31March2015.Thegovernmententitiesprovidedinformationon1570companies.Oncesubmitted,allreportsarepubliclyavailableviatheportalandendusersareabletofindreportsbycompanyname,mineraltype,licensenumbersandsoon.Thishasimprovedthetimelinessofdataavailabletothepublicandincreasedtheaccessibilitytogeneralusers.

ThesecondphaseoftheeReportingprojectwaslaunchedinAugust2015andwillbecompletedbyDecember2016.Themainaimsofthesecondphaseinclude:

• Apublishable,highqualitycasestudyonthee-Reportingpilotphase–thiswillbethefirststepinreplicatingthesysteminotherEITIimplementingcountries.

• Redesignedreportingforms,field/definitions(onlinehelpfiles),andalternativesubmissionproposals.

• On-goingon-demandsupportduringthe2015reportingperiod.

• Uploadofavailablehistoricaldatatodemonstrateselectedtools.

• Integrationofdatafeedsandautomatedupdatingofe-Reportingdatabase.ApprovalhasalreadybeensecuredforintegratingtheGeneralDepartmentofTaxationdatabasethroughtheNationalDataCentre.TheintegrationofMRAM’sfourseparatedatabase,whicharenotinteroperable,willtakelonger,althoughwenoteafeasibilitystudysupportedbytheWorldBankontheintegrationofthefourMRAMdatabasesontotheNDCwason-goinginNovember2015.

• Modificationstothereconciliationprocesstoincludeanoptionto‘drilldown’intothedetailsofanyonetransaction,withautomaticreportingbyexceptionand/oranalysisofreportsselectedbytheReconciler.

185http://e-reporting.eitimongolia.mn

• Uploadofavailableadditionaldatasets,includingenvironmentaldata.

• Demonstrableexportofalldata(orselectedsubset)inXML/XSDsoftware.

• Selection,acquisitionandimplementationofdemonstratortools,integrationguideformanipulationandgenerationofreportsfortabular,graphicalandcadastraldata.

• Designdocumentsfordisaggregatingdatatoexplaintheprocess,thetemplatesinExcel,importviaXML/XSDandacceptabledemonstrationoftheprocess/software.

• Trainingplan,descriptionoftrainingcurricula,trainingmaterialsandtrainingfeedback.

• Enhancementstothereportingpartoftheadminmodule,withautomaticgenerationoftables,graphsandmaps(showinguserlocations).

By20April2016,whentheSecretariat,togetherwiththeEBRD,AdamSmithInternationalandtheMinistryofMining,ranaworkshopforaround30journalistsontherebrandedEITIMdataportal,theprojecthadreachedalandmark.HavinguploadedhistoricalEITIMdatafortheperiod2006-2014,theprojectwasontracktointegratethedataportalwiththeGeneralDepartmentofTaxation,allowingforautomaticexchangeofinformation.WhileMRAMhadthusfarrefusedautomaticexchangeofinformation,despitetheabsenceoftechnicalconstraints,agreementwasreachedonmanualexchangeofcadastralinformationonamonthlybasis.Theremainingeightmonthsoftheprojectin2016weretobefocusedonend-userapplicationsanddatavisualisation/analysis.

Stakeholderviews

SeveralgovernmentrepresentativesnotedtheydidnotuseEITIinformationintheirwork,althoughothersfromtheRevenueDepartmentandNSOnotedtheyusedEITIdatatoreconcilerevenuedataandGDPfiguresrespectively.ItwasnotedthatfollowingtheimplementationoftheJuly2014LawonGlassAccountsascandaleruptedwhenanillegalpaymentwasfoundinearly2015,butthatnosuchscrutinytookplaceasaresultofthepublicationofanEITIReport.OnegovernmentrepresentativenotedhediduseEITIinformationinhiswork,asameansofcomparingandconfirmingthestatisticshisowndepartmentproduced.ArepresentativefromtheMNAOnotedthattheyconsultedEITIdataparticularlyintheirworkwithSOEs,althoughtheynotedtheirneedfor“official”figures,notingtheydidnotconsiderEITIfiguresas“official”,notingtheMNAO’sconcernsaboutthereliabilityofEITIdata.CSOsexpresseddoubtthatgovernmententitiesliketheMoFusedEITIdata,buthighlightedPWYP’s‘datamining’projectusingEITIdatalaunchedin2013.IndustryrepresentativesconsultedstatedthattheydidnotuseEITIdatafortheirownwork,notingthattheyconsideredtheEITIdatatobeoutdatedbythetimeofpublication.WhiletheserepresentativespraisedthedevelopmentofsubnationalEITIsummaryreports,theyconsideredthatinsufficientoutreachhadtakenplacetoensurethatcitizensinaimagsandsoumsreceivedthesereports.Severalrural-basedCSOsnotedthatthenewinformationprovidedbyEITIonthelegalownershipofexplorationlicenseswasparticularlyusefulforlocalcommunitiesandgovernments,whooftendidnotknowhowmanycompanieswereoperatingintheircommunities.

MembersofthemedianotedwhileEITIreportscontainedmuchusefuldataforcitizens,theyweredifficulttomakesenseofwithsomanydatatables.TheEITIMeffortstodevelopsubnational(soumandaimag)summaryEITIreportswereveryhelpfulinmakingrelevantinformationaccessibletothepublic.Itsimplifiedtheinformation,madeitmorereader-friendly(presentinginformationingraphsandinfographics)andwastailoredtothespecificinterestsoflocalcitizensaccordingtotheirlocation.

SeveralCSOsnotedthatamajorconcernwasthelackofintegrationbetweengovernmentITsystemsand

theEITIMdataportal,whichcausedinconsistenciesindatadependingonsources,althoughtheinclusionoflinkstotherelevantgovernmentdatabasesinthe2014EITIReportandworkonintegratingthesystemsin2016werewelcomed.AllstakeholdersconsultedpraisedtheEITIMDataPortalformakingmoredatathanwaspreviouslyaccessiblethroughtheMRAMwebsitemoreaccessibletoabroadersectionofstakeholders.CSOsinparticularnotedthedataportaladdressedCSOs’significantconcernspreviouslyaboutthelackofaccessibilityofEITIinformation.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthattheMSWGhasmadesignificantprogressinmakingdatainEITIReportsaccessible.TheEITIMdataportalisasignificantimprovementinrenderingthisdataaccessibletothebroaderpopulation,notablyinawaythatprovidesforlocation-basedqueries.

7.3 LessonsLearnedandfollow-uponrecommendations(#7.3)

TheNationalCouncilandMSWGhavebothdiscussedrecommendationsfromthe2014EITIMReportandMongolia’sNovember2015pilotValidationreport,althoughonlyingeneralterms.TheMSWGdiscussedsomeoftherecommendationsofthedraft2014EITIReportatits11December2015meeting.186ThediscussionfocusedontherecommendationtoengagetheIAearlierintheyeartoensureitsinputindatacollectionthroughtheeReportingsystemandtherecommendationforacomprehensivereviewoftheeReportingsystemtoensureintegrityofthedata.WhileaCSOrepresentativeraisedtheissueofrecommendationsfromthepilotValidationreportingeneralterms,butthisdidnotincludediscussionofspecificrecommendations.

TheNationalCouncilconsideredtherecommendationsfromthe2014EITIReportatits18December2015meeting187,includingapresentationbytheIA.SeveralCSOrepresentativesexpressedsupportfortherecommendationtoengagetheIAearlierintheyear.TheNationalCouncildecidedtofollowuponall12recommendationsfromthe2014EITIReport,althoughtheEITIMSecretariatwasdesignatedastheentitytofollowupandimplement11ofthe12recommendations.WhiletheNationalCouncildiscussedthefactthatthepilotValidationhadtakenplaceinNovember2015,theredonotappeartohavebeendiscussionsaboutthespecificrecommendationsofthepilotValidationreport.

The2016EITIworkplan188includesactivitiesrelatedtofollowinguponrecommendationsfromthe2014EITIReportandthepilotValidationreport,butonlyingeneralterms.Activity10.4oftheworkplanincludesageneralactivitytoprepareforandorganiseValidation,submitfinalfindingstoNationalCounciland“havediscussions”,aswellasafootnoteindicatingthatunspecified“additionalwork”isplannedtofollowuponrecommendationsofthepilotValidationreport.AheadofimplementationofRequirement1.5.c.ivfrom31December2016,theMSWGshouldconsiderincludingactivitiesrelatedtofollowinguponspecificrecommendationsfromEITIreportingandValidationinits2017EITIworkplan.

186http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf187http://eitimongolia.mn/sites/default/files/uploads/en/NC_15_20151218_en.pdf188http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdfhttp://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf

The2015annualactivityreport189includesthelistof12recommendationsinthe2014EITIReportandacopyoftheexecutivesummaryandkeyrecommendationsofthepilotValidationreport.Whilethe2015AARstatesthatmostofthepilotValidation’srecommendationswereincludedinthe2016EITIworkplan,onlyageneralreferencetofollowingupontheserecommendationsisincluded,asnotedabove.Howeverthe2015AARdoesconfirmtheNationalCouncil’sapprovalatits18December2015meetingtoacceptandfollowuponallrecommendationsfromthe2014EITIReportandpilotValidationreport.However,itshouldbenotedthatatthetimeofwriting(April2016)thatEITIMhasfacedafundinggapinthesixmonthssincepublicationofthe2014EITIandpilotValidationreports,delayingimplementationofkeyactivitiesinthe2016EITIworkplan.

TheMSWGandtheIAhavesystematicallyfollowedupondiscrepanciesinthefinancialreconciliationsectionofthe2013EITIReport.TheMSWGhasclearlystatedatseveralmeetings190thatoneofthemaingoalsofEITIimplementationwastoeliminatediscrepancies,whichexplainsthesignificantattentiondevotedtofollowingupondiscrepancies.Duringdiscussionsofthedraft2013EITIReportatitsmeetingon10October2014,theMSWGdiscusseddiscrepanciesindetail.TheMNT55billiondiscrepancyrecordedinPetroChinaDaqingTamsag’sdisclosuresfor2013wereexplainedbythefactthatPetroChinabookedrevenuefromoilsalesthroughitsChinesesubsidiaryratherthanitsMongoliansubsidiary,butthatfollowingtheJuly2014PetroleumLawitwouldbeobligedtoaccountforsuchsalesthroughitsMongoliansubsidiary.191Theotherdiscrepanciesaremostlyduetolackofclarificationfromthecustomsserviceonthedisaggregationofcustomstax,VATonimportedgoodsandcustomsservicefeesaswellasthelackofreportingbythreecompanies(p.80ofthe2013EITIReport).

TheissueoffollowinguponpastEITIrecommendationshasbeenoneofthemainpointsofdiscussionontheMSWGandtheNationalCouncilsince2013inparticular.TwoCSOs–theCenterforHumanRightsandDevelopmentandtheZorigFoundation–completeda“MonitoringReportontheImplementationStatusofRecommendationsProvidedbytheEITINationalReconciliationReports”in2014.Evaluatingthefollowupofrecommendationsinthe2006-2011EITIReports,thestudysurveyed89recommendationsincludedinthesesixEITIReports,ofwhich40weredistinctrecommendations.Therewereseveralrepeatedrecommendations:threewereincludedinfiveEITIReports,28wereincludedintwotofourEITIReportsand12wereincludedinonlyoneEITIReport.TherecommendationswereallfocusedontheEITIreportingprocessitself,ratherthanincludingbroadersuggestionsforsectorreform.Thestudyfoundfivekeytypesofrecommendations:

- Recommendationsonreportingtemplates

- Recommendationsonreportingscope

- Recommendationsonreportingparties

- Recommendationsonarrangingreportingprocesses

- RecommendationsonimprovingEITIimportanceandeffectiveness

ItnotedthatEITIReportrecommendationswerediscussedateightofthe11meetingsoftheNational 189http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongol%20EITI%20AAR%202015%20report%20in%20English.pdf190Mostrecentlyatits10October2014meeting.191MSWGmeetingminutes,10October2014,p.4.

Councilbetween2006and2014.WhilethestudynotedthattheEITIMSecretariatestimated27ofthe40distinctrecommendationswereimplemented,thestudyestimatedalowernumberofeightrecommendationsimplemented.Themainreasonsforthislackofimplementationof32recommendationswerethelackofactionablerecommendationsandlackofclarityinthepartiesresponsibleforimplementation.Further,thestudynotedfourkeychallengesinfollowinguponrecommendations:

- Recommendationsweretoogeneral,sometimesunclearandinsomecasescontravenedlegislation

- Lackofresourcesforeffectiveimplementationoftherecommendations

- Longprocessandabsenceofresponsibilityforimplementationoftherecommendations

- InsufficientcooperationbetweenEITIstakeholdersinimplementingrecommendations

Stakeholderviews

SeveralgovernmentrepresentativesandtheEITIMSecretariatnotedtheinclusionoffollow-uponrecommendationsfromthe2014EITIReportandMongolia’spilotValidationinthe2016workplan,underactivities10.1-10.5.SeveralCSOsnotedthatthetwosetsofrecommendationshadbeendiscussedbytheMSWGandNationalCouncilinDecember2015,butnotedthelackofimplementationofrelatedworkplanactivitiesinthefirsthalfof2016duetobudgetconstraints.HoweveroneCSOnotedthatactivitiesrelatedtofollowinguponEITIrecommendationsdidnotnecessarilyrequirefunding,citingexamplesofMSWGmeetingsordiscussionswithgovernmentrepresentativesaboutinformationgaps.

OnegovernmentrepresentativenotedthatthemainrecommendationtheywerepartlyresponsibleforimplementingwasthatcoveringqualityassuranceofgovernmentEITIdisclosuresandthatthishadyettobeimplemented.AnofficialletterhadbeensenttotheStateAuditAgencyduringthespringof2015requestingtheagencyundertakeauditsofthegovernment’sEITIdisclosures.Theagencyrespondedthatthiswouldbepossible,butonlyifincludedinitsfutureworkplanandapprovedbytheGreatKhuralaspartofthenationalbudget.Thiswasnotincludedthisinthedraft2016NationalBudget.TheStateAuditAgencyalsonotedthattheywouldonlyprovidefullassurance,whichwouldentailafirstauditofgovernmentsubmissionsandasecondauditofthefinalEITIReport.SeveralgovernmentrepresentativeswereawaretheissueofdataqualityassurancewouldposechallengesatValidationgiventhatithasconsistentlyfeaturedasarecommendationofpastEITIReports.

ThestructureoftheNationalCouncilandMSWGdidnotsupporteffectivefollow-uponEITIrecommendations,accordingtoaMNAOrepresentativeconsulted.Whilethereweremanysuchmulti-stakeholdercouncilsinMongolia,coveringissuesrangingfromHIVpreventiontolabourrights,giventhatthesewerenotconsideredgovernmententitiestheirrecommendationstendednottobetakenasseriouslyasinternalgovernmentrecommendationsaccordingtotherepresentative.HenotedthatiftheEITIReportwassubmittedtoParliamentortoagovernmentstructuredirectly,recommendationswouldbemoreeffectivelyimplemented.SeveralgovernmentrepresentativesstatedtheyconsideredmostoftheworkrelatedtoimplementingEITIrecommendationswastheresponsibilityofgovernment.

TwogovernmentrepresentativesnotedthattheEITIrecommendationswereusefulandthatitwasattemptedtoincorporatethemintothevariousMinistries’activities.HoweverthechallengewasthatindividualsresponsibleforimplementingrecommendationswerenotidentifiedintheEITIReports.ItwasexpectedthatthefiveworkinggroupsconstitutedbytheMSWGinJanuary2015wouldleadtomore

actionablerecommendationshowever.Ahigh-levelgovernmentofficialcloselyinvolvedintheEITIconcededthatrecommendationswouldbebetterimplementedifhigh-levelgovernmentofficialsweremoreinvolvedintheprocess.HoweverthePrimeMinisterwasconsistentlybriefedonEITIdevelopments.TwoindustryrepresentativesnotedthatEITIrecommendationsnevermadeittothetopofthegovernment’slistofpriorities.Allindustryrepresentativesnotedthatthelackofimplementationofrecommendationshadbeendiscussedindetailsince2013,withnoclearresults.TheyhadnotconsideredtheuseofEITIReportsasinstrumentsforlobbyinggovernmentonareasofregulatoryuncertaintyhowever.OneCSOnotedthattheimpactofEITIReportshadbeenlowduetothelackofimplementationofpastrecommendations.Giventhemembershipofhigh-rankingofficialsontheNationalCouncil,itwasnotedthatthefollow-uponrecommendationsshouldbefeasiblebutthatlackofpoliticalwillwasthecauseofpoorimplementation.

OneCSOandarepresentativefromtheAnti-CorruptionAgencynotedthelackofformalinvestigationslaunchedonthebasisofdiscrepanciesidentifiedthroughEITIreporting,whichconcernedtheCSOgiventhecumulativeMNT51billionindiscrepanciesidentifiedthroughninefiscalyearsofEITIreporting.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmadesatisfactoryprogressinmeetingthisrequirement.WhilerecommendationsofEITIReportsarenotconsistentlyimplemented,theMSWGhasheldconsistentdebatesovertherecommendations,particularlyoverthepastthreeyears.TheMSWGhasestablishedadhocworkinggroupstofollowuponspecificrecommendations.

7.4 Outcomesandimpactofimplementation(#7.4)

WhileboththeNationalCouncilandMSWGhavediscussedtheneedforanassessmentoftheoutcomesandimpactofEITIimplementationinMongolia,mostrecentlyattheNationalForuminNovember2015,areviewofmeetingminutesshowsthatnoattemptatwiderstakeholderconsultationsoraformalimpactassessmenthasbeenmade.

The2015AnnualProgressReport(APR),publishedon30December2015,wassplitintotwodocuments:anarrativereportandamatrixofthe2015workplanwithdetailsofprogressachieved.The2015APRprovidesanoverviewandsummaryofactivitiesundertakenin2015,butnodetailedassessmentofprogressinmeetingeachEITIRequirement.Whileitssecondsectionisdedicatedtothe“StatusofmeetingeachEITIrequirementandprogress,”itconsistsofaverbatimquoteofthepilotValidationreport’sexecutivesummary.

Section2.2states“MongoliaEITI2014or9thReportcoversallnecessaryinformationrequiredbythestandard,”whichisdifficulttoreconcilewithcommentsonthe2014EITIReportfromvariousstakeholdersidentifyinggapswithrequirementsoftheEITIStandard.TheAPRreferstotheMSWG’sfollow-upofrecommendations,butonlyinbroadtermsandonlythosefromthe2014Report.Itcited,forinstance,thattheNationalCouncilagreedtofollowuponallrecommendationsfromthe2014EITIReportbutnoindicationoftheorderofpriorityorpracticalstepstobeundertaken.The2015AnnualProgressReportdoesnotrefertofollowuponanyrecommendationsfrompriorEITIReports,despitethefacttherehadbeenprogressonseveralrecommendationsfromthe2013EITIReport.TheAnnualProgressReportdoesincludeanoverviewofstepstakentoexceedtherequirements(mainlyintheareaoftheeReportingsystemandsubnationalimplementation).

Whilethe2015AnnualProgressReportnotesthat47ofthe50plannedactivitieshadbeencompletedin2015(90%completionrate),itdoesnotnotewhethertheobjectivesoftheworkplanwereachieved,nordoesitrecalltheobjectivesofEITIimplementation.AlthoughtheAnnualProgressReportcommentsthatstakeholderengagementisnotregular,itdoesnotprovidereflectionsonpasteffortstostrengthenparticipationorthoughtsonfutureeffortstoimproveparticipation.

TheInternationalSecretariatdidnotfindevidenceofwiderconsultationsaroundthedevelopmentofthe2014orthe2015AnnualActivityReportsandgatheredthattheMSWGandNationalCouncilapprovedboththe2014and2015annualactivityreportafterlimiteddebateandconsultation.Moregenerally,therewaslittleevidenceofdiscussionsorfeedbackprovidedontheEITIprocessandtheimpactoftheEITIingeneralbeyondtheMSWG.

CSOrepresentativeshavemadesignificanteffortstoassessandadviseonstrengtheningEITIimplementationinMongolia.InMay2014NRGIpublishedagapanalysisontheEITIprocessinMongolia.ThegapanalysisbasedonEITIReport2012identifiedsignificantgapsbetweenreportingpracticesandthenewStandardandprovidedrecommendationsforthe2013EITIMReport.NRGImadeapresentationofthestudytominingcompanies,CSOsandgovernmentrepresentativesinJuly2014andalsosentittotheEITIMSecretariat,butdidnotbelievethegapanalysishadbeensharedmorewidelywithstakeholders.NRGIitselfheldtwomeetingswiththeIAin2014tosharetheoutcomesoftheanalysesandprovideadviceonwaysofaddressingspecificgaps.TheIndependentResearchInstituteofMongolia(IRIM)hasdevelopedamodelofimpactassessmentforEITI.Thedevelopmentofthemodelwasthefirststagebutthesecondstage–anactualimpactanalysis–hasnotyetbeenapprovedandimplementedasofNovember2015.ThemodelshowshowEITIprinciplessupportedatheoryofchange,andhighlightsquestionssuchaswhyMongoliawasimplementingtheEITI,thepotentialimpactofimplementationandtheneedtofocusnotoninputsbutonoutputsandoutcomesofEITIforthecountry.

Stakeholderviews

AllstakeholdersconsultedagreedthatCSOsweretheonlyMSWGmemberstohaveprovidedsubstantiveinputtothedraftannualactivityreport.WhilemoststakeholdersreferredtotheAARas“thedocumentpreparedfortheEITIInternationalSecretariat”,oneCSOsaidtheyhadraisedthisataMSWGmeetingandarguedforthedocumenttobeameansofcommunicatingEITIachievements,challengesandrecommendationstothebroaderMongolianpublic.

SeveralgovernmentandpastIArepresentativesnotedthattheEITIhadhadadefiniteimpactinthatmanypeopleinlocalcommunitiesandlocalgovernmentnowunderstoodtheminingsectoranditscontributiontotheeconomymuchbetter.Protestsovermining,whichtheyadmittedhadapoorreputation,continuedbutthelevelofunderstandinghadgrown.ThiswasconfirmedbyseveralCSOsconsulted,althoughtheyemphasisedconflictwithlocalcommunitieshadonlyreducedinsomeinstances,butthatdisseminationofEITIinformationhadalsoservedasanexampleforlargerminingandoilcompanies,whonowalsoheldpublicmeetingswithlocalcommunities.Severalgovernmentrepresentativesalsonotedthatrevenuetransparencyinrevenuesandexpenditurescreatedasupportiveenvironmentforinvestment,createdgroundsforbuildingtrustwithlocalcommunitiesandensuredasociallicenseforextractivescompaniestooperate.However,governmentrepresentativesnotedthattheEITIwasnotsufficientinandofitself,citingotherrecenttransparency-relatedreformssuchasthoserequiringdisclosuresofgovernmentexpenditure,procurementandconflictofinterest.

SeveralminingindustryrepresentativesnotedthattheEITIhadbroughtmoretransparencytotheminingsector,butthattheydidnotconsiderthistobeanimpactinitself.Fortheretobesubstantialimpact,EITI

recommendationshadtobeconsistentlyimplementedaccordingtotheserepresentatives.OilandgascompaniesconsultednotedthattheyconsideredtheincreasedtransparencythroughEITItohavereducedpublicsuspicionsabouttheindustry.ApastIAnotedthatitappearedthattaxcompliance,atleastbylargercompanies,hadincreasedinthepastdecadeanddrewthelinktoEITIimplementation.SomeCSOslinkedimprovementsinMongolia’sminingcadastresince2007toEITIimplementation,albeitnotingthattherewereotherfactorsinvolved.

AgovernmentrepresentativenotedtherewasscopefortheEITItohaveagreaterimpact,forinstanceintheareaofdatareliability.TheTavanTolgoiprojectwascitedasanexample:whiletheplannedprojectwassignificantandincludedassociatedinfrastructure,therewasverylittlepublicinformationabouttheproject.CompaniesinvolvedinTavanTolgoihadhiredhigh-costauditors,yetthegovernmenthadreservationsabouttheauditmethodologiesemployedandthiswasanareawheremoreinformationcouldbedisclosedthroughtheEITI.SeveralgovernmentrepresentativesalsonotedthatbeneficialownershipdisclosureinfutureEITIreportingwouldlikelyhaveabigimpactonpublicoversightofextractiveindustriesgovernance.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatMongoliahasmademeaningfulprogressinmeetingthisrequirement.WhiletheMSWGhasheldregulardiscussionsontheimpactandoutcomesofEITIimplementationinMongolia,thesehavetendedtoremainadhocandinformal.CivilsocietyorganisationsproducedamonitoringreportontheimplementationofEITIrecommendationsin2014,assessingtheimpactoftheEITIProcessonpoliciesandpractices.TheMSWGhasalsoconsideredundertakinganimpactassessmentbyeachstakeholdergroupinitsdevelopmentofthe2016workplan,althoughthishasyettobeundertaken.The2015annualactivityreportisnotusedasameansofassessingtheimpactofEITIimplementation.

Table7-Summaryassessmenttable:Outcomesandimpact

Publicdebate(#7.1)

TheMSWGhassoughttoensuretheEITIReportiscomprehensible,accessibleandactivelypromoted,particularlythroughaimagandsoumlevelreports.EITIinformationhasgeneratedpublicdebate,particularlyatthesubnationallevel.

Dataaccessibility(#7.2)

EITIdataisaccessible,referencesinternationalclassifications,machine-readableandactivelydisseminatedthroughtheeReportingwebsite.

Lessonslearnedandfollowuponrecommendations(7.3)

RecommendationsofEITIReportsarefolloweduponbytheMSWG,eveniftheyarenotconsistentlyimplemented.

Outcomesandimpactofimplementation(#7.4)

TheMSWGhasproducedannualprogressreportsdocumentingprogressandoutcomesofimplementation,althoughnottrackingitsimpact.Itappearsthatonlyoneofthethreestakeholdergroupsprovidedinputtothe2015annualactivityreport.Furtherworkonassessingimpactshouldinneededandstakeholderengagementindevelopingtheannualprogressreportshouldbestrengthened.

Meaningfulprogress

Recommendations:1.TheMSWGmaywishtoconsiderestablishingmoreformalmechanismsforsubnationalMSGstoprovideinputtonationalEITIdiscussions,toensurediscussionsatthelocallevelarereflected.2.TheMSWGshouldconsiderdiscussingtheroletheEITIcouldplayinachievingnationalprioritiesinreformoftheextractiveindustriesaspartofitsannualreviewoftheworkplan.3.TheMSWGcouldconsiderestablishingclearpublicreportingmechanismsforadhocworkinggroupsthatfollowuponEITIrecommendationsandsettimeframesforcompletingtheirwork.4.TheMSWGmaywishtoundertakeanimpactassessmentwithaviewtoidentifyopportunitiesforincreasingtheimpactofimplementation.5.TheMSWGcouldconsiderpresentingthefindingsofEITIReportstoParliament’sStandingCommitteeonEconomicAffairsannually,inlinewithGovernmentResolution222of2012.6.LocalKhuralsmayconsiderusingthesubnationalEITIcouncilsforconsultationswithindustryandcivilsocietyontheapprovalofnewmininglicenses,inlinewiththenewMineralsLaw.7.TheMSWGmaywishtoclarifyspecificstakeholdersresponsibleforfollowinguponindividualEITIrecommendations,toensuremoreeffectivefollowupandimplementationofrelevantrecommendationsfromEITIreportingandValidation.

7.5 Impactanalysis(nottobeconsideredinassessingcompliancewiththeEITIprovisions)

Impact:TheEITIprocessinMongoliahashadsomeimpact,evenifstakeholdersagreeithasbeenlimitedtoawarenessraisingandfocusedonthereportingprocess.AspartoftheInternationalSecretariat’sassessmentoftheimpactoftheEITIinMongoliainitstenyearsofimplementation,allstakeholderswereaskedwhyMongoliawasimplementingtheEITI.OnegovernmentstakeholdernotedthatMongoliahaddecidedtoimplementtheEITIin2005whentheextractiveindustrieswereopaqueandatatimewhenthegovernmentwasseekingtoattractforeigninvestmentintheminingsector.TheEITIwasthusseenasatooltoattractinvestment.OneofCSOrepresentativenotedthattheend-goalofimplementingEITIwastoreducepovertyinMongolia.

SeveralCSOsnotedthatbeforetheEITI(pre-2006),nocommunitiesknewhowmuchmoneythegovernmentwasgettingfromthesector.Peoplenowhaveaccesstothisinformationandthelevelofnationalandsubnationaldebateoverthegovernanceoftheextractiveindustrieshasgrown,evenifthiswasseenasduetotheminingboomsince2009.Nowthatlocalcommunitieshadaccesstoinformationonhowmuchmoneytheirlocalgovernmentswerereceivingfromextractivescompanies,theywerenoweagertoknowmoreonissuesoflicenses(includingtheirallocation),employment,environmentalissues,etc.ThenumberofNGOsfocusedontransparencyhasalsogrown,andtransparencyisnowaregulartopicofdiscussionsamongparliamentarians,studentsandgovernmentofficials.CSOsalsonotedthegovernmentusedMongolia’scompliancestatusasasignofprestige,eveniftheywereconcernedover

thelackofmeaningfulsupportfortheprocessanddisclosuresrequiredundertheEITIStandard.Civilsocietyalsoconsideredtheircampaigningforamininglegislationandonspecificdeals,liketheErdenesTavanTolgoidealhaltedinearly2015,asaconcreteoutcomeoftheEITIinthesensethatCSOscouldnowrefertothegovernment’scommitmenttoitsEITIcompliancestatusintheirlobbyingandasameanstoensurepublicoversightofminingdeals.WhilegovernmentrepresentativesnotedthatEITIcompliancestatusreflectedtheircommitmenttotransparencyandsecuringasociallicensetooperateforcompanies,industrydidnothighlightasignificantimpactofimplementation.

Severalgovernment,industryandCSOrepresentativesnotedthatthemostsignificantevidenceoftheimpactoftheEITIwastheformationofsubnationalcouncils,whichhadbroughtmuchclosertiesbetweengovernmentagencieslikeMRAM,companiesandlocalcommunitiesandlocalgovernmentsandwasstartingtobuildtrustamongststakeholders.Howeveritwasnotedthatthemaininteractionwasatspecificeventsandfollow-upcontactwasentirelyconductedthroughtheEITIMSecretariat.AfewCSOsnotedthattheEITIcouldyieldmorebenefitstocitizensby,inparticular,disclosingmoreinformationonbeneficialownership,whichcouldreducetheriskofconflictofinterestandcorruption,andpublishingcontracts,toenablecitizenstojudgethe“fairness”ofdeals.

TheMay2016studyoncorruptionriskassessmentinMongolia’sminingsector,producedbytheUNDevelopmentProgrammetogetherwiththeMinistryofMiningandIRIMMongolia,highlightsthelimitedimpactofEITIimplementationoncorruptionintheminingsector.192Howeverthereport’sdescriptionoftheimpactofEITIimplementationfocusedonlyonthereductionindiscrepanciesduringtheEITIreconciliationratherthanabroaderfocusondisclosuresofinformationrelatedtotheextractiveindustriesvaluechainrequiredundertheEITIStandard.Thereportonlynotesthat“noactionwastakenandnoonewasheldaccountablewhenrequireddisclosures(…)weremissing.”

Sustainability:TheEITIprocessalsofacessignificantriskstoitssustainability,bothfinanciallyandintermsofconsistencyofengagement.AdraftLawonMineralResourceSectorTransparency(the“EITILaw”)hasbeeninpreparationforalmostthreeyearsnow.

ThefinancialsustainabilityoftheEITIprocessalsoposesarisk.TheEITIMhashadtooperatewithoutfundsforseveralmonthsatatimeonanannualbasisinrecentyears,duetodelaysinaccessingWorldBankgrantfunding.WhiledisbursementofMDTFgrantscoveredexpensesretroactively,thetransitiontotheExtractiveIndustriesGlobalProgrammaticSupport(EGPS)fundfromJanuary2016ledtoasix-monthgapinfundingfortheEITIMSecretariat.

Atthepoliticallevel,thesustainabilityoftheEITIprocessfacessomerisksgiventhepotentialimpactofJune2016parliamentaryelectionsongovernmentrepresentationandchairingofMSWGmeetings,givenexperienceofthelackofNationalCouncilmeetingsin2014asaresultofpoliticalchanges.

192UNDP,MinistryofMining(May2016),‘CorruptionriskassessmentintheminingsectorinMongolia’-http://www.mn.undp.org/content/dam/mongolia/Publications/DemGov/20160603_MiningCorruptionStudy/Corruption%20risk%20assessment_Mining_Eng.pdf?download

Annexes

AnnexA-ListofMSGmembersandcontactdetails

ListofNationalCouncilmembersandcontactdetails(asof11July2016)

Name Position E-MailMembersince

Ch.Saikhanbileg PrimeMinisterofMongolia saikhanbileg@parliament.mn Nov2014

R.Jigjid MinisterforMining jigjid@mm.gov.mn Dec2014

B.Bolor MemberofParliament,MinisterforFinance

bolor@parliament.mn Sep2015

N.Battsereg MemberofParliament,MinisterforTourism,EnvironmentandGreenDevelopment

battsereg@parliament.mn Sep2015

Ch.Ulaan ChairmanofStandingCommitteeonStateBudgetofParliament

ulaan@parliament.mn Oct2015

A.Zangad GeneralAuditorofMongolia a_zangad@yahoo.com Nov2012

S.Mendsaikhan ChairmanofGeneralAgencyofRegistrationandStatistics

mendsaikhan@nso.mn Jan2009

N.Ganbold ChairmanofIndependentAuthorityAgainstCoruption

bat-otgon@iaac.mn Nov2011

D.Bayarbat GovernorofTuvaimag Dec2012

N.Bayarsaikhan HeadofStepwithoutBorderNGO

swb.ngo@gmail.com Mar2009

G.Urantsooj HeadofHumanrightsandDevelopmentCenter

gurantsooj@rocketmail.com Dec2006

P.Erdenejargal ExecutiveDirectorofOpensocietyforum

jargal@forum.mn Dec2006

D.Tserenjav ExecutivedirectorofTransparentFoundationNGO

tseren2005@yahoo.com Jul2012toMay2013;

Jul2015

N.Narantsetseg HeadofBaigaliEhiinAvralSanNGO

naraa_green@yahoo.com Jul2015

B.Bayarmaa HeadofOwnersofKhuvsulLakeMovementNGO

khuvsguldalainezed@yahoo.com May2013

L.Dolgormaa MemberofBoard,ResponsibleMiningInitiativeNGO

dolgormaa-ehc@live.com May2013

O.Otgonsaikhan HeadofMyMongolianLandMovementNGO

onomoooonoo@yahoo.com Jul2015

B.Batbold MemberofBoard,CivilCouncilforEnvironment

tadaa_uba@yahoo.com Jul2012

MemberofBoard,CivilCouncilforEnvironment

N.Algaa PresidentoftheMongolianNationalMiningAssociation

algaa@miningmongolia.mn Jun2014

L.Davaatsedev HeadofBoardofCoalAssociation

davaatsedev@me.com Jul2012

T.Ganbold PresidentofMongolianGoldProducersAssociation

ganboldt@adm.mn Dec2014

ExecutiveDirectorofPetrochinaDachinTamsagLLC

G.Tsogt VicePresidentoftheMongolynAltMAKLLC

tsogt@mak.mn Jul2012

G.Battsengel ChiefExecutiveOfficerofEnergyResourceLLC

battsengel@energyresources.mn Jul2012

AndrewWoodley

PresidentandCEOofOyuTolgoiLLC

lkhamaakh@ot.mn Oct2014

M.Boldbaatar AdvisortoCEOofMongolrostsvetmetLLC

boldbaatar66@yahoo.com Jul2012

S.Enkhtuya ExceutivedirectorofMonpolymetLLC

monpolymet@mongol.net Jul2012

D.Galbaatar DeputydirectorofMarketingDepartmentofErdenetMiningCorporationLLC

galbaatar@erdenetmc.mn Jul2012

B.Delgermaa SeniorAdvisortothePrimeMininster,SecretaryofNationalCouncil

delgermaa@cabinet.gov.mn Dec2014

ListofMSWGmembersandcontactdetails(asof11July2016)

№ Name Position E-Mail Membersince

1 B.Delgermaa SeniorAdvisortothePrimeMinisterofMongolia

delgermaa@cabinet.gov.mn Dec2014

2 E.Sumiya SenoirOfficerofCabinetSecretariatofGovernmentofMongolia

sumiya_e@cabinet.gov.mn

3 B.Bat-otgon HeadofEnlightenmentandPreventionDepartment,

bat-otgon@iaac.mn

IndependentAuthorityAgainstCoruption

4 Kh.Purevsuren HeadofAccountingPolicyDepartment,MinistryofFinance

purevsuren_kh@mof.gov.mn

zulai_g@mof.gov.mn

5 N.Enkhbayar HeadofStrategicPolicyandPlaningDepartment,MinistryofMining

enkhbayar@mm.gov.mn

zuk_mn@yahoo.com

6 G.Nyamdavaa HeadofNaturalResourcesDepartment,MinistryofTourism,EnvironmentandGreenDevelopment

7 S.Purev ChairmanofGeneralDepartmentofTaxationandCustoms

enkhtuya.da@mta.mn

8 Ts.Sharavdorj ChairmanofGeneralAgencyforSpecializedInspection

9 D.Uuriintuya ChairwomanofMineralResourcesAuthority

oyuntsetsegnyamjav@yahoo.com

10 G.Ulziiburen ChairmanofPetroleumAuthorityofMongolia

bazarvaani_oyun@yahoo.com

11 N.Batdorj DeputyGovernorofSelengeaimag

batdorj89@yahoo.com

12 D.Enkhbold CEOofMongolianNationalMiningAssociation

enkhbold@miningmongolia.mn Jun2014

13 T.Naranzaya ExecutivedirectorofGoldProducersAssociation

nrnzaya@mongoliagold.org

14 I.Batmunkh OfficerofErdenesTavanTolgoiLLC

batmunkh.i@erdenestt.mn Feb2014

15 Ch.Ochirlkham DirectorofFinanceandEconomicDivisionofBaganuurJSO

enkh1990@yahoo.com Feb2014

16 Kh.Lkhamaa AdvisorofStakeholdersEngagementofOyuTolgoiLLC

lkhamaakh@ot.mn Sep2012

17 P.Bolormaa SeniorTaxAccountantofBorooGoldLLC

bolormaa.p@centerragold.mn Feb2014

18 DirectorofPRDeparmentofSouthgobiSandsLLC

Feb2014

19 Ch.Byambasuren CommunicationsmanagerofCGBEMLLC

byambasuren@mongoliaminerals.com Feb2014

20 Ts.Enkhjargal DirectorofSDLADepartmentofArevaMongolLLC

Enkhjargal.tserendorj@areva.com Sep2015

21 T.Amarzul ExecutivedirectorofPetroMatadLLC

amarzul@petromatad.com

22 ExecutivedirectorofPetroChinaDachinTamsagLLC

23 N.Bayarsaikhan HeadofStepwithoutBorderNGO

swb.ngo@gmail.com Mar2009

24 G.Chagnaadorj HeadofSacredStupaMovement

ariunsuvraga@mail.mn May2013

25 N.Narantsetseg HeadofBaigaliEhiinAvralSanNGO

naraa_green@yahoo.com Jul2015

26 L.Tur-Od PresidentofTransparencyInternationalMongolia

lturod@gmail.com Sep2015

27 B.Bayarmaa HeadofOwnersofKhuvsulLakeMovement

khuvsguldalainezed@yahoo.com May2013

28 L.Dolgormaa MemberofBoard,ResponsibleMiningInitiativeNGO

dolgormaa-ehc@live.com May2013

29 N.Baigalmaa OfficerofCenterofHumanrightsandDevelopment

chrd@mongolnet.mn May2013

30 D.Tserenjav ExecutiveDirectorofTransparencyFoundationNGO

tseren2005@yahoo.com Jul2012

31 O.Otgonsaikhan HeadofMyMongoliaLandMovement

onomoooonoo@yahoo.com May2013

32 B.Batbold MemberofBoard,CivilCouncilforEnvironment

tadaa_uba@yahoo.com Jul2012

33 MemberofBoard,CivilCouncilforEnvironment

34 Sh.Tsolmon CoordinatorofMEITISecretariat

eiti.secretariat.mn@gmail.com Jul2012

AnnexB-Listofstakeholdersconsulted(96)

Government

DelgermaaBanzragch,senioradvisortothePrimeMinisterofMongoliaandChairoftheMSWG

B.BolormaaandG.Zulai,DepartmentofAccountingPolicyDepartment,MinistryofFinance

DambaDorj,seniorofficer,divisionofminingpolicy,MinistryofMining

EnkhbayarNemekhbayar,directorgeneral,strategicpolicyandplanningdepartment,MinistryofMining

ChinbaatarNachin,directorofcadastredivision,MineralResourcesAuthorityofMongolia(MRAM)

BattulgaSosorbaram,headofminingdivision,MRAM

ByambadagvaBayaraa,headofreserveandeconomicresearchsubdivision,MRAM

AmraaTsengemaa,vicechairman,PetroleumAuthorityofMongolia(PAM)

SunderiyaBatjargal,chieflegalofficer,ErdenesMongol

TumurpurevJamtsaa,miningprojectdirector,ErdenesMongol

MrZANGADAyur,AuditorGeneralofMongolia

BATTUYABuyandelger,DeputyAuditorGeneralofMongolia,PrincipalAuditor

B.Bat-otgon,HeadofEnlightenmentandPreventionDepartment,IndependentAuthorityAgainstCoruption

MrsSarangere,IndependentAuthorityAgainstCorruption;

AyunaNechaeva,NationalStatisticsOffice

OtgonbayarChimeddorj,directorMacro-economicDivision,MinistryofFinance

Industry

BaigalmaaShurka,GeneralManagerofCommunities,OyuTolgoi

BrianWhite,PrincipalAdvisorCommunications,OyuTolgoi

LkhamaaKh.,advisorstakeholderengagement,OyuTolgoi

Enkh-AriunaaOidovdanzan,PrincipalAdvisorCompensationAgreement,OyuTolgoi

RenchinpagmaB.,OfficerExternalRelations,OyuTolgoi

GraemeHancock,PresidentandChiefRepresentativeinMongolia,AngloAmerican

SunjidmaaJamba,managerforcorporateaffairsandsustainability,AngloAmerican

Bolormaa,BorooGold

N.Algaa,presidentoftheMNMA

D.Enkhbold,executivedirectoroftheMNMA

B.BoldbaatarofMongolrstsvetmet

MrsZ.Sugarmaa,generalmanagerofcommunityrelationsdepartmentofEnergyResourcesLLC

AmarzulTuul,executivedirectorofPetromatad

Erinbileg,DongShengPetroleum

Bolon,PetrochinaDaqingTantsag

BatmunkhIderkhangai,foreignrelation,localcommunity,publicrelationofficer,ErdenesTavanTolgoi

GerelmaaDarambazaar,CSRofficer,ErdenesTavanTolgoi

NaranzayaT.,CEO,MongolianGoldProducersAssociation

CivilSociety

D.Tserenjav,executivedirectorofTransparencyFoundationNGO

Ts.Otgonsuren,journalistwithTransparencyFoundationNGO

BatboldB.,memberoftheboardoftheMECCandheadoftheGreenParliament,MongolianEnvironmentalCivilCouncil

JanaGanbaatar,chairmanoftheinspectioncommittee,MongolianEnvironmentalCivilCouncil

G.Chagnaadorj,headofAriunSuvragaMovementNGO

NamsraiBayarsaikhan,member(andformerNationalCoordinator)ofPWYPMongolia(+97688724869)

ErdenechimegDashdorj,NationalPWYPCoordinatorforMongolia(+97688077077)

SelengeOyunbileg,OSF

DorjdariNamkhaijantsan,NationalCoordinatorforMongolia,NaturalResourceGovernanceInstitute

Numuun,NRGI

BayarsaikhanNamsrai,member(andformerNationalCoordinator)ofthePWYPMongoliacoalition

BolormaaL.,foundingeditor,MongolianMiningJournal

B.Oyunchimeg,journalistattheMongolianNationalBroadcaster

L.Tur-Od,TransparencyInternational-MongolianNationalChapter

N.Narantsetseg,Head,MotherNatureSaveFoundation

O.Narangerel,Head,KhangaikhanNetworkforRegionalEnvironmentConservation

E.Byambajav,AlumniAssociationofIrkutskEconomicsUniversity

Ts.Tuyatsetseg,DeputyHead,MongolianLawyers’AssociationforEnvironment

Otgontsetseg,OnonandUlzRiverNGO

S.Tserenpurev,CEO,NewAdministrativeInitiativeNGO

Ch.Tuya,Head,KhanKhentiiMountainandKhatanOnonRiverProtectionAssociationNGO

SanjaasurenOyun,ZorigFoundationGanbaatarJana,MECCAltantsatsralt,MECC

EmilOmarov,PWYPEurasiaRegionalCoordinator

Sub-nationalcouncilmembers

Kh.BaasankhuuSecretaryofEITISub-nationalcouncil,KhovdaimagGovernor’sOffice

D.Natsagdorj,DeputyMayorofUmnugobiaimag

B.Tuulaikhuu,Speaker,AiragsoumCitizens’RepresentativeKhural,Dornogobiaimag

Ts.Aldarmaa,Secretary,LuussoumCitizens’RepresentativeKhural,Dundgobiaimag

S.Sukhdorj,Speaker,KhuldsoumCitizens’RepresentativeKhural,Dundgobiaimag

B.Munkhbat,Membersub-nationalcouncil,Governor’sAdministrationofSelengeaimag

Ts.Ganbat,Speaker,ShinejinstsoumCitizens’RepresentativeKhural,Bayanhongoraimag

Kh.Enkhtur,DeputyGovernor,AdministrationofShinejinstsoum,Bayankhongoraimag

Kh.Otgonmunkh,Speaker,UlziitsoumCitizens’RepresentativeKhural,Dundgobiaimag

E.Nandintsetseg,Ikhkhetsoum,Dornogobiaimag

D.Batzul,OfficerforMiningandEnvironment,AdministrationofUvsaimag

O.Badarch,TraditionandFutureNGO,Umnugobiaimag

P.Batsailkhan,Speaker,GaluutsoumCitizens’RepresentativeKhural,Bayankhongoraimag

D.Sondor,LawyerCenterNGO

S.Battulga,Governor,Galuutsoum,Bayankhongoraimag

N.Enkhjargal,EnkhUranItgelpartnership

Mr.Munkhdelger,grassrootsNGObasedinTsogttsetsiisoum,Umnugobiprovince

MrOtgonmunkh.Kh,Chair,citizen’srepresentativekhural,basedinUlziitsoum,Dundgobiaimag

MrZandraa.B,Head,Mongoliannationalcoalitionofbaghandsoums

Others

MarkEberst,partneratKPMGAuditMongolia

Sh.Nomindari,KPMGMongolia

AlexisMajnoniD'intignano,KPMGFrance

OsorgaravBookhuu,generaldirectorpartner,UlaanbaatarAuditCorp.

ErdenetsogNatsadorj,auditmanager,UlaanbaatarAuditCorp.

TserengavaaJIGDEN,DalaivaAudit

JargalsurenJ,,DalaivaAudit

BryanLand,TaskTeamLeader,WorldBank

JamesAnderson,CountryManager,WorldBankMongolia

TuyenD.Nguyen,ResidentRepresentative(Mongolia),InternationalFinanceCorp.(IFC)

DoljinsurenJambal,UNDPProgrammeManager

Dr.StefanHanselmann,ProgramDirectorIMRIIntegratedMineralResourceInitiative,GiZ

RichardBiastoch,Officer,IMRIIntegratedMineralResourceInitiative,GiZ

NancyFoster,developmentconsularattheCanadianEmbassy

OyunbilegP.,communicationsmanager,Australia-MongoliaExtractivesProgram(AMEP),AdamSmithInternational

PatienceSingo,ProjectDirector,"SustainableArtisanalMining"Project,SwissAgencyforDevelopmentCooperation

DanielValenghi,headofprogramme,SwissAgencyforDevelopmentCooperation

AnnexC-Listofreferencedocuments

WorkplansandAnnualactivityreports:

• MongoliaEITIAnnualActivityReport2015-http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongol%20EITI%20AAR%202015%20report%20in%20English.pdf

• ReportonPlanofAction2015ofMongoliaEITI-http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%20Activities%20by%20activities%20Report%202015%20in%20English.pdf

• Mongolia2016EITIWorkplan-http://eitimongolia.mn/sites/default/files/uploads/wokplanandreport/Mongolia%20EITI%202016%20Workplan%20in%20English.pdf

• PLANOFACTIONOFEITIMFOR2015(EITIM2015workplan)

http://www.eitimongolia.mn/sites/default/files/uploads/EITIMActioPlan2015en.pdf

• PLANOFACTIONFORTHEYEAROF2014OFEITIMIMPLEMENTATION(EITIM2014workplan)http://www.eitimongolia.mn/sites/default/files/uploads/en/EITIM_POA_2014en.pdf

• TheEITIMmid-termstrategy2010-2014http://www.eitimongolia.mn/sites/default/files/uploads/en/Mongolia_EITI_Strategy_2010-2014.pdf

• EITIM2014annualactivityreport,January2015http://www.eitimongolia.mn/sites/default/files/uploads/EITIMWorkReport2014en.pdf

• EITIM2013-2014annualactivityreport,July2014https://eiti.org/files/document/Mongolia_EITI_Activitie_report_2013_half_2014_half_last.pdf

• ActionPlanofpreparationfortheEITIinternationalvalidation,approvedbythePrimeMinisterandChairmanoftheEITINationalCouncil,HECh.Saikhanbileg,28August2015http://www.eitimongolia.mn/mn/node/4872

EITIReports,Summaries,ValidationReportandSecretariatReview:

• MongolianinthEITIReconciliationReport2014-http://eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202014%20en.pdf

• Mongolia2014EITIInceptionReport(4August2015),unpublished.

• MongoliaeighthEITIReconciliationReport2013http://www.eitimongolia.mn/sites/default/files/uploads/final-reports/Final%20report%20EITI%20Mongolia%202013%20en.pdf

• Mongolia2012EITISummaryReport(ОҮИТБС-ын2012онынэгтгэлийнтайлан)http://www.eitimongolia.mn/sites/default/files/uploads/Summary_report_2012.pdf

• Mongolia2009ValidationReporthttps://eiti.org/files/Mongolia%20Final%20Validation%20Report.pdf

• EITIInternationalSecretariatReviewofMongolia,September2010https://eiti.org/files/Secretariat%20Review%20-%20Mongolia.pdf

• TheMonitoringReportonImplementationstatusofrecommendationsprovidedbytheEITINationalReconciliationReports,preparedbytheCenterforHumanRightsandDevelopment,inpartnershipwiththeZorigFoundation,in2014.

• EITIM(February2016),TermsofReference,IndependentAdministratorforthe2015EITIReport-http://eitimongolia.mn/sites/default/files/uploads/ToR_for_Mongolia_EITI_2015_Report_IA_English_Updated.pdf

• EITIM(March2015),TermsofReference,IndependentAdministratorforthe2014EITIReport-http://www.eitimongolia.mn/sites/default/files/attachments/ToR%20for%20IAuditor%20en.pdf

LegaldocumentsandToRsrelatedtoEITIimplementation:

• TheStatuteofEITIMSecretariat,order62,2007.06.27http://www.eitimongolia.mn/sites/default/files/uploads/en/Statute_of_Mongolia_EITI_secretariat.pdf

• LawofMongoliaonMinerals(revised),8July2006

http://lrcm.mn/wp-content/uploads/2014/10/06e4ce_b4da5304144d40f68772950fe7eafeef.pdf

Mongolianversionofthe2006LawonMinerals(revised)

http://www.eitimongolia.mn/sites/default/files/uploads/Tsomiin_energii_tuhai_huuli.pdf

• Governmentresolutionnumber1,on3January2006,onMongolia’sintentiontoimplementtheEITI(Mongolian)(Олборлохүйлдвэрлэлийнилтодбайдлынтухайсанаачилгыгдэмжихтухай)

http://www.eitimongolia.mn/sites/default/files/uploads/1%20-%202006.01.04.pdf

• TermsofReferenceoftheNationalCouncilcommittedtocoordinateandmonitortheImplementationoftheExtractiveIndustriesTransparencyInitiativeinMongolia,2012.11.28http://www.eitimongolia.mn/sites/default/files/uploads/en/EITI_National_Council_TOR_in_English.pdf

• TermsofReferenceoftheMulti-Stakeholders’WorkingGroupcommittedtoimplementExtractiveIndustriesTransparencyInitiative,2012.11.09http://www.eitimongolia.mn/sites/default/files/uploads/en/ToR_of_MSWG_Mongolia_EITI.pdf

• TripartiteMemorandumofUnderstandingoneffectiveimplementationofExtractiveIndustriesTransparencyInitiativeandpartnershipbetweenGovernmentofMongolia,companiesandNGOcoalitionhttp://www.eitimongolia.mn/sites/default/files/uploads/en/MoU_Mongolia_EITI.pdf

• TermsofReferenceforIndependentAdministrator,2014EITIReporthttp://www.eitimongolia.mn/sites/default/files/attachments/ToR%20for%20IAuditor%20en.pdf

• HandbookforbusinessentitiesonreportingtoEITI,March2014(inMongolianonly)(ОЛБОРЛОХҮЙЛДВЭРЛЭЛИЙНИЛТОДБАЙДЛЫНСАНААЧИЛГЫНХЭРЭГЖИЛТИЙГОРОННУТАГТХАНГАХҮҮРЭГБҮХИЙДЭДЗӨВЛӨЛИЙНГАРЫНАВЛАГА)http://eitimongolia.mn/sites/default/files/uploads/EITI_sub_council_guide_%2020140423.pdf

• GovernmentofMongolia(15September2012),GovernmentResolution30,

http://pubdocs.worldbank.org/en/917021434986534073/pdf/Mongolia-GovRes30-2012-Procedure-on-Transfers-from-GLDF-and-LDF-and-Baseline-expenditures-Sep2012.pdf

• GovernmentofMongolia(30June2015),DecentralisationPolicySupport,Component3ofGovernanceandDecentralisationProgramme,phaseII,2015-2018,http://cabinet.gov.mn/files/fileres/16010002.pdf

Otherdocumentsonline:

• EITIMeReportingsystem

http://e-reporting.eitimongolia.mn/

• EITIMbeneficialownershipinteractiveinfographichttp://www.eitimongolia.mn/en/beneficial-owners

• OpenSocietyForum(2013),“Extractingdata:AnalysisofEITINationalReportsfrom2006-2011,”http://www.forum.mn/res_mat/OSF/Data%20Mining_eng.pdf

• EBRD(2014),LawinTransition,Throughthelookingglass:theroleoftheExtractiveIndustriesTransparencyInitiative(EITI)insustainableresourcedevelopment,http://www.ebrd.com/downloads/research/law/lit14eb.pdf

• EBRD(25June2013),StrategyforMongolia-http://www.ebrd.com/downloads/country/strategy/mongolia.pdf

Meetingminutes:

• MinutesofmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency3March2010

http://eitimongolia.mn/sites/default/files/uploads/en/NC_6_20100305.pdf

• MinutesofmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency24June2010

http://eitimongolia.mn/sites/default/files/uploads/en/NC_7_20100624.pdf

• MinutesofEITIMNationalCouncilMeeting(10November2011)http://eitimongolia.mn/sites/default/files/uploads/en/NC_8_2011.11.10.pdf

• MinutesofmeetingofMongoliaExtractiveIndustryTransparencyInitiativeNationalCouncil,8May2012http://eitimongolia.mn/sites/default/files/uploads/en/NC_9_2012.05.08.pdf

• MinutesofEITIM10thNationalCouncilMeeting(28November2012)http://eitimongolia.mn/sites/default/files/uploads/en/NC_10_2012.11.28.pdf

• Minutesof11thmeetingofNationalCouncilofMongolianExtractiveIndustryTransparency23December2012

http://eitimongolia.mn/sites/default/files/uploads/en/NC_11_2013.12.23.pdf

• MinutesofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(29April2011)http://eitimongolia.mn/sites/default/files/uploads/en/AH_22_20110429.pdf

• MinutesofMeetingofMulti-StakeholderWorkinggroupofMongoliaExtractiveIndustries

TransparencyInitiative(2June2011)http://eitimongolia.mn/sites/default/files/uploads/en/AH_23_20110602.pdf

• MinutesofMeetingofMongoliaExtractiveIndustryTransparencyInitiativeMulti-StakeholderWorkingGroup(23December2011)http://eitimongolia.mn/sites/default/files/uploads/en/AH_24_20111223.pdf

• MinutesofMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup24January2012http://eitimongolia.mn/sites/default/files/uploads/en/AH_25_20120124.pdf

• MinutesofMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(12October2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_26_20121012.pdf

• MinutesofmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMultiStakeholderWorkingGroup(18October2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_27_20121018.pdf

• MinutesofmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(9November2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_28_20121109.pdf

• 29thmeetingofEITIMMSWG(14December2012)http://eitimongolia.mn/sites/default/files/uploads/en/AH_29_20121214.pdf

• Minutesof30thmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMultiStakeholderWorkingGroup(6March2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_30_20130306.pdf

• MinutesofmeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMultiStakeholderWorkingGroup(27March2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_31_2013.03.27.pdf

• MinutesofEITIMMSWGMeeting(15May2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_32_2013.05.15.pdf

• MinutesofMeetingofMongoliaExtractiveIndustriesTransparencyInitiativeMulti-StakeholderWorkingGroup(3December2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_33_2013.12.03.pdf

• MinutesofmeetingofEITIMMulti-StakeholdersWorkingGroup(13December2013)http://eitimongolia.mn/sites/default/files/uploads/en/AH_34_2013.12.13.pdf

• Minutesof12thmeetingofEITIMNationalCouncil(13January2015)-http://eitimongolia.mn/sites/default/files/uploads/en/NC_12_20150113_en.pdf

• Minutesof13thmeetingofEITIMNationalCouncil(4June2015)-http://eitimongolia.mn/sites/default/files/uploads/en/NC_13_20150604_en.pdf

• Minutesof14thmeetingofEITIMNationalCouncil(18December2015)-http://eitimongolia.mn/sites/default/files/uploads/en/NC_15_20151218_en.pdf

• Minutesof35thmeetingofEITIMMSWG(11March2014)–

http://eitimongolia.mn/sites/default/files/uploads/en/AH_35_2015.03.11_en.pdf

• Minutesof36thmeetingofEITIMMSWG(10October2014)–http://eitimongolia.mn/sites/default/files/uploads/en/AH_36_20141010_en.pdf

• Minutesof37thmeetingofEITIMMSWG(11December2015)-http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf

• Minutesof38thmeetingofEITIMMSWG(25May2015)-http://eitimongolia.mn/sites/default/files/uploads/en/AH_37_20150525_en.pdf

• Minutesof39thmeetingofEITIMMSWG(12December2015)-http://eitimongolia.mn/sites/default/files/uploads/en/AH_39_20151211_en.pdf

• Minutesof40thmeetingofEITIMMSWG(22April2016)–unpublishedasof12July2016.

Secondaryliterature:

• PWYPMongoliaCoordinatingCommittee,31March2015,unpublished,providedbythePWYPcoalition.

• IMFWorkingPaper(April2015),‘FromNaturalResourceBoomtoSustainableEconomicGrowth:LessonsforMongolia-https://www.imf.org/external/pubs/ft/wp/2015/wp1590.pdf

• WorldBank(November2015),MongoliaEconomicUpdate-http://pubdocs.worldbank.org/pubdocs/publicdoc/2015/11/920971447119845335/meu-nov2015-en.pdf

• WorldBank(January2016),MongoliaEconomicBrief-http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/2/419151454466826444/MEB-Jan-2016-en.pdf

• USEnergyInformationAdministration(September2015),‘TechnicallyRecoverableShaleOilandShaleGasResources:Mongolia-https://www.eia.gov/analysis/studies/worldshalegas/pdf/Mongolia_2013.pdf

• EuropeanBankforReconstructionandDevelopment(November2015),‘Countryassessments:Mongolia’-http://2015.tr-ebrd.com/wp-content/uploads/2015/11/TR2015_16_CA_Mongolia.pdf

• MinistryofFinance(August2015),‘ExtractiveIndustryFiscalRegimeInMongolia’-http://www.imf.org/external/np/seminars/eng/2015/natrestax/pdf/batbayar.pdf

• AmericanCenterforMongolianStudies(2015),‘StateownershipandthedevelopmentofnaturalresourcesinMongolia’-http://socialsciences.hawaii.edu/conference/demr2015/_papers/krusekopf-charles.pdf

• WorldBank(November2007),GrowthDiagnosticsforaResource-RichTransitionEconomy:TheCaseofMongolia-http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1206974166266/4833916-1206974192224/IanchovichinaGooptuwps4396.pdf

• FT(30June2016),“Mongoliaoppositionscoreslandslideelectionvictory”,http://www.ft.com/cms/s/0/fc03c8c8-3e66-11e6-8716-a4a71e8140b0.html#axzz4DRX5OA7M

• LeeCashell(6July2016),‘Mongolia’selection–aprotestvoteforgood’,http://blogs.ft.com/beyond-brics/2016/07/06/mongolias-election-a-protest-vote-for-the-good/

• FreedomHouse(2015),FreedomintheWorld2015:Mongolia,https://freedomhouse.org/report/freedom-world/2015/mongolia

• USDepartmentofState(2014),2014HumanRightsReports:Mongolia,http://www.state.gov/j/drl/rls/hrrpt/2014/eap/236460.htm

• USDepartmentofState(June2015),MongoliaInvestmentClimateStatement2015,http://www.state.gov/documents/organization/241879.pdf

• FT(24January2013),‘Mongoliacokingcoalminetroublesmount’,http://www.ft.com/cms/s/0/1883afe8-6622-11e2-b967-00144feab49a.html#axzz4Dp84CvFQ

• TheUBPost(13June2016),‘CabinettobuybackErdenesTavanTolgoisharesfromthepublic’,http://theubpost.mn/2016/06/13/cabinet-to-buy-back-erdenes-tavan-tolgoi-shares-from-the-public/

• Forbes(25February2015),‘Mongolia’sendlesslegalflexibility’,http://www.forbes.com/sites/jonspringer/2015/02/25/day-828-mongolias-endless-legal-flexibility/#7a64a3f943ed

• USDepartmentofTreasury,MonthlyMDBVotingRecord,March2016,https://www.treasury.gov/resource-center/international/development-banks/Documents/March%202016.pdf

• StateBank,2014AnnualReport,https://www.statebank.mn/w/content/2015/11-26/Statebank%20Annual%20report%202014%20Eng_baga.pdf

• Moody’s(3November2015),SupportforDevelopmentBankofMongoliatoremainstrong,https://www.moodys.com/research/Moodys-Support-for-Development-Bank-of-Mongolia-to-remain-strong--PR_337354

• WorldBank(2015),MongoliaPublicFinancialManagementPerformanceReport,http://www.adb.org/sites/default/files/linked-documents/49210-001-sd-02.pdf

• MRAM(2015),MRAMInformationCircular2015,http://www.bgr.bund.de/DE/Themen/Zusammenarbeit/TechnZusammenarbeit/Downloads/1094_Circular2015.pdf?__blob=publicationFile&v=2

• News.mn(9March2015),“TavanTolgoistalledbyErdenesTavanTogloi’sChalcodebt”,http://www.news.mn/r/206199

• UniversityofQueensland(2015),‘Mining,“sociallicense”andlocal-levelagreementsinMongolia’-http://socialsciences.hawaii.edu/conference/demr2015/_papers/byambajav-dalaibuyan.pdf

• OyuTolgoiInvestmentAgreement,http://www.turquoisehill.com/i/pdf/Oyu_Tolgoi_IA_ENG.PDF

• AsianDevelopmentBank(September2013),“Mongolia:UpdatingtheEnergySectorDevelopmentPlan”(p.15),http://www.adb.org/sites/default/files/project-document/81826/43079-012-tacr-01f.pdf

• UNDP,MinistryofMining,Anti-CorruptionAgency(May2016),‘CorruptionriskassessmentintheminingsectorinMongolia’-http://www.mn.undp.org/content/dam/mongolia/Publications/DemGov/20160603_MiningCorruptionStudy/Corruption%20risk%20assessment_Mining_Eng.pdf?download

AnnexD-DetailsofMongolia’sEITIandValidationReports

Contractamount(USD)

Contractamount(MNT)

NameofIndependentAdministrator

DateofPublication

Companydisclosures-numberofcompany

Governmentdisclosures-numberofcompanies

Numberofcomd\paniesreconcile

Unresolveddiscrepancy

Mongolia1stReconciliationReport2006

101,564.40 N/A CraneandWhiteAssociates(Australia)

May-08

64 137 25 4billionMNT

Mongolia2ndEITIReconciliationReport2007

121,000.00 N/A ConsortiumofMongolianandMalaysiaauditfirmsErnstandYoung

Nov-09

102 184 38 775millionMNT

Mongolia3rdEITIReconciliationReport2008

94,501.00 N/A ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse

Jun-10 115 184 46 425millionMNT

Mongolia4thEITIReconciliationReport2009

132,165.00 N/A ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse

Jun-11 129 363 101 58millionMNT

EITIMValidationReport2009

65,747.00 N/A ConsortiumofBritishCoffeyInternationalDevelopmentandMongolianauditfirmDalaivan

Mar-10

274 477 150

Mongolia5thEITIReconciliationReport2010

144,860.03 202,278,203.00

ConsortiumofMongolianUlaanbaatarAuditCorporationandBritishfirmHartNurse

Jan-12 301 518 200 360thousandMNT

Mongolia6thReconciliationReport2011

139,777.12 194,583,734.00

Nov-12

1529 1829 200 75millionMNT

109,603.30 181,294,812.00

ConsortiumMooreStephensandDalaivanAuditLLC

Dec-13 1180 1617 200 360millionMNT

116,727.69 220,101,739.00

Dec-14 1197

1617 250 36millionMNT

USD84,000 MNT169million

ConsortiumofKPMGFranceandKPMGMongolia

Dec-15 990 1570 236 577millionMNT

USD77,000 MNT152,344,500

ConsortiumofUlaanbaatarAuditCorp.AndHartNurse

Dec-16(planned)

Total 1,186,945.54

Source:EITIMSecretariat

AnnexE–Resultsofthe2013-2015IndependentAdministratortenders

2013EITIReportTenderResults(in2014)

# Company Technicalscore

Financial(MNTm)

Financialscore%

Totalscore

1 KPMG 84.99% 65.0% 79.0%

2 UlaanbaatarAudit

92.03% 57.0% 81.5%

3 Dalaivan 87.10% 55.0% 77.5%

Financial(MNTm)

Financialscore%

Totalscore

1 KPMG 93.87% 100.0% 95.7%

2 UlaanbaatarAudit

90.21% 83.0% 88.0%

3 Dalaivan 93.17% 87.0% 91.3%

Round1

Financial(MNTm)

Financialscore%

Totalscore

1 KPMG 89.44% 180.0 87.3% 88.8%

2 UlaanbaatarAudit

86.39% 170.4 92.3% 88.1%

3 Dalaivan 88.01% 157.2 100.0% 91.6%

Round2

Financial(MNTm)

Financialscore%

Totalscore

1 KPMG 92.29% 180.0 81.9% 89.2%

2 UlaanbaatarAudit

88.18% 152.3 96.7% 90.7%

3 Dalaivan 95.76% 147.4 100.0% 97.0%

AnnexF–GeneralLocalDevelopmentFundtransfers,2013-H1-2016

Aimag/Name/

Planned TransferredRevenue/byeachsource/

MinieralRoyalties

VAT AimagSurplus/CapitalCitySurplus

Total Fulfilled Fulfilled%

Numberofprojectscarriedout

Arkhangai

8,704,084.40

684,896.19

6,399,258.57 1,039,390.70

8,123,545.45

93.3 346

Bayan-Ulgii

7,646,648.60

699,197.39

5,464,334.17 899,631.39

7,063,162.95

92.4 394

Bayankhongor

10,176,249.50

621,351.00

7,744,453.13 1,239,994.28

9,605,798.41

94.4 398

Bulgan 7,353,908.90

436,665.15

5,148,386.10 897,794.99

6,482,846.24

88.2 267

Gobi-Altai

9,959,821.00

436,803.31

6,830,168.27 1,237,319.88

8,504,291.46

85.4 352

Dornogobi

8,130,427.80

487,284.16

6,137,282.50 991,973.69

7,616,540.35

93.7 216

Dornod 8,907,879.30

566,024.73

6,156,009.46 1,082,386.58

7,804,420.78

87.6 313

Dundgobi

8,023,392.70

305,110.55

5,879,329.40 1,003,224.89

7,187,664.84

89.6 294

Zavkhan

8,218,412.80

518,333.06

6,340,013.05 999,139.50

7,857,485.60

95.6 389

Uvurkhangai

9,586,099.70

816,523.74

6,377,641.78 1,136,110.28

8,330,275.80

86.9 297

Umnugobi

9,737,962.00

563,959.21

6,562,718.20 1,190,828.78

8,317,506.20

85.4 246

Sukhbaatar

8,396,890.90

419,910.72

6,908,707.86 1,036,010.69

8,364,629.27

99.6 248

Selenge

7,174,198.80

804,557.74

5,038,808.51 823,504.29

6,666,870.54

92.9 219

Tuv 7,621,652.50

690,446.96

5,336,104.05 897,581.70

6,924,132.71

90.8 376

Uvs 8,095,164.70

590,884.07

5,953,745.52 973,055.29

7,517,684.87

92.9 422

Khovd 8,792,874.70

626,902.33

6,224,942.73 1,058,984.38

7,910,829.45

90.0 293

Khuvsgul

9,358,054.60

938,245.68

6,134,019.06 1,089,556.28

8,161,821.03

87.2 304

Khentii 8,332,411.10

539,720.50

6,711,731.40 1,011,046.60

8,262,498.50

99.2 395

Darkhan-Uul

6,915,534.40

752,155.67

4,994,438.70 797,050.09

6,543,644.45

94.6 91

Ulaanbaatar

35,030,643.30

9,790,736.17

14,765,220.11

3,210,330.95

27,766,287.24

79.3 374

Orkhon 7,511,136.00

757,603.63

5,383,787.21 873,899.79

7,015,290.64

93.4 87

Gobi-Sumber

5,940,363.10

111,533.56

4,568,063.68 758,585.59

5,438,182.83

91.5 118

209,613,810.80

22,158,845.54

141,059,163.47

24,247,400.60

187,465,409.61

89.4 6439

/Thousand

Tugrugs/

Aimag/Name/

Planned

TransferredRevenue/byeachsource/

VAT MineralRoyalties

AimagSurplus/CapitalCitySurplus

Total Fulfilled

Fulfilled%

Arkhangai

11,073,753.24

5,154,971.25 617,867.75

2,266,175.25

8,039,014.24

Bayan-Ulgii

9,638,774.47

4,425,490.56 598,035.55

1,912,482.87

6,936,008.98

Bayankhongor

12,789,616.29

5,882,341.55 638,071.20

2,462,422.82

9,482,835.57

Bulgan

9,253,561.33

4,552,402.30 394,536.19

1,917,693.66

6,864,632.16

Gobi-Altai

12,373,300.35

6,538,516.21 371,725.67

2,739,625.22

9,649,867.10

Dornogobi

10,146,842.66

4,887,619.89 412,134.02

2,135,591.70

7,435,345.61

Dornod

11,184,497.56

5,630,818.54 586,422.57

2,161,951.58

8,379,192.69

Dundgobi

9,947,539.36

5,059,827.51 381,876.93

1,948,154.73

7,390,901.61

Zavkhan

10,347,604.62

4,932,000.75 468,313.94

2,157,078.46

7,557,393.15

Uvurkhangai

12,263,936.40

5,974,417.75 743,332.69

2,632,488.40

9,350,238.84

Umnugobi

12,185,360.12

6,285,161.85 423,255.06

2,663,549.57

9,371,966.49

Sukhbaatar

10,495,067.20

5,188,187.66 458,062.48

2,050,291.92

7,696,542.06

Selenge

9,215,881.39

4,333,539.43 581,516.80

1,719,243.48

6,634,299.70

Tuv 9,618,24

4,420,083.38 592,854.58

1,909,959.9

6,922,897.87

6,922,897.8

4.23 1 7

Uvs 10,131,962.85

4,687,205.97 501,183.72

2,086,023.51

7,774,413.19

11,002,556.57

5,380,369.65 613,522.45

2,101,487.93

8,095,380.03

Khuvsgul

11,997,624.07

5,806,994.56 922,526.45

2,197,696.31

8,927,217.32

Khentii

10,461,535.90

4,787,896.52 474,136.18

2,183,545.71

8,445,578.41

Darkhan-Uul

8,548,986.32

3,851,539.30 602,905.10

1,641,802.99

6,096,247.39

Ulaanbaatar

46,330,654.49

15,581,801.23 8,040,350.46

8,515,433.71

32,137,585.40

Orkhon

9,455,287.19

4,290,777.75 635,321.98

1,848,339.27

6,774,438.99

Gobi-Sumber

7,328,760.09

3,734,959.86 102,231.19

1,587,790.66

5,424,981.72

121,386,923.47 19,16

195,386,97

791,346.70

0,182.97

8,829.64

8.53 86,978.53

sandTugrugs/

Aimag/Name/

PetroleumRoyalties

Aimag/CapitalCitySurplus

Fulfilled Filfilled%

Arkhangai

5,049,164.24

3,121,836.31

559,048.70

245,186.90 263,826.18

4,189,898.09

83.0 210

Bayan-Ulgii

4,588,614.50

2,762,331.56

603,580.73

216,964.64 233,469.17

3,816,346.10

83.2 250

Bayankhongor

5,918,656.90

3,771,136.99

512,144.79

296,205.01 318,725.84

4,898,212.63

82.8 377

Bulgan 4,338,622.27

2,779,589.06

356,130.30

218,312.65 234,865.66

3,588,897.67

82.7 256

Gobi-Altai

5,733,752.41

3,766,348.50

351,654.66

295,819.32 318,298.31

4,732,120.78

82.5 318

Dornogobi

4,755,750.85

3,032,518.96

408,775.73

238,171.05 256,257.87

3,935,723.60

82.8 136

Dornod 5,173,098.81

3,280,819.07

467,126.47

257,695.40 277,271.05

4,282,911.99

82.8 223

Dundgobi

4,581,3

3,037,4

245,04

238,571.24 256,699.0

3,777,764.9

82.5 220

92.32 48.68 6.05 2 9

Zavkhan

4,840,962.90

3,082,312.66

421,969.92

242,082.57 260,453.68

4,006,818.84

82.8 322

Uvurkhangai

5,557,418.93

3,397,866.25

663,931.74

266,887.24 287,144.05

4,615,829.27

83.1 282

Umnugobi

5,649,276.45

3,604,975.57

482,115.09

283,136.06 304,623.98

4,674,850.70

82.8 210

Sukhbaatar

4,856,354.33

3,150,609.77

348,146.93

247,470.06 266,231.51

4,012,458.26

82.6 202

Selenge

4,450,072.63

2,605,122.63

679,767.41

204,602.95 220,162.15

3,709,655.13

83.4 219

Tuv 4,594,193.91

2,798,646.52

562,130.65

219,810.16 236,467.90

3,817,055.23

83.1 299

Uvs 4,693,119.35

2,930,425.97

482,692.55

230,161.39 247,625.65

3,890,905.56

82.9 276

Khovd 5,235,145.32

3,287,155.58

515,323.01

258,169.36 277,781.46

4,338,429.41

82.9 274

Khuvsgul

5,492,913.52

3,265,526.50

775,264.74

256,478.47 275,932.26

4,573,201.98

83.3 358

Khentii 4,946,144.65

3,141,099.67

441,508.21

246,705.55 265,448.27

4,094,761.70

82.8 326

Darkhan-Uul

4,241,535.22

2,484,428.02

645,986.54

195,142.60 209,971.65

3,535,528.81

83.4 85

Ulaanbaatar

24,576,761.37

10,314,453.65

8,963,770.59

810,138.53 871,638.10

20,960,000.87

85.3 411

Orkhon 4,577,2

2,706,9

664,02

212,618.61 228,734.6

3,812,304.1

83.3 94

27.21 29.82 1.13 2 8

Gobi-Sumber

3,308,778.37

2,256,679.99

96,571.79

177,233.88 190,671.63

2,721,157.29

82.2 85

127,158,956.46

74,578,261.71

19,246,707.74

5,857,563.62 6,302,300.00

105,984,833.06

83.3 5433

/Thousand

Tugrugs/

Aimag/Name/

2016/1-6months/

PetroleumRoyalties

Aimag/CapitalCitySurplus

Fulfilled Fulfilled%

Arkhangai

4,107,646.64

673,639.37

109,914.95

64,473.12 1,400,611.01 2,248,638.45

Bayan-Ulgii

4,017,988.10

440,089.35

116,216.81

54,186.02 1,056,903.60 1,667,395.78

Bayankhongor

5,681,933.38

813,689.58

150,349.69

125,560.55 1,670,418.80 2,760,018.62

Bulgan 4,043,587.18

464,597.89

71,038.78

57,203.63 1,110,014.75 1,702,855.05

Gobi-Altai

6,569,770.15

1,106,608.72

69,268.26

80,844.97 2,111,956.14 3,368,678.10

Dornogobi

6,366,661.01

542,847.69

78,732.08

66,838.14 1,287,914.16 1,976,332.07

Dornod 5,035,324.24

557,743.10

90,770.87

68,672.14 1,330,208.49 2,047,394.59

Dundgo 4,852,11 62,975.59 1,221,069.89 40.1

bi 2.42 611,476.71

50,796.44

1,946,318.63

Zavkhan 4,900,506.23

534,789.33

84,290.87

65,845.95 1,272,782.98 1,957,709.13

Uvurkhangai

4,444,612.93

547,719.20

132,120.27

67,437.95 1,313,703.02 2,060,980.43

Umnugobi

13,446,795.70

609,724.93

161,784.04

75,072.40 1,454,946.46 2,301,527.83

Sukhbaatar

5,188,521.59

512,011.96

73,272.96

63,041.49 1,226,978.75 1,875,305.16

Selenge 7,472,574.44

443,379.36

140,072.22

54,591.10 1,057,317.47 1,695,360.14

Tuv 6,679,827.41

464,544.68

113,834.91

57,197.08 1,110,702.82 1,746,279.49

Uvs 3,893,900.62

597,604.30

92,228.56

61,267.55 1,186,913.37 1,938,013.78

Khovd 4,419,902.75

546,408.02

98,894.12

67,276.51 1,306,232.41 2,018,811.05

Khuvsgul 4,435,988.69

556,709.73

150,559.45

68,544.91 1,327,347.99 2,103,162.08

Khentii 5,341,137.69

725,982.15

87,775.78

64,761.57 1,556,432.05 2,434,951.55

Darkhan-Uul

3,909,740.70

393,971.68

124,312.93

48,507.78 946,638.36 1,513,430.74

Ulaanbaatar

18,890,809.97

1,970,735.84

1,807,077.10

205,709.41 4,105,134.43 8,088,656.78

Orkhon 4,890,58 55,456.28 1,076,629.97 37.8

4.04 450,406.25

267,681.71

1,850,174.21

Gobi-Sumber

2,453,421.65

358,612.02

19,123.57

44,154.12 861,464.74 1,283,354.45

131,043,347.52

13,923,291.85

4,090,116.39

1,579,618.24 30,992,321.64 50,585,348.11

/Thousand

Tugrugs/

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