The Board of the World Bank Group has called for reforms of the Extractive Industries (mining, oil and gas) in Nigeria and other developing countries. The World Bank has endorsed the Extractive Industries Transparency Initiative.

The Board of the World Bank Group has called for reforms of the Extractive Industries (mining, oil and gas) in Nigeria and other developing countries. Vanguard gathered that the World Bank has endorsed the Extractive Industries Transparency Initiative and is actively engaged with several developing nations like Nigeria, Azerbaijan, and Kyrgyzstan, among others to develop a more systematic approach to disclosure of revenues from extractive industries.

In addition, the Bank Group will begin requiring disclosure of revenue figures for new major extractive industries projects immediately, and for all projects within the next two years. Chairman and President of the World Bank Group, James D. Wolfensohn, in a statement said the Bank has endorsed the Extractive Industries Transparency Initiative and is actively engaged with several developing nations Nigeria, Azerbaijan, and Kyrgyzstan, among others to develop a more systematic approach to disclosure of revenues from extractive industries.

In addition, he noted that the Bank will begin requiring disclosure of revenue figures for new major extractive industries projects immediately, and for all projects within two years.

Said Wolfsensohn: “We believe increased transparency to be absolutely essential to improving poverty impact. The proposed reforms are built around the central theme that the bank’s investments and policy advice in the extractive industries should benefit the poor first and foremost.”

The move, Vanguard learnt, was the Bank’s response to a wide-ranging process of review that included multiple in-depth, independent technical reviews, project site visits, and a series of conferences around the globe to solicit the views of stakeholders in government, industry, civil society, and local communities.

According to Wolsensohn, Board members expressed a wide range of views on specific issues in the draft management response and, in response, management agreed to refine language on some issues and submit a final version of the text in the next few weeks. In addition, he noted that the role played by the stakeholder process led by Dr. Emil Salim was valuable in shaping the Bank’s thinking and has contributed to global dialogue on extractive industries.

That dialogue has produced higher standards on issues such as transparency, governance, local participation, disclosure, protection of the environment, and promotion of renewable energy. Management, in its proposal to the Board, indicated that it would continue investments in oil, gas, and mining production, as these will continue to be essential parts of the development of many poor nations. Management also noted that as countries develop their resources, Bank Group capital and expertise can help ensure such projects meet high environmental, social, and governance standards, and that revenue from the projects is used transparently and effectively.

The harsh reality is that some 1.6 billion people in developing nations still do not have electricity, and some 2.3 billion people depend on biomass fuels that are harmful to their health and the environment.

That underscores the need for continued but selective engagement in oil, gas, and coal investments. We are engaged in a process aimed at improving the situation of those in poverty and ensuring that work with extractive industries and new initiatives on renewable energy continues to be developed.

The Bank Group is committed to working with governments, the private sector, and civil society to improve outcomes and ensure it maintains its leadership role.

Management proposed, and the Board agreed, that the Bank Group would have an annual review with the Board of progress toward achievement of the objectives outlined in the management response and to remain engaged with all stakeholders.

The central message of the reviews was that while extractive industry investments can contribute to sustainable development, the Bank Group should further enhance its efforts in several areas: explicitly identifying and tracking poverty reduction associated with its projects, the overall quality of governance in host countries, broader inclusion of local stakeholders, transparency of revenue management and project documents, and the promotion of renewable energy and cleaner fuel alternatives. Among the reforms proposed are:

Poverty Alleviation: The Bank Group is to develop new indicators of project-specific poverty reduction impacts, identify such indicators prior to project approval, and track progress against those indicators over the lifetime of a project.

Governance: The World Bank Group is committing to use explicit governance indicators” such as the quality of fiscal management, transparency, and anti-corruption policies in determining whether to engage in extractive industries projects and how such projects should be structured. In project documents disclosed to the public, the Bank Group will describe its governance assessment of a project.

Renewable Energy: Following on the renewable energy conference held in Bonn, Germany earlier this year, we intend to take a leadership role on this issue and work with stakeholders to ensure the renewable and energy efficiency agenda is central to an environmentally sustainable energy policy, said Peter Woicke, Executive Vice President of the International Finance Corporation.

The World Bank Group will seek to scale up its activities in this sector, and management has set an initial target to increase its renewable energy and energy efficiency portfolios by 20 percent annually over the next five years, which will increase the level of investments in this sector to more than $400 million per year. This target will be reviewed on a regular basis.

Franklin Alli, Vanguard (Lagos), August 16, 2004