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Scoping Study for Guidance of EITI Report 2016

Scoping Study for Guidance of EITI Report 2016

EITI Indonesia is currently preparing the 2016 EITI Report. The EITI Standard requires a time difference between the publication of the EITI Report and the reporting year of not more than two years. To meet these requirements, the scope as a reference for the completion of the 2016 EITI Report has been prepared. The discussion of the scope of the EITI Report was carried out at the MSG meeting on March 2, 2018.

The EITI report consists of 2 parts, the Reconciliation Report and Contextual Report. One of the important things in the scope of the report is the determination of materiality for the EITI Reconciliation Report. Materiality is the basis for determining whether a production unit can be categorized as a reporting entity or not. Materiality for the EITI report uses certain value limits on the basis of a type of revenue that is considered to be sufficient to represent the contribution to the state. For oil and gas, the materiality value limit is if the contractor and its partners deposit the government’s oil and gas share above zero, which means that 100% of contractors and partners who contribute to state revenues from oil and gas will submit a report. As for the mineral and coal sectors, the materiality is based on each mining production unit that deposits royalties to the state during the current year determined by its materiality limit by the decision of the Executing Team Meeting.

Within the scope of the 2016 EITI Report it was determined that the materiality limit of the EITI reporting company was the largest companies contributing to 94% of the total cumulative National Non-Tax State Revenue (PNBP) in 2016. There were 112 of the largest mining companies contributing 94% to the total PNBP National which will become the reporting entity for the 2016 EITI Report. In the 2015 EITI Report, there were 123 mining companies that became EITI reporting entities which contributed to 93.6% of the total National PNBP. Of these 123 companies 85 companies reported, and there were 38 companies that did not provide reports. Limited databases in the coal mining sector are the most impediments to the company’s report collection process. Determining 112 reporting companies for the 2016 EITI Report, it is expected that the level of difficulty in data collection can be minimized and the reconciliation process can be optimized.

 Opsi Ruang Lingkup

The scope for the Contextual Report contains references to the latest information in the extractive industry sector, and not only limited to information in 2016. Some of the things that must be discussed in the 2016 EITI Report include the latest issues regarding simplification of licensing, beneficial ownership, implementation of Law No 23 of 2014 concerning Regional Government, and recent developments in regulations concerning Revenue Sharing Funds (DBH). In accordance with the scope, the 2016 EITI Report must also discuss current challenges and issues related to governance in the extractive industry, such as: the development of the implementation of the gross split scheme, the current status of the revision of the Oil and Gas Law and the Mineral and Coal Act, the Domestic Market Obligation (DMO) coal, the progress of the divestment plan mining companies, BUMN Mining Holding, and other recent extractive industry issues.