EITI Finance Committee Minutes of the Meeting of 8 July 2010

Draft 1, 9 July 2010 EITI Finance Committee Minutes of the Meeting of 8 July 2010 08 July 2010, By Teleconference Participants Board Members Tony Hodge (London, Chair) Alfred Brownell (Monrovia on an interrupted line) Humphrey Asobie (Abuja) Julie McDowell (Edinburgh) Wouter Biesterbos (The Hague) Secretariat Eddie Rich (Oslo) Leah Krogsund (Oslo) 1. Agenda Review The circulated agenda was accepted. 2. Minutes of the Last Meeting, Actions Arising, Records Wouter asked about the funding formula established in 2007. When looking at the Financial Paper, he had noted many differences between supporting countries payment figures, and noted that some were not expected to contribute in 2010. He asked for an insight into the funding formula and asked how the Secretariat approached donors. Eddie replied by saying that the 2007 formula was based on the general principle of balance between the constituencies to ensure that the EITI was not beholden to any one sector. Norway offered the EITI a lump sum of $600,000. The balance was then divided 50/50 between governments and companies. Civil society fell under supporting countries, while institutional investors fell on the side of the companies. Civil societies provided $75K in 2008, nothing in 2009. The EITI was expecting $50K from civil societies in 2010. Implementing countries made their contributions through funding in-country implementation activities. The EITI approached all supporting countries for support in 2010. Funding of the Secretariat is voluntary and some countries have stated that they have no budget for the EITI in 2010. Efforts to get new contributors such as foundations are on-going but the EITI highlights that it will not spend a substantial amount of its time looking for funds. The Secretariat, on the other hand, would be concerned if a number of countries were to stop funding because the loss of funding from even one country ($250K) makes a significant impact on the EITI budget. Page 1 of 10

Wouter asked whether the contribution changed if more supporting countries came on board. He also wanted to know whether countries contribution was fixed at $250K. Eddie replied by saying that the EITI was not a membership organization and there was therefore no membership fee. All contributions were voluntary contributions. The Secretariat sought $250K from each supporting country, but EITI did not necessarily receive this amount, and that funding was subject to negotiations. Some countries like the US supported the multi-donor trust fund while some supported specific projects. There was no clear no clear pattern to funding. The record of the meeting was agreed. 3. Committee Terms of Reference Julie introduced the redrafted terms of reference which were intended to clarify and distinguish the roles of the committee in oversight of financial strategy and in monitoring and reviewing its implementation. Eddie confirmed that the new version covered all the elements that were included in the draft version. There was a discussion about whether the committee had oversight of the World Bankadministered multi-donor Trust Fund. Wouter and Eddie noted that the MDTF had its own accountability mechanism to the donors, and that the limits of the committee must be around complementary of the plans and budgets. Eddie noted that a MOU existed but this did not allow for the development of a joint work plan and budget. It was noted that there were also other complementary activities, particularly by bilateral development agencies such as the GTZ. The Terms of Reference was agreed as attached at annex 1. ACTION: 1. Eddie to send ToRs to Paulo at World Bank for endorsement. 2. Humphrey and Alfred to send any additional comments by e-mail. 4. Work Plan between now and Paris Conference The committee had two main tasks in the run-up to the Paris Conference. Task 1 Committee Report to the Dar Board Meeting on 2011 Budget It was agreed that to try to have a finance committee paper including 2010 accounts up to end of 31 August would put too much time strain on the committee. It was therefore agreed that committee present a paper showing the unaudited accounts from 1 Jan - 30 June 2010 only at the board meeting in October, alongside the proposed budget for 2011. Eddie mentioned that the sister document to the 2011 budget, the 2011 workplan, was to be discussed at the EITI retreat, scheduled for the 3 rd week of August. The first draft of workplan would be drawn up after the retreat and this may affect the committee s budget paper but the changes were expected to be minor. A more major review of whether the international management was fit for purpose financially and in human resources would be part of the EITI evaluation to be prepared for the conference but too late for this board paper. ACTION: Page 2 of 10

1. The Secretariat to circulate an outline of the finance paper for the October board meeting (attached annex 2). 2. EITI to organise a teleconference in the last week of August to discuss the first draft of the board paper. Task 2 Committee Report to the Paris Board meeting Eddie mentioned that the Secretariat had consulted the accountants and that the audited accounts were unlikely to be ready before 14 January. The committee felt that it was unrealistic to have this approved by the audit committee and then to prepare a Board paper in time for the Board paper deadline (most likely on 18 January). Three options were discussed: a) The committee could miss the deadline of circulating the board papers two weeks ahead of meeting and circulate the finance paper at a later date. b) The committee could present the finance paper at the Spring board meeting - after the conference (April/May 2011). c) The committee could circulate the paper for approval via board circular. The committee agreed that: a) The audited 2010 accounts be presented at the subsequent meeting following the Conference in February 2011. b) The committee would present a finance paper at the meeting in February 2011. This paper would include the unaudited accounts for 2010. c) The audit committee be informed of this decision. A new timeline for the Committee was set out on that basis (see annex 3). 5. Other Business There being no other business, the meeting ended at 12:30 CET. 6. Next meeting 11am (CET) on Thursday 26 August. Page 3 of 10

Annex 1 Final Terms of Reference for EITI Finance Committee The remit of the Finance Committee is to: provide oversight, direction and support for the financial strategy of the EITI Secretariat and EITI activities, including considering issues related to o funding of the EITI Secretariat and EITI activities o financial reporting o procedures for payments o procedures for maintaining cash balances. monitor and review implementation of the financial strategy for the EITI Secretariat including considering issues related to o receipt of funding contributions o budget planning o the use of funds in accordance with priorities established by the EITI Board o the format and adequacy of reporting to the EITI Board on the use of funds. Page 4 of 10

Annex 2 Outline of Board Paper on Summary of Jan June 2010 Accounts and 2011 Budget 1 1 Summary of Accounts 01 Jan 30 June 2010 The Secretariat presents the Board with a set of unaudited accounts for the period 01 January to 30 June 2010. Figures in summary: Jan June 2010, in USD Approved budget 2010 3 817 000 Actual contributions received as at June 2010 Actual expenditure as at June 2010 Estimated balance - total contributions 2010 Estimated expenditure 2010 1.1 Revenue received as at 30 June 2010 From Jan to June 2010, the Secretariat has received funding as detailed below. Countries & NGOs Companies Currency Norwegian Kroner These contributions do not include in-kind contributions e.g. the Government of Norway hosting cost of both the secretariat and the board meeting, and time inputs from all stakeholders. 1.2 Expenditure 1 January 2010 30 June 2010 Spending 01 Jan to 30 June 2010 Title Acc. Code Description 2008 2009 2010 2010 2010 Implementation 7336 Travel costs 92 875 7300 Other Implementations cost 119 024 7708 National Coordinators Total Implementation costs 211 899 Outreach 7325 Travel costs 100 146 Board Meetings 7334 Travel costs 7125 Other Outreach costs 25 220 Total Outreach costs 125 366 (actual) (actual) (budget allocation) (actual Jan - Jun) (forecast Jan- Dec) USD $ USD $ USD $ USD $ USD 1 Figures and text to be filled in August. Page 5 of 10

7312 Printing costs 7337 Translation costs 7310 Postage 7700 Other Board Meeting costs 167 661 Total Board Meeting costs 167 661 Conferences 7134 Other Conference costs 35 126 7335 Travel costs 7339 Translation costs 7338 Printing costs 7311 Postage 7313 Publications & Edting (incl video) 5960 Gifts etc. Total Conference Costs 35 126 Communications 6820 Non-Board/Conference related 24 802 printing costs 6825 Design of EITI publications 27 603 6730 Non-Board/Conference related 42 914 translation costs 6940 Non-Board/Conference related 9 020 postage costs Total Communications Costs 104 339 Chairman's Support 7100 Salaries & taxes 100 946 7101 Rent 34 768 7102 Telephone 14 166 7103 Postage 2 164 7104 Printing 66 832 7106 Stationery 6 803 7107 Accounting costs 3 126 6782 Other office expenses 71 555 Project consultants 6740 Main expenses (remuneration etc.) 7133 Travel related costs 162 391 Total project consultants costs 162 391 Staff related costs 5010 Salaries - permanent 719 355 employees 5011 Housing contribution 125 343 5012 Wages - (interns) 282 970 5190 Holiday pay - ferie penger[1] 73 374 5237 Insurance - pension 25 325 5410 Employers tax 131 312 (arbeidsgiveravgift) 5411 Tax on holiday money 10 346 5426 School fees 54 346 5430 Statutory pension premium[3] 25 325 7610 Tim Bittiger[2] 59 369 Page 6 of 10

2910 Salary advances Total Salary Costs 1 276 726 Other staff expenses 5220 Mobile telephone costs incl. office calls 5422 Moving costs 5510 Overtime costs 6 923 5520 Canteen expenses[4] 7 695 5920 Insurance - injury 5950 Insurance - travel 1 437 1392 Travel advances etc. 6860 Staff courses/training expenses 2 827 Total Other Staff Costs 249 221 Office Expenses 6010 Write-off, assets 6300 Office rent, heating etc. 33 788 6430 Rental - office equipment 34 741 6360 Cleaning expenses 6430 Inventory 7 361 6541 Establishment costs 6700 Accounting costs 18 245 6780 Miscellaneous costs 6800 Stationery 11 969 6840 Newspapers, books etc 16 500 6900 Telephone 52 721 5910 Entertainment expenses 1 560 6960 Internet costs 93 834 7770 Licences and royalties 4 672 Total office expenses 275 391 Contigency 2 955 Total expenditure 2 911 435 1.3 Comments [The Secretariat considers the approved budget of $3.8m for 2010 to be adequate. As a result of the under expenditure in 2009, the Secretariat will only actively be seeking funding for $3.3m in 2010.] 2 Proposed Budget 2011 2.1 Expenditure 2011 Estimated costs Description 2008 2009 2010 2010 2011 (actual) (actual) (Workplan Budget) (forecast) Proposed Budget USD $ USD $ USD $ USD$ USD $ Implementation Travel costs 92 875 56 954,92 Page 7 of 10

Other Implementations cost 119 024 72 377,31 National Coordinators 38 117,09 Total Implementation costs 211 899 167 449,32 150 000 Outreach Travel costs 100 146 40 657,87 Other Outreach costs 25 220 62 375,45 Total Outreach costs 125 366 103 033,32 100 000 Board Meetings Travel costs 47 524,07 Printing costs 14 213,96 Translation costs 26 155,36 Postage 5 270,44 Other Board Meeting costs 167 661 59 531,59 Total Board Meeting costs 167 661 152 695,42 100 000 Conferences Other Conference costs 35 126 60 597,97 Travel costs 225 823,80 Translation costs 35 442,18 Printing costs 36 176,36 Postage 4 526,76 Publications & Edting (incl 38 959,39 video) Gifts etc. 303,49 Communications Total Conference Costs 35 126 401 829,95 100 000 Non-Board/Conference related 24 802 15 919,88 printing costs Design of EITI publications 27 603 24 163,32 Non-Board/Conference related 42 914 32 962,66 translation costs Non-Board/Conference related 9 020 4 328,35 postage costs Total Communications Costs 104 339 77 374,22 72 000 Chairman's Support Project consultants Staff related costs Other staff expenses Salaries & taxes 100 946 103 458,88 Rent 34 768 28 084,36 Telephone 14 166 4 461,85 Postage 2 164 1 246,97 Printing 66 832 450,78 Stationery 6 803 4 477,68 Accounting costs 3 126 2 315,28 Other office expenses 71 555 2 598,09 Total Chairman s Support Costs 300 360 147 093,90 170 000 Main expenses (remuneration 162 391 122 454,33 etc.) Travel related costs 9 243,33 Total Project Consultants 162 391 131 697,66 100 000 Costs Salaries - permanent 719 355 596 507,94 employees Housing contribution 125 343 124 606,98 Wages - (interns) 282 970 107 838,10 Holiday pay - ferie penger[1] 73 374 70 112,97 Insurance - pension 25 325 16 785,37 Employers tax 131 312 135 351,38 (arbeidsgiveravgift) Tax on holiday money 10 346 9 885,93 School fees 54 346 79 608,60 Statutory pension premium[3] 25 325 16 785,37 Tim Bittiger[2] 59 369 108 991,46 Salary advances - Total Salary Costs 1 276 726 1 266 474,10 2 500 000 Mobile telephone costs incl. 6 923 39 527,37 office calls Page 8 of 10

Moving costs - Overtime costs - Canteen expenses[4] 7 695 832,5 Insurance - injury - Insurance - travel 1 437 1 383,33 Travel advances etc. - Staff courses/training 2 827 7 965,70 expenses Total Other Staff Costs 249 221 49 708,90 300 000 Office Expenses Write-off, assets 387 248,40 Office rent, heating, cleaning 33 788 36 412,70 etc. Rental - office equipment 34 741 791,28 Cleaning expenses - Inventory 7 361 869,64 Establishment costs 237,92 Accounting costs 18 245 9 459,37 Miscellaneous costs 10 649,30 Stationery 11 969 7 819,19 Newspapers, books etc 16 500 13 698,36 Telephone 52 721 27 257,69 Entertainment expenses 1 560 1 246,59 Internet costs 93 834 45 440,95 Licences and royalties 4 672 2 935,92 Total Office Expenses 275 391 166 575,73 150 000 Contigency 2 955-75 000 Total Budgeted Expenses 2 911 435 2 663 932,53 3 817 000 2.2 Revenue 2011 2007 2008 2009 2009 2010 2010 2011 Revenue required less contribution from: Actual Actual Actual Actual Funding Workplan Jan-June 2010 Forecast Workplan Forecast Government of Norway 425 926 500 000 560 000 600 000 600 000 Total remaining 466 896 2 110 067 3 369 027 2 947 000 3 217 000 of which Supporting countries and NGOs (50%) 0 1 069 127 2 034 945 1 573 500 1 608 500 of which NGOs 0 130 109 0 75 000 75 000 Supporting Countries 0 939 018 2 034 945 1 498 500 1 533 500 Private sector (50%) 466 896 1 040 940 1 334 082 1 373 500 1 608 500 of which Investors 20 000 10 942 9 763 50 000 50 000 Leaving 446 896 1 029 998 1 324 319 1 323 500 1 558 500 of which Oil and gas companies (2/3) 199 969 755 562 882 879 882 333 1 039 00 Mining and minerals (1/3) 246 927 274 436 441 440 441 166 519 500 Total 892 822 2 610 067 3 929 027 3 547 000 3 817 500 Page 9 of 10

Annex 3 - EITI Financial Committee workplan and timeline up to 2011 Conference (revised) The finance committee faces two main tasks up to the 2011 Conference: Task 1 Committee Report to the Dar Board Meeting on 2011 Budget 1. 19 August - Draft board paper circulated to committee by secretariat (including 2011 budget and unaudited accounts Jan-June2010). 2. 26 August meeting of committee to discuss draft Board paper. 3. 1 October probable date for final draft of 2011 Secretariat workplan. Consideration for need for meeting of finance committee to revise budget paper in light of 2011 workplan. 4. 5 October deadline for submission of Board papers 5. 19-20 October Board meeting, Dar es Salaam Task 2 Committee Report to the Paris Board meeting 6. 9 January Draft board paper on unaudited 2010 budget outturn figures circulated to committee by secretariat. 7. 16 January finance committee meeting to discuss the board paper. 8. 18 January deadline for board papers. 9. 1 February probable date of Paris board meeting. 10. April/May board meeting to discuss audited 2010 outturn figures. Page 10 of 10