Ministry of Mines and Petroleum Statement On Afghanistan’s Temporary Suspension from EITI

Ministry of Mines and Petroleum Statement 

On

Afghanistan’s Temporary Suspension from EITI

January 27, 2019

 

Introduction

Afghanistan has been suspended from the EITI in January 2019. The government of Afghanistan has commenced addressing the recommendations from the draft validation report and made noticeable progress to comply with the EITI standards as specified in the relevant circular of the EITI. The Ministry of Mines and Petroleum will comply with EITI benchmarks to ensure the suspension is lifted. Through its reform initiatives, the Ministry will ensure that EITI concerns and decisions are clearly addressed. Although, Afghanistan is given time until July 18, 2020, our intention is to request re-validation in the Global Conference in Paris in June 2019 as we intend to address all of the recommendations and moved beyond those recommendations to restore Afghanistan’s candidate status. 

Since November 2017, the Government of Afghanistan, in particular the Ministry of Mines and Petroleum, has taken significant steps in bringing transparency in the extraction and management of extractive sector; this includes (1) approval of the Mining Sector Roadmap and Minerals Law to improve the regulatory framework, (2) approval of the Reform Strategy to bring institutional reform and improve service delivery at the Ministry, (3) prevention of illegal mining, and (3) management/processing of mining contracts.

Legal Reform

The High Economic Council approved the Mining Sector Roadmap in December 2017 with the objective to set a robust legal and institutional foundation for the development of extractive sector. Also, the Roadmap identifies a list of measures for bringing reform in the Ministry of Mines and Petroleum’s other sectorial entities.

Moreover, in October 2018, the Government passed the new Minerals Law. The law provides a comprehensive and strong legal foundation for Afghanistan’s extractive sector. Based on the new law, a robust system of checks and balances has been introduced to ensure that tendering processes and evaluations are conducted in a transparent manner. Private sector, international partners, and civil society can now be assured that tendering process will be transparent. The law addresses a set of measures/terms, including Beneficial Ownership, Politically Exposed Persons, and Majority Owners which are fundamental parts of EITI standards. In addition, royalty is fixed as a percentage in the new minerals law. Investors can now make bid and investment decisions with the assurance that royalty rates will not change.

Institutional Reform

The Ministry of Mines and Petroleum has undertaken a number of actions to reform the Ministry’s organizational structure and mechanisms for service delivery. A new organizational structure has been developed based on the Mining Sector Roadmap, Hydrocarbons Law, Minerals Law, and Reform Strategy. With the new institutional system, the Ministry aims to improve its role in the areas related to policy-making and relinquish its regulatory functions.

Moreover, MoMP has introduced a number of e-governance reforms to ensure that transparency and project management systems are updated. The Ministry launched its transparency portal where the Ministry publishes license related information. In addition, we introduced the Mining Cadaster Management System (MCAS), and implemented it in 5 provincial offices. MCAS will ensure transparency in the issuance and management of the mining licenses/contracts.  We aim to extend implementation of MCAS in 10 more provinces in 2019.

Prevention of Illegal Mining

The Ministry is committed to reduce illegal mining sites. For this purpose, the Ministry, for the first time, initiated establishment of Mining Protection Committee (MPC) within the Ministry. Also, the Ministry has managed to form a Mining Protection Commission with the cooperation from the Office of the President of Afghanistan. The Commission has drafted Illegal Mining Protection Procedure, Monitoring Mechanism, and an Action Plan for their work. Thus far, MoMP has surveyed over 2,000 sites in four provinces. The list of 600 illegal mining sites have been shared with the Ministry of Interior Affairs for further actions.

Mining Contracts

Based on GoIRA’s commitment on the development of the extractive sector, the Ministry of Mines and Petroleum, in collaboration with the relevant entities, solved the legal and technical issues of the three major mining contracts including, Balkhab Copper Mine, Badakhshan Gold Mine, and Shaida Copper Mine. The bidding process and evaluation for the above-mentioned contracts were conducted through a legal and transparent mechanism. We believe, the implementation of these projects will have significant contribution to the economic development of Afghanistan. As part of the EITI standards, the Ministry has published the contracts of all three projects on its website in addition to the rest of the existing contracts.

In conclusion, we would like to assure all entities including our international partners, civil society, and investors, that the Ministry of Mines and Petroleum is committed to creating a favorable environment for investment in the extractive sector, and will follow participatory approach towards the development of the mineral sector of Afghanistan. We are working to make sure that our reform measures will result in development of transparent system for extraction and management of our mineral resources.