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Oil, gas, mineral and logging firms obliged to disclose payments to governments

Plenary Session Press release - Justice and home affairs12-06-2013 - 13:50
mineral treatment plant near uranium opencast mine in Arlit, Niger   ©Belga/AFP/P.Verdy

Large extractive companies dealing with oil, gas and minerals and loggers of primary forests will be obliged to disclose full details of their payments to national governments for every project that they operate, under new legislation approved by Parliament on Wednesday. The aim is to make companies dealing with strategic resources and governments more accountable.

MEPs approved, in two separate votes, a package of two proposals imposing on large extractive companies new obligations to provide details of payments to governments and reducing EU accounting red tape for smaller EU firms.

During the debate on Tuesday, Arlene McCarthy (S&D, UK), responsible for one of the two approved pieces of legislation, said: "During the tough negotiations with Council (...) we insisted on very tough rules and that reporting had to be meaningful, significant and had to deliver genuine transparency."

Klaus-Heiner Lehne (EPP, DE), in charge of the other proposal, said the main achievements of the new rules were: "Firstly, an increased harmonisation of European accounting laws (...), secondly getting rid a lot of red tape and making life easier for small and medium businesses."

Full disclosure

The approved law forces large extractive companies dealing with oil, gas and minerals and loggers of primary forests to provide full details of their payments to federal, national and regional governments. This will have to be done on a project-by-project basis, i.e. for each lease or licence obtained to access resources, for example a mine or an oil field.

All payments above €100,000 will have to be published, to guarantee full transparency. In addition, MEPs approved an anti-evasion clause to ensure that companies cannot artificially split or aggregate payments to avoid disclosure. The types of payment to be reported include: production entitlements, certain taxes, royalties, dividends, bonuses, fees and payments for infrastructure improvements.

Small and medium sized firms are exempted from the new provisions and see their administrative burden reduced further compared to current rules.

No to the "tyrant's veto"

A major success for Parliament was to remove the "tyrant's veto" from the draft legislation – a clause exempting companies from the reporting requirements where the host country's criminal law bans such disclosure.

Parliament also introduced a strong review clause that will oblige the European Commission to explore the possibility of including additional sectors and disclosure provisions in the scope of this legislation within three years after its entry into force.

The new rules will enter into force following Council's formal approval. Member states will have two years to transpose them into their national legislation.

Procedure: Ordinary legislative procedure (co-decision), first reading agreement

REF. : 20130607IPR11387