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Azerbaijan justifies EITI expectations

28 September 2013 [09:14] - TODAY.AZ
As opposed to other Soviet republics on the eve of the Soviet collapse, Azerbaijan was fully confident in its future. This feeling was based on the fact that the country is very rich in energy resources. At the same time, there was a risk of it becoming one of the poorest countries and one of the states most dependent on oil and gas production.

After joining the Extractive Industries Transparency Initiative (EITI) 10 years ago, Azerbaijan made a big step forward in gaining a reputation as a transparent country. During this period, Azerbaijan directed revenue from the extractive sector to successful economic growth and increasing living standards in the country.

Head of the EITI international secretariat Jonas Moberg stressed Azerbaijan's leading role in the EITI and the country's achievements in this sphere during the tenth anniversary of Azerbaijan's accession to the initiative.

EITIs purpose is to increase the transparency of expenses and revenues in the mining sector of the countries directly dependent on natural resources. The principle of the initiative is for the mining companies to fill in the declarations reflecting their payment to the treasury in details. The countries, where these resources are being developed, fill in a similar declaration. This allows them to verify data with these companies. As a result, it enables the society to control income obtained from natural resources.

According to Azerbaijan's latest report on EITI, around $454.4 million and 2.109.2 million manat were transferred to the country's government in 2012 as a result of implementing the oil and gas projects and gold and silver production. Thus, revenues from the activity of oil and gas companies and the companies engaged in gold mining through taxes, royalties, bonuses and other payments have become an important tool for ensuring economic growth and social development of Azerbaijan.

Azerbaijan will soon apply new accounting standards on EITI. They will reflect more information about the revenues from implementing the production projects, each company's deductions in annual reports. It is assumed that responsible companies will benefit as a result of equal relations in the economic field, more predictable business conditions and an opportunity of better ensuring the energy security.

There are such global trends that the companies thinking about their image and ultimately their entering the international capital markets become more open. Transparency is a financial and economic category, rather than moral. The more a company is open, the more it is competitive on the stock exchange. Those who evade taxes are losing.

Extractive Industries Transparency Initiative was put forward at the World Summit on Sustainable Development in Johannesburg by British Prime Minister Tony Blair for the first time in September 2002. London hosted the conference on EITI in June 2003. The representatives from 32 world countries, including Azerbaijan, attended it. An Azerbaijani delegation was headed by incumbent President Ilham Aliyev.

The resolution on the government's joining of EITI and the establishment of the State Commission on Extractive Industries Transparency Initiative dated November 13, 2003 was the result of the conference and Azerbaijan's first step. Thus, Azerbaijan became the first country which joined EITI, by confirming the full application of principles and criteria of the initiative.

Summing up the ten-year-results, it should be stressed that Azerbaijan gained success in transparency in the extractive industries. This was facilitated by the government's understanding of the strategic future of the country and the desire of the companies developing oil and gold deposits in the country to ensure the transparency of income formation and distribution by using natural resources.



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