Introduction:

The Extractive Industries Review is a consultative process initiated by the World Bank Group, taking into consideration suggestions raised by various stakeholders,  to review its future role in the extractive industries (oil, gas and mining). [1]

The WBG has been active in a number of roles in the extractive industries. Questions have been raised about how and whether such industries can make a positive contribution to sustainable development and poverty reduction in its member countries. Given increasing concerns, as well as changes in the focus of its own activities and in the industries themselves, the emerging lessons of experience and with new issues coming to the forefront, World Bank Group senior management believes that a review of the World Bank Group role is now timely.

The Extractive Industries Review is being initiated by the Mining Department and the Oil, Gas and Chemicals Department of the World Bank Group.  Both of these departments are joint IFC/World Bank departments with overall responsibility for the mining and oil and gas operations of IFC, IBRD/IDA. Other relevant departments of the World Bank Group, including the Multilateral Investment Guarantee Agency (MIGA), the Operational Vice Presidents, the Environmental and Social Development Vice Presidency (ESSD) of the World Bank and IFC’s environmental and social departments, and the International Center for Settlement of Investment Disputes (ICSID) are involved in the Extractive Industries Review.  The format of the proposed Review has been presented to a Technical Briefing of the Executive Directors of the World Bank Group and has the full support of the President of the World Bank Group and senior management.

In parallel to the Extractive Industries Review, various relevant evaluation processes are taking place in the World Bank Group: its operational evaluation units (OED and OEG) will jointly carry out an independent evaluation of World Bank Group experience in extractive industries. The office of the Compliance Advisor/Ombudsman (CAO) of IFC/MIGA is managing a review of the impact and implementation of the environment and social safeguard policies. In addition, the CAO will complete a compliance review of recent extractive industries projects in IFC/MIGA portfolios as a contribution to the Extractive Industries Review. All of these activities will feed into the Extractive Industries Review Report.

Objectives:

The specific objectives for the Extractive Industries Review are:

(i)           To better obtain and understand the views of stakeholders about the best future role of the World Bank Group in the extractive industries if it is to promote sustainable development and poverty alleviation.

(ii)         To identify where possible areas of consensus on the role of the World Bank Group and the relevant issues, and to identify significant alternative or dissenting views in this respect.

(iii)        To make recommendations on the basis of such better understanding to focus, redesign, or reconsider, as needed, future World Bank Group policies, programs, projects, and processes in the sector.

The Review will specifically focus on the role of the World Bank Group in the oil, gas and mining sectors, and is thus not intended to be a standard setting exercise for the extractive industries at large.

Structure:

The Extractive Industries Review is structured as follows:

It is an independently led consultation with stakeholders, with the objective to obtain, hear and understand their views concerning the role of the World Bank Group in extractive industries towards contributing to promote sustainable development and poverty reduction. It will be led by an independent Eminent Person, who will summarize the outcomes and provide recommendations to the World Bank Group management in a report that he will issue to the World Bank Group’s President and the general public at the end of the Extractive Industries Review.

In a parallel activity, the World Bank Group’s operational evaluation units will jointly carry out an Independent Evaluation of the World Bank Group experience in extractive industries under a separate terms of reference. Furthermore, the office of the Compliance Advisor/Ombudsman (CAO) of IFC/MIGA is managing a review of the impact and implementation of the environment and social safeguard policies. This is due to be completed and the final report published in September 2002. In addition the CAO will complete a compliance review of recent extractive industries projects in IFC/MIGA portfolios as a contribution to the Extractive Industries Review. This compliance review will look at the way in which IFC and MIGA interpret environment and social policies and procedures in recent projects.  The Extractive Industries Review Final Report will take account of the findings of these evaluations.

The World Bank Group management has pledged to react to the Extractive Industries Review Report by issuing a set of management recommendations within three months of receiving the Report.

The Consultation Process

In order to achieve the objectives stated above, the purpose of the independently led consultation with stakeholders is to obtain the views and concerns of stakeholders about the best future role of the World Bank Group in relation to the extractive industries in promoting sustainable economic development and poverty alleviation.  These views and concerns shall be recorded through a Extractive Industries Review Report which is to provide a credible record of the views and concerns expressed, summarize consensus and dissenting views, and provide recommendations about a refocus/redesign/reconsideration of World Bank Group policies, programs, projects and processes.

The format of the consultation is to be developed in ongoing consultations with  stakeholders.  The intention is to engage all stakeholders including governments, civil society, industry, and the World Bank Group, in an effective dialogue about the best future role(s) for the World Bank Group given its objectives, its comparative advantages, and relevant industry issues and tradeoffs. The guiding principles of the Extractive Industries Review are inclusiveness, transparency, independence and relevance.

The Extractive Industries Review will involve significant time and efforts from all stakeholders. The Extractive Industries Review’s Report is to record the outcome of a set of consultation workshops, project visits, web-based dialogue, commissioned research, background papers and other means of consultations aimed to ensure thorough participation by stakeholders in the sectors.

The Review is intended to try and create an opportunity for those who wish to participate to do so in a satisfactory and meaningful form. This can take place either through participation in meetings, personally or through networks, organizations and representatives, and through other means such as papers, email and the Internet.

Guiding Principles for the Extractive Industries Review:

The Extractive Industries Review is intended to be:

(i)                  Transparent – in its objectives, design and processes and in the record of its results including the publication of a Report.

(ii)                Inclusive – by being open to stakeholders and designed and run in a way that, as far as practical, allows all groups to participate effectively.

(iii)               Independent – of the control of World Bank Group, the Extractive Industries Review will be led by a prominent individual from outside the World Bank Group (Eminent Person), who is supported by a secretariat that is approved by the Eminent Person.

(iv)              Relevant - to World Bank Group future activities, providing the opportunity and a process for stakeholders to state their views and discuss the role of the World Bank Group in extractive industries.

To ensure transparency, inclusiveness, independence, and relevance of the process with regard to future World Bank Group activities, the World Bank Group will be an active member of the Extractive Industries Review.  Its commitment to the Extractive Industries Review will be ensured by:

i.            its involvement in the process as a stakeholder;

ii.          offering to provide some staff to the Secretariat;

iii.         facilitating the Eminent Person’s direct access to World Bank Group management and the World Bank Group President;

iv.        providing the Eminent Person with access to Bank internal documents subject to relevant policies and procedures [2] , which may include signing of confidentiality agreements;

v.          providing the Eminent Person with the opportunity to comment on the Management Recommendations; and

vi.        providing an explanation for any of the proposals made in its Management Recommendations that differ from significant views expressed in the Extractive Industries Review Report.

The Eminent Person

At the outset of the Extractive Industries Review, the World Bank Group President will appoint an Eminent Person to oversee the consultation process.

The Eminent Person will be an individual with an outstanding record in the extractive industries or a related area. The key role of the Eminent Person is to ensure that the Extractive Industries Review is credible and achieves its key objectives and that all groups of stakeholders who wish to participate are able to do so. In particular, the Eminent Person will:

i.               Guide the design and implementation of the Extractive Industries Review.

ii.             Lead the consultation with stakeholders by framing an agenda for and leading major consultative meetings including helping identify areas of significant consensus and agreement.

iii.            Appoint, in consultation with stakeholders, a number of experts on specific issues and/or regional topics.

iv.           Participate in meetings and other forms of consultation as needed to ensure their effectiveness and success.

v.             Guide the selection of stakeholders for the Consultative Meetings and encourage their active involvement in the Extractive Industries Review.

vi.           Commission research, background papers, investigations or focused consultations that would help stakeholders more clearly express their views and to allow a broader consensus to emerge on particular views.  

vii.          Lead the preparation of the Extractive Industries Review Report that summarizes the outcome of the consultation process with stakeholders in a way that will provide concrete recommendations for the World Bank Group’s activities in the extractive industries.

viii.        Review the Management Recommendations and comment on them after the Extractive Industries Review in a communication to the World Bank Group President, made public to the participants of the Extractive Industries Review and the public.

Advisors

A number of advisors shall be selected by the Eminent Person, in consultation with stakeholders in order to get maximum value from the Extractive Industries Review process. These advisors will assist the Eminent Person in ensuring the objectives of the Extractive Industries Review are met.

They will be individuals with a relevant background and experience in the extractive industries and/or in areas related to this industries’ role in sustainable development and poverty reduction.

Extractive Industries Review Report

The Extractive Industries Review Report is to provide a record by: (i) describing the process of consultation; (ii) summarizing the views and concerns expressed by stakeholders on the future role of the World Bank Group in the extractive industries, identifying, where appropriate, areas of broad consensus and significant alternative views; (iii) and it will furthermore make recommendations for the World Bank Group to focus, redesign or reconsider, as needed, future World Bank Group policies, programs, projects, and processes in the sector.

A final draft of the Extractive Industries Review Report will be made available to stakeholders for comment, and discussed with all stakeholders during a final consultation meeting.

Extractive Industries Review Secretariat

An Extractive Industries Review Secretariat independent of the World Bank Group will be established to provide support for the work of the Eminent Person.

The Secretariat will be staffed by persons approved by and accountable to the Eminent Person.  The Secretariat will help ensure the overall success of the Extractive Industries Review in meeting its objectives.

The Secretariat will be responsible for assisting the Eminent Person in: (i) completing the design of the Extractive Industries Review; (ii) organizing and administering  the process of soliciting a wide range of stakeholder views, including the organization of large stakeholder meetings as appropriate; (iii) organizing other forms of consultation such as web based approaches; (iv) commissioning research where needed; (v) recording the outcomes of consultations; (vi) publishing summaries of all major consultative meetings and making them available for comment, in draft form, to participants of the consultative meetings and the general public, (vii) supporting the Eminent Person in writing the Final Report; and (viii) being  involved in external fund raising if necessary.

Budget and Costs

The costs of the Extractive Industries Review will be financed partly by the World Bank Group out of its own funds and, partly through funds contributed by bilateral Trust Fund donors for the purpose. Carefully avoiding conflict-of-interest situations the Secretariat may also solicit  funding from other sources.

The Eminent Person assisted by the Secretariat, shall be accountable the World Bank Group and other sources when applicable for the proper budgeting, accounting and spending of funds allocated to it in line with usual World Bank Group procedures and best practices and, where appropriate, consistent with the conditions of donors.

Timing

The Extractive Industries Review will be completed by June 2003, 45 days after receipt of the final report of the independent evaluations of the World Bank Group experience in extractive industries being carried out jointly by the World Bank Group’s operational evaluation units (OED and OEG). The Extractive Industries Review Report will be completed by its presentation to the World Bank Group’s President. Following this presentation, the Eminent Person will be provided an opportunity to comment on the Management Recommendations.

Management Recommandations

Objectives

The objectives of the Management Recommendations are for World Bank Group management to formally respond to the Extractive Industries Review Report.  They will also set out how the World Bank Group would move towards implementation of changes it proposes. 

Content and process:

It is impossible to know in advance the outcome of the dialogue with stakeholders, or the Extractive Industries Review Report itself and Evaluation reports and hence the nature of the recommendations that will be made by World Bank Group management.  They could include, but not be limited to, the extent and nature of World Bank Group involvement in the extractive industries as well as recommendations about safeguards, and other policies. 

It is, however, likely that some recommendations could be within the direct control of management and could be implemented with the publication of Management Recommendations, or even during the consultation process itself.  Some recommendations may require a discussion or decision by the World Bank Group’s Board, where, for example, they represent significant policy changes by the World Bank Group.  And it is possible that some may necessarily need to be conditional on further investigation and consultation.

Therefore, following the consultation process with stakeholders, World Bank Group management (the Directors of the Mining and the Oil, Gas and Chemicals Departments) will produce and make public a report of Management Recommendations. This report will recommend how the World Bank Group should respond to the Extractive Industries Review Report, and it will include a proposed timetable for implementation.  Where the Management Recommendations suggest a policy discussion or policy decision, they will be directed to the World Bank Group’s Board.  The Eminent Person will be consulted during the preparation of the Management Recommendations, and will be given the opportunity to express his/her views on the final document, in a report to the World Bank Group’s President and the general public.

The Management Recommendations will address all material views expressed by stakeholders, as presented in the Extractive Industries Review Report.  Wherever they do not follow particular views presented in the Extractive Industries Review Report, or favor certain alternatives, the rationale for these decisions will be provided.  The Recommendations will be made available to the participants in the Extractive Industries Review process and to the general public. 

Timing

The Management Recommendations will be prepared within three months of the presentation of the Extractive Industries Review Report to the President of the World Bank Group.

[1] The extractive industries activities that this review treats are upstream activities including oil, gas and mineral production. Downstream activities such as petrochemicals, refining and marketing are not included in the review.

[2]   For policies and procedures regarding disclosure of information see for: (a) for an overview on disclosure of information: http://www.worldbank.org/html/pic/Dp_root.htm; (b) the policy on disclosure of information: http://www.worldbank.org/html/pic/dp02.htm; (c) Bank Procedures on disclosure of operational information: http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf; and (d) IFC’s Policy on public disclosure: http://www.ifc.org/enviro/enviro/Disclosure_Policy/disclosure.htm.