How Collecting and Sharing Information on Natural Resources Can Improve Revenue Collection and Resource Management by Patrick Heller of Revenue Watch Institute

1. Revenue Watch Institute www.revenuewatch.org

2. RWI Who We Are We promote transparent, accountable and effective management of oil, gas and mineral resources for the public good. www.revenuewatch.org

3. RWI Revenue Watch is the only organization dedicated exclusively to addressing the special problems of countries dependent on the development of oil, gas and mining—countries where poverty, corruption and armed conflict too often converge www.revenuewattch.org

4. Our Topic Collecting and sharing information on natural resources to… -- increase government revenues -- improve management of natural resources

5. Our Project Where: Two districts on the Indonesian island of Java – Blora and Bojonegoro What: Help the two districts make their oil revenues transparent…and use the information for sustainable development planning. When:2008-2011

6. Background on the districts Blora and Bojonegoro are home to more than two million people, most of them dependent on subsistence agriculture. Their villages and fields also lie atop a vast, recently discovered oil field. Known as the “Cepu Block,” these reserves be developed to account as much as 20 percent of Indonesia’s oil production. But this underground wealth also brings risks.

7. Indonesia’s national government collect oil revenues and allocates shares to the country’s regions as well as the local governments where the oil is produced . But this sharing of revenues did not automatically equip local governments to manage the funds. Nor did it guarantee that local governments would be transparent with citizens about budgets and development plans – or even have the capacity to develop plans for sustainable development.

8. Blora and Bojonegoro now have an opportunity to create meaningful, sustainable social and economic development – if local authorities have the necessary knowledge and tools to manage their windfall from the Cepu Block.

9. RWI’s work in Blora and Bojonegoro To help the districts get the maximum benefit from their oil wealth, RWI and our international partner (the Local Government and Public Sector Reform Initiative) provided financial support, expert advice and training to national and local citizens’ groups as well as to the local governments and oil companies.

10. How We Did it We held intensive training sessions with national and local civil society groups on topics including revenue tracking, revenue transparency and revenue sharing. The national government offered support by sending representatives from the Finance Ministry and the Ministry of Economic Affairs to discuss technicalities of oil revenues.

11. Equipped with more knowledge, the citizens’ groups convinced the governments of Blora and Bojonegoro to sign an agreement committing all the parties to develop a transparency plan and a plan for sustainable development – key examples of better governance of revenues from oil.

12. The partners held public meetings to help communities manage their expectations about the impact of future oil revenues. From the 100 or so participants, teams were chosen for more intensive workshops. The members included farmers’ groups, women’s groups, parliamentarians, NGOs, religious organizations …and government officials who would eventually help formulate policy

13. In the workshops, RWI and our partners discussed issues of transparency, freedom of information, corporate social responsibility and community development programs. We also delved deeper into how oil can generate great wealth but also bring instability, unwise spending and corruption – unless transparency and sustainable development are core values.

14. Our local partners regularly wrote opinion articles in national, provincial and local newspapers on transparency of information, freedom of information, details of the Cepu Block and the disruptions that oil wealth can bring.

15. Involving Local Government When elected officials in Blora raised questions about the economic potential, our local partners offered technical advice to the government on oil revenues and securing a fair deal. Meanwhile, officials from Bojonegoro recognized they lacked key revenue information from the national government, which made budgeting and development programs far more difficult.

16. EITI and Oil Companies RWI also offered local officials and citizens’ groups information about EITI (the Extractive Industries Transparency Initiative) and how to work and communicate with oil companies. Our audiences in both Blora and Bojonegoro responded by including information on oil companies’ corporate social responsibility and community development programs into their transparency plans.

17. Initial Results Blora The district government formally created transparency standards…and included funds in its 2011 budget for a transparency team. The standards apply not only to revenues…but also to health and safety issues, environmental impacts, corporate social responsibility and community development. Thanks to the planning process, the district increased the 2011 budgets for health and education . It prepared to put into force the sustainable development plan created as part of this project.

18. Initial Results Bojonegoro The district government expects to create transparency regulations before the end of 2011. As in Blora, the standards apply not only to revenues…but also to health and safety issues, environmental impacts, corporate social responsibility and community development. The government is drafting regulations for investments, in anticipation of an oil boom. As a result of the contacts initiated by this project, the main oil company in the district has begun coordinating its community development projects with the district’s planning agency.

19. Lessons Learned Involve all parties – especially the public. A better-informed citizenry is crucial to advocacy…and for creating programs for sustainable economic and social development. Involving all parties can help win support from the most reluctant players, in this case oil companies.

20. Lessons Learned (2) There is no such thing as too much capacity-building or technical assistance. Even if a project is locally-based, do not ignore the importance of advocacy at the national level.

21. More on RWI Revenue Watch is based in New York, with satellite offices in London and Accra, Ghana, and a regional presence in Azerbaijan, Nigeria, Indonesia, Tanzania and Peru. We and our partners work in more than 30 countries. www.revenuewatch.org

22. Our History Revenue Watch began in 2002 as a program of the Open Society Institute. We first focused on Azerbaijan, Iraq and Kazakhstan, especially on how authorities collected and used the money earned from oil. We became an independent organization in 2006, when the demand and need for our work outstripped that of a small program. We now have a staff of nearly 50 and a diversified donor base. www.revenuewatch.org

23. Contact RWI rwi@revenuewatch.org 1.646.929.9750 Revenue Watch Institute 1700 Broadway, 17th floor New York, NY 10019 www.revenuewatch.org

24. Contact RWI Media media@revenuewatch.org www.revenuewatch.org