A second wind for Afghanistan’s mining sector?

 

Newly appointed Minister of Mines and Petroleum Nargis Nehan prepares to tackle lack of development in the sector.

Vital for prosperity 

Speaking to Deputy Head of EITI Eddie Rich in Kabul on Wednesday, President Ashraf Ghani reflected on the importance of reforming the extractive sector in Afghanistan:

“Agriculture may be critical for stability in our country, but mining and hydrocarbons will be critical to prosperity. We need to find a way to develop the sector in a sustainable, long-term manner”.

The President’s remarks followed the recent publication of a report by Afghanistan EITI (AEITI) on the status of the extractive industries in the country. According to the report, Afghanistan had earned USD 42 million in 2015, up from USD 27 million in 2014 though far from the USD 1 billion a year that the sector could be worth, according to the report.

“The extractive sector has been at a standstill for some time now”, explained one international observer, “we are all watching closely to see how the newly appointed Minister of Mines and Petroleum plans to address this in the coming months”.

Reforming the sector

Newly appointed Minister Nehan set out her agenda for the sector at the third EU Anti-Corruption Conference earlier this week. Minister Nehan said: 

“There is a lot that needs to be done and we will need to work together with civil society and industry as well as our international partners to achieve our aims”.

High among her priorities were the review, digitalisation and publication of contracts, working with the regions to address unregulated mining, and improving systems within the government to improve revenue generation from the sector.  

A herculean task

Minister of Finance Eklil Hakimi said that the Government of Afghanistan was aware of the herculean task ahead of Minister Nehan.

“Capacity at the Ministry of Mines and Petroleum is currently very low. She will need substantial technical support from partners if she is to succeed in turning the ministry around. This is a long-term project, but she will have the full support of the government and we will work together with our partners to ensure that she succeeds.”

Speaking from Kabul, where he was supporting Afghan stakeholders in assessing their progress in implementing the EITI Standard, Eddie Rich said:

“There is much experience among EITI implementing countries that Afghanistan can draw on to support the minister’s ambitious agenda. License allocation, contract transparency, sub-national transfers - these are all covered by the EITI Standard. As a country that implements the EITI, Afghanistan can use the Standard to support reforms in these areas”.

The latest AEITI Report, published on 30 April 2017, includes recommendations that the Government of Afghanistan could implement to address shortcomings along all stages of the extractive industry value chain.

Supporting reforms through Validation

The EITI’s mission to Kabul was part of Afghanistan’s ongoing preparations for Validation, the EITI’s quality assurance process. Afghanistan’s Validation will start on 1 July 2017 and will assess Afghanistan’s progress in implementing the requirements of the EITI Standard. According to Pablo Valverde, EITI Regional Director:

“It is normal to think of Validation in terms of compliance with the EITI Standard. This is only part of the story. Validation will assess progress against the requirements of the Standard, but more importantly, Validation will provide the Government of Afghanistan with a comprehensive baseline for the sector, a detailed list of next steps to inform reforms and a timeframe by which to execute them”.