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sharing in governance of extractive industries

Natural Resource Charter Case Studies

This is a series of case studies that illustrates the principles of the Natural Resource Charter. The charter is a tool used by governments and societies seeking to better harness the opportunities created by extractive resources.
 
The charter is organized around 12 core precepts offering guidance on key decisions governments face, beginning with whether to extract resources and ending with how generated revenue can produce maximum benefits for citizens.
 
Each of the following case studies discusses a key policy decision related to one of the charter precepts using a country example. They document the resource-related challenges countries faced at a particular point in time, how governments tackled these challenges, what the outcomes were, and what lessons for other countries can be learned.
 
Getting a Good Deal: Ring-fencing in Ghana
Ghana | Precept 4
Challenges associated with administering the extractive industry tax regime provide the backdrop to Ghana’s ring-fencing reforms. Since Ghana’s first large oil field began production in 2010, tax payments were lower than anticipated due to the deduction of development and exploration costs from neighboring extractive projects. The country has since revised the ring-fencing rules for both mining and petroleum operations, the results of which have yet to be seen. This case study considers the trade-offs associated with ring-fencing and explains why it should be approached with caution.
 
Thinking Locally: Community Consultation in the Philippines
Philippines | Precept 5
Local governments in the Philippines can influence the decision on whether mining operations proceed in their jurisdictions. Several local governments have denied their consent to mining operators or imposed moratoriums. Environmental gains have been made as a result, but there have also been significant investment losses for the national government. This case study considers the trade-offs associated with granting local authority on mining and explains the challenges that ultimately led to reduced benefits at the local level.
 
Sonangol: Angola’s Charm Offensive
Angola | Precept 6

A significant component of Angola’s productive oil sector is Sonangol, the national oil company. Despite the country’s history of political instability and lack of technical expertise, Sonangol has managed to maximize revenue for the government and create an investor-friendly environment. The company is well regarded by the international and regional oil industry. However, Sonangol performs functions that may be out of its remit and a complex relationship exists between the government and the company that has ultimately weakened its transparency and created mistrust among the public.
 
Diminished Returns: Managing Oil Revenues in Azerbaijan
Azerbaijan | Precept 7
Oil-rich Azerbaijan has failed to avoid the risks associated with oil producing countries.  Revenues are accumulated in a national oil fund, set up in 1999 to effectively manage the country’s oil wealth. Despite its transparency, the fund lacks accountability. The main risk is the government’s spending, which is too high and of poor quality. With oil and gas revenue expected to decline in 2015, the government will be hard pressed to finance its current expenditure and achieve sustainability in the future.
 
Investing for the Future: Timor-Leste’s Petroleum Fund
Timor-Leste | Precept 7

Income from oil provides Timor-Leste with an opportunity to pursue development orientated goals. This case study describes the Timor-Leste Petroleum Fund (PF) and how it sought to generate income for current and future generations. The PF is highly ranked among sovereign wealth funds especially for a new, post-conflict country and has successfully accumulated large savings, however as this study suggests there are shortcomings which could provide lessons for other countries.
 
Digging for Diversification in Botswana
Botswana | Precept 10
This case study discusses the diversification of Botswana’s economy away from mineral extraction. Revenues from the country’s vast diamond reserves are expected to decline rapidly in the 2020s, and while the government has pursued efforts to minimize resource dependence, results have been mixed. The study concludes with lessons learnt for other countries pursuing effective resource governance.
 
Mine Power: Partnering to Upgrade Energy Infrastructure in the DRC
Democratic Republic of the Congo | Precept 10
Power is needed to get to the Democratic Republic of Congo’s valuable mineral assets. Yet the country’s lack of energy infrastructure has been a key bottleneck for this energy-intensive industry. A partnership between the public utility and mining companies has the potential to greatly improve energy infrastructure and demonstrate the viability of private sector involvement, however multiple challenges stand in the way.
 
Reversal of Fortune: Thailand's Oil and Gas Sector
Thailand | Precept 11
Thailand’s experience provides an example of why public engagement and transparency by all major stakeholders is needed in the extractive sector. The prospect of greater transparency could see a reversal in the country’s current trajectory of slower economic growth and also dispel myths that fuel public mistrust of the sector. This case study shows how disseminating information on the oil and gas sector through the Extractive Industries Transparency Initiative (EITI) could potentially benefit not only citizens and government but also companies.
 
Additional case studies (2011-2013)
A Knowledge-Based Oil and Gas Industry
Ghana Public Participation
Norway’s Path to Inclusive and Sustainable Development
Oil Discovery and Fiscal Discipline in Ghana
Sierra Leone’s Concessions Management System
Botswana’s Strategic Partnerships
Chile: Creating an Attractive Investment Environment
Lessons from Iraq’s 2009 Oil Auctions
Geological Information
Direct Distribution of Resource Wealth
Structural Balance Policy in Chile
Ghana and the Oil Curse

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