The 2013 Resource Governance Index A measure of transparency and - - PowerPoint PPT Presentation

The 2013 Resource Governance Index

A measure of transparency and accountability in the oil, gas and mining sector

Washington, D.C. May 15, 2013 http://www.revenuewatch.org/rgi

Outline

• 1. What’s at stake
• 2. What the Index measures
• 3. How the Index is built
• 4. Results and Main Findings
• 5. Recommendations
• 6. Conclusion

2

What’s at stake?

• Oil, gas and mining sector governance as a development

challenge – In resource rich countries, over 1 billion people live on less than $5 a day, and 640 million live on $2 a day or less. – In 2011, Nigeria’s oil revenues alone were 60 percent higher than international aid to all of sub-Saharan Africa. – In 1980-2006: Oil-rich states 3 times less likely to democratize than non-oil producers.

• Governance is the challenge, but also the solution.
• The RGI aims to help advance this effort.

3

Why is a measure of resource governance needed?

• Raise awareness about a major development

challenge

• Concretize what may be seen as a vague challenge
• Enable empirical research and analysis
• Enable evidenced-based policymaking and advocacy
• Inform dialogue across all stakeholders
• A diagnostic tool to identify global and country

reform priorities

4

What is the Resource Governance Index?

• A measure of transparency

and accountability of the

• il, gas and mining sector in

58 countries.

• For each country,

researchers, gathered primary information in 2012 to answer a standard questionnaire with 173 questions, vetted by a peer reviewer.

5

How is the Index built?

Resource Governance Index composite

6

Index structure

7

Institutional & Legal Setting (20%) Reporting Practices (40%) Safeguards & Quality Controls (20%) Enabling Environment (20%)

10 Indicators 20 Indicators 15 indicators 5 Indicators Indicator Indicator Indicator Indicator 1 Freedom of information law 1 Licensing process 1 Checks on licensing process 1 Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 2 Comprehensive sector legislation 2 Contracts 2 Checks on budgetary process 2 Open Budget (IBP Index) 3 EITI participation 3 Environmental and social impact assessments 3 Quality of government reports 3 Government effectiveness (WGI) 4 Independent licensing process 4 Exploration data 4 Government disclosure of conflicts

• f interest

4 Rule of law (WGI) 5 Environmental and social impact assessments required 5 Production volumes 5 Quality of SOC reports 5 Corruption (TI Corruption Perceptions Index & WGI control of corruption) 6 Clarity in revenue collection 6 Production value 6 SOC reports audited 7 Comprehensive public sector balance 7 Primary sources of revenue 7 SOC use of international accounting standards 8 SOC financial reports required 8 Secondary sources of revenue 8 SOC disclosure of conflicts of interest 9 Fund rules defined in law 9 Subsidies 9 Quality of Fund reports 10 Subnational transfer rules defined in law 10 Operating company names 10 Fund reports audited 11 Comprehensive SOC reports 11 Checks on Fund spending 12 SOC production data 12 Government follows Fund rules 13 SOC revenue data 13 Fund disclosure of conflicts of interest 14 SOC quasi fiscal activities 14 Quality of subnational transfer reports 15 SOC board of directors 15 Government follows subnational transfer rules 16 Comprehensive Fund reports 17 Fund rules 18 Comprehensive subnational transfer reports 19 Subnational transfer rules 20 Subnational reporting of transfers

Some Key Results and Findings

• Eleven countries (out of 58) meet satisfactory standards
• f resource governance.
• Forty-seven do not, and many perform poorly.
• Governance deficit is the largest in the most resource-

dependent countries -- where many of the poor live.

• The governance gap extends to state-owned

companies, natural resource funds.

• Satisfactory performance is possible in diverse

contexts, including in emerging economies.

8

80% of countries do not meet satisfactory governance standards

98 92 88 85 80 77 76 75 74 74 73 70 68 66 63 62 61 58 57 56 56 56 54 53 53 51 50 48 47 47 47 46 46 46 46 43 43 43 43 42 42 41 41 39 38 37 34 34 33 31 31 29 28 26 19 13 5 4

20 40 60 80 100

• 1. Norway
• 2. United States (Gulf of Mexico)
• 3. United Kingdom
• 4. Australia (Western Australia)
• 5. Brazil
• 6. Mexico
• 7. Canada (Alberta)
• 8. Chile
• 9. Colombia
• 10. Trinidad and Tobago
• 11. Peru
• 12. India
• 13. Timor-Leste
• 14. Indonesia
• 15. Ghana
• 16. Liberia
• 17. Zambia
• 18. Ecuador
• 19. Kazakhstan
• 20. Venezuela
• 21. South Africa
• 22. Russia
• 23. Philippines
• 24. Bolivia
• 25. Morocco
• 26. Mongolia
• 27. Tanzania
• 28. Azerbaijan
• 29. Iraq
• 30. Botswana
• 31. Bahrain
• 32. Gabon
• 33. Guinea
• 34. Malaysia
• 35. Sierra Leone
• 36. China
• 37. Yemen
• 38. Egypt
• 39. Papua New Guinea
• 40. Nigeria
• 41. Angola
• 42. Kuwait
• 43. Vietnam
• 44. Congo (DRC)
• 45. Algeria
• 46. Mozambique
• 47. Cameroon
• 48. Saudi Arabia
• 49. Afghanistan
• 50. South Sudan
• 51. Zimbabwe
• 52. Cambodia
• 53. Iran
• 54. Qatar
• 55. Libya
• 56. Equatorial Guinea
• 57. Turkmenistan
• 58. Myanmar

Satisfactory (71-100) Partial (51-70) Weak (41-50) Failing (0-40) 9

RGI Results for the 58 countries

Transparency is missing where it is needed most

11

Satisfactory performance is possible in diverse contexts

12

Concrete Illustrations of the governance deficit

• In 20 countries (e.g. Venezuela) substantial resource

revenue bypass the treasury.

• 21 countries (e.g. Guinea) do not publish information
• n primary sources of revenue (royalties, profit shares
• r taxes)
• In 18 countries (e.g. Alberta, Canada) government
• fficials do not disclose their financial interest in any

extractive activity.

• Azerbaijan, Russia and Kazakhstan have poor records in

key areas including corruption, civil and political liberties and democratic accountability.

13

Regional performance

14

Specific areas of governance shortcomings

• State-owned companies in 45 countries
• 18 SOCs are under no legal obligation to report

information about their operations

• Natural resource funds in 23 countries
• In 15 countries, e.g. Azerbaijan and Russia, spending

from the funds bypasses legislative approval.

15

State-owned companies in 45 countries

20 40 60 80 100

Statoil Pemex Petrobras ONGC Rosneft Ecopetrol PDVSA KazMunaiGaz Pertamina CODELCO CNPC O.C.P. Sonangol Petromin ZCCM-IH SOCAR Petrotrin KPC Petroecuador Petronas YPFB Sonatrach NNPC Ministry of Oil YOGC PMDC ARAMCO Petrovietnam SNH Qatar Petroleum STAMICO Debswana Nile Petroleum EGPC Gecamines ENH ZMDC Erdenes MGL Libyan National Oil Corporation NIOC BAPCO GEPetrol Northern Coal Enterprise MOGE Turkmengas 16

Natural resource funds in 23 countries

20 40 60 80 100

17

Recommendations to improve resource transparency and accountability

• Disclose contracts signed with extractive companies.
• Ensure that regulatory agencies publish timely,

comprehensive reports on oil, gas and mining operations.

• Extend transparency and accountability standards to SOCs

and natural resource funds.

• Concerted effort to control corruption, strengthen the rule
• f law and guarantee civil and political rights.
• Adopt international reporting standards for governments

and companies.

18

RGI products on http://www.revenuewatch.org/rgi

• 58 printable country pages

19

RGI products

• 58 detailed country questionnaires with sources for every

indicator score

20

RGI products

• An interactive tool for comparing and visualizing resource

governance

21

RGI products

• 5 regional factsheets summarizing regional findings and

recommendations, translated in regional languages.

22

Thank you!

http://www.revenuewatch.org/rgi http://www.revenuewatch.org/rgi/findings http://www.revenuewatch.org/rgi/countries