Transcription of ExtractiveIndustriesValueChain - World Bank
1 Ext ractiveIndustriesfor DevelopmentSeries#3 AfricaRegionWorkingPaperSeries#125 March2009Ex tractiveIndus tries Value ChainA ComprehensiveIntegratedApproachto DevelopingExtractiveIndustriesEleodoroMa yorgaAlbaAwork in g paperbytheOil, Gasand Mining PolicyDivision and theAfrica PovertyReductionandEconomicManagement DepartmentWor ld Ban k Group' s Oil , Gas, and Mi ningPolicyDiv is ionOi l, Gas , Minin g, and Che mical s Dep ar tmentA jo int serv ice of the Wo rl d Bankand theInte rnat io nal FinanceCorp or ati onThe Oil, Gas , an d Mini ng Po licy Di vis ion ser ies publi shes review s an d anal ysesof sect or ex peri en ce fro m ar ou nd the worldas well as ne w findin gs froman al yt ica l wor k.
2 It pl ace s parti cu lar emph asis on how the expe rienc e an dkno wledg e ga ine d re late s to de ve lo ping countrypolic y make rs, communitiesaff ec te d by ext ra ctiv e in du str ie s, extr acti ve industryenterp rise s, and ci vil soci etyorg an izat io ns. We hope to se e th is se ries in form a wide range of in terestedpartieson the oppo rtu ni tie s as we ll as the ri sks pres ented by the find ing s, int er pre ta tio ns , an d conc lus ions exp re ssed in thi s pap er are entirelyth os e of the autho rs an d sho uld not be attr ibutedin any manne r to the Worl dBan k or its aff il iate d org an izatio ns, or to members of its Boardof Ex ecutiv eDir ec to rs or the co unt rie s th ey re pre se nt.
3 The Worl d Bank does not guar anteethe ac cu rac y of the dat a includ ed in this pu blicat ion and acceptsnores ponsi bili ty what so ev er fo r any cons eq uence of thei r ten tsviiAc kno wl edge mentsviiiAc ron yms1 Intro duc ti on4 Lin k 1:Aw ard of Con tr acts an d Li censes5 Lin k 2:Regu lati on an d Mo ni tori ng ofOp er ati ons11 Lin k 3:Coll ec tion of Tax es and Royalt ies14 Lin k 4:Reve nu e Manage men t and Allocation18 Lin k 5:Im ple men tati on of Sustai nabl eDe vel op men t Polic ie s an d Pr ojec ts21 Conc lusi on23An ne x 1:Gove rn anc e an d Tr ans parencyinthe EI Va lu e Ch ain : A Lis t of Basic Issu es tobe Consi de redE x t r a c t i v e I n d u s t r i e s V a l u e C h a i nAck nowledgmentsThe lea d aut hor of th is rep ort is Ele odor o MayorgaAlba, from the Oil , Gas, an dMining Po licy Di visi on of th e Wo rl d Bank (COCPO).
4 Sp ecial thanksgo toMicha el Le vi tsky, Sil van a To rd o, and Shei la Shahri ari of COCPOfor thei rval ua ble cont ribu tio ns to thi s re po rep ort has be ne fite d fr om th e guidan ce of a number of World Ban k and IFCcollea gu es whos e ass ista nc e is grat ef ull y e followin g review ersin part icu lar hav e pro vide d insig htful commentsand gui dance in fin alizingthisrep or t: Pau lo de Sa, Mic ha el Stan le y, All ison Be rg, AlexandraPugache vsky, JohnStr on gma n, Geor g Caspary , an d Mauri cio Rios Iba ez(all in COCPO), andCl ive Arms tr ong of th e In te rn ati on al Fin anc e Corporation(I FC). Many thanksal so to Sud hir Sh et ty and Lin da van Ge lder, Afric a RegionPov erty Reductionan d Econom ic Ma nag eme nt Depart me nt; Fr ancois Ran trua, Afri ca Region;KaiKai ser , Pu blic Sec to r Gove rn anc e uni t, PovertyReductionan d Ec onomi cMana gem ent Depart me nt; an d man y oth er colle agues from th e World Bank andth e Int erna ti onal Mo ne ta ry Fun d fo r the ir val uable contri butionand ly, speci al cre di t go es to Est he r Petr il li-M assey for her editorialsup port andas si stance wit h th e pu blic ati on.
5 ViiE x t r a c t i v e I n d u s t r i e s f o r D e v e l o p m e n t S e r i e sA f r i c a R e g i o n W o r k i n g P a p e rAcr on ymsAASSMMArti sa nal a nd S ma ll- Sc al e M ini ngCCAASSMMCo mm unit ie s an d Sm all -S cal e M in in gCCOOCCPPOOWo rld B ank O il , G as, an d Mi ni ng P ol ic y Divi si onCCoommmmDDeevvCo mm unit y De velopme nt P rogramEEIIEx tra cti ve In du str ie sEEIITTIIEx tra cti ve In du str ie s Tr an spa re nc y I ni tiati veGGDDPPGro ss Dom estic Pro duc tGGGGFFRRGl obal G as Flar in g R eduction In itiati veIIDDAAIn terna ti ona l D eve lopme nt As soc iati onIIFFCCIn terna ti ona l F in anc e Corp orat ionIIMMFFIn terna ti ona l M on etary FundMMTTEEFFMed iu m T erm E xp en ditur e Fr ame wo rkPPEEFFAAPu blic E xp en ditu re a nd Fin anc ial Ac co untabi li ty Initi ativePPEERRPu blic E xp en ditu re R eviewPPGGIIPet ro leu m G ove rnan ce I nitia tiv ePPRRSSPPP overt y Red uctio
6 N S tr ate gy P aperTTAATe chnical Assis tan ceTTFFTrus t F undWWBBGGWo rld B ank Groupviii1E x t r a c t i v e I n d u s t r i e s f o r D e v e l o p m e n t S e r i e sA f r i c a R e g i o n W o r k i n g P a p e rIn tr od uctionPr oper s tewar dsh ip o f revenue fro m t he o il, gas, an d mi nin g in dus tr ies hastre men dou s pot ent ia l to lif t people out of p ov erty an d c on tr ibu te to sus tai nabl edevel op ment . These indust rie s cre at e job s directly a nd indirectly, t ra nsferte chn olo gi es an d knowledge, a nd generate sig ni fi can t i nc om e. T hes e be nefit spro vide govern men ts wit h a fina ncia l b as e f or infras truc ture dev el opment and soc ialse rvic e del ivery.
7 The ext ract ive ind us tries , a nd th e p etrol eum sec tor in pa rtic ul ar, arekno wn fo r ge ne rat in g high eco no mic rent the di fferen ce be twe en th e v alue an dcost of pr odu cti on and the go vernment s share of thi s ren t c an be ver y lar ge intimes of h igh c ommod it y prices, a s in t he last seve ral yea rs. However, extrac ti ve industr y ( EI ) revenue has some ch ar ac ter is ti cs vol atil ity,uncertainty, exh au sti bility , a nd the f act t ha t it o ri gi nate s l ar ge ly from abroad th atchal len ge p ol ic y makers. Ma ny res our ce-ri ch coun tri es h ave fall en p rey to the re sou rc e c urs e, 1un der wh ich po or po licy choices and corruption have e xace rba tedth e c yc les of p ov erty and conflict.
8 The Wo rld Bank has be en w orkin g clos el y wi thgovern men ts to s up po rt tra ns pa re nt, sus tain able manage me nt of thei r m in era l an dhyd roc arb on reso urc es to m ax imiz e d evelopment gai ns and re duc e pov erty .2Th e W orl d B an k has s tr ongly support ed th e Ext rac tiv e In dus tri es Tran sp aren cyIn iti ative (EITI )3si nc e its l au nc h i n 20 02. The EITI seeks to h elp res ource -r ichcoun tries maxi mi ze the d evelopment ga ins f rom the exp loi tati on of t hei r oi l, g as,an d mineral resour ces by encouraging greater EI re ve nue t ran spa renc y. Through t heve rif ic ation an d fu ll publicat ion of pa ym ent s m ade by comp anie s and re ve nue s fr omoil, gas , an d mi nin g received by g overnments, t he EI TI hel ps t o safe guard agai ns tcor rup tion an d p ro vides a pow erf ul illustration of vol unta ry en gage me nt ofgovern men ts, indu stry, civil society a nd oth er s take hol de rs to e sta bli sh a l ocal lyim plem ented gl obal stan da rd.
9 Th e E ITI, h ow ev er, doe s not co ver a ll t he ch al le nge s that th e EI bri ng t o res ource -ric h coun trie s. P ubli c repor ting of EI revenue, though extre mel y va lu able , repre se ntsonly on e ste p in impro ving s ector govern an ce an d m axi miz ing d eve lop men toutc om es th rough out t he EI value chain. How the se resou rce s are act uall ydevel ope d and how the revenue generate d ulti mat el y is spe nt w ill d ete rm ine acoun try s s uc ce ss in achiev ing long- term gr ow th and su stai nab le de ve lopm en reso urce curse re fe rs to th e par ado x th at co untries with a bundant nat ura l r eso urce s tend to register lower economic growth than countries withoutthe se nat ura l re sources.
10 Th is ha ppe ns for many differ ent re aso ns, i ncluding dif fi culties in developing and implementing sound and sustainablespen di ng a nd sa ving p oli cie s i n the fa ce of la rg e, volatile, and uncertai n r eve nues and a decline in the competitiveness of other economic sector s ( caus edby app re cia tio n of t he re al excha nge r at e as r esource reve nue ent er s an eco nomy). 2 For in forma tio n on ge ne ral World Bank Gr oup governance and acco unt ab ilit y po licie s, c onsult http://worldb in forma tio n on the E IT I co nsult : ht tp ency .o rg, a nd h ttp x t r a c t i v e I n d u s t r i e s V a l u e C h a i nTh e W or ld Ban k, wit h ot her d evelop ment par tne rs , is s tep pin g u p i ts effort s t opr ovid e a mo re inte grat ed and com prehe ns iv e ap proac h to managin g th e ful l EIvalu e cha in , i nc lud in g all t he st eps of EI dev el op me nt a nd i mp act.
