State Participation in the Natural Resource Sectors

Transcription

1 State Participation in the Natural Resource Sectors Taxing Natural Resources: New Challenges and Perspectives IMF, Washington, D.C. September 25-26, 2008 Charles McPherson IMF Fiscal Affairs Department The views expressed are the author s only and should not be attributed to the International Monetary Fund

2 Caveats Broad definition of participation Upstream participation only Petroleum bias

3 Outline of Remarks Evolution of state participation Forms of participation Objectives Issues Policy responses Country experiences Concluding observations

4 Evolution of State Participation The Commanding Heights Resource nationalism (the 1960s and 70s) Re-thinking participation (the 1980s and 90s) Return of nationalism? (the 2000s)

5 State Participation in Petroleum-Rich Countries Country Participation Country Participation Algeria 51% CI Oman Angola 20%/variable CI Qatar 65% Azerbaijan 20%/variable CI Russia Minority to 100% Bahrain None Saudi Arabia 100% Brunei Darussalam 50% Sudan Cameroon 50% CI Syria Colombia 30%-100% Trinidad and Tobago None Congo, Rep. of Turkmenistan None Ecuador None United Arab Emirates 60%-100% Equatorial Guinea 15% CI Uzbekistan 50% Gabon 15% CI Venezuela 60%-100% WI Indonesia 10%WI Vietnam 15% CI Iran 100% Yemen None Iraq 100% Kazakhstan 50%/variable CI Bolivia* Kuwait 100% Brazil* Variable Libya 50%CI Chad* 10% Mexico 100% Mauritania* 10%/variable CI Nigeria 50+% Sao Tome and Principe* None Norway (SDFI) 20%- 56%WI Timor-Leste* 20% CI

6 State Participation in Minerals-Rich Countries Country State Participation Country State Participation Botswana Diamonds negotiable Mauritania WI other minerals Chile None Mongolia 10% Local/50% Govt Dem. Republic of Congo 5%F/ Negotiated equity Namibia None shares 15%-51% Ghana 10% F/20% WI Papua New Guinea 30% WI Guinea 15% F Peru None Indonesia None Sierra Leone 10% F/30% WI Jordan South Africa 15% Black Ownership Kyrgyz Republic Variable WI 15%-66% Uzbekistan Liberia 15% F Zambia Minority Interests

7 Forms of Participation Full equity participation Carried equity participation Free equity participation Production sharing

8 Objectives Lead roles assigned to NOCs, NMCs National champions Development agencies Commercial enterprises Regulators Fiscal agents/instruments

9 Issues Governance Macroeconomic management Funding

10 Competing Budgetary Allocations in Nigeria NNPC Defense & Internal Security Education Road & Construction Agriculture Health Housing

11 Tax Revenues and Equity Returns 18,000 16,000 14, Tax revenues 1,262 State equity $mm discounted at 15%. 12,000 10,000 8,000 6,000 14,877 14,084 13,470 14,074 12,539 13,078 4,000 2,000 0 Angola Eq. Guinea Cameroon Guinea Mozambique Timor Leste

12 Government Take from Oil and Mining Projects Compared 100% 90% 89% Petroleum Project 80% 70% 71% 68% Mining (Copper) Project 60% 57% 55% 50% 45% 40% 30% 20% 10% 0% Angola Colombia Ghana Chile Botswana Indonesia

13 Impact of Project Delays on State Revenues 20,000 17,500 Benefits to $MM 15,000 12,500 10,000 7,500 5,000 2,500 0 Benefits to Angola 15% equity no delay Benefits to Angola 15% equity 1 year delay Benefits to Angola no equity no delay

14 Issues (continued) Commercial efficiency Conflicts of interest Institutional issues

15 Policy Responses Laws and fiscal regimes Roles and responsibilities Macroeconomic recognition Transparency and accountability Reduced financial exposure Efficient tax design

16 Selected Country Experiences Best practice Reformers Renewed resource nationalists State monopolists

17 Norway: Best Practice Some history 1960s No/limited participation 1972 Statoil and mandatory participation 1985 The state steps back (SDFI) 2001 Partial privatisation Current regime Comprehensive legal and fiscal framework Roles and responsibilities clearly defined Explicit macroeconomic consideration High levels of transparency and accountability

18 Brazil: Reformer Some history O petroleo e nostro! Mid-1990s Financial crisis and sweeping reform 1997 End of Petrobras monopoly/partial privatisation/competition/anh Sector recovery Current regime Limited legal and fiscal uncertainty.. Clear roles and responsibilities Macroeconomic recognition High levels of transparency

19 Venezuela: Renewed Nationalist Some history. Foreign domination of the sector 1975 Nationalization/PDVSA 1990s Financial crises. Apertura Petrolera 1998 Hugo Chavez Current regime Significant legal and fiscal uncertainties Massive government intervention/politicization PDVSA. Mushrooming social expenditures No transparency

20 Saudi: Confirmed Monopolist Some history. Sector developed by foreign consortium. Aramco Early 1970s Participation Agreement Late 1970s gradual non-acrimonious nationalization. Saudi Aramco Upstream opening Current regime Clear definition of roles. Saudi Aramco/SPC Professionalism/limited political interference Macroeconomic integration No external transparency

21 Mexico: Reluctant Monopolist? Some history Strong anti-foreign sentiment 1938 High profile nationalization. Pemex 2000s Serious production declines New administration commits to sector reform Current regime History of politicization, inefficiencies, non-commercial activities, draconian taxes Constitutional prohibition on private sector participation Reform debate on governance, fiscal and private sector participation

22 Concluding Observations State participation is likely to remain a significant feature of the resource sectors Past issues and abuses were serious but are now well recognized A growing body of best practice is emerging Political context and political will are critical to achieving looked-for benefits