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 oil, 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 Institutional & Legal Setting Reporting Practices Safeguards & Quality Controls Enabling Environment (20%) (40%) (20%) (20%) 10 Indicators 20 Indicators 15 indicators 5 Indicators Indicator Indicator Indicator Indicator Accountability & democracy (EIU 1 Freedom of information law 1 Licensing process 1 Checks on licensing process 1 Democracy Index & WGI voice and accountability) 2 Comprehensive sector legislation 2 Contracts 2 Checks on budgetary process 2 Open Budget (IBP Index) Environmental and social impact 3 EITI participation 3 3 Quality of government reports 3 Government effectiveness (WGI) assessments Government disclosure of conflicts 4 Independent licensing process 4 Exploration data 4 4 Rule of law (WGI) of interest Corruption (TI Corruption Environmental and social impact 5 5 Production volumes 5 Quality of SOC reports 5 Perceptions Index & WGI control of assessments required corruption) 6 Clarity in revenue collection 6 Production value 6 SOC reports audited Comprehensive public sector 7 SOC use of international accounting 7 7 Primary sources of revenue balance standards SOC disclosure of conflicts of 8 SOC financial reports required 8 Secondary sources of revenue 8 interest 9 Fund rules defined in law 9 Subsidies 9 Quality of Fund reports 10 Subnational transfer rules defined 10 Operating company names 10 Fund reports audited in law 11 Comprehensive SOC reports 11 Checks on Fund spending 12 SOC production data 12 Government follows Fund rules Fund disclosure of conflicts of 13 SOC revenue data 13 interest Quality of subnational transfer 14 SOC quasi fiscal activities 14 reports Government follows subnational 15 SOC board of directors 15 transfer rules 16 Comprehensive Fund reports 17 Fund rules Comprehensive subnational transfer 18 reports 19 Subnational transfer rules 7 20 Subnational reporting of transfers
Some Key Results and Findings • Eleven countries (out of 58) meet satisfactory standards of 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
100 20 40 60 80 0 98 1. Norway 2. United States (Gulf of Mexico) 92 88 3. United Kingdom 4. Australia (Western Australia) 85 80 5. Brazil 80% of countries do not meet satisfactory 77 76 75 74 74 73 6. Mexico 7. Canada (Alberta) 8. Chile 9. Colombia 10. Trinidad and Tobago 11. Peru 70 12. India 13. Timor-Leste 68 66 14. Indonesia 15. Ghana 63 62 61 16. Liberia governance standards 17. Zambia 58 57 56 56 56 18. Ecuador 19. Kazakhstan 20. Venezuela 21. South Africa 22. Russia 54 53 53 23. Philippines 24. Bolivia 25. Morocco 26. Mongolia 51 50 48 47 47 47 46 46 46 46 27. Tanzania 28. Azerbaijan 29. Iraq 30. Botswana 31. Bahrain 32. Gabon 33. Guinea 34. Malaysia 35. Sierra Leone 36. China 43 43 43 43 42 42 41 41 37. Yemen 38. Egypt 39. Papua New Guinea 40. Nigeria 41. Angola 42. Kuwait 43. Vietnam 39 38 37 44. Congo (DRC) 45. Algeria Failing (0-40) Weak (41-50) Partial (51-70) Satisfactory (71-100) 46. Mozambique 47. Cameroon 34 34 33 31 31 48. Saudi Arabia 49. Afghanistan 50. South Sudan 51. Zimbabwe 29 28 52. Cambodia 53. Iran 54. Qatar 26 19 55. Libya 56. Equatorial Guinea 13 9 57. Turkmenistan 5 4 58. Myanmar
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 on primary sources of revenue (royalties, profit shares or taxes) • In 18 countries (e.g. Alberta, Canada) government officials 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
100 20 40 60 80 0 Statoil Pemex Petrobras ONGC Rosneft State-owned companies in 45 countries 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 16 MOGE Turkmengas
Natural resource funds in 23 countries 100 80 60 40 20 0 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 of 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
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