World Bank - Extractive Industries Value Chain

The World Bank, Extractive Industries Value Chain: A Comprehensive Approach to Developing Extractive Industries, in the Extractive Industries for Development Series No.3 & Africa Region Working Paper Series No. 125 (Washington D.C.: World Bank, March 2009)

This paper focuses on the Extractive Industries Value Chain from the exploitation of non-renewable resources to reaching sustainable development. The author notes that the EI Value Chain goes beyond public reporting and monitoring of revenues but encompasses the award of contracts and licenses, regulations and monitoring operations, collection of taxes and royalties, distribution of revenues and implementing sustainable development projects and policies.

The paper then explains each of the links in the EI value chain. Link one deals with the award of contracts and licenses which is said to be efficient when the procedures for awarding exploration through production rights are competitive, transparent and well defined and the regulatory rules of the process are certain. Link two on the regulation and monitoring of operations touche clearly on defined institutional responsibilities as well as capacity building for monitoring and ensuring regulatory compliance.

The third link of the EI Chain focuses on the collection of taxes and royalties with emphasis on the design of an optimal fiscal regime, adequate administrative and audit capacity, acceptable accounting and reporting standards and regular public reporting. Link four on the management and allocation of revenue considers the design of sound macro-economic policies adapted to volatile and finite resources, making savings decision for oil revenues and the judicious allocation of public expenditures. The last link of the chain considers the efficient design and implementation of sustainable development policies including investing in priority areas expressed in a country’s development strategies and the sustainable development of resource producing regions.

The paper concludes with a note that the diverse approach of the EI Value Chain to good industry practice in the oil, gas and mining sectors is important towards achieving sustainable development.

 

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