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Institutional Roles and Accountability of State-Owned Enterprises By Patrick Heller
Disampaikan Dalam Diskusi Publik “Mencari Model Kelembagaan Sektor Hulu Migas Dalam Revisi Undang – Undang Migas” yang diselenggarakan oleh PWYP Indonesia bekerjasama dengan Revenue Watch Institute Jakarta, 4 Desember 2013
1. Core Principles: The Chatham House Principles
1 Clarity of goals, roles and responsibilities
2
Sustainable development for the benefit of future generations
3 Enablement to carry out the role assigned
4 Accountability of decision-making and performance
5 Transparency and accuracy of information
Source: Chatham House, 2005
Natural Recourse Charter
Precept 6: “Nationally owned resource companies should be accountable, with well-defined mandates and an objective of
commercial efficiency.”
Archetype 1: Norway
Policy
Monitoring and Regulation
Commercial Operations
Archetype 2: Angola
Policy
Commercial Operations
Monitoring and Regulation
2. Benefits and Risks of National Participation
What are some major benefits that a country can gain from national participation?
• Development of national skills
• Long-term economic control
and financial returns
• More effective state control
over the pace and
development of the industry
• Stimulator of local content and
positive economic spillovers
NOCs
IOCs
Majors
Average $ per employee, 2004
NOCs $962,000
IOCs $1.8 million
Source, Victor 2007
What are some risks that go along with national participation?
A. Inefficient Project Development and Revenue Collection
B. Underinvestment - Pemex
Source: Pemex
C. Unaccountable management of public revenues
$32 Billion
D. Poor relationships with citizens
• Unrealistic expectations
• Weak social outreach
• Low environmental protection standards
• Lack of coordination with decentralized governments
Policy
Monitoring and Regulation
Commercial Operations
Strategy
3. SOE accountability mechanisms
A. Define roles clearly and limit conflict of interest
“Exporting the Norwegian Model” Low Political Competition High Political Competition
High Institutional Capacity Quadrant III -Consolidate functions initially -Consider separating functions as becomes more pluralistic Example: MALAYSIA
Quadrant IV -Separate functions Examples: NORWAY, BRAZIL, MEXICO
Low Institutional Capacity Quadrant I -Consolidate functions Example: ANGOLA
Quadrant II -Develop technical and institutional capacity Example: NIGERIA
B. Develop a workable model for State-SOE fiscal flows
All revenues to consolidated fund/special funds, NOC to
receive allocation from parliament
NOC can retain a predefined part of revenues from the petroleum
sector
NOC retains all revenues from production share/equity and
pays taxes and dividends to the state
Degree of
State control
1
2
3
High
Low
C. Regular reporting of key data
Transparent reporting of:
• Volume and price data for oil sales
• Revenue streams
• Spending and earnings projections
• E&P activities of NOC and private oil companies
• Reserve and production data, and future estimates
4. Indonesia and the Resource Governance Index – Pertamina reporting
• Publishes detailed annual reports, including information on reserves, production, value of exports, investment, costs (http://www.pertamina.com/investor-relations/)
• Publishes information on taxes and dividends paid to the state
• Independent audits
Source: http://www.revenuewatch.org/countries/asia-
pacific/indonesia/overview
BP Migas/SKK Migas Reporting
• Published annual reports (only 2012 seems currently available) (http://www.skkmigas.go.id/publikasi/laporan-tahunan)
• Published information on reserves, production volumes, investment, costs
• Did not publish information on prices of oil sales, value of production, government share in PSCs
• Did not publish contracts