Presentation on theme: "World Bank Involvement in Extractive Industries Paulo de Sa Manager Oil, Gas and mining Unit (SEGOM) November 5, 2013."— Presentation transcript:
1World Bank Involvement in Extractive Industries Paulo de Sa Manager Oil, Gas and mining Unit (SEGOM) November 5, 2013
2 Promote shared prosperity The World Bank and Extractive industries End ExtremePoverty Promote shared prosperitytwin wbg goalsRevenue Maximization, Transparency & Governance, Poverty Targeted ExpendituresLeveraging Inclusive GrowthLocal Content, Jobs, InfrastructureConflict Prevention and Managing Fragility.Sustainability: Resources, Environmental & Socialei themes in support1. Revenue Maximization, Transparency & Governance, Poverty Targeted ExpendituresEI provides one of the best sources of revenue for fighting poverty and dwarfs aid inflows. But it needs to be maximized and managed in a transparent manner (e.g. EITI) to ensure that the benefits reach the people.2. Leveraging Inclusive Growth, Local Content, Jobs, InfrastructureThe government, private sector and communities can create shared value. The more the local economy can participate in the EI operation and leverage its infrastructure, the larger and more inclusive the benefits. Direct employment is low due to mechanization but skills development will increase local employment in higher income positions. Roads, rail, ports and power needed by EI (and built by private sector) can be made for multiple uses.3. Conflict Prevention and Managing FragilityThere is a high correlation between fragile and conflict affected states and EI. Deeper diagnosis and solutions to reduce and prevent conflict are essential to ensure poverty gains are not eroded.4. Sustainability: Resources, Environmental and SocialEI development needs to take place with minimum environment/social footprint (e.g. GGFR), and specific consideration to community and gender issues.
3Strategic Setting: Governance Challenges for Extractives Weak institutions, poor governance and lack of infrastructure remain major concerns.The lack of modern geological data and overall knowledge of mineral potential is one of the key barriers to improving the quality of resource deals (Collier).Lack of human capacity.Poor capacity to negotiate investment agreements and monitor contract enforcement.Weak Public Financial Management and Public Investment Management.Limited local economic SME capacity and insufficient local and regional strategic planning to harness the economic linkages.Weak track record in sharing benefits with local communities.Political and institutional dimensions are important determinants of how resource rich countries perform.
4SEGOM: Core Areas of Intervention Sector Governance and ReformLegal & regulatory framework and licensing/contracts /auctionsInstitutional strengthening and capacity buildingGeodata AcquisitionHydrocarbon resources data managementBetter governance and transparency (EITI agenda)Oil, Gas and Poverty AlleviationGas policies as part of a lower carbon energy growthGas pricing, Gas Master Plan and development of domestic marketsUtilization of flared gas (GGFR)Sustainable LivelihoodsEnvironmental and Social managementLocal economic development planning, economic linkages and local contentHealth & SafetySupport for reducing energy poverty4
5Transparency and Accountability across the whole chain The Extractive Industries Value ChainBetter deals that are better managed for more development impactWorld Bank has the capacity to support key links in the value chainTransparency and Accountability across the whole chain5
6Strategic Setting: Challenges for Gas Green Growth – leveraging gas as a transition to renewables: opportunity to optimize the use of gas in power systems, including intermittent renewables (e.g. integrated gas and renewables planning)Access to energy and diversification of energy sources: Links to the Sustainable Energy for All (SEFA) AgendaTrade: Foster exploration and an efficient use of gas at the country and regional level (e.g. infrastructure integration and/or demand pooling)Integration of Gas-to-Power Value Chain: Harmonization of policy, regulation, and tariff setting to assure that gas is properly valued and risks mitigated along the entire value chain.Harness new potential Shale Gas resources: Evaluate its potential and promote sound policy and regulation around its development
7Role of the World Bank in Gas-to-Power ElectricityGasTransportation& TreatmentElectricityTransmission& DistributionGasProductionPowerGenerationElectricityConsumersResource estimationFiscal terms/taxLicensingRegulation and monitoringReduction of flaringGas pricingInvestment (IFC/MIGA)Investment (private/public)TariffsRegulationOpen access rulesInvestment (private/public)IPP framework/biddingRegulation and monitoringElectricity pricingGuaranteesEnergy efficiencyInvestmentRegulation and monitoringElectricity pricingGuaranteesEfficiencyIntegration of renewablesElectricity pricingSubsidiesEnergy efficiencyCross-cutting issuesPricing & TariffsCredit supportReliabilitySafeguardsPolicy and RegulationTransparency7
8Gas Map of Africa:Where the Opportunities Are and how the Bank is Helping to Capture themGas as an Agent of TransformationResource:Huge undeveloped discoveriesNon-associated gas, LNGRationale for Bank involvement:Governance, macro managementIndustrial developmentBank Interventions:Revenue managementInstitutional capacity buildingLocal gas market developmentForward/backward linkages (SME’s)Gas as a Squandered ResourceResource:Huge proved reserves in NigeriaPredominantly associated gasRationale for Bank involvement:Energy accessFlaring avoidanceBank Interventions:GGFRGas and power pricing reformContract guaranteesInfrastructure financeGas as an Alternative to CoalResource:Potential increase in pipeline gas exports from MozambiquePotential shale gas and coal-bed methaneOffshore exploration beginningRationale for Bank involvement:Lower carbon growth strategyPossible Bank Interventions:Regional pipeline expansionRegulation of shale gas activities
9Finance/Private Sector Development: Examples of an Integrated Approach - MozambiqueSEGOM (Oil & Gas Unit):Preparation of Gas Master Plan including downstream potential (financed by AAPF and PGI)EI-TAF grant for legal support for mining negotiations and gas (LNG) negotiationsDirect/ immediate services to the government to improve sector governanceTA Project preparation ($50 mln IDA + pledges of US$20+ mln from at least two other donors for co-financing) for Government capacity building for both mining and gasEITI implementationFinance/Private Sector Development:Supply chain linkages (through Growth Poles Project)Economic Management:Fiscal and revenue management (PRSP series)Demand Side Governance work (jointly with EITI and CSO support grant)9
10Gas pricing policy study EITI implementation Africa Energy/SEGOM: Examples of an Integrated Approach - GhanaSEGOM:Oil & Gas Capacity Building Project supports 11 agencies with responsibility for managing the sector ($38 mil)Gas pricing policy studyEITI implementationAfrica Energy/SEGOM:“Energizing Economic Growth in Ghana,” 2013 comprehensive study of petroleum and power sectorsPolicy advice and TA on LNG import optionsSEGOM/Economic Management:Revenue management and forecasting technical assistanceAfrica Energy/SEGOM (AFTEG)Power sector financing and TAWAGP guarantees10
11Summary Inventory of Our Oil and Gas Activities Technical AssistanceExamplesGas pricing policy developmentGhana, Iraq, BangladeshGas master planning/domestic gas sector developmentMozambique, Ghana, Tanzania, IraqLNG import strategyBangladesh, Lebanon, Vietnam, PhilippinesBalancing LNG Exports with domestic needsYemen, TanzaniaShale gas and coal-bed methane policy and regulationPoland, BotswanaCapacity BuildingGhana, Tanzania, Mozambique, KenyaFinancingExamplesLending for gas-fired power plantsNigeria, Ghana, Bangladesh, Mauritania, EgyptPartial risk guarantees for power/gas sales contractsNigeria, West African Gas Pipeline, Cote d’IvoireGas distribution system efficiency improvementPakistan, UkraineGathering systems (including flare reduction)Kazakhstan,
12Global Programs and Facilities That Support the Work Extractive Industries Transparency Initiative (EITI)Global standard for good governance in EI. Revenue transparency, tripartite process and platform for governance and accountability.Extractive Industries Technical Advisory Facility (EI-TAF)Better deals. Reducing asymmetry of information. Rapid response and support for contract negotiationsGlobal Gas Flaring Reduction (GGFR)Capturing flared gas for energy access & power/industry
13Global Gas Flaring Reduction (GGFR) GGFR, a public-private partnership, supports national efforts to increase the use of associated natural gas, thus reducing gas flaring and venting which waste resources and increase global CO2 emissions. GGFR aims to improve energy efficiency, expand access to power by developing gas markets, and mitigate climate change through the reduction of greenhouse gas emissions from flaring.Since its inception, GGFR has received almost $45 million in donor contributions which have helped finance 40 projects/activities (mostly in the Africa region).GGFR has successfully contributed to a 20% decrease in global gas flaring the past seven years.Gas flared annually in Africa could produce 200 TWh electricity (more than twice AFR’s power consumption (excl. South Africa).GGFR Phase 4 began on January 1, 2013.
14Extractive Industries Transparency Initiative (EITI) EITI promotes and supports improved governance and transparency in resource-rich countries through the full publication and verification of company payments and government revenues.As of March 2011, 38 countries are implementing EITI of which 20 countries have been declared compliant.SEGOM manages a multi-donor trust fund that assists countries to implement the EITI. Since 2005, the EITI MDTF has received $61.5 million from 15 donors.Next rules - Broadening and deepening EITI:Improving quality of reportsEnhancing CSOs participationNew agenda: licensing and contract transparency, tax administration, budget transparencyUpdated by Carmen
15Extractive Industries Technical Advisory Facility (EI-TAF) EI-TAF assists developing resource-rich countries to structure extractive industry transactions and related sector policies. EI-TAF facilitates rapid-response, third-party advisory services and capacity building for resource policy frameworks and transactions.14 on-going projects in Liberia, Sierra Leone, Mozambique, Kenya, Guinea, Rwanda and Mauritania, Colombia, Haiti, etc.Through its Knowledge Management window EI-TAF supports the production and dissemination of global knowledge products. The flagship product is the EI Source Book.Established in 2009, EI-TAF has received a total of $25 million in contributions from 7 donors. Next steps include expanding the facility and increasing funding to US$ 50 million.