Post on 13-Dec-2015
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Support for Large scale Investment deals
June 2014
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Challenges
Reasons for poorly concluded deals
• Resource constraints – limited financial, technical and human resources
• Lack of specialized know-how, technical expertise and experience in negotiating complex contracts
• High staff turnover in key agencies
• Asymmetry of information - economic variables of the transaction, relevant fiscal and legal tools;
• Time pressure from external donors and companies to conclude negotiations
• Weak governance
• Poor and incoherent legal and regulatory framework
• Internal competition among different ministries to influence the outcome of the negotiation process
• Corruption on the part of government officials in charge of negotiating contracts
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Phases of Resource Development and
ManagementSetting the investment environmen
t
Resource-based development
vision
Government policies and strategies
(including laws and regulations)
Sector-wide analyses
Preparing for a
project
Project feasibility
studies, fiscal models, EIAs
and SIAs
Tender documents and
process (if doing a
competitive bid)
Model contracts
Negotiating with an investor
Multi-disciplinary team and
negotiation strategy
Contractual provisions
Implementing &
monitoring the
contract
Monitoring to ensure contract
compliance
Managing and
Allocating the
revenues
Designing a PIPDevelopment
plans and budgets
Aligning with other
stakeholders
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Range of Skills Needed:
Development planning
Governance (e.g. anti-corruption/stakeholder engagement)
Legal (sector-specific and broader financial, fiscal, commercial)
Project development
Sector and project economics
Financial analysis and modeling
Financial structuringSector-specific expertise (e.g. geology, infrastructure,
industry)
Environmental, social impacts, human rights
Occupational health and work safety
Fiscal and tax management
Tendering and procurement
Accounting and financial reporting
Negotiation strategy
Monitoring and evaluation
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Information Asymmetry
Geological data and its interpretation
Global sector trends
Global commodity market trends
Commodity pricing trends and systems
Consumer trends
Technology developments
Comparative and “model” laws and contracts
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Support available
Technical Assistan
ce
Capacity Building
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Support available
• Fee and non-fee based
• Prominent initiatives• African Legal Support Facility (ALSF)• International Senior Lawyers’ Project (ISLP)• Norad – Oil for Development• Natural Resource Governance Insitute• UNDP• World Bank – Extractive Industries Technical Advisory
Facility (EI-TAF)
• Others• Individual academics and academic centers• Consultants• Bilateral donors• Law firms
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What are the Gaps in Support?
• Expertise other than legal (e.g. financial/economic experts, financial modelers, sector experts, investment bankers)
• Assembling a negotiating team
• Experience working with governments
• Timing of support – “rapid response”
• Long term assistance
• Implementation, monitoring and enforcement of deals
• Lack of availability of documentation (e.g. precedents)
• Lack of knowledge sharing
• Coordination between existing support initiatives
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What Mechanisms might help address gaps?
• Increase the coordination, scope and visibility of existing initiatives
• Assist with procurement of support
• Tools and resources for governments and civil society• Matrix of available support initiatives• Roadmap of the process from policy development
through to contract monitoring• Compile all existing resources and tools and create
new ones – eg databases of contracts
• Forum for information and knowledge sharing
• Develop a portal to house these tools and resources and host the forum