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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