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Restructuring the arrangements between government and state enterprises in the oil and mining sectors
Author(s) -
Aharoni Yair,
Ascher William
Publication year - 1998
Publication title -
natural resources forum
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.646
H-Index - 49
eISSN - 1477-8947
pISSN - 0165-0203
DOI - 10.1111/j.1477-8947.1998.tb00729.x
Subject(s) - restructuring , business , government (linguistics) , natural resource , market economy , state (computer science) , currency , state owned , resource (disambiguation) , control (management) , economic policy , economic system , economics , finance , monetary economics , political science , computer network , linguistics , philosophy , computer science , law , management , algorithm
The article analyses the relationship between governments and state‐owned enterprises (SOEs) in the oil and minerals sectors. The case is made that SOEs in these sectors have distinct peculiarities of behaviour, and are beset with specific difficulties in addition to typical problems common to SOEs in all sectors. The reasons for the uniqueness of SOEs in the oil and minerals sector stem mainly from their large size, their capacity to earn and borrow foreign currency, their strategic importance and other factors. The key to understanding and reforming state oil and mining enterprises lies in recognizing that their sub‐optimal behaviour is often caused by conflicts within government regarding control of the SOE's financial flows, including the natural resource rent. These conflicts are frequently aggravated by the inappropriateness of fiscal arrangements between these SOEs and their governments. Guidelines for reforming these arrangements are offered, which, in some respects, differ considerably from those applicable to conventional state‐owned enterprises outside the natural resources sector.