An Enabling Investment Climate:
Afghanistan Oil, Gas and Mining
What the Sector Can Provide – inclusive, integrated growth by
leveraging large, private-sector anchor investments into
mining, oil & gas
Michael Stanley, Mining Lead
World Bank Group
Washington, D.C.
Challenges
Ahead
• field security
• long lead times for exploration / development
• “good fit” policy, legal & regulatory frameworks
• land acquisition / ROW
• risk mitigation
• shared access infrastructure
• strengthening institutions / building adsorptive capacities
2
The Enabling Investment Climate:
Geodata, Institutions & Adsorptive Capacity
What investors want
Geological Potential
– access to mineral resources
Conducive Investment Climate – banking, repatriation of profits, realistic
Geodata
Investment Laws
foreign exchange controls
Security of Tenure – transparent, non-discretionary exploration / mining rights
Mining Cadastre
and regulations
Consistency of Mineral Policy – competitive fiscal conditions, stability of
exploration / exploitation terms and conditions
Stability of Legislation – predicability of exploration / mining terms and
conditions, tax liability, fiscal regime. Good enough fit
Availability of Infrastructure
Mineral Policy
Tax Legislation
Mining, env. / social,
and tax regulations
Public Private
Partnerships
Modified after (a) Transitional Islamic State of Afghanistan: Mining as a Source of Growth, Report No. 28231-AF, The World Bank 2004; and (b)
James Otto – A Global Survey of Mineral Investment Preferences, Mineral Investment Conditions in Selected Countries of the Asia Pacific Region
(United Nations ESCAP 1992).
Geodata
Pre-Competitive Geodata
USD/km2
Aynak
>10,000,000
1,000,000
MINE
DEVELOPMENT
DETAILED
EXPLORATION
PUBLIC FUNDING
Hajigak
Sherbegon
100,000
PRIVATE FUNDING
100
10
REGIONAL
EXPLORATION
REGIONAL
GEOLOGICAL
MAPPING
MINERAL
RESOURCES
ASSESSMENT
5
Good Fit Policy,
Legislation,
Regulations
The Enabling Investment Climate:
Strengthen Institutions and Build Adsorptive Capacity
•Effective Sector Policy
• Transparent, non-discretionary licensing /
award of contract procedures (first come
and tenders)
“Good fit laws and regulations”
• Good fit regulations, improved implementation
• Non-discretionary, transparent contract monitoring
and compliance procedures
•Transparent and efficient implementation of royalty
and tax regime
•Development of a robust inspection regime to check
compliance with health, safety and environmental
standards
The Sectoral Gaps
in Afghanistan
The Enabling Investment Climate:
Address Gaps and Build Adsorptive Capacity
Inputs
Private and public
infrastructure (PPI)
Outputs
Mobilize infrastructure
investments
PPI dialogue and options
analysis
Strengthening of laws,
policies & regulatory
oversight
“Good fit”
Legal & regulatory
oversight
Improved land / title
verification processes
ROW , resettlement and
compensation processes
Outcomes
FDI into PPI shared-use infrastructure
Open access to infrastructure
Improved access to regional trade / transshipment
opportunities
Security of Tenure
Vibrant commercial enterprises
Improved land-acquisition
The Enabling Investment Climate:
Address Gaps and Build Adsorptive Capacity
Inputs
Risk mitigation
instruments covering land
reform and regulatory
oversight
Outputs
Financial risk instruments
in place
Outcomes
Improved financial market perspective on
government obligations
Strengthen regional trade
and commerce
Options analysis on
prioritized regional
interconnects
Early regional trade / transshipment agreements
The Enabling Investment Climate:
Address Gaps and Build Adsorptive Capacity
Inputs
Public financial
management of EI
revenues (PFM)
Outputs
Revenues Transparency
Macro-fiscal rules, revenue
sharing arrangements
Dedicated expenditure
arrangements
Technical studies
Outcomes
Transparency anti-corruption processes and
institutions
Local benefits sharing
Rational expenditures
Building adsorptive
Leveraging of private sector investments to
capacity to integrate
complement public investments
Integrated public and private
public and private sector
development plans
investment / development
plans
The Enabling Investment Climate:
Address Gaps and Build Adsorptive Capacity
Inputs
Building enterprise
development capacity for
(jobs) around competitive
industries
Outputs
Outcomes
Skilled local labour for direct Economic growth through direct / indirect linkages
/ indirect jobs
Beginning of economic diversification through
SME’s cluster-industries
clusters
Strengthening social
Demand-side monitoring of
mobilization for improved service delivery, improved
service delivery
consultation , and grievance
mechanisms around the
sector
Empowerment of the demand-side on service
delivery
Improved HDI’s around sector operations
View Sector Investments within Integrated Corridors
Amu Darya
Basin(2011)
Dushi
Gold
(2010)
Hajigak
Iron Ore
(2011)
Aynak
Copper
(2010)
Inclusive Growth Corridors
Map Legend
Input: Power or water
Economic
diversification, clusters
Year
2
4
6
8
10
12
14
16
World Bank
Group
Mine
Zone of Economic /
cultural impact
Output Infrastructure
Summary
•collect & dissemination of geodata
• implement “good fit” laws and regulations
•Strengthen institutions and adsorptive capacity
• focus enabling investment drivers:
o open access, public private infrastructure
o gaining right-of-way
o structuring risk mitigation instruments
o strengthen regional trade and commerce interconnects
o Public financial management of EI revenues (PFM)
oBuilding adsorptive capacity to integrate public and private sector investment /
development plans
oBuilding enterprise development capacity for (jobs) around competitive industries
oStrengthening social mobilization for improved service delivery
o government takes a resource corridor approach
o inclusive integrated growth
Thank You
Michael Stanley, Mining Lead
World Bank Group
Washington, D.C.
mstanley@worldbank.org
What Can Be Achieved In the 10 Years
• Mines -- Two major industrial mines in operation (Aynak and
Hajigak); one or more hydrocarbon blocks producing, 2 - 4 smaller
scale industrial mines in gold, lithium, other metallic minerals; 200+
licensed quarry operations, gemstones, and other artisanal
production.
• Infrastructure -- Major transportation (rail), power and water
infrastructure investments in “corridors” to support mining
investment; “spin-offs” in terms of local economic development.
• Governance – EITI, transparent non-discretionary sector
administration, central government control over “illicit” mining and
regularization of artisanal miners;
• Support – Provision of geodata, sector promotion, and resource
corridor support through Government partnerships: ADB, World
Bank, USAID, UKDFID, AUS AID and others.