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1. Billion-Dollar Exposure: Investor-State Dispute Settlement in Mozambique’s Fossil Fuel Sector

Author:
Lea Di Salvatore and Maria Julia Gubeissi
Publication Date:
02-2024
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Mozambique is endowed with extensive untapped natural resources, particularly gas and coal. The country’s gamble on fossil fuel-based economic growth comes with signiicant economic risks and crowds out investments in the country’s enormous renewable energy potential. ◆Mozambique faces a substantial economic risk due to its exposure to investor-state dispute settlement (ISDS) claims by foreign investors in its coal, oil, and gas sectors. The investment protections in the country’s international investment agreements and contracts, combined with ISDS, expose Mozambique to multi-billion-dollar financial liabilities. Even conservative estimations show that potential ISDS liabilities from oil and gas projects would cover almost a decade of Mozambique’s government expenditures for SDGs. ◆ Mozambique’s international investment agreements and publicly available oil, gas, and coal contracts allow foreign investors to bypass the national judicial system and bring multi-billion-dollar ISDS claims against Mozambique. Such claims can result in significant costs for the country, and they also have a considerable chilling effect on any new public-interest regulation in areas such as health, environment, community rights or labor protections. ISDS can undermine attempts to adopt meaningul legislation to transition away from fossil fuels and achieve sustainable development goals. This regime can therefore contribute to locking the country into a high-carbon economy. ◆In addition, multiple stabilization clauses in the analyzed contracts lock the operations into specific legal and fiscal regimes for the duration of the contracts. Stabilization clauses protect investments from unexpected regulatory changes or new fiscal rules. If a host state does introduce such changes, stabilization clauses allow investors to demand measures or compensation that would ensure their same profitability absent such changes. These clauses thus exacerbate the limits to – and chilling effect on – states’ public interest regulation. ◆Mozambique and other countries can take actions to remove ISDS from their contracts and treaties, replacing the mechanism with alternative dispute resolution mechanisms. They can also take steps to terminate investment agreements in force. Home countries of Mozambique’s foreign investors have a responsibility to support such action, especially as they, themselves, remove ISDS from their own treaties.
Topic:
Natural Resources, Gas, Investment, Fossil Fuels, Coal, and Disputes
Political Geography:
Africa and Mozambique

2. Guidebook on Nigeria’s Energy Transition

Author:
Tengi George-Ikoli and Nafi Chinery
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
This guidebook serves as a comprehensive reference tool for the Nigerian government, as well as an accountability tool that enables Nigerian civil society actors to track the government’s implementation of its commitments to the energy transition. Nigerian government has designed to transition from fossil fuels—oil, gas and coal—to renewable energy technologies, including institutional, policy, legal and fiscal frameworks. It is informed by engagements with state and non-state actors including representatives of the government, the private sector, communities, youth and women’s groups, and by their views of the strengths and weaknesses of Nigeria’s energy transition plans. Accounting for Nigeria’s unique context and peculiarities as a fossil-fuel-dependent nation, the guidebook seeks to provide greater clarity on ways to navigate the energy transition for the Nigerian government, civil society, the media, the country’s citizens and the international community. It also seeks to mitigate transition led shocks and strengthen the overall transition process in Nigeria. The guidebook can enhance stakeholder knowledge of Nigeria’s energy transition process and government action to accelerate the transition. This should encourage the adoption of a comprehensive plan aligned with the needs and realities of most Nigerians. The insights provided in the guidebook may also inspire and influence regional conversations across the African continent, creating a collective demand for a people-centered and just energy transition in multiple countries.”
Topic:
Climate Change, Oil, Gas, Fossil Fuels, and Energy Transition
Political Geography:
Africa and Nigeria

3. Senegal’s Gas-to-Power Ambitions: Securing Scale and Sustainability

Author:
Papa Daouda Diene, Thomas Scurfield, Aaron Sayne, and Jessica Obeid
Publication Date:
07-2024
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Senegal will benefit from generating electricity from some of its gas, but authorities should carefully consider the scale of the country’s “gas-to-power” ambitions and how they relate to its renewable energy plans. This is a pivotal moment for achieving the government’s energy and sustainable development objectives. Recent plans to develop over 3 gigawatts (GW) of gas-to-power capacity by 2050 may face obstacles. Senegal may not be able to extract enough gas to feed the power plants; it may also struggle to raise sufficient funds (at least USD 2.2 billion) to build the necessary infrastructure. A more balanced energy mix, with a stronger emphasis on renewables alongside gas, offers Senegal a more secure pathway, but necessitates a cohesive long-term strategy and international support. Senegal’s participation in a Just Energy Transition Partnership (JETP) has led to increased medium-term renewable power generation goals—possibly to around 1 GW by 2030. To reach them, Senegal’s development partners must deliver the promised financial and technical support. If Senegal realizes only those plans that are published, gas will comprise 75 percent of installed capacity in the long term. The absence of a long-term plan for renewables could lock the country into this large role for gas, inhibiting the intended catalytic effect of the JETP and preventing the government from fully leveraging the country’s solar and wind potential. A more transparent and inclusive approach will help Senegal’s government to refine and implement its energy plans, helping to manage public expectations, foster public trust and increase credibility with investors.
Topic:
Gas, Fossil Fuels, Sustainability, and Energy Transition
Political Geography:
Africa and Senegal

4. Tax Avoidance, Tax Evasion and Trade Misinvoicing: Risks to Senegal’s Mining Sector

Author:
William Davis
Publication Date:
09-2024
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Tax evasion, trade misinvoicing and multinational companies’ efforts to avoid tax are important risks in the extractive sector, especially in developing countries, including Senegal. Senegal’s extractive governance arrangements are strong in many areas, including in preventing multinational tax avoidance. However, there is cause for concern in two areas: misinvoicing of international trade (imports and exports), and cost inflation by subcontractors in the extractive industries. Quantitative estimates of trade misinvoicing suggest the former is a significant problem for Senegal (including for its mining sector), which could lead to the loss of 1–3 percent of the country’s tax revenues. Authorities in Senegal should address such risks, especially before the country begins large-scale oil and gas production. Unless they do so, revenues from the country’s hydrocarbon resources will be at risk. Measures that Senegal can take include strengthening the tax authorities—especially customs and auditing accounts of extractive industry suppliers.
Topic:
Corruption, Government, Gas, Mining, Minerals, Tax Evasion, and Public Finance
Political Geography:
Africa and Senegal

5. Why Senegal Should Minimize Petroleum Operations Emissions

Author:
Papa Daouda Diene, Thomas Scurfield, and William Davis
Publication Date:
09-2023
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Slowing climate change is not the only reason Senegal should reduce greenhouse gas emissions. Minimizing emissions, particularly of methane, from the country’s oil and gas operations will increase government revenues, support its ambitions to use gas to increase domestic energy access, and reduce harms to the health and environment of local communities. Senegal’s government is starting to act on minimizing emissions from oil and gas production, but officials should consider strengthening the regulatory framework to support emissions minimization. Greater transparency and accountability, including effective campaigning by civil society actors, is critical to ensure effective action by companies, investors and the government. Measures to reduce oil and gas methane emissions have been well-known and cost-effective for many years, but progress in most countries has been slow. Senegal’s government should at a minimum ensure that the existing regulatory framework is publicly accessible, while Senegal EITI should advocate for disclosure of actual emissions when oil and gas production starts.
Topic:
Gas, Fossil Fuels, Carbon Emissions, and Energy Transition
Political Geography:
Africa and Senegal

6. Optimizing the Role of the Extractive Industries in Domestic Revenue Mobilization: Analysis of Uganda's Mining, Oil, and Gas Revenue Generation and Management Laws

Author:
Dan Ngabirano and Onesmus Mugyenyi
Publication Date:
12-2023
Content Type:
Research Paper
Institution:
Advocates Coalition for Development and Environment (ACODE)
Abstract:
Dwindling aid and more recently the devastating effects of the COVID-19 global pandemic have rendered many African countries socially, politically, and economically vulnerable. Many are unable to effectively provide basic goods and services for their people, and their ability to pursue long-term development goals has been severely undermined. Given this situation, several African governments continue to fall behind in honouring their global commitments such as those made under the UN Sustainable Development Goals (SDGs) and the various regional and international human rights treaties that they are party to. To bridge the current funding gap, several African countries have turned to extensive borrowing with even more damaging consequences. In the face of this crisis, African countries have been urged to embrace and, in some instances, enhance their domestic revenue mobilization efforts as a more reliable and sustainable option. Uganda has heeded this call and in 2019, the country adopted a five-year Domestic Revenue Mobilization Strategy (DRMS). The key objective of this strategy is to improve revenue collection and lift the country’s tax-to-GDP ratio to between 16%-18%. More critically, DRMS recognizes the strategic role and potential contribution of oil, gas, and mineral revenues to national development. The DRMS underlines the need for the development of a strong extractive industries taxation fiscal regime. Given this reality, this study was conceived and set out to review and analyze the various laws, policies, and practices relevant to Uganda’s extractive industries fiscal regime, and to establish the extent to which these may enhance revenue generation, management, and equitable sharing of resource wealth. While focused on petroleum revenue generation, management and sharing in the Albertine region districts of Hoima, Buliisa and Kikuube, the study refers to experiences from gold mining in Mubende district. In this regard, the study established that gold mining in the district has for the most part been informal and unregulated. For this reason, both the central government and Mubende district local government have not been very successful in generating critical revenues from the largely artisanal and small-scale miners-dominated sector. Secondly, where revenue has been realized from gold mining in a few instances, it has been paid to the central government with less benefit to the district local government.
Topic:
Oil, Gas, Mining, Revenue Management, and Extractive Industries
Political Geography:
Uganda and Africa

7. Sub-Saharan Africa May Be a New Source of Gas for the EU

Author:
Jędrzej Czerep
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In order to become independent from supplies of energy resources from Russia, EU countries are intensively looking for alternative gas import opportunities, including from Sub-Saharan Africa. This direction may become an important element of European diversification, but its development requires external investments and improvement and expansion of the existing infrastructure. European companies and the EU itself can play a key role in this regard.
Topic:
Energy Policy, European Union, Gas, and Diversification
Political Geography:
Africa, Europe, and Sub-Saharan Africa

8. NIGAL: Algeria, Niger, & Nigeria revive talks on Saharan Gas Pipeline

Author:
FARAS
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
Algeria, Niger, and Nigeria held talks on June 20 and 21, 2022 in the Nigerian capital Abuja on the revival of a decades-old project to pipe gas across the Sahara, a potential opportunity for Europe to diversify its gas sources, media reported. Alegria’s Minister of Energy and Mines Mohamed Arkab said the meeting was “important and successful”, setting the “first building block” for a project that’s been just an idea for over 15 years. It was agreed to continue consultations through the technical team that was formed in Abuja and tasking it to prepare the necessary feasibility studies for the project. It was also agreed that the three ministers should meet again no later than the end of July in Algeria.
Topic:
Regional Cooperation, Gas, Economy, and Pipeline
Political Geography:
Africa, Algeria, Nigeria, Niger, and Sahara

9. New Producer Contract Terms and Uncertainty: Lessons From the Recent Past

Author:
Patrick Heller, Perrine Toledano, Tehtena Mebratu-Tsegaye, and David Mihalyi
Publication Date:
03-2022
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
The petroleum industry is volatile, and governments in “new producer” countries have operated at a significant information disadvantage when negotiating with international oil companies. This challenge is growing today; new producer countries face intensifying questions around whether to offer fiscal incentives to maintain investment in the face of 1) the pandemic-induced volatility in oil prices and 2) long-term questions about the future of the industry in the face of the climate crisis and the global energy transition. This confluence of short-term and long-term uncertainty is prompting a reexamination of the narrative that once took hold in many new producer countries. The traditional story was one of linear progression from being non-producers to small levels of production to ultimately having oil and gas become a major economic contributor over the long term. This notion of progression was associated with a commonly held theory: After a country’s first major discovery, the geological risk that wells will be dry was expected to decrease. Countries could therefore shift from a position of having to grant tax breaks (and other concessions) to international investors, to taking a tougher stance in laws and negotiations for new projects going forward. In this paper we examine whether this theory has been borne out in practice and make recommendations to support new producers in their navigation of the uncertainty associated with the energy transition. Among the eight “new producer” countries, for which we analyzed a total of 26 contracts signed before and 25 contracts signed after discovery events (all occurring between 2001 and 2014), the evidence is mixed. Only three of the eight countries in our sample—Ghana, Mozambique and Uganda—demonstrated a clear pattern in the direction of more stringent terms in post-discovery contracts. They featured definitive steps to increase some of the obligations of contractors to the state, and no significant terms that became less stringent. Five out of eight countries did not meaningfully alter their approach to gain greater concessions from their company partners.
Topic:
Energy Policy, Oil, Governance, Gas, and Private Sector
Political Geography:
Uganda, Africa, Mozambique, and Ghana

10. North Africa Can Reduce Europe's Dependence on Russian Gas by Transporting Wasted Gas Through Existing Infrastructure

Author:
Mark Davis, Perrine Toledano, and Thomas Schorr
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
North Africa can reduce Europe's dependence on Russian gas by transporting wasted gas through existing infrastructure.
Topic:
Energy Policy, Oil, Military Strategy, Natural Resources, Gas, and Conflict
Political Geography:
Africa, Russia, Europe, and Ukraine