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. [email protected] 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.