India in top ten countries with best resource governance -Governance Now

India in top ten countries with best resource governance

ONGC ranks 2nd of 74 state-owned enterprises in the Resource Governance Index, which measures quality of resource governance in 81 countries

GN Bureau | July 6, 2017

#Resources Governance Index #resources #minerals #oil and gas

India is the second-best performer in resource governance in the Asia-Pacific region after Australia, says the 2017 Resource Governance Index (RGI).

RGI measures the quality of resource governance in 81 resource-rich countries that produce oil, gas and minerals. The score is made up of three components: value realisation and revenue management (measures key characteristics of the extractives sector) and, the enabling environment that captures the broader context of governance.

In this year’s index, India’s oil and gas sector scored 70 of 100 points and ranks 9th of 89 country assessments. This rank lies in the range of countries where “it is reasonably likely that extractive resource wealth benefits citizens, but there may be costs to society”.

India scored:

75 of 100 points in good value realisation (covers governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state-owned enterprises),
66 of 100 points in revenue management (covers national budgeting, sub national resource revenue sharing and sovereign wealth funds) and,
69 of 100 points in enabling environment (draws on pre-existing research to measure the broader governance context)

The report says that though India is the highest-ranked country in the value realisation component in the Asia-Pacific region, political instability poses risks to the governance of the sector.

According to the report, India has proven oil reserves of 5,749 million barrels and gas reserves of 43 trillion cubic feet. The oil and gas sector contributes 12 percent of total exports, but growing domestic demand makes India a net oil importer. In 2015, India was the fourth largest consumer of oil after the United States, China and Japan.

The report also scores state-owned enterprises (SOEs) that “play a pivotal role in many countries’ extractive industries. Some harness oil and minerals for national development. Others squander nations’ resources through inefficiency and corruption.”

In India, majority of oil production is controlled by state-owned enterprises. The largest of these, the Oil and Natural Gas Corporation of India (ONGC), scored 87 of 100 points and ranks 2nd. The index highlights that such a score means an “opportunity for enhancing ONGC’s governance that lies in improving non-operational activity and commodity sales rules (both of which are related to ONGC’s role in selling fuel with a subsidised price to domestic customers)”.

See full report here

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