Afghanistan was yesterday urged to avoid repeating the
mistakes made by resource-cursed countries that
have failed to reap wider social benefits from the profits.
Its a matter of spending the money transparently
on things that benefit ordinary people, in the here and
now, said Paul Collier, professor at Oxford University.
He called for natural resources to be viewed as an
opportunity for countries to transform themselves with their
Collier was speaking at a World Bank seminar about the
Natural Resource Charter, a rulebook for governments grappling
with natural resource management. It urges transparent tenders,
greater accountability and measures to ensure that societies
see obvious benefits.
Afghan officials have this year claimed that the country has
abundant reserves of metals, minerals and rare earths worth up
to $1 trillion. Afghanistan has begun a tender process to
foreign companies to submit bids for the extraction of iron-ore
deposits in some of the most dangerous parts of the country.
After three months a shortlist of candidates will be selected
to visit the site and conduct due diligence; a winner would be
disclosed in mid 2011.
Omar Zakhilwal, the Afghan finance minister, told
Emerging Markets that the government was aware of the
need to be alert to mistakes made by other resource-rich
countries in the past.
We certainly want to repeat the success. As for the
failures, you have to be vigilant, Zakhilwal said. A key
focus is to build capacity within the government for oversight
of contracts and monitoring of corruption, he added.
Not only is it important to us to negotiate a good
deal for Afghanistan, but also we have to make sure that
contracts are delivered on, Zakhilwal said.
The finance ministry had managed to double revenue
collection from $60 million to more than $130 million per month
within the past year and a half.
The government says it will try to include locals in
resource extraction by recruiting them into a security force
protecting the mines. The technique would also be employed for
a proposed $3.3 billion gas pipeline that could one day run
through Taliban heartland, from Turkmenistan through to
Pakistan and India.
A big question is how costs, and then revenue, would be
split between Afghanistan and foreign investors. One possible
approach is a version of the model developed for the oil
industry in Iraq, as it emerged from conflict.
The Iraqi approach was unusual because oil remains in the
Iraqi states hands, in contrast to the US
governments plans for an Oil Law which would have handed
reserves to foreign companies. The Baghdad government awarded
companies service contracts, and agreed to pay them a fee to
pump oil for a set price per barrel.
The Iraqi approach was a significant achievement,
according to Yahia Said, a senior fiscal expert on the country
for the World Bank. The process was transparent and the oil
ministry succeeded in negotiating down the sums that it would
have to pay oil companies, he said. Oil provides more than
four-fifths of the Iraqi governments revenues.