The Natural Resource Governance Institute – an independent non-profit organization dedicated to improving countries’ governance over their natural resources – has released the Resource Governance Index (RGI) profile for Senegal, scoring its hydrocarbon sector, 82 points out of 100. This score, which places the sector in the RGI’s ‘good’ (highest) performance band, is based on good rules and practices in each of the index’s three components: value realization (76 points), revenue management (95 points), and enabling environment (75 points).
The RGI evaluates how 18 resource-rich nations manage their oil, gas, and mineral resources. Three components make up the index composite score. Two of the indicators are fundamental aspects of the extractives industry – value realization and revenue management – and the third is the enabling environment, which encompasses the larger context of governance. These three broad aspects of governance are made up of 14 subcomponents, each of which has 51 indicators derived from 136 questions.
Senegal’s overall high ranking for the oil and gas industry is attributable to the country’s favorable overall enabling environment. Because the legislative framework and the sector’s key projects are still in the development phase, the value realization and revenue management ratings are exceptionally high.
Despite the absence of legislation on the management of hydrocarbon earnings, the laws and practices governing cash flows between the state and national oil company Petrosen are clear. There is, however, room for improvement in the transparency standards governing title allocation. The country’s regulations and procedures include transparency and accountability mechanisms for the tax system, production, payments, budget management, and debt.
The Natural Resource Governance Institute equally shares some key recommendations on the way forward for the Senegalese authorities. Most notably are the recommendations for the Senegalese government on how it should require state and public workers to reveal their investments in hydrocarbon businesses, as well as publish the information on the beneficial owners of oil and gas titles, and the disclosure of this information on all titles. The institute also suggests a mandatory legislative examination and publication of Petrosen’s annual reports and accounts should also be established, together with the creation of an independent board of directors.