Yair Aharoni is the Rector of the College of Management, Tel Aviv, Israel.
Restructuring the arrangements between government and state enterprises in the oil and mining sectors
Version of Record online: 9 OCT 2009
1998 United Nations
Natural Resources Forum
Volume 22, Issue 3, pages 201–213, August 1998
How to Cite
Aharoni, Y. and Ascher, W. (1998), Restructuring the arrangements between government and state enterprises in the oil and mining sectors. Natural Resources Forum, 22: 201–213. doi: 10.1111/j.1477-8947.1998.tb00729.x
- Issue online: 9 OCT 2009
- Version of Record online: 9 OCT 2009
The article analyses the relationship between governments and state-owned enterprises (SOEs) in the oil and minerals sectors. The case is made that SOEs in these sectors have distinct peculiarities of behaviour, and are beset with specific difficulties in addition to typical problems common to SOEs in all sectors. The reasons for the uniqueness of SOEs in the oil and minerals sector stem mainly from their large size, their capacity to earn and borrow foreign currency, their strategic importance and other factors.
The key to understanding and reforming state oil and mining enterprises lies in recognizing that their sub-optimal behaviour is often caused by conflicts within government regarding control of the SOE's financial flows, including the natural resource rent. These conflicts are frequently aggravated by the inappropriateness of fiscal arrangements between these SOEs and their governments. Guidelines for reforming these arrangements are offered, which, in some respects, differ considerably from those applicable to conventional state-owned enterprises outside the natural resources sector.