A COMPARATIVE ECONOMIC EVALUATION OF PETROLEUM FISCAL REGIMES IN THE EMERGING OIL PRODUCER COUNTRIES OF EAST AFRICA

摘要

This paper applies a Discounted Cash Flow (DCF) method to carry out a comparative evaluation of the economic competitiveness of four existing petroleum fiscal regimes in East Africa. Economic measures are derived to determine the various fiscal regimes’ performance under six criteria; i) The amount of government revenues; ii) Timing of government revenues; iii) Stability of government revenues; iv) Neutrality of the fiscal regimes; v) Progressivity/adaptability of the fiscal regimes; and vi) Contractor profitability. The paper proposes an alternative fiscal regime for comparison with these incumbent regimes. The alternative regime consists of a reduced effective royalty rate, state participation and ROR-based profit sharing. The emerging oil producing countries of East Africa consist of Kenya, Mozambique, Tanzania and Uganda which share geograpical and geological features including the offshore Rovuma basin and the onshore East African rift valley system. (Abeinomugisha and Obita, 2011). These countries are therefore likely to present alternative destinations for private capital, with individual countries seeking to gain competitive advantage via the design of their fiscal regimes. The comparative evaluation of existing fiscal regimes is meant to determine the status quo, while comparison with an alternative regime illustrates the benefits of introducing more progressive elements to the existing fiscal regimes. The Discounted Cash Flow (DCF) method of comparative economic analysis of petroleum fiscal systems have been applied in Blake and Roberts (2006), Tordo (2007), Daniel et al. (2010) and Cottarelli (2012) among others. However, no publication has been authored to rank the performance of fiscal regimes in East Africa. The paper is organised as follows; after the introduction, section two describes the methodology, the data used and the assumptions; section three presents an analysis of the findings and results; and four provides the conclusions.