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Restructuring the arrangements between government and state enterprises in the oil and mining sectors

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  • Yair Aharoni
  • William Ascher

Abstract

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.

Suggested Citation

  • Yair Aharoni & William Ascher, 1998. "Restructuring the arrangements between government and state enterprises in the oil and mining sectors," Natural Resources Forum, Blackwell Publishing, vol. 22(3), pages 201-213, August.
    • Handle: RePEc:wly:natres:v:22:y:1998:i:3:p:201-213
    DOI: 10.1111/j.1477-8947.1998.tb00729.x
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    References listed on IDEAS

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    1. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. "The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
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    4. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    5. William Ascher, 1994. "Survey of issues in government policy and public management of state oil and mining companies in developing countries," Natural Resources Forum, Blackwell Publishing, vol. 18(1), pages 3-11, February.
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