Open Fiscal Models

Alongside growing revenue and contract transparency, increasing fiscal model transparency is needed. Only with financial model transparency can relevant actors better assess whether contracts are balanced in terms of fiscal returns and understand when revenues start flowing to the government. CCSI strongly supports financial model transparency and has developed two open fiscal models. We are currently welcoming feedback on their usefulness, user-friendliness, and on any observed inaccuracies.

Translating Gas and LNG into Money

With the new gas discoveries in East Africa and in the Levantine Basin comes the need for countries involved to better understand the gas value chain and how to structure complex and capital intensive Liquefied Natural Gas (LNG) projects for the benefit of the country. Having a fiscal model is key to enable this understanding.

Thomas Mitro of the University of Houston and CCSI have built the first open fiscal LNG model that allows users to test different LNG commercial structures, compare domestic gas use options and assess the impact of various fiscal tools along the gas value chain. A manual has been developed to explain some concepts of the LNG value chain and how these can be tested in the model.

We hosted a 1.5-hour webinar on March 23, 2016 to explain the concepts of the LNG value chain and the model. The recording of the webinar can be accessed here and the presentation used in the webinar here. Since then we have updated the model with additional features. Please reach out to if you would be interested in attending a webinar that goes through this second version of the model.

CCSI is also working with the Commercial Law Development Program to develop an import LNG terminal model that can be used and adapted for training purposes. The model and accompanying manual will also be uploaded and made available on CCSI’s website. It will serve as a tool for stakeholders in countries that are looking to import gas from the growing international LNG market and will help to understand different LNG-to-power structures and associated risks.

Benchmarking Gold Mining Fiscal Regimes

With the support of IBIS, CCSI has developed a gold benchmarking model that allows users to compare 10 fiscal regimes of gold producing jurisdictions and the possibility to add the fiscal terms of an additional mining contract.

The use of the model has been piloted with the Africa Center for Energy Policy (ACEP) in Ghana and LATINDADD in Peru. Given that the benchmarking exercise needs to be done among peer group countries, which are those with a similar geology, infrastructure and political risk, the model includes the fiscal terms of countries chosen by ACEP and LATINDADD. ACEP chose to include Indonesia, PNG, South Africa and Tanzania as the peer countries for Ghana, and Latindadd chose Brazil, Chile, Colombia and Mexico as the peer countries for Peru.

Several sensitivity tests are provided, which allow the user to understand how the project economics and government returns change with varying assumptions, such as changes in the prices or changes in costs. CCSI has not locked any cells in the model to ensure that it is highly adaptable depending on the needs/requirement of the user.

CCSI has also built the business case for transparency for both extractive companies and institutional investors and is actively contributing to the contract transparency movement.