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 (CCSIs senior fellow) 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 key concepts of the LNG value chain and how the model can be used. The recording of a webinar describing the model can be accessed here and the accompanying presentation here. Since the webinar we have updated the model with additional features.
In collaboration with the Commercial Law Development Program of the US Department of Commerce, CCSI has also developed an LNG-to-power plant model, which allows users to asses different structures along the LNG to electricity value chain for importing countries. The accompanying manual facilitates the use of the model.
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.