chapter  2
18 Pages

Managing the Extractive Resource

ByStephen K. Donyinah

This chapter deals with the contextual economic and petroleum environment in which various developing countries attempt to develop their petroleum resources. It also deals with the principles and concepts of economic rent and revenue maximization and explores how they apply to natural resources management such as petroleum. Ghana's design replicates some aspects of fiscal designs of developed economies and is too simple, it thereby risks losing the full benefits of its hydrocarbon potential. Ghana remains capacity short in electricity generation while flaring of gas is continuing without environmental tax and bonds in the fiscal design. Increasing Ghanaian holding of shares also reduce the discount rate used by the International Oil Companys (IOCs) and on the whole cement the expected stability, flexibility and neutrality in the fiscal petroleum design. Future research should be focused on the process of internalization of economic rent through the strengthening of the domestic banking, insurance and capital markets.