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1 Setting the Legal and Policy Framework

Stage 1:
Setting the Legal & Policy Framework

Setting the Legal and Policy Framework refers to the need for a country to formulate clear policies and strategies that both attract FDI and benefit the country.

Government Policies and Strategies Legislative and Regulatory Frameworks Sector-Wide Analyses
2 Pre-Negotiation

Stage 2:
Pre-Negotiation Stage

The Pre-Negotiation Stage refers to the period during which a government identifies a particular project or investment and conducts feasibility studies and impact assessments.

Feasibility Studies Impact Assessments Tender Process and Financial Structure
3 Contract Negotiation

Stage 3:
Contract Negotiation Stage

The Contract Negotiation Stage refers to the actual negotiation of investment contracts between a government and an investor.

Prepare for the Negotiation Assemble a Negotiation Team Develop a Negotiation Position Contract Negotiation
4 Contract Implementation and Monitoring

Stage 4:
Implementation & Monitoring Stage

The Implementation and Monitoring of the Investment Stage refers to the period during which an investment project is developed and operated pursuant to the terms of the investment contract.

Monitoring Implementation Grievance Mechanisms

Roadmap

Develop a Negotiation Position

Content of this page:

The government should establish a timeline and roadmap for the negotiations to follow during the negotiation process to ensure that all relevant issues are properly discussed, with relevant technical, legal and commercial experts present, and agreed upon.

The members of the negotiation team should also understand and agree an effective negotiation strategy ahead of time to progress the government’s negotiation position. This includes prior agreement on who should lead the negotiation and who in the room is empowered to take decisions on which aspects of the deal.

Key Tools At This Stage

Useful Resources

Negotiations

A Good Deal Better? Uganda's Secret Oil Contracts (Plus Economic Model) Explained Go to resource

  • Date:  2014
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  Global Witness

Global Witness has analysed and made public two “production sharing agreements” signed by the Ugandan Government and international oil companies in February 2012. They determine what share of oil revenues the Government of Uganda will get and almost every aspect of its relationship with the oil companies. This is the first time this information has been made public.

Their analysis shows that the Ugandan Government has succeeded in negotiating a better financial deal in these contracts compared with older contracts – for which it should be congratulated. But there are some significant weaknesses that still need to be addressed. The contracts lack some important human rights and environmental safeguards. This is of particular concern given the unique habitats of the oil region in Uganda which sits on the border with the Democratic Republic of Congo and the Nile River.

To see how Uganda’s oil money will be shared and evaluate the new contracts against the old contracts see the Revenue Infographic. You can also download Global Witness' open source Economic Model, the first of its kind, which can be updated when new information becomes available or adapted for other countries’ contracts. A guide is also available here.

50 Pieces of Advice to an Official who is Engaged in the Negotiation of Mining Contracts Go to resource

The governments of resource rich countries have a responsibility to be well prepared and knowledgeable in contract negotiations for natural resource extraction and long-term 
land leases – not just for the sake of securing a balanced financial deal, but to promote high standards in labour and human rights, environmental protection, health, safety, transparency and fiscal management.

This handbook provides fifty pieces of advice to ensure good governance, capacity building and sustainable development for resource rich countries.

IISD Guide to Negotiating Investment Contracts for Farmland and Water Go to resource

  • Date:  2014
  • Sector:  Land & Agriculture
  • Source:  IISD

The IISD Guide to Negotiating Investment Contracts for Farmland and Water is a legal and policy tool for governments and communities that are involved in negotiating investment contracts with foreign investors. The guide focuses on a particular type of contract involving long-term leases of farmland. Part I, Preparing for Negotiations, is designed to assist in the preparatory phase. Part 2, Model Contract, is structured like an investment contract for the lease of farmland and proposes model provisions.

IISD Handbook on Mining Contract Negotiations for Developing Countries Go to resource

  • Date:  2015
  • Sector:  Extractive Industries, Mining, Oil & Gas
  • Source:  IISD

Many governments lack the experience or human resources to prepare effectively for a negotiation, and are unable to make the investments needed to overcome these difficulties. Yet without preparing properly, there is little hope of achieving the desired national and community objectives. This guide provides a comprehensive approach that allows governments to set priorities and address critical issues in the preparation process.  It will assist governments in developing internal capacity and understanding where outside experts can best help. The guide addresses the process before negotiations begin, where the hard work gets done to lay the groundwork for a successful negotiation.

Mining Contracts: How to Read and Understand Them Go to resource

A book created to highlight strong contract clauses and explore how others could be improved. It goes beyond legal considerations to explore the policy questions and company interests underlying contract provisions—issues that are crucial for understanding and negotiating contracts, and for monitoring their enforcement.

Available in English and French

NRGI Reader | Granting Rights to Natural Resources: Determining Who Takes Natural Resources Out of the Ground Go to resource

This reader comes from a series of 20 short, illustrated overviews of key topics in the extractives sector. Together they serve as a robust introduction for the lay reader to fundamental issues and concepts in oil, gas and mining sector governance. They contain helpful figures and infographics, and each reader has a standard format: key messages, concepts, case examples, and a final set of practitioner-orientated questions to ask.

Oil Contracts: How to Read and Understand Them Go to resource

  • Date:  2012
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  OpenOil

Walk-through guide on oil contracts: what they are, who participates in them, how the revenues should be handled and divided, what the different impacts of an oil project are, what its role is in fostering economic development, and how disputes between parties can be resolved.

Fiscal Tools

A Good Deal Better? Uganda's Secret Oil Contracts (Plus Economic Model) Explained Go to resource

  • Date:  2014
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  Global Witness

Global Witness has analysed and made public two “production sharing agreements” signed by the Ugandan Government and international oil companies in February 2012. They determine what share of oil revenues the Government of Uganda will get and almost every aspect of its relationship with the oil companies. This is the first time this information has been made public.

Their analysis shows that the Ugandan Government has succeeded in negotiating a better financial deal in these contracts compared with older contracts – for which it should be congratulated. But there are some significant weaknesses that still need to be addressed. The contracts lack some important human rights and environmental safeguards. This is of particular concern given the unique habitats of the oil region in Uganda which sits on the border with the Democratic Republic of Congo and the Nile River.

To see how Uganda’s oil money will be shared and evaluate the new contracts against the old contracts see the Revenue Infographic. You can also download Global Witness' open source Economic Model, the first of its kind, which can be updated when new information becomes available or adapted for other countries’ contracts. A guide is also available here.

NRGI Reader | Revenue Management and Distribution: Addressing the Special Challenges of Resource Revenues To Generate Lasting Benefits Go to resource

This reader comes from a series of 20 short, illustrated overviews of key topics in the extractives sector. Together they serve as a robust introduction for the lay reader to fundamental issues and concepts in oil, gas and mining sector governance. They contain helpful figures and infographics, and each reader has a standard format: key messages, concepts, case examples, and a final set of practitioner-orientated questions to ask.

Contractual Terms

A Good Deal Better? Uganda's Secret Oil Contracts (Plus Economic Model) Explained Go to resource

  • Date:  2014
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  Global Witness

Global Witness has analysed and made public two “production sharing agreements” signed by the Ugandan Government and international oil companies in February 2012. They determine what share of oil revenues the Government of Uganda will get and almost every aspect of its relationship with the oil companies. This is the first time this information has been made public.

Their analysis shows that the Ugandan Government has succeeded in negotiating a better financial deal in these contracts compared with older contracts – for which it should be congratulated. But there are some significant weaknesses that still need to be addressed. The contracts lack some important human rights and environmental safeguards. This is of particular concern given the unique habitats of the oil region in Uganda which sits on the border with the Democratic Republic of Congo and the Nile River.

To see how Uganda’s oil money will be shared and evaluate the new contracts against the old contracts see the Revenue Infographic. You can also download Global Witness' open source Economic Model, the first of its kind, which can be updated when new information becomes available or adapted for other countries’ contracts. A guide is also available here.

IISD Guide to Negotiating Investment Contracts for Farmland and Water Go to resource

  • Date:  2014
  • Sector:  Land & Agriculture
  • Source:  IISD

The IISD Guide to Negotiating Investment Contracts for Farmland and Water is a legal and policy tool for governments and communities that are involved in negotiating investment contracts with foreign investors. The guide focuses on a particular type of contract involving long-term leases of farmland. Part I, Preparing for Negotiations, is designed to assist in the preparatory phase. Part 2, Model Contract, is structured like an investment contract for the lease of farmland and proposes model provisions.

IISD Handbook on Mining Contract Negotiations for Developing Countries Go to resource

  • Date:  2015
  • Sector:  Extractive Industries, Mining, Oil & Gas
  • Source:  IISD

Many governments lack the experience or human resources to prepare effectively for a negotiation, and are unable to make the investments needed to overcome these difficulties. Yet without preparing properly, there is little hope of achieving the desired national and community objectives. This guide provides a comprehensive approach that allows governments to set priorities and address critical issues in the preparation process.  It will assist governments in developing internal capacity and understanding where outside experts can best help. The guide addresses the process before negotiations begin, where the hard work gets done to lay the groundwork for a successful negotiation.

Mining Contracts: How to Read and Understand Them Go to resource

A book created to highlight strong contract clauses and explore how others could be improved. It goes beyond legal considerations to explore the policy questions and company interests underlying contract provisions—issues that are crucial for understanding and negotiating contracts, and for monitoring their enforcement.

Available in English and French

NRGI Reader | Extractives-Linked Infrastructure: Exploring Options for Shared Use of Infrastructure Projects Go to resource

This reader comes from a series of 20 short, illustrated overviews of key topics in the extractives sector. Together they serve as a robust introduction for the lay reader to fundamental issues and concepts in oil, gas and mining sector governance. They contain helpful figures and infographics, and each reader has a standard format: key messages, concepts, case examples, and a final set of practitioner-orientated questions to ask.

NRGI Reader | Revenue Management and Distribution: Addressing the Special Challenges of Resource Revenues To Generate Lasting Benefits Go to resource

This reader comes from a series of 20 short, illustrated overviews of key topics in the extractives sector. Together they serve as a robust introduction for the lay reader to fundamental issues and concepts in oil, gas and mining sector governance. They contain helpful figures and infographics, and each reader has a standard format: key messages, concepts, case examples, and a final set of practitioner-orientated questions to ask.

Oil Contracts: How to Read and Understand Them Go to resource

  • Date:  2012
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  OpenOil

Walk-through guide on oil contracts: what they are, who participates in them, how the revenues should be handled and divided, what the different impacts of an oil project are, what its role is in fostering economic development, and how disputes between parties can be resolved.