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Oil wealth funded much of Timor-Leste's reconstruction after its bloody struggle for independence from Indonesia ended in 2006, with petroleum receipts responsible for 94 percent of government revenues in 2011. Limits on government withdrawals from the national Petroleum Fund have helped make Timor-Leste's budget surplus as a percent of gross domestic product the largest in the world.

Timor-Leste's Performance on the Resource Governance Index

Timor-Leste received a "partial" score of 68, ranking 13th out of 58 countries. A very low Enabling Environment score offset "satisfactory" performance on the other components of the RGI.

(out of 58)
(out of 100)
13 Composite Score 68
15 Institutional & Legal Setting 77
Freedom of information law 33
Comprehensive sector legislation 100
EITI participation 100
Independent licensing process 100
Environmental and social impact assessments required 0
Clarity in revenue collection 83
Comprehensive public sector balance 100
SOC financial reports required N/A
Fund rules defined in law 100
Subnational transfer rules defined in law N/A
8 Reporting Practices 82
Licensing process 100
Contracts 67
Environmental and social impact assessments 0
Exploration data 100
Production volumes 100
Production value 67
Primary sources of revenue 100
Secondary sources of revenue 50
Subsidies 100
Operating company names 100
Comprehensive SOC reports N/A
SOC production data N/A
SOC revenue data N/A
SOC quasi fiscal activities N/A
SOC board of directors N/A
Fund rules 100
Comprehensive fund reports 100
Subnational transfer rules N/A
Comprehensive subnational transfer reports N/A
Subnational reporting of transfers N/A
16 Safeguards & Quality Controls 70
Checks on licensing process 67
Checks on budgetary process 44
Quality of government reports 53
Government disclosure of conflicts of interest 100
Quality of SOC reports N/A
SOC reports audited N/A
SOC use of international accounting standards N/A
SOC disclosure of conflicts of interest N/A
Quality of fund reports 83
Fund reports audited 100
Government follows fund rules 83
Checks on fund spending 100
Fund disclosure of conflicts of interest 0
Quality of subnational transfer reports N/A
Government follows subnational transfer rules N/A
38 Enabling Environment 28
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 20
Open Budget (IBP Index) 35
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 62
Government effectiveness (WGI) 10
Rule of law (WGI) 10
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 15th/58, Score: 77/100) learn more

With a comprehensive legal framework and independent licensing process, Timor-Leste received a "satisfactory" score of 77.

The National Petroleum Authority (ANP) awards production-sharing contracts to companies through competitive public bidding rounds and regulates the sector.

Currently, all of Timor-Leste's oil and gas is produced in the offshore Joint Petroleum Development Area (JPDA). Government revenues from the area are received in cash rather than in kind, with a 10 percent share going to Australia under the Timor Sea Treaty. However, when production begins in Timor-Leste's Exclusive Zone, companies will be required to provide the government with in-kind oil payments for the domestic market.

The ANP supervises the marketing of petroleum produced in the JPDA and collects all "first tranche petroleum" payments, while the Finance Ministry collects taxes. All of Timor-Leste's petroleum revenues go into the Petroleum Fund, administered by the central bank.

The Petroleum Act guarantees public access to some industry information, but technical data and "trade secrets" remain confidential. Environmental and social impact assessments are not required, though companies must submit an environmental protection plan. Timor-Leste achieved compliance with the Extractive Industries Transparency Initiative in 2010.

Reporting Practices (Rank: 8th/58, Score: 82/100) learn more

Timor-Leste releases substantial data on many aspects of the hydrocarbon industry, earning a "satisfactory" score of 82.

Many, but not all, petroleum contracts are publicly available. The Petroleum Act requires extensive disclosure on licensing rounds, but the ANP has yet to release this information.

Finance Ministry budget reports include data on production volumes, prices, export values, and disaggregated resource revenue streams. The ANP also publishes considerable information on the petroleum industry, including data on reserves, production volumes, and investment, but these figures are not organized systematically. The central bank and the Finance Ministry publish Petroleum Fund receipts. The Finance Ministry's budget clearly delineates petroleum and non-petroleum revenues.

Safeguards & Quality Controls (Rank: 16th/58, Score: 70/100) learn more

Incomplete government monitoring but extensive audit requirements led to a "satisfactory" score of 70.

National law limits the discretion of the licensing authority and ensures that the licensing process is competitive and fair. Contract awards may be appealed. Parliament has no legal mandate to review contracts but has nevertheless taken an oversight role.

The government employs an external auditor to review revenues deposited into the Petroleum Fund. Audits are submitted to the Finance Ministry, which in turn provides reports on petroleum revenues to parliament, usually with at least a year's delay.

Enabling Environment (Rank: 38th/58, Score: 28/100) learn more

Timor-Leste's particularly poor performance on measurements of government effectiveness and the rule of law led to a "failing" score of 28, by far its lowest on any component of the RGI.

State-Owned Companies

In 2011 the government created Timor-Gap Empressa Publico, an entirely state-owned company intended to participate in the country's oil industry, but not to monopolize it. Timor-Gap is not yet fully operational and, as of July 2012, had published no information on its activities.

Natural Resource Funds (Rank: 5th/23, Score: 83/100) learn more

In 2005 Timor-Leste created the Petroleum Fund to help preserve resource revenues for future generations. The Finance Ministry is responsible for the overall management of the fund, while the Banking and Payments Authority oversees operational management. The Petroleum Fund law includes rules governing deposits and withdrawals, and additional transfers from the fund must be approved by the legislature. Comprehensive monthly, quarterly, and annual reports on the fund's operations are available to the public, as are annual audit reports.

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