Bahrain


Facebook logoTwitter logo

Petroleum and mining make up a fifth of Bahrain’s gross domestic product. The state is increasingly dependent on the petroleum industry; extractive revenues accounted for 91 percent of government revenue in 2011, up from 76 percent in 2005. Extractive exports represented 76 percent of total exports in 2011. Unlike other Gulf states, Bahrain exports refined petroleum products rather than crude oil. The national oil company refines Bahraini and Saudi crude, much of it for export to India and other Asian markets.


Bahrain’s Performance on the Resource Governance Index

Bahrain received a “weak” score of 47, ranking 31st out of 58 countries. A “failing” performance on the Institutional and Legal Setting and Reporting Practice components contrasted with “partial” success on Safeguards and Quality Controls and the Enabling Environment.

Rank
(out of 58)
Score
(out of 100)
31 Composite Score 47
50 Institutional & Legal Setting 38
Freedom of information law 0
Comprehensive sector legislation 33
EITI participation 0
Independent licensing process 0
Environmental and social impact assessments required 50
Clarity in revenue collection 100
Comprehensive public sector balance 56
SOC financial reports required 0
Fund rules defined in law 100
Subnational transfer rules defined in law N/A
39 Reporting Practices 40
Licensing process 33
Contracts 33
Environmental and social impact assessments 0
Exploration data 0
Production volumes 100
Production value 67
Primary sources of revenue 33
Secondary sources of revenue 33
Subsidies 0
Operating company names 67
Comprehensive SOC reports 17
SOC production data 43
SOC revenue data 0
SOC quasi fiscal activities 0
SOC board of directors 50
Fund rules 100
Comprehensive fund reports 100
Subnational transfer rules N/A
Comprehensive subnational transfer reports N/A
Subnational reporting of transfers N/A
26 Safeguards & Quality Controls 59
Checks on licensing process 11
Checks on budgetary process 100
Quality of government reports 56
Government disclosure of conflicts of interest 100
Quality of SOC reports 33
SOC reports audited 0
SOC use of international accounting standards 0
SOC disclosure of conflicts of interest 0
Quality of fund reports 67
Fund reports audited 100
Government follows fund rules 100
Checks on fund spending 100
Fund disclosure of conflicts of interest 100
Quality of subnational transfer reports N/A
Government follows subnational transfer rules N/A
15 Enabling Environment 58
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 70
Open Budget (IBP Index) N/A
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 26
Government effectiveness (WGI) 70
Rule of law (WGI) 64
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 50th/58, Score: 38/100) learn more

Bahrain's "failing" score of 38 was largely due to its lack of disclosure policies and the absence of an independent licensing process.

The National Oil and Gas Authority (NOGA) has licensing and regulatory responsibilities, with revenues accruing through production sharing contracts with foreign firms or directly from state-owned companies. Ultimately, the Finance Ministry receives all cash payments and deposits them in the treasury. Environmental impact assessments are required but not made public, and there is no freedom of information law.

Reporting Practices (Rank: 39th/58, Score: 40/100) learn more

While the government provides some information on extractive industry production and transfers to the Future Generations Reserve Fund, overall, Bahrain's disclosure policies are fragmented and incomplete, resulting in a "failing" score of 40.

There is little information about the licensing process, which often includes direct negotiations between companies and the government. However, in recent years contracts requiring legislative approval have been included in government publications.

Neither NOGA nor the state-owned Bahrain Petroleum Company (BAPCO) publishes financial statements, so it is difficult to trace government revenue flows from the extractive industries. The Finance Ministry publishes annual data on resource exports, production costs, taxes, and dividends, but does not include the financial balances of state-owned companies in its review of state accounts. The national budget does include annual oil revenue contributions to the Future Generations Reserve Fund and makes clear distinctions between resource and non-resource revenues.

Safeguards & Quality Controls (Rank: 26th/58, Score: 59/100) learn more

Bahrain's "partial" score of 59 is the product of contrasting oversight policies: the budget and the Future Generations Reserve Fund are subject to significant monitoring requirements, yet there is no effective regulation of state-owned companies.

NOGA's investment arm maintains full ownership of BAPCO, giving NOGA a major financial stake in the industry and little incentive to reform a licensing process that is uncompetitive and opaque. The legislature reviews production sharing contracts, but there are neither regulations limiting NOGA's discretion in the licensing process nor mechanisms for appealing licensing decisions.

However, Bahrain has taken steps to ensure the integrity of oil and gas funds. Regulatory officials and employees of state-owned companies cannot have a financial stake in the petroleum industry. A national audit office reviews resource revenues and submits annual reports to the legislature.

Enabling Environment (Rank: 15th/58, Score: 58/100) learn more

Bahrain received a "partial" score of 58, reflecting relatively high rankings on corruption control and government effectiveness and low scores on government accountability and democracy.


State-Owned Companies (Rank: 41st/45, Score: 14/100) learn more

A number of state-owned companies operate in the extractive sector. BAPCO, the largest, is active in all aspects of the petroleum industry. It sells oil domestically at undisclosed prices and supplies all of the nation's natural gas, probably subsidizing national energy consumption. BAPCO publishes little information on revenue generation, joint ventures, or quasi-fiscal activities. It does not appear to be subject to independent audits, and no law requires that it disclose its accounts.

Natural Resource Funds (Rank: 3rd/23, Score: 96/100) learn more

Bahrain deposits a portion of its oil revenues in the Future Generations Reserve Fund managed by the Finance Ministry. Rules for deposits into the fund are defined by law, and withdrawals are prohibited unless sanctioned by the legislature. It appears these rules are followed. Lawmakers review annual reports of the fund's investments, and these reports are published online. A national audit authority audits the fund and publishes its findings.

View full questionnaire for Bahrain Download questionnaire for Bahrain