Kuwait's Performance on the Resource Governance Index
Kuwait ranked 42nd out of 58 countries and received a "weak" score of 41, with particularly poor performance on the Institutional & Legal Setting component.
(out of 58)
(out of 100)
|52||Institutional & Legal Setting||28|
|47||Safeguards & Quality Controls||36|
Institutional & Legal Setting (Rank: 52nd/58, Score: 28/100) learn more
Kuwait's "failing" score of 28 reflects the lack of a comprehensive legal framework.
Kuwait does not grant licenses for oil extraction; the state-owned Kuwait Petroleum Corporation (KPC) is the sole concessionaire. However, KPC and its subsidiaries do sign service contracts, in which international oil companies participate as subcontractors in upstream oil operations in exchange for a fee per barrel extracted. A handful of state-owned companies also subcontract services for downstream activities; these contracts are awarded following open bidding rounds with sealed bids.
Laws governing extractive activities provide only guiding principles and do not clearly designate regulatory responsibilities. In practice, the Oil Ministry and the Supreme Petroleum Council share oversight of the industry. KPC collects oil revenues from its subsidiaries and transfers them to the Kuwait Investment Authority.
There is no freedom of information law. Kuwait requires environmental impact assessments but does not make public the results.
Reporting Practices (Rank: 37th/58, Score: 43/100) learn more
Kuwait received a "weak" score of 43, the product of a lack of contract transparency and disaggregated revenue data.
KPC publishes information on subcontracting policies, the value of contracts, and the names of subcontracting companies, but the details of agreements are not disclosed.
The Supreme Petroleum Council does not publish revenue data. The Finance Ministry publishes only historical information on prices, the value of resource exports, and production costs in certain annual Minister Statements. The Oil Ministry publishes an online magazine with historical information on reserves, production volumes, prices, and estimates of investment in exploration and development, but does not publish information on disaggregated revenue streams. The Central Bank issues public reports that include historical comparisons of production volumes and prices, as well as current information on the value of resource exports.
Safeguards & Quality Controls (Rank: 47th/58, Score: 36/100) learn more
With insufficient mechanisms to ensure competition and prevent mismanagement of the oil sector, Kuwait received a "failing" score of 36.
Parliament plays a significant oversight role, although its activities often appear to be politically motivated. Lawmakers must approve all contracts with foreign companies, but there are no clear procedures for other parties to appeal contracting decisions.
The Supreme Audit Authority reviews state accounts and its reports are presented annually to lawmakers. However, government officials and executives of state-owned companies are not required to disclose their financial interests in the extractive industry. A weak legislative framework, political interference, and disputes over regulatory responsibilities have created inefficiencies and opportunities for corruption.
Enabling Environment (Rank: 16th/58, Score: 57/100) learn more
Kuwait received a "partial" score of 57, the product of mediocre rankings for corruption control and the rule of law, and a poor democracy and accountability score.
State-Owned Companies (Rank: 18th/45, Score: 63/100) learn more
KPC is entirely state-owned and monopolizes oil industry. Together with its ten subsidiary companies, KPC manages all aspects of the upstream and downstream oil sector. The company publishes comprehensive, up-to-date information on revenue generation but its figures do not include disaggregated revenue streams, aside from income tax data. KPC's annual reports are audited, and it provides information on its board of directors, but rules governing the board's decision-making are not available.
Natural Resource Funds (Rank: 19th/23, Score: 15/100) learn more
The General Reserve Fund (GRF) and the Future Generations Fund (FGF) concentrate revenues from the extractive industries. The GRF receives all state revenues, most of which come from oil, and holds all government assets. Each year, 10 percent of these revenues are deposited in the FGF. The Kuwait Investment Authority manages both funds. Rules for deposits are set by executive decree and published. Internal, classified publications include information on the funds' assets, transactions, and investments, but it is illegal to disclose the information. The funds are audited, but the results are not made public.
INSTITUTIONAL & LEGAL SETTING
SAFEGUARDS & QUALITY CONTROLS
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Key Economic Indicators
|GDP (constant 2011 international $ billion)||48.1||91.5||176.6|
|GDP per capita, PPP (constant 2005 international $)||38,359||48,783||47,935|
|Oil and gas revenues (% total government revenue)||77||83|
|Extractive exports (% total exports)||94||95||93|
|Sources: Oil and gas revenue as share of total government revenue from the Economist Intelligence Unit and the International Monetary Fund. All other data form the World Bank. Oil and gas revenues 2011 data from 2010; Extractive exports 2005 data from 2004; 2011 data from 2009.|