State-Owned Enterprises: Role and Governance

State-controlled companies often play an outsized role in the management of the oil, gas, and mining industries. For example, they control about 90 percent of all global oil reserves and are responsible for about 75 percent of production. Some engage overseas and execute projects in other markets, such as Brazil's Petrobras, Norway's Statoil, and Malaysia's Petronas. Some support other types of development within their country, such as Chilean copper company Codelco. The comparative advantages and privileges of these enterprises are dissected. The risks associated with state-owned enterprises are also evaluated, such as inefficient project development and suboptimal revenue collection. Finally, this chapter notes how some of these risks can be mitigated, such as through clearly defining the role of the state-owned enterprise and having workable systems for managing revenue flows between the state-owned enterprise and the state.

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