2. MISSION
To improve institutional capacity of
Southern oil and gas producing countries
to effectively manage the sector through
South-South cooperation,
ensuring that resulting
revenues are used
to achieve sustainable
development for!their
citizens.
Photo: Sven Torfinn/Panos Pictures
Contents
Background ii
Purpose of the Document 2
Government Membership to the SSEI 4
Sustainability Revenue Model and
Value-Added!Services 8
Vendor Selection 9
Vendor Groups 10
Vendor Participation Levels and
Associated Costs 10
Governance and Transparency 11
Advisory Services 12
Capital Markets Financing 12
Partnership Firm 13
Management Costs and Fees 14
Governance and Oversight 14
Table 1: Budget Forecast 16
Table 2: Revenue Forecast 18
Relationship Between SSEI, Vendor Platform
and!International!Financial Services 20
Way Forward 22
b i
3. The South-South Energy Initiative (SSEI) is a capacity-building programme that will
culminate in the creation of an international organization, owned and managed by
Southern stakeholders through a dedicated secretariat, to promote sustainable and
equitable progress in the oil and gas sector for countries of the global South. The SSEI
builds on the tradition and knowledge of the first international effort of Southern oil-producing
and exporting countries in the 1960s to manage their oil and gas resources. The
focus then was on markets, pricing for maximum leverage and the contribution of oil and
gas to their macroeconomic development frameworks. Today, the SSEI will complement
the contributions of organizations such as the Organization of Petroleum Exporting
Countries (OPEC), the Gas Exporting Countries Forum (GECF), the African Petroleum
Producers’ Association (APPA) and the Latin American Energy Organization (OLADE). It
will enhance the way these resources contribute to financing for national development,
while centralizing human development underpinned by good governance, protecting and
meeting environmental challenges, and ensuring sustainable and equitable development
for the citizens of its member countries.
The SSEI will establish a formalized structure for oil- and gas-producing countries of the
global South. It will be guided by several fundamental principles, which include learning,
sharing existing knowledge, producing new knowledge through innovative ideas, building
capacity, undertaking research and policy dialogue, and developing an inventory of
data and intelligence on the energy sector. Membership into the SSEI will be open to all
emerging and established oil- and gas-producing countries of the global South. The SSEI
will endeavour to uphold these principles and in so doing, grow into an organization in
which membership becomes a privilege. The SSEI will create a business environment
for its member countries based on a policy that incorporates South-South principles and
that generates reliable and robust information that can!be used to achieve new growth
opportunities for its Southern stakeholders.
The primary objectives of the SSEI are threefold:
• Support its member countries in the management of their hydrocarbon resources,
thus increasing access to energy and ensuring more equitable and sustainable
development;
• Facilitate South-South cooperation, collaboration and communication among
emerging and more established oil and gas economies of the global South; and
• Assist its member countries to build institutional capacity and competence in the
governance!of their hydrocarbon resources.
The SSEI Secretariat, based in Accra, Ghana, will manage the relationships with member
countries and will be entrusted with day-to-day activities to deliver products and services
that will meet these objectives and enable member countries not only to boost much
needed capacity through the sharing of South-South knowledge and experience, but also
to foster sustained commercial engagement across the global South.
The United Nations Office for South-South Cooperation (UNOSSC), in its mandated role
as a facilitator, will incubate the SSEI in the initial phase, ensuring that partners and
resources are brought together to establish a strong Southern-owned institution, and
will exit at the appropriate time. UNOSSC has commissioned this business model to
outline the financial underpinnings of the SSEI, which will enable the SSEI to flourish in a
sustained manner over the!long-term.
BACKGROUND
Photo: curraheeshutter/ii shuttershock 1
4. PURPOSE OF THE DOCUMENT
Photo: Yosef Hadar/World Bank
The primary purpose of this document is to outline the parameters and provide a
roadmap to guide countries of the global South to join the SSEI. It complements the
Programme Document1 that describes in detail the development of this capacity-building
initiative for the global South. The primary focus of this capacity-building venture is the
establishment of the SSEI as a robust, self-sustaining, Southern-owned, autonomous
institution. This new organization will assist oil and gas economies of the global South to
harness the benefits of their petroleum resources so as to create broad-based, equitable
and sustainable development gains for the citizens of their countries. As such, this
corresponding document lays out a sustainable revenue-generating business model that
will ease the reliance on SSEI member countries for the sustainability of the organization
through the provision of value-added products and services administered through the
SSEI Secretariat. Two key areas will be addressed in the document: membership into the
SSEI, and its revenue-generating services. All other aspects of the SSEI are not dealt with
herein, as they have been covered in the Programme Document and its accompanying
annexes and reports.
1 Programme Document is available on www.ssei.org
2 3
5. As an international organization owned by member countries, the primary revenue
base of the SSEI will derive from annual membership fees from member countries. In
assessing the appropriate membership fee structure, several considerations were made,
including a member country’s participation in other international organizations as well
as the services that they receive from these organizations. Member countries of the SSEI
will fall into three categories as described below: Founding Member, Full!Member and
Observer Member.
Membership Category Levels
a. Founding Member status will offer several advantages, including a permanent seat
on the Board of Directors as discussed in section Governance and Oversight and the
opportunity to serve as chair of the Board. Founding Members will have voting rights
on all issues relating to SSEI rules and regulations as well as benefits and policies of
the organization. The admittance of new member countries to the SSEI is contingent on
the positive vote of the Founding member countries. Founding Members will also have
unlimited access to data and intelligence housed by the SSEI Secretariat. The number
of Founding Members will be limited to 20.
b. Membership as a Full Member will carry with it several of the benefits of a Founding
Member, with the primary exception being the right to chair the Board of Directors.
Moreover, while Full Members sit on this Board, they will not exercise a vote. However,
they will have voting rights1 on all matters of general interest at annual meetings. They
will also have the opportunity to become a Founding Member within the first three
years of the operation of the SSEI, provided that their application is accepted by the
Board of Directors and their addition will not exceed the maximum number of Founding
Members, currently set at 20.
c. All Founding Members and Full Members are from the global South. Countries outside
the global South can, however, join the SSEI as Observer Members under certain
conditions, which include having interests and objectives similar to those of the SSEI
and its member countries. Observer Members cannot sit on the Board of Directors nor
do they have voting rights. They may, nevertheless, be invited to participate in Board
meetings, annual conferences and other SSEI functions and they will be entitled to
several of the services and facilities of the SSEI, including its!publications and library,
as well as its expertise.
1 The voting rights of the Full Members do not include issues related to rules and regulations, or policies
and benefits of the SSEI; those issues are reserved for Founding member countries. Full members will
have a vote on all other issues of general interest that concern the SSEI.
GOVERNMENT MEMBERSHIP TO THE SSEI
Photo: G 4 iulio Napolitano/FAO 5
6. Membership Fees
Based on the budget and projected capital requirements (Table 1), each Founding Member
will pay an initial, one-time fee of US$ 250,000 for the start-up costs of the SSEI. A Full
Member country will pay an initial, one-time fee of US$ 100,000. Observer Members
will pay a one-time start-up fee of US$ 175,000. An annual membership fee will also
be required upon entry as a SSEI Member country. Each Founding Member will pay an
annual fee equal to five percent of the approved annual budget of the SSEI, while a Full
Member will pay an annual fee of two percent. Observer Members will pay an annual fee
of US$ 60,000 paid through the SSEI Foundation, discussed in section SSEI Foundation.
Governance and Oversight
The SSEI will establish a High-level Advisory Panel consisting of six well-respected and
acknowledged leaders and officials in the area of international development, business,
and oil and gas management. The Panel will have no legal responsibilities but will be
responsible for giving advice and making recommendations to the organization’s Board
of Directors and management team. Activities of the High-level Panel will focus on
fundraising, high-level policy advice and public advocacy for SSEI. UNOSSC will have a
permanent observer seat on the High-level Panel.
The SSEI will be governed by a Board of Directors (i.e the 20 Founding member countries)
with fiduciary and operational oversight of the organization. The Board will be charged
with the responsibility of securing resources for the SSEI to fulfil its mission and ensuring
that it is financially self-sustaining over time. The Board will ultimately be responsible for
adherence to legal standards and ethical norms. It will also have to ensure that the SSEI
quickly establishes strong monitoring and evaluation and reporting procedures; such a
function has particular importance for a start-up institution that is unproven, without
reputation and initially reliant on multiple sources of financial!support.
The day-to-day management of the SSEI will be handled by the Secretariat based in Accra,
Ghana. The management team will be led by an Executive Director, with supporting staff.
The structure, function and human resource profiles of the Secretariat are detailed in the
Programme Document2.
2 Programme Document is available on www.ssei.org
As stipulated in the statute of the SSEI, Founding member countries will have a voting
seat on the Board of Directors. Founding Members will have the opportunity to chair the
Board of Directors for a term of two years. The rotation of the chair position will occur
in chronological order, based on the date that each Founding member country joins the
SSEI. This succession method will ensure that every Founding Member participates in
this critical governing function of the SSEI. In view of the fact that the SSEI’s Secretariat
will be hosted in Ghana, Ghana will serve as the first chair. The chair will have an absolute
tie-breaking vote and will choose the location of the annual meeting of all SSEI members.
Full member countries will hold non-voting seats on the Board of Directors. Observer
Members will occasionally be invited to Board meetings and other functions of the SSEI as
determined by the Board; however, their status will remain that of Observer with no voting
rights at any meeting, including Board meetings. Figure 1 illustrates the organizational
structure of the SSEI. UNOSSC will have a permanent observer seat on the board with no
voting rights.
Figure 1: Structure of the SSEI Secretariat
Head of
Programmes
Head of
Communication,
Marketing & Outreach
Head of
Finance & Operations
Head of
Research & Analysis
Head of
Investments
Head of
Private Sector
Partnerships
High Level Advisory Panel
Board of Directors
Executive Director
Deputy Executive Director
PUBLIC!PRIVATE INITIATIVE
6 7
7. Historically, international organizations have generated a sizeable portion of their
revenue from the membership dues of their member countries. Given current global
financial and fiscal pressures, it is increasingly difficult to sustain organizations solely
through reliance on government budgets that pay for membership fees. In an effort to
reduce dependence on such revenue streams, the SSEI will supplement the income from
membership dues with a sustainable revenue model in which value-added services will be
designed to capitalize on resources and capital in the private sector. This will be managed
as a special initiative under the leadership of the SSEI Executive Director, referred to
as the Public-Private Initiative. The sustainability revenue model is composed of three
revenue-generating services: a vendor platform, international financial and advisory
services, and a foundation.
Vendor Platform
Oil- and gas- producing countries of the global South continue to grapple with the
challenge of growing their local goods and services companies, while bolstering gainful
and competitive participation of their citizens and private-sector actors in the industry. To
respond to this issue of paramount importance to the SSEI, this revenue-generating arm of
the Public-Private Initiative will address this challenge by establishing a vendor platform
that will attract, through a rigorous vetting process, companies of the global South that
will provide a high-level of services, products and technologies to all member countries
of the SSEI. The vendor platform is designed to promote local content, boost private-sector
participation, and provide a dedicated means through which local businesses in
the oil and gas industry can export their services across the global South and beyond.
Participating vendors will be held to superior standards and in turn will propagate the
image that selection for the SSEI vendor platform represents an industry seal of quality
and excellence.
Vendor Selection
The selection of vendor partners for the SSEI vendor platform will be one of the factors
critical to the success of the SSEI. All corporations in the energy, oil and gas or allied
industries will be eligible to join the SSEI vendor platform, provided that they meet
the standards, categories and subcategories as defined in the international Standard
Industrial Classification System (SIC). Potential vendors from the global South will
have priority in view of SSEI’s objective to promote and support local populations and
businesses.
The vetting process (also referred to as the screening process) will be the same for all
potential vendors, regardless of their government’s membership status in the SSEI. The
SSEI will use the screening process – an important risk-management tool – to implement
a stringent, transparent policy, both to ensure its integrity and to encourage member
countries to align themselves with vendors that have proven track records and that
can meet their contractual obligations. In today’s environment, thorough screening of
vendor partners is critical for a safe, secure, and efficient organization. Used effectively,
the vetting process will reduce time, increase the likelihood of project completion, and
provide assurance that the selected vendors have the requisite skills, certifications,
licences, capital and business acumen to work with the SSEI and its member countries.
SUSTAINABILITY REVENUE MODEL AND VALUE-ADDED!SERVICES
Vendor
Platform
Sources of Revenue
SSEI
Foundation
International
Finance and
Advisory
Services
Member
Countries
Secretariat
8 9
8. All potential vendors will be required to complete the same documentation in their
application process. For full transparency, all vendor applications will be subject to a
third-party verification process. The SSEI will enlist a qualified, external service provider
that has competent screening capabilities and that can ensure the integrity of the entire
screening process from information submission to approval.
Vendor Groups
The SSEI vendor partners will comprise two groups. Each of these groups will, in turn, have
the ability to participate at one of two participant levels as described in Vendor Participation
Levels and Associated Costs. The two categories of participating!vendors!are:
• Companies from member countries of the global South
• Companies from member countries outside the global South
Two important factors were considered in establishing these categories: (a) it allows
for easy codification and classification of credible southern oil and gas which in turn,
enhances opportunities for the global South to compete regionally and globally and (b) it
provides the space for vendors external to the global South, to interact and work more
deliberately with their southern counterparts, thereby ensuring that better and more
fruitful partnerships have a chance to be built, as well as encourage more effective
transfer of knowledge, skills and technology.
Vendor Participation Levels and Associated Costs
Vendors that are selected to join the SSEI will participate in the organization at one of
two levels, each with its respective associated cost. The two levels are: Founding vendor
partners and general vendor partners.
a. Founding vendor partners are those vendors from the SSEI Founding member and Full
member countries. These vendors will have membership benefits that accompany their
status. These benefits include, where possible, direct access to decision makers from
member countries and the ability to provide input in meetings and conferences with
member country decision makers on critical issues that affect them. Founding vendor
partners will have access to the international financial services network of project-financing
specialists; participation at events with open calls for papers; nomination
as distinguished lecturers at SSEI annual meetings; and access to Member country-level
programmes not accessible to the second level of vendor partners. In addition,
founding vendor partners will have access to a global coalition of environmental
and social organizations, access to expert stakeholders on issues surrounding the
energy, oil and gas sectors; access to SSEI vendor-only previews of leading reports
on emerging sustainability issues, trends, and member country initiatives; access to
SSEI’s vendor-only webinars; mentorship programmes; opportunities for networking,
professional development and continuing education; membership referrals; exclusive
global business networking events; special recognition as well as preferential fees
and placement at all SSEI events. Founding vendor partners, once approved, will
pay a one-time application fee of US$ 50,000 and an annual fee of US$ 25,000. Each
Founding member country and Full member country will be allowed to nominate up to
10 potential vendor partners; however, there will be no preferential vetting process for
these vendors. All vendors will have to meet the same criteria and are subject to the
same vetting process whether selected by a member country or not.
b. General vendor partners comprise vendors from SSEI member countries holding
Observer status. These vendors will pay a one-time application fee of US$ 30,000 and
an annual fee of US$ 15,000. They will enjoy most of the same benefits as founding
vendor partners; however, general vendor partners will not have access to proprietary
information and data on SSEI Member countries.
In order for the vendor platform to work effectively as one of the SSEI sustainable
revenue-generating services, a sales strategy, including a membership drive, budget
and implementation plan, will need to be developed to ensure successful solicitation of
potential vendors with the appropriate background and expertise.
Governance and Transparency
The vendor platform and its services will be set up and managed as a Public-Private Initiative
under the overall direction of the SSEI Executive Director. The Head of Private sector
partnerships will be responsible for the day-to-day operations and activities of the vendor
platform. As illustrated in Figure 1, s/he will report to the Executive Director of the SSEI.
The SSEI Board of Directors will be responsible for ensuring that the highest standards of
transparency, integrity and ethics are upheld in all aspects of the vendor platform.
International Financial and Advisory Services
It is estimated that resource-driven countries (i.e. countries with a dominant oil, gas and
minerals sector) will require over $1.3 trillion annually in total infrastructure investment
in the period from now to 2030 to meet projected economic growth1. Many of these
resource-driven countries are developing countries and potential member countries of
the SSEI. Access to such capital needs remains daunting for these developing countries,
several of which are unrated by prominent credit rating agencies. In addition, public
finance, fiscal pressures, market uncertainty and stringent bank regulations limit the
ability to mobilize funding for large-scale projects from traditional financing instruments
such as bank loans. Current global market conditions call for new financing solutions
and innovative approaches to access the capital and investments available in the private
sector, in particular capital markets financing. It is said that while infrastructure needs are
too large for existing funding sources, they are trivial relative to world capital markets.2
Several multilateral institutions such as International Finance Corporation, (IFC), the
Multilateral Investment Guarantee Agency (MIGA) and regional banks including the African
Development Bank (AfDB) as well as international investment banks are recognizing the value
of capital markets financing and are expanding their portfolios to cover this void. However,
appraising and structuring bankable projects is a highly complex, lengthy and costly process,
particularly for projects in the global South where political and commercial uncertainties
constitute the greatest risks associated with undertaking such financing propositions. The
complexity is exacerbated by the fact that the global South has historically lacked the know-how
and experience to maximize the value of capital markets financing. It is therefore not
surprising that no one institution is prepared and/or capable of providing all the elements
necessary to raise the project funds. Sharing risks not only with the recipient governments
but also with project sponsors and institutions through partnerships and collaborative
approaches is therefore the way in which business has to be conducted.
1 McKinsey Global Institute, Reverse the curse: Maximizing the potential of resource-driven economies.
December 2013.
2 “Unlocking Private Finance for African Infrastructure.” Social Europe Journal, November 2013.
10 11
9. Given this growing need for SSEI member countries to develop the prerequisite
infrastructure to gainfully expand their oil and gas sectors, and thereby realize their
national development goals, and the financing gap that exists to achieve such goals,
the SSEI, under its Public-Private Initiative, proposes to form a partnership with an
international financial institution to address this long-known challenge that its member
countries continue to face. In so doing, the SSEI will not only provide a dedicated avenue
for its member countries to access capital for their domestic infrastructure financing
needs but also assist SSEI member countries to develop their own capacities in capital
markets financing. A possible ancillary result could be the eventual development and
boosting of local and regional capital markets through South-South cooperation.
The Public-Private Initiative will capitalize on its support to member countries through
customized project financing that will meet the growing demand for sustainable project-finance
strategies in their respective oil and gas industries. The public-private partnership
will provide a dedicated range of services that include tailored, project-specific financial
structures and guidance to the SSEI member countries, using a collaborative approach in
the global financial marketplace.
Advisory Services
Development projects need proper and adequate structure and packaging to guarantee
that every aspect of the project is covered, and includes contingencies. Countries of the
global South in general, have difficulty in packaging economically viable projects to present
to potential sponsors. Often, this phase of the project preparation adds considerable time
to the entire financing process.
Through this proposed partnership with an international financial institution, SSEI member
countries will receive assistance and advice for packaging commercially bankable
projects. In addition, SSEI member countries will be assisted in making rapid impact
analysis of projects before they even launch into the assessment of project viability. This
assessment will determine the likelihood of a project being funded (in the global market
place) and will determine whether the Member country should proceed with the time,
manpower and capital needed to move the project forward. The advisory services team
will then work with the Member country to determine the key factors necessary to obtain
funding.
Other advisory services provided to member countries will include evaluation of the
overall project transaction structure, creation of strategies to fund difficult transactions,
provision of risk mitigation strategies and general counsel on transaction-specific
documents. The fees obtained from the advisory services will be channeled through the
SSEI Foundation (see section SSEI Foundation) and eventually, these fees could contribute
to reducing the annual membership dues of member countries.
Capital Markets Financing
A key objective of the partnership with a financial firm will be to assist SSEI member
countries to raise funding through capital markets. To this end, the financial institution
will underwrite transactions and bring bond issues to market on behalf of SSEI member
countries. The firm will create and place project finance bonds and use a collaborative
approach through a vast network of financial products and institutions that include: Credit
Enhancements for non-rated, difficult to fund projects, Principal Protection Guarantees
and Default Payment Guarantees.
Partnership Firm
To provide these services to the SSEI member countries, the SSEI will solicit tenders
from international financing firms and institutions with the following characteristics
and!capabilities:
• A financing team with expertise and extensive international experience in managing
large institutional project-finance activities and the capability to provide superior
services to SSEI member countries, including comprehensive advisory services,
project-finance information, education and support throughout the entire life cycle of!a
transaction;
• A proactive and structured management approach, which is crucial to the ultimate
success of creating capital for complicated projects, coupled with the flexibility to
customize and manage project-finance transactions to meet member countries’
mandated objectives;
• A funding process emphasizing proactive capital sourcing and hands-on project
structuring management that includes the development of structured products and
professionally packaged projects;
• The capability to offer 100 % principal and payment protection for project debt;
• The capability to amortize project funds over much longer tenures (30 years, for
example) than the typical 10-17 years offered by most financial corporations;
• The provision of sound project-finance structures and syndications, the use of a
technology-based platform, and the securing of funds for member countries to further
develop their oil, gas and energy resources;
• The capacity to arrange for funding commitment fees to be advanced to SSEI member
countries and to pay for soft costs and “last-mile expenses” on approved transactions
in order to allow the transaction to close in a timely manner;
• Financing new investments by structuring the financing around the projects’ own
operating cash flow and assets without additional sponsor guarantees, so as to
alleviate investment risk and raise funds at a relatively low cost;
• Access to resources of larger organizations through collaborative approaches, enabling
the financial services team to concentrate on building and managing the project-finance
transaction while at the same time delivering outstanding member!service;
• The ability to provide minimum transaction fees.
The financial firm that partners with the SSEI to provide these services will need to
have a strong social conviction to meet the many challenges faced by SSEI member
countries, such as raising the retainer and commitment fees to engage a project sponsor.
It is envisioned that the SSEI Foundation (see section SSEI Foundation) will pay for such
fees but it is the expectation that the financial firm contracted by SSEI, through its
corporate social responsibility programme, for example, may waive these fees until the
SSEI Foundation is operational.
12 13
10. Management Costs and Fees
The financial and advisory services rendered to SSEI member countries will generate
revenue in the following ways:
• Project transaction fees: A project success fee of a nominal percentage will be
assessed for each project closed through the partnership. This success fee will first
cover the costs and fees associated with the transaction. The difference will be divided
equally between the financial firm under contract to effect the transaction and the
SSEI. The SSEI portion of fees will be held in trust by the SSEI Foundation (see section
SSEI Foundation) for the benefit and growth of the SSEI.
• Advisory services fees: Every transaction is different and advisory fees will vary
accordingly. Fees will be charged based on the services rendered. After all associated
expenses are paid, the net profit from the advisory services fees will be split equally
between the financial firm and SSEI.
Governance and Oversight
The SSEI financial and advisory services will be delivered through a partnership with an
independently owned and operated international financial services firm with the ability
to provide a dedicated line of services to the SSEI member countries. The day-to-day
interactions with the firm will be entrusted to the Head of Investments, who will report
to the SSEI Executive Director. S/he will be assisted in the task of managing the relations
with the financial firm by an oversight and compliance board to ensure that business
activities are conducted in a fully transparent manner. The Financial Advisory Board will
consist of six seasoned finance professionals (four from the global South and two from
countries outside the global South) and will be expected to implement policy and strategy
as determined by the SSEI and guided by international financial rules!and!regulations.
SSEI Foundation
The SSEI will accept contributions from countries outside the global South, from national
and international oil, gas and energy corporations, as well as from philanthropists and
other actors that wish to support the mission of the SSEI. These contributions will be
received through the SSEI Foundation3, which will provide assistance to SSEI member
countries in several ways, including payment of membership fees for member countries
in difficult financial situations and assistance to!member countries seeking to package
complicated projects. The SSEI Foundation will!provide an extra level of security by acting
as an additional revenue stream to sustain the SSEI.
The SSEI Foundation will ultimately operate as a separate entity, with its own offices, staff
and governing board. It is foreseen that the head of the foundation would have a direct
reporting line to the SSEI Executive Director and the Board of Directors. A thorough study
and project paper will be developed to guide the SSEI on the best approach to setting up
and managing its foundation.
3 Contributions will be received and administered by the United Nations Development Group’s MultiPartner
Trust Fund until the SSEI Foundation is operational.
EXCHANGING
KNOWLEDGE
AND EXPERIENCE
TO FUEL COLLECTIVE
ECONOMIC GROWTH
COLLABORATING
TO ACHIEVE SUSTAINABLE
ENERGY SOLUTIONS
ERADICATING
POVERTY
BY CAPITALIZING ON OIL
AND GAS RESOURCES
WORKING TOGETHER
IN THE GLOBAL SOUTH
WITH COUNTRIES, REGIONS,
CORPORATIONS, ACADEMIA,
AND INSTITUTIONS
14 15
11. Table 1: Budget Forecast
Staffing and other costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Executive Director 185,000 194,250 203,963 214,161 224,869 236,112 247,918 260,314 273,329 286,996
Deputy Executive Director 165,000 173,250 181,913 191,008 200,559 210,586 221,116 232,172 243,780 255,969
Department heads (4) 600,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 930,797
Public Private Initiative heads (2) 300,000 315,000 330,750 347,288 364,652 382,884 402,029 422,130 443,237 465,398
Technical/Programme Specialists (6) 600,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 930,797
Technical/Programme Analysts (6) — — 420,000 441,000 463,050 486,203 510,513 536,038 562,840 590,982
Administrative personel (4) 160,000 168,000 176,400 185,220 194,481 204,205 214,415 225,136 236,393 248,213
Rent — — — — — — — — — —
Utilities — — — — — — — — — —
Technology, communication supplies 70,000 73,500 77,175 81,034 85,085 89,340 93,807 98,497 103,422 108,593
Office supplies (including furniture) 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
High-level meeting (biennually) 27,500 30,319 33,426 36,853 — 40,630 —
Board meetings (annually) 27,500 28,875 30,319 31,835 33,426 35,098 36,853 38,695 40,630 42,662
UNOSSC cost recovery 359,895 426,768 512,691 — — — — — — —
Total staffing and other costs 2,544,895 2,692,143 3,341,654 2,938,576 3,118,931 3,239,780 3,438,622 3,571,857 3,791,080 3,937,973
Programmatic costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
INA methodology (40 countries) 600,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 930,797
INA data aggegation/analysis 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
Global conference 500,000 525,000 551,250 578,813 607,753 638,141 670,048 703,550 738,728 775,664
Regional policy meetings (5 a year) 300,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 930,797
Technical specialist workshops (4 a year) 250,000 262,500 275,625 289,406 303,877 319,070 335,024 351,775 369,364 387,832
Senior level specialized seminars (4 a year) 300,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 930,797
Staff exchanges and secondments (30 a year) 450,000 472,500 992,250 1,041,863 1,093,956 1,148,653 1,206,086 1,266,390 1,329,710 1,396,195
Research, publications 50,000 52,500 110,250 115,763 121,551 127,628 134,010 140,710 147,746 155,133
Database maintenance (including data warehousing and maintenance of secure member access) 20,000 21,000 22,050 23,153 24,310 25,526 26,802 28,142 29,549 31,027
Advocacy/communications/marketing (including website maintenance, print collaterial) 100,000 100,000 25,000 26,250 27,563 28,941 30,388 31,907 33,502 35,178
Total programmatic costs 2,620,000 3,376,000 4,016,050 4,216,853 4,427,695 4,649,080 4,881,534 5,125,611 5,381,891 5,650,986
TOTAL $5,164,895 $6,068,143 $7,357,704 $7,155,428 $7,546,626 $7,888,860 $8,320,155 $8,697,468 $9,172,971 $9,588,958
Assumptions
Inflation: 5%
Government of Ghana to pay rent+utilities as per Host Country Agreement
UNOSSC costs present for first 3 years, 7% annual budget
Year 3 onwards programmatic offerings double to numbers indicated in parentheses
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12. Table 2: Revenue Forecast
Government Membership dues Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Founding member countries (one time initial payment) 1,250,000 1,250,000 1,250,000 1,250,000
Founding member countries (annual membership fee) 1,291,224 3,034,071 5,518,278 7,155,428 7,546,626 7,888,860 8,320,155 8,697,468 9,172,971 9,588,958
Member countries (one time initial payment) 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Member countries (annual membership fee) 516,489 1,213,629 2,207,311 2,862,171 3,773,313 4,733,316 5,824,109 6,957,974 8,255,674 9,588,958
Observer country (one time initial payment) 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000
Observer country (annual membership fee) 120,000 240,000 360,000 480,000 600,000 720,000 840,000 960,000 1,080,000 1,200,000
Subtotal 4,027,713 6,587,700 10,185,589 12,597,600 12,769,939 14,192,176 15,834,264 17,465,442 19,358,646 21,227,917
Vendor Platform dues Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Founding vendor (one time initial payment) 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Founding vendor (annual fee) 250,000 500,000 750,000 1,000,000 1,250,000 1,500,000 1,750,000 2,000,000 2,250,000 2,500,000
General vendor (one time initial payment) 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000
General vendor (annual fee) 150,000 300,000 450,000 600,000 750,000 900,000 1,050,000 1,200,000 1,350,000 1,500,000
Subtotal 1,200,000 1,600,000 2,000,000 2,400,000 2,800,000 3,200,000 3,600,000 4,000,000 4,400,000 4,800,000
International Financial and Advisory Services Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Advisory fees 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Closed projects transaction fees 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000
Subtotal 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000
Foundation 0 500,000 500,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Total gross revenue (projected) 5,927,713 8,887,700 12,885,589 15,697,600 16,269,939 18,092,176 20,134,264 22,165,442 24,458,646 26,727,917
Annual commissions (10%) 120,000 160,000 200,000 240,000 280,000 320,000 360,000 400,000 440,000 480,000
TOTAL INCOME $5,807,713 $8,727,700 $12,685,589 $15,457,600 $15,989,939 $17,772,176 $19,774,264 $21,765,442 $24,018,646 $26,247,917
Assumptions
5 Founding member country sales per year for 4 years for a total of 20 memberships
5 Member countries sales per year for ten years
2 Observer countries per year for ten years
All member countries and observers paying dues annually for the ten years
10 Founding vendors sales per year for ten years
10 General vendors sales per year for ten years
All vendors paying dues annually for the ten years
Advisory service fees from 10 projects per year at $10000 per project
International Financial and Advisory services one $60MM transaction per year, 1% transaction fees
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13. The SSEI, as an independent, international organization owned by Southern member
countries, will be managed through a dedicated secretariat. The Secretariat will provide
all programme administration including substantive research and management, resource
mobilization, facilitation, advocacy, and monitoring and evaluation. The primary focus of
the SSEI secretariat will be to develop and support relations with the member countries
and serve as the link between the High-level Advisory Panel, the Board of Directors and
its member countries.
There is a clear delineation of responsibilities between the SSEI secretariat on the
one hand and the revenue-generating services of the SSEI – the vendor platform and
international financial and advisory services – on the other. The SSEI Executive Director
will have overall management responsibility to oversee the public-private initiatives; the
vendor platform will be managed in-house by the Head of Private sector partnerships.
The financial and advisory services will be led by the Head of Investments, who will
manage the partnership with the firm contracted to provide the services outlined in
section International Financial and Advisory Services. Both heads will report directly
to the Executive Director. The Board of Directors, as the oversight body of the SSEI, will
ensure that the Executive Director and his/her team perform to the highest standards.
Common synergies between the SSEI, the vendor platform and the international financial
and advisory services include a shared vision and aligned goals as well as a shared
commitment to fulfil the objectives of the SSEI. The vendor platform and the international
financial and advisory services will depend on the substantive and administrative support
services of the Secretariat to accomplish their mutual goals in providing value-added
services through public-private initiatives to SSEI member!countries.
RELATIONSHIP BETWEEN SSEI,
VENDOR PLATFORM!AND!INTERNATIONAL!FINANCIAL SERVICES
Photo: X 20 alex73/Dreamstime 21
14. This document has outlined a business model for the establishment and operationalizing
of the SSEI. It has focused primarily on the revenue-generating services that the SSEI
will provide to its members countries, including the vendor platform and international
financial and advisory services. Both of these revenue streams will be managed through
public-private initiatives in which the SSEI plays a leading role alongside the public sector
government actors and the oil and gas private-sector partners.
A number of steps are necessary for UNOSSC to move forward with this initiative. The
Government of Ghana, as the host of the SSEI, and UNOSSC will effect a concrete
membership drive that will not only raise awareness and interest in the new organization
among the global South oil- and gas- producing countries, but will also secure Founding
memberships ahead of the launch scheduled for first quarter of 2015. It will be necessary
to develop a dynamic sales strategy to attract potential vendors to join the vendor
platform being built by the SSEI. As for the international financial and advisory services
that the SSEI will provide, the firm with which the SSEI chooses to partner requires
comprehensive terms of reference that outline the financial and advisory services to
be offered to SSEI’s member countries. The SSEI Foundation should be established in
tandem with the membership drive so that the SSEI can begin to receive funds to support
its initial activities.
WAY FORWARD
Photo: Dmitry Bairachnyi/22 Dreamstime 23
