State-owned enterprises (SOEs) play important roles in exploiting natural resources and managing the extractive sector. They can generate significant revenue for the state, enable a government to exercise greater control over the sector, help improve local technologies and skills or manage exposure to energy transition risks.
The way that state participation and SOEs are governed has considerable implications for public finances and the economy. Although some SOEs have made significant contributions to development and revenue generation, others have struggled with poor governance and corruption. Lack of transparency about how much the state receives from the sale of its oil and gas can create a distorted picture of government revenues from the extractive sector.
EITI reporting and Validation have shown that although financial transactions related to state-owned companies have become more transparent, there is still a demand for improving transparency standards around SOE governance.