1、UNSD/NA/GS,1,TREATMENT OF NATURAL RESOURCES IN THE 1993 SNA,UNSD/NA/GS,1,Ivo Havinga UN STATISTICS DIVISION Economic Statistics Branch National Accounts Section,UNSD/NA/GS,2,NATURAL RESOURCES IN THE SNA,In this session we shall be discussing the treatment of the following in the SNA:Mineral explorat
2、ion Land Decommissioning costs Exploitation of natural resources by non-residents Mobile phone licences,UNSD/NA/GS,3,NATURAL RESOURCES IN THE SNA,Mineral exploration,UNSD/NA/GS,4,Mineral Exploration in the 1993 SNA,Mineral exploration is undertaken in order to discover new deposits of minerals or fu
3、els that may be exploited commercially. Such exploration may be undertaken on own account. Alternatively, specialized enterprises may carry out exploration either for their purposes or for fees. The information obtained from exploration influences the production activities over a number of years. Th
4、e expenditures incurred on exploration within a given accounting period, are therefore treated as expenditures on the acquisition of an intangible fixed asset and included in the enterprises gross fixed capital formation.,UNSD/NA/GS,5,Treatment in 1993 SNA,In discovery of assets through mineral expl
5、oration, 1993 SNA recognises two assets“mineral exploration” as a category of produced fixed asset.“subsoil deposits as a category of non-produced assets.Exploration, whether successful or not, is treated as gross capital formation.,UNSD/NA/GS,6,Calls for review of present treatment,Since publicatio
6、n of 1993 SNA a number of questions have been raised; Is the exploration activity separable from the value of the asset? How to measure exploration activity? How to value the deposit? How to record payments by the extractor to the legal owner of the deposit?,UNSD/NA/GS,7,Terminology and coverage for
7、 mineral exploration,The IASB uses the expression “mineral exploration and evaluation” which includes expenditure on following items: acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching; sampling; and activities in relatio
8、n to evaluating technical feasibility and commercial viability of extracting a mineral resource. This coverage is substantially the same as the SNA coverage (1993 SNA para10.91),UNSD/NA/GS,8,AEG Recommendations:,Since information compiled according to the IASB recommendations is likely to form sourc
9、e material for statisticians, and because it is desirable to avoid giving the impression that the SNA coverage is narrower, it would seem desirable to adopt the longer and more precise terminology used by the IASB AEG Recommendations: The AEG agreed to change the item “mineral exploration” to “miner
10、al exploration and evaluation” and to draw on the IASB coverage of this item to specify the SNA item.,UNSD/NA/GS,9,One asset or two?,Is the exploration activity separable from the value of the asset? (one asset or two) There was a suggestion that instead of keeping the discovery of the asset separat
11、e from the deposit itself, they should be combined and a new “developed natural asset” recorded instead. This would be treated as a produced asset so that, in effect, the value of the deposit became included in the total of produced assets and excluded from the total of non-produced assets. AEG Reco
12、mmendations The group agreed to maintain a distinction between: mineral exploration and evaluation as a produced asset and the mineral deposit as non-produced assets.,UNSD/NA/GS,10,How to measure exploration activity?,The 1993 SNA (para 10.91) recommendation has led a number of users to assume that
13、the mineral exploration activity is always to be treated as a non-market activity with no associated net operating surplus. In case of own-account exploration, valuation may done so. However, when the activity is undertaken by a separate enterprise the full amount charged by this enterprise, includi
14、ng their net operating surplus, should be included in the value of mineral exploration and evaluation. AEG Recommendation:“mineral exploration and evaluation” is market production to be valued either at market prices, if purchased, or as the sum of costs plus mark-up, if produced on own-account.,UNS
15、D/NA/GS,11,How to value deposits?,There are 3 options to value deposits: Present value of net returns from exploitation Market prices (seldom available) Owners valuationThe AEG agreed that the preferred valuation for mineral deposits is market price which is seldom available. In default, the deposit
16、 should be valued as the present value of future receipts of resource rent.,UNSD/NA/GS,12,How to record payments by the extractor to the legal owner of the deposit?,In1993 SNA payments made by the exploiter to the legal owner are treated as property income. Sometimes, when the owner of the resource
17、is the govt, the payments may be described as taxes even though they are still effectively appropriation of part of the resource rent.,UNSD/NA/GS,13,AEG Recommendations,In principle, payments by the extractor to the owner of the deposit are property income. Payments by extractor to owner of deposits
18、 should continue to be shown as property income even if they are described as taxes and treated as such in government accounts.,UNSD/NA/GS,14,Lease on Natural Resources,Natural resources with infinite life (like land and radio spectrum) may be made available, on lease to other units, for use.Such a
19、lease does not fit in the characterization of either the operational lease or the financial lease.Resource Lease: A resource lease is an agreement whereby the legal owner of a natural resource which has an infinite life makes it available to a lessee in return for a regular payment, recorded as prop
20、erty income and described as rent. The resource is recorded on the balance sheet of the lessor. No consumption of fixed capital is recorded in respect of the resource in the SNA in the accounts of either the lessor or lessee.,UNSD/NA/GS,15,NATURAL RESOURCES IN THE SNA,Treatment of Land,UNSD/NA/GS,16
21、,Treatment of Land in 1993 SNA,Land improvements are GFCF.On the balance sheet, land improvements are included with land as non-produced assets.The decline in value of land improvements is recorded as CFC.,UNSD/NA/GS,17,Land improvement 1993 SNA,Reclamation of land: dykes, sea walls, dams. Clearance
22、 of forests, rocks, etc. Draining marshes, irrigation of deserts by dykes, ditches, irrigation channels. Prevention of flooding or erosion by sea or rivers: breakwaters, sea walls, flood barriers.,UNSD/NA/GS,18,Land improvement 1993 SNA,Land improvements are not in themselves used directly to produc
23、e other goods and services in a way that most structures are. Their construction is undertaken to obtain more or better land, and it is the land, a non-produced asset, that is needed for production. For example, a dam built to produce electricity serves quite a different purpose from a dam built to
24、keep out the sea.Acquisitions of tunnels and other structures associated with the mining of mineral deposits, etc., are classified as GFCF and not as improvements to land.,UNSD/NA/GS,19,Land - Problems in current treatment,Land improvements are recorded as GFCF but are also recorded as non-produced
25、assets on the balance sheetCFC is recorded in respect of a non-produced asset. In some cases, land improvements may account for most of the combined value. Some countries are unable to obtain estimates of the total value of land, and they can only estimate land improvements.,UNSD/NA/GS,20,Way forwar
26、d: Options,Leave the SNA as it is. Classify land as either produced or non-produced according to how much land improvements contributed to total value.Identify land improvements as produced assets and unimproved land as non-produced. Treat land improvements in the same way as buildings and structure
27、s.,UNSD/NA/GS,21,AEG decisions,GFCF of land improvements should be treated like other GFCF and result in a produced asset appearing separately in the balance sheet;The non-produced component of land should be valued at its present unimproved value;Where the value of land cannot be partitioned into a
28、n improved and unimproved part, adopt recommendations for land and associated structures as in Para 13.57 for balance sheets and Para 7.131 for rent and rentals;,UNSD/NA/GS,22,AEG decisions contd.,Costs of ownership transfer on land should be recorded as fixed assets and included with land improveme
29、nts.Activities such as land clearance, land contouring, creation of wells and watering holes which are integral to the land in question and which are carried out by the landowner are to be treated as part of land improvements. Activities such as the creation of sea walls, dykes, dams and major irrig
30、ation systems which are in the vicinity of the land but not integral to it, often affect land belonging to several owners and which are often carried out by government, are to be classified as structures.,UNSD/NA/GS,23,Treatment of disposal/decommissioning costs in the SNA,UNSD/NA/GS,24,Cost of disp
31、osal of non-financial assets,Costs of ownership transfer is capital formationThe cost of ownership transfer on disposal of an asset should be recorded as gross capital formation at the time it occurs, but this GCF should be written off over the period the asset is held. This is a change from SNA93,
32、which says that it is written off immediately after the transaction occurs. This also means that in order to write off the value of COT on disposal, one needs to have an estimate of expected length of time an asset is held on average and an estimate of expected COT on disposal. Remember that it is w
33、ritten off even before COT takes place. Installation and de-installation costs should be included in costs of ownership transfer if separately invoiced, and in the purchasers price of the asset otherwise.,UNSD/NA/GS,25,Cost of disposal of non-financial assets,Terminal costs should be recorded as cap
34、ital formation when they occur but the whole cost should be written off as CFC over the life of the asset, analogous to costs of ownership transfer on disposal. This means that it will have to be written off even before decommissioning takes place.When this recommendation on terminal costs cannot be
35、 followed for lack of adequate data, these costs should still be recorded as GFCF but written off as CFC immediately.,UNSD/NA/GS,26,Natural resources in the SNA,Right to use/exploit natural resources between residents and non-residents,UNSD/NA/GS,27,Right to exploit natural resources between residen
36、ts and non-residents,LAND For land a notional resident unit is created which is deemed to purchase the land while the non-resident is deemed to purchase a financial asset.Similar treatment for the building or other immobile produced asset when acquired by a non-resident. Thus the decision to treat s
37、ome land as produced (land improvements) does not alter the position that all land must be owned by a resident unit.,UNSD/NA/GS,28,Right to exploit natural resources contd.,Mineral Deposit If a unit is exploiting mineral deposit for more than one year, it is necessarily a resident unit. It is possib
38、le to imagine a licence to exploit a mineral deposit being given to a non-resident unit In the period before exploitation starts, should this unit be regarded as resident? The 1993 SNA recognize that in this case a centre of economic interest was not established before activity started. But in align
39、ment with the BPM, it has been decided by the AEG that the acquisition of the licence is sufficient to establish a centre of economic interest and thus the licence holder would be deemed to be resident.,UNSD/NA/GS,29,Right to exploit natural resources contd.,Forests If a non-resident unit enters a c
40、ountry for a short period (less than one year) to fell part of a forest, should this be treated as a notional resident unit giving rise to production or not? AEG Decisions: For logging or static natural resources subject to short-term extraction: Extraction must take place for more than a year to es
41、tablish a resident unit, A fee for one-time extraction represents the sale of an asset, and Illegal extraction should be recorded as uncompensated seizure.,UNSD/NA/GS,30,Right to exploit natural resources contd.,Fish A fishing vessel becomes resident only if the operator establishes a base in the co
42、untry in question, otherwise the residence of the vessel remains that of the operator, regardless of the area in which it is fishing,Fish beyond the EEZ may be treated as assets if allocated by international agreement,Permits to catch fish may represent assets in their own right,Illegal fishing shou
43、ld in principle be recorded as uncompensated seizure.,UNSD/NA/GS,31,Treatment of mobile phone licences,Issuing licences for mobile phone licences major source of income to Govts. Treatment not exclusively mentioned in the1993 SNAThe ISWGNA decided: Spectrum is a tangible, non-produced asset The lice
44、nse to use it is an intangible asset in most circumstances Typically, licence payments are neither taxes nor purchases of the spectrum itself Land, subsoil assets and the spectrum are similar types of assets and so are leases and licences based on the use of these assets There is no single, universa
45、l and clear-cut criterion to distinguish between rent and asset sale a range of criteria needs considering Most cases examined point to licence payments as purchase of an asset, not rent The value of licence and the value of the spectrum move symmetrically Further elaboration will be useful for the
46、future,UNSD/NA/GS,32,Mobile phone licences contd.,Payment for licence to use - rent or sale of asset?Determining Criteria: Costs and benefits assumed by licensee: more risks and benefits associated with the right to use an asset are incurred by the licensee, the more likely the qualification of a tr
47、ansaction as the sale of an asset as opposed to rent.Up-front payment or installment: mode of payment is in itself not conclusive for a characterisation as asset or rent payment. However, business practice shows that up-front payments of rent for long periods (15-25 years in the case of mobile phone
48、 licences) are highly unusual and this favours an interpretation as sale of an asset.,UNSD/NA/GS,33,Mobile phone licences contd.,Length of the licence: licences granted for long periods suggest a treatment as the sale of an asset, for shorter periods a treatment as payments for rent.Actual or de fac
49、to transferability: possibility to sell the licence is a strong indication of ownership.Cancellation possibility: stronger the restrictions on the issuers capacity to cancel the licence at his/her discretion, the stronger the case for treatment as a sale of an asset.Conception in the business world and international accounting standards: businesses, in accordance with IAS, often treat a licence to use the spectrum as an asset. This provides an added incentive to treat them in a similar way in the national accounts.,UNSD/NA/GS,34,Licence to undertake an activity,
