Somalia: Effective Implementation of the Petroleum Fiscal Regime

The Federal Government of Somalia solicited FAD support to ensure that the country’s petroleum fiscal regime, amid growing interest in oil and gas exploration, is robust from fiscal revenue and investment-attraction perspectives. To this end, a workshop was held in Nairobi in January 2026 with representatives from the Ministry of Finance, Ministry of Petroleum and Mineral Resources, the Somalia Petroleum Authority, the Office of the Prime Minister, and the Parliamentary Budget Office. It offered an opportunity to assess the current legal and fiscal framework governing petroleum activities, identify inconsistencies between existing agreements and legislation, and apply the Fiscal Analysis of Resource Industries (FARI) methodology to quantitatively evaluate Somalia’s fiscal regime. Key findings highlight the need to clarify fiscal terms across existing production sharing agreements, strengthen coordination between the Somalia Petroleum Authority and tax administration, and refine fiscal parameters such as state participation and the R-factor calculation.