- Who we are
- General Background
Who we are
The OPEC Fund for International Development (the OPEC Fund) is the multilateral development finance institution established in 1976 by the Member States of the Organization of the Petroleum Exporting Countries (OPEC) as a channel of assistance to the developing countries. The idea for the institution came one year earlier, at the Conference of Sovereigns and Heads of State of OPEC Member Countries, which was held in Algiers, Algeria, in March 1975. A Solemn Declaration of the Conference “reaffirmed the natural solidarity which unites OPEC countries with other developing countries in their struggle to overcome underdevelopment,” and called for measures to strengthen cooperation between these countries. The consolidated resources of the OPEC Fund are additional to the financial assistance made available by the OPEC Fund's Member States through other bilateral and multilateral channels.
12 Member Countries: Algeria, Ecuador, Gabon, Indonesia, the Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and the Bolivarian Republic of Venezuela. Ecuador reactivated its membership in June 2014 after a 22-year absence.
The OPEC Fund 's supreme authority is its Ministerial Council, composed of finance ministers of the Member Countries. The Council issues policy guidelines, approves the replenishment of the OPEC Fund's resources, authorizes the administration of special funds and makes major policy decisions. It meets once a year. The Governing Board is composed of one representative and one alternate from each Member Country. Subject to directives issued by the Ministerial Council, the Board is responsible for the conduct of the OPEC Fund's general operations. It stipulates, in particular, policies with regard to the use of the OPEC Fund's resources and usually meets four times a year. The Director-General is appointed by the Ministerial Council and is the institution’s chief executive officer.
The OPEC Fund’s resources consist of voluntary contributions from its Member Countries, income from its investments and loan repayments. Member Country contributions have been replenished several times. The latest, fourth replenishment came in 2011, when resources were increased by a minimum amount of US$1bn. Additionally, the OPEC Fund has been authorized by the Ministerial Council to look into ways of enhancing its resources, including but not limited to borrowing and securitization.
The OPEC Fund enjoys a high level of repayments through all its financing mechanisms. Non-performing loans are less than 3% of the outstanding.
Yes. The OPEC Fund ’s financial statements are prepared annually according to the International Financial Reporting Standards and are audited by an independent external auditor. Highlights are published in the the OPEC Fund's Annual Report and on its website.
All developing countries are, in principle, eligible for OPEC Fund assistance, regardless of political or religious orientation. However, the least developed countries (LDCs) are accorded higher priority and have received more than one-half of the institution’s cumulative commitments to date. Also eligible are international institutions whose activities benefit the developing countries. Although, developing nations themselves, OPEC Member Countries are excluded from benefiting from assistance, except in the case of disaster relief or within the context of a regional program.
The OPEC Fund is located in Vienna, Austria, where it is one of a number of international organizations hosted by the Austrian Government. The OPEC Fund has a headquarters agreement with its host country, under which it enjoys all the privileges and immunities within the general framework of the Vienna Convention on Diplomatic Relations, 1961. The OPEC Fund does not maintain offices or staff outside its headquarters.
Each institution has a separate function. The OPEC Fund's main concern is poverty eradication through South-South cooperation between its Member Countries and other developing countries; the Secretariat's principal aim is to coordinate the petroleum policies of Member Countries and to determine the best means of safeguarding their interests. Both institutions are located in Vienna, Austria, but are housed and managed separately. Whereas the OPEC Fund’s supreme authority is the Ministerial Council composed of finance ministers, OPEC’s supreme authority is the Conference composed of energy ministers. In addition, each institution has evolved over time to comprise a slightly different set of Member Countries.
No. The OPEC Fund’s assistance is entirely independent of the level of income Member Countries receive from their oil resources. This has been clearly demonstrated over time, with commitments consistently growing, even when oil prices have been low.
What We Do
The OPEC Fund helps its beneficiary countries pursue their social and economic development by providing financial assistance towards the realization of their specific development goals. The OPEC Fund may also act as an agent on behalf of its Member Countries in their relations with other international financial institutions.
Because of their size or uneven endowments of physical and human resources, many developing countries are unable to bring about a change in their economic situation if they have to rely only on themselves. The OPEC Fund thus encourages regional cooperation and integration and acts accordingly at both an advocacy and an operational level.
The OPEC Fund’s mandate is to address the main development priorities and concerns as identified by its beneficiary countries. In implementing its mandate, the OPEC Fund pays particular attention to the interrelated challenges of securing access to energy, food, and water, which it considers to be the three main obstacles to poverty alleviation in the developing countries. Around one-half of the OPEC Fund ’s cumulative assistance has been dedicated to the energy-water-food nexus. This support has been provided in the form of both loans and grants for infrastructure construction, capacity-building, and research and development. Substantial resources have also gone to the transportation sector, which serves as an enabler of the nexus, and to human capacity building, which is a core element of the OPEC Fund’s vision.
The OPEC Fund’s Energy for the Poor initiative (EPI) emerged out of the Solemn Declaration of the Third OPEC Summit, which took place in Riyadh in November 2007. The Declaration called for the complete eradication of energy poverty as a global priority and urged the OPEC Fund to intensify its efforts in support of this goal. The EPI was launched by King Abdullah of Saudi Arabia in June 2008 and subsequently adopted by the OPEC Fund as its flagship program.
Since 2008, the OPEC Fund has worked tirelessly to push energy poverty to the top of the international agenda and was responsible for the universal acceptance of energy poverty eradication as the “missing” Millennium Development Goal.
In June 2012, OPEC Fund Member Countries issued a Ministerial Declaration on Energy Poverty and dedicated a revolving minimum sum of US$1bn to finance the EPI. The OPEC Fund is boosting the volume of its operations in the energy sector accordingly, in collaboration with all relevant stakeholders. By using a broad range of financing mechanisms, the OPEC Fund tailors its assistance to meet a diverse range of needs and priorities, from research and institution strengthening to providing sustainable energy for off-grid and on-grid populations. The OPEC Fund focuses on funding solutions that are appropriate to local conditions and, as a matter of policy, does not prioritize fossil fuels over renewables or vice versa.
As a result of its high-profile advocacy efforts, the OPEC Fund is a key partner in SEforALL, which has three goals: to achieve universal access to sustainable energy, to double energy efficiency, and to double the share of renewables, all by the year 2030. the OPEC Fund considers its own EPI as complementary to the objectives of SEforALL. In 2011, OFID’s former Director-General Suleiman J Al-Herbish was invited to join the UN Secretary-General’s High-level Group on SEforALL, which was charged with developing the Action Agenda that was presented to the 2012 Rio+20 Summit.
The OPEC Fund has consistently channeled much of its development assistance to agriculture and rural development. In addition to direct support to agriculture, this assistance covers investment in rural infrastructure and in projects that promote private enterprise development on- and off-farm, as well as agricultural research.
The OPEC Fund is also quick to act in times of famine, regularly supporting the work of the World Food Program, and has strong ties with other specialized UN agencies, such as the International Fund for Agricultural Development and the Food and Agriculture Organization. The OPEC Fund also works closely with the Common Fund for Commodities, providing financing to help develop improved production technologies and secure market access for small-scale commodity producers.
The OPEC Fund is convinced that an integrated water-food-energy approach remains the only applicable solution for today’s water crisis. The OPEC Fund offers assistance for the rehabilitation and extension of urban and rural water supply, sewerage and waste management systems, and the development of sustainable agriculture irrigation schemes. In addition to reducing poverty and enhancing food security, this assistance has greatly helped lower the incidence of waterborne diseases, which are the main cause of child mortality in the world’s poorest countries.
How the OPEC Fund carries out its mandate
The OPEC Fund’s operations respond to the priorities defined by its partner countries, as they are in the best position to evaluate the needs arising from their social, economic and financial situation.
It is not the OPEC Fund's practice to recommend partner country governments to undertake reforms or adopt new policies designed to improve their countries' social and economic performance. The OPEC Fund nonetheless requires proper project and program implementation as stipulated in the loan agreement, including transparency of procurement processes and compliance with its procurement policies, regular reporting by the borrower, and monitoring of OPEC Fund projects and/or programs in coordination with other co-financiers.
No. The OPEC Fund's procurement guidelines follow the general principles of international competitive bidding, which is open to all sources. The loans are not tied to procurement from Member States of the OPEC Fund or from any other countries. However, a margin of preference is allowed for goods and services obtainable in the recipient country or originating in other developing countries, on a case-by-case basis.
The OPEC Fund’s main consideration is the social, economic, and environmental viability of a development project or program and its contribution to poverty alleviation and development in the partner country.
The OPEC Fund’s operations are the result of consultations with its partner countries and/or co-financing institutions. The OPEC Fund regularly exchanges information on its pipeline of projects with all its partners.
In providing its development assistance, the OPEC Fund capitalizes on countries' own accumulated knowledge and development experiences. In addition to national governments and government entities, the OPEC Fund works with a broad range of stakeholders in the development process. Cooperating partners include the bilateral and multilateral development agencies of its Member Countries, the World Bank, the regional development banks, the specialized agencies of the United Nations, the private sector, and academia, as well as non-governmental and civil society organizations, among others. The OPEC Fund has established formal cooperation agreements with a number of strategic partners. Each agreement has its own specific framework and focus and serves to optimize development coordination and harmonization.
The OPEC Fund is fully engaged in the Global Partnership for Effective Development Cooperation (GPEDC), which evolved out of the aid effectiveness movement launched in Paris in 2005 to define a more results-oriented global aid architecture. The GPEDC is based on four principles:
- country ownership of development programs
- a focus on results
- inclusive partnerships
- transparency and accountability from all stakeholders.
The OPEC Fund is working both independently and with its sister institutions—under the umbrella of the “Coordination Group”—to implement these principles. The Coordination Group, represented by the OPEC Fund, is a full member of the GPEDC steering committee.
The OPEC Fund enjoys a particularly high degree of collaboration and procedural harmonization with the other 11 members of the “Coordination Group of Arab Institutions, the Islamic Development Bank and the OPEC Fund.” The Coordination Group was established in 1975 to enhance and coordinate the development efforts of member development finance institutions in the area of project evaluation, financing and monitoring, and management of loans. It also seeks to achieve uniformity and consistency in its members’ development policies and financing procedures.
The 12 members of the Coordination Group are: the Abu Dhabi Fund for Development, the Arab Bank for Economic Development in Africa, the Arab Fund for Economic and Social Development, the Arab Gulf Program for Development, the Arab Investment and Export Credit Guarantee Corporation, the Arab Monetary Fund, the Arab Trade Financing Program, the Islamic Development Bank, the Kuwait Fund for Arab Economic Development, the OPEC Fund, the Qatar Development Fund, and the Saudi Fund.
The OPEC Fund enjoys Observer Status with the United Nations and works closely with a large number of the specialized agencies of the UN system, including UNDP, UNESCO, UNICEF, UNIDO, UNRWA and UNODC, among others.
Yes. The OPEC Fund Scholarship Scheme provides several scholarships each year to support high-achieving young academics from developing countries through their graduate studies in a development-related discipline. The call for applications is announced on the OPEC Fund website every January and the winners named in June.
The OPEC Fund Annual Award for Development, which comes with a US$100,000 prize, is presented to individuals or organizations that have made an outstanding contribution to development.
The OPEC Fund's financing instruments
The OPEC Fund provides its financial assistance in a number of ways. The main methods of funding are: public sector loans, direct support to private enterprise, trade financing, and grants (go to menu on the left for these funding mechanisms).