Martin Endjala
With the discovery of oil and gas offshore of Namibia, the country will need effective, practical, fair and transparent legal policies to evade the curse of other African countries like Nigeria and the Democratic Republic of the Congo.
This was emphasized by the Institute for Public Policy Research Executive Director, Graham Hopwood last week as he took a swipe at the upstream Petroleum sector in the country, amidst the discovery of oil and gas as well as the recent announcement by the Mines and Energy Minister, Tom Alweendo, that a revision of the Petroleum Act which is long overdue.
Hopwood says that the exploitation of oil and gas resources will pose a wide range of challenges for Namibian economic policymakers and the sooner they start thinking about them the better.
This is on the backdrop of Namibia’s legislation in the early 1990s framework said to be not up to speed, while explorations are already under the way, with a projected estimation of 2-3 years before Namibia can fully start commercializing its oil discovery.
Hopwood is of the opinion that the local content process needs to be on a speedy pace to make sure that by the time Namibia is in the position to extract its oil discovery, policies are already put in place to regulate this investor, to make sure that these resources benefit all Namibians and not just the reach.
With the huge oil volumes Namibia is expected to be making, he raised concerns the fact that Namibia has no refinery to host and refine its own oil, is another messy situation, that needs urgent addressing.
Lamenting that oil being stored elsewhere should be a no-go if Namibia is to avoid the curse of its fellow African counties.
It is estimated that Graff and Venus could rank among the top 20 global discoveries in the last decade with the potential to turn Namibia into the third largest producer of oil in Sub-Saharan Africa with revenues peaking at US$5.6 billion by the mid-2030s.
Hopwood stated that countries with significant oil and gas revenues often “bank” revenues in a sovereign wealth fund where they are invested for future generations or to help cushion unexpected economic shocks.
Examples include Angola, Equatorial Guinea, Gabon, Ghana, and Nigeria above. Namibia formally launched its own Welwitschia sovereign wealth fund on 12 May 2022.
“Whilst the public finances are currently extremely tight, this is a welcome initiative which should stand Namibia in good stead if properly managed. Experience with the mining and especially the diamond mining industry does not give much cause for hope as far as transparency is concerned”, he said.
He is therefore basing his stance that local content should create a system that benefits, especially now that government will soon start getting doubled or even tripled revenues into its coffers from the levies and loyalties.
This money he says, should then be ploughed back into the public to benefit citizens, by creating jobs and giving an income grant to all Namibians.
Hence his recommendations are that local content be fair and transparent, in terms of employment procedures, adding that the more we are transparent in operations, the higher chance of realizing the objectives of this local policy.
Poor local content design inadvertently leads to non-compliances, value leakage and rent-seeking.
The mining and petroleum ACTs are currently under review and it is expected to be finalized this year.
