Martin Endjala
With the discovery of oil and gas in 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 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 in the country and the recent announcement by the Mines and Energy Minister Tom Alweendo on the reviewing 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 the Namibian economic policy makers kers and the sooner they start thinking about them the better.
This is on the backdrop of Namibia’s legislation in the early 1990s framework, which said to not be up to speed. 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, policies are already put in place to regulate investors and to make sure that these resources benefit all Namibians.
With the huge oil volumes Namibia is expected to be making, he raised concerns with the fact that Namibia has no refinery to host and refine its own oil. This, he stressed is another messy situation, that needs urgent addressing.
He also said that Namibia should guard against storing oil in foreign nations.
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.
According to Hopwood, local content should create a system that benefits all, given 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.
Hopwood has since urged local content to 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. As Poor local content design, inadvertently leads to non-compliances, value leakage and rent-seeking,” he added.
The mining and petroleum Acts are currently under review,according to an announcement by the Mines and Energy Minister Tom Alweendo earlier this year. They are expected to be finalized this year.
