Ester Mbathera
The executive director of the Ministry of Mines and Energy, Penda Ithindi, has reassured investors that Namibia is committed to maintaining stability in the sector beyond the elections.
Ithindi was addressing questions posted by the Windhoek Observer last week regarding the potential impact of the upcoming November elections on Namibia’s oil and gas industry.
“Namibia is governed by the rule of law, and all decisions are made within the confinement of the law and by the Constitution. Namibia has seen change in leadership four times already, and no disruption has occurred during those times,” he said.
He assured that measures are in place to maintain investor confidence, including the emphasis on security of tenure for agreements in the industry.
“As a country, we emphasise the security of tenure and will ensure that investors’ confidence is retained with all agreements,” he said.
Ithindi did not specify any plans to sign a stability clause or similar agreements before or after the elections.
Auditing and financial advisory company Deloitte defined the stability clause as a provision that enhances “certainty and predictability,” which are essential for the success of long-term investment projects, particularly in the capital-intensive petroleum sector.
Last year, NJ Ayuk, executive chairman of the African Energy Chamber, advised Namibian leaders to come up with or strengthen contracts in the oil sector to avoid delaying production.
He advised that petroleum contracts should include what is known as a fiscal stability clause.
He explained that such a clause would protect investors from adverse impacts resulting from legislative or regulatory changes, including new tax requirements.
“What matters is, in the end, the companies’ return on investment would not be impacted by changes that occurred after their deal was finalized. For Namibia, a newcomer to oil and gas deals, adding a fiscal stability clause to petroleum contracts will be key to retaining the energy industry’s intense interest,” he said.
He argues that this is a crucial step for retaining investor interest, especially in a sector where substantial financial commitments are at stake.
Stability clauses are standard practice in countries like Guyana and Mozambique.
Ayuk cautioned that failing to implement a fiscal stability clause could result in delays during contract negotiations with major players like Shell and TotalEnergies, potentially stalling project timelines.
“When a developing country fails to offer the clauses, they’re giving oil and gas companies reason to limit investments there,” he said.
