Niël Terblanché
The development of a sturdy National Upstream Petroleum Local Content Policy and eventual implementation thereof will enable Namibians from all walks of life to participate in the country’s exciting hydrocarbon future.
Local Content Policies (LCP) have become a key priority of host governments and industry players alike.
Increasingly more resource-rich developing countries are enacting local content legislation as a means of maximising the benefits to be gained from petroleum and other industries.
Given this reality, the Namibian Government have equally decided to adopt this instrument with the objective to increase local participation in the value chain of goods and services, creating employment, training and development of Namibian citizens, to enable transference of technology, skills and knowledge and to ensure equity participation for Namibians at all levels of the petroleum sector.
The Ministry of Mines and Energy along with other stakeholders have already developed a draft policy framework and seen against the background of the recently announced oil discoveries has to be refined for finalisation and implementation to enable all Namibians to share in the spoils sooner rather than later.
Tom Alweendo the Minister of Mines and Energy, during the opening of a workshop in Windhoek where aspects of the National Upstream Petroleum Local Content Policy will be polished, said that he is optimistic that participants will seize the opportunity to make positive contributions to finalise the draft LCP.
“What will happen tomorrow depends on what we decide to do today. Let us, therefore, ensure that we make good use of this opportunity to one day look back and say to ourselves we did a great job,” he said.
He said that the workshop is a platform that offers a unique opportunity to share ideas on how to craft an effective LCP in Namibia’s emerging upstream oil and gas sector.
“The recent oil and gas discoveries in commercial quantities hold a great potential to transform our economy beyond taxes and royalties that would accrue to the State. Like most countries with oil and gas resources, we are set to introduce a robust policy to ensure that our citizens benefit, and in-country value is generated from the exploitation of its oil and gas resources,” he said.
Alweendo pointed out that questions regarding the impact of the oil discovery on the Namibian socio-economic landscape if oil will become a curse rather than a blessing must always be kept in mind.
“The short answer to these questions is that it will all depend on what we decide to do today. The impact will be what we decide it to be,” he said.
He said that for oil to be a blessing hinges mostly on a robust policy environment.
“It has been proven that countries with strong institutions, a stable political system and an effective legal framework were able to manage their oil revenue with a positive impact on their economies and for the benefit of their citizens. That is why our President, Dr Hage Geingob, has always extolled the virtues of systems, processes, and institutions,” he said.
He said that local content is defined as the active participation of the Namibian workforce and entrepreneurs in the upstream oil and gas sector through training, employment and local procurement of goods and services.
“We need to draw a distinction between local content and local ownership. They are related, but not the same. Local ownership refers to the level of equity ownership by Namibians in petroleum licenses. It is one thing to have a well-written policy and another to have the policy being implemented and therefore effective,” he stressed.
The minister said that Namibia needs a policy that will facilitate economic diversification, and deepen backwards and forward linkages from various segments of the oil and gas sector value chain, thereby fast-tracking our industrialization.
“For that to happen, it is essential that our LCP must have elements that promote job creation for Namibians, accelerate industrialization through in-country value creation, strengthen local entrepreneurship through enterprise development, skills, and technology transfer,” he said.
He said that Namibia’s LCP will only work if all stakeholders collaborate and pull together in the same direction. The minister added that all stakeholders must prepare themselves in advance by developing the necessary capabilities.
“One of the most important roles the Government, through the Ministry of Mines and Energy, must play is to ensure that we have an effective monitoring and evaluation system in place. Without an effective monitoring and evaluation system, we will not know if the Policy is delivering on its objectives. We will not know if or when we need to modify the Policy,” he said.
Alweendo pointed out that three specific issues – the culture of entitlement, inclusivity, and transparency – must be addressed during the workshop.
With regard to the culture of entitlement, he said that it should not be allowed to thrive because it would be difficult to achieve the objectives of the final LCP and he encouraged entrepreneurs to understand the required capabilities to be an effective participant in the local content framework.
“We will all be better off as businesspeople and members of society if we foster a culture of meritocracy as opposed to entitlement,” he said.
With regard to inclusivity, he said that there are many examples across the world where the oil and gas sector became an exclusive sector, dominated by a group or a few individuals while excluding ordinary citizens.
The minister quoted President Geingob and said: “Exclusivity spells conflict while inclusivity spells harmony”.
With regard to transparency, he said that a lack thereof will derail the effective implementation of local content policy because of the potential for corruption in the oil and gas sector.
“To mitigate against corruption and ensure that in-country value creation reaches ordinary citizens requires us to be transparent in our operations. We must be fair and transparent with our employment procedures, and procurement processes and in exercising oversight over the policy implementation. The more transparent we are in our operations, the higher the chance of realizing the objectives of this LCP,” he stressed.
The National Upstream Petroleum Local Content Policy lays the framework for maximising the benefits to Namibian Citizens from petroleum resources through the enhancement and development of strategies that will target phased participation of Namibian Labour, goods, and services, companies, ownership and financing along with value chain.
By enhancing these strategies, the relevant aspects of the LCP have also been incorporated into the revised Petroleum Act and Model Petroleum Agreement. This incorporation into the legal framework is critical to ensure consistency and accuracy.
The policy, from the outset, was designed to be flexible to accommodate any reviews should the need arise.
