Development of Upstream Petroleum Resources: Flawed bill must be stopped

The lack of transparency and unlimited powers that will be granted to the Minister of Mineral Resources and Energy if the Upstream Petroleum Resources Development Bill were to be accepted by Parliament is cause for serious concern.

For example, it is intended to allocate a 20% share in all petroleum rights to the state, which opens the door for corruption. Similarly, the minister will have the unlimited power to reserve certain areas for petroleum development exclusively for black investors, with nothing standing in his way to exercise this discretion for the benefit of his cadres.

This bill intends to remove the development of the upstream oil and gas industry from the scope of the existing Mineral and Petroleum Resources Development Act (Act 28 of 2002) and regulate it separately from other mining activities. Although this regulatory separation in itself is not necessarily a problem, according to the civil rights organisation AfriForum, the bill will have far more consequences than just creating further policy uncertainty in the minerals and energy sector. As a result, investor confidence, which has already reached an unprecedented low, will simply weaken further.

“This is detrimental to the development of the country’s petroleum resources and further hurts the struggling South African economy. In the end, the majority of the country’s residents will be the innocent victims of the government’s greed,” says Marais de Vaal, AfriForum’s advisor for Environmental Affairs.

AfriForum has been expressing its opposition to this bill since its first appearance in 2019 and has today submitted comments on the current form of the bill, which has already been approved by the National Assembly. Comments must now be considered by the National Council of Provinces.

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