Job-killing MPRDA Bill: ANC proposes massive state intervention in oil and gas sector
The ANC in the Mineral Resources Portfolio Committee in Parliament has proposed to entitle the state to take over oil and gas companies in their entirety.
Whilst going through a clause by clause reading of the new Mineral and Petroleum Resources Development Act (MPRDA) Bill in Parliament yesterday evening, ANC members proposed to lift the ceiling on the state's right to take over up to 100% of oil and gas drilling operations.
The initial proposals for state intervention in the sector have drawn heavy criticism from oil and gas companies.
The proposed changes entitle the state up to 20% of free carried interest in any venture and makes allowances for further acquisitions, with no ceiling, at an "agreed price". This replaces the "fair market value" that was proposed initially.
The practical effect of this will be that any oil and gas venture will have to turn over a significant proportion of any finds it makes for free. It could then be forced to hand over the remaining rights to those finds at a forced sale price.
This last minute change shows a depth of economic illiteracy that is hard to fathom.
It is likely to end any prospect of oil companies spending on exploring what is thought to be major oil and gas reserves off South Africa's coast.
It may well make drilling for shale gas uneconomic.
The committee is due to take its final vote on the Bill this afternoon.
This latest decision will have a major impact on foreign investment, and will without doubt limit potential job creation in the sector.
The DA believes the Department has failed to get to grips with administering the oil and gas sector. Evidence of this is the massive changes in its proposals from week to week as this Bill has been discussed in committee.
The DA believes oil and gas should be given its own legislation and that measures changing the rules for oil and gas should be removed from the Bill to allow the department to properly consult and think through how the sector should be run.
A DA proposal to this effect was opposed by the ANC in committee yesterday.
The ANC is ramming this Bill through, and it may well be signed into law, before Parliament rises with disastrous consequences for South Africa's mining, oil and gas industries.
It is yet another indication that Zuma's ANC is not serious about fixing our embattled mining sector and creating the jobs that our people need to lift themselves out of poverty.
Mineral Resources Committee passes hugely destructive mining bill
Parliament's Mineral Resources Portfolio Committee this afternoon passed the Mineral and Petroleum Resources Development Amendment Bill. In the DA this law is referred to as the 'crony enrichment bill', because of the power to designate mining licence beneficiaries it will provide the Minister.
Other disastrous provisions of the Bill include:
The Minister will be able to block exports and force mines to sell minerals at a lower local price;
The state will be entitled to take over 100% of oil and gas companies, 20% for free and the other 80% at a forced, 'fire sale' price; and
Allow the Minister to rule the sector by making regulations which can easily be changed at short notice.
These and other provisions will stop mining sector growth and probably lead to closed shafts and workers losing their jobs. It will also mean fewer exports and a worse balance of payments position.
South Africa's promising new on and offshore oil and gas sector is now unlikely to ever develop.
It is very likely the Bill will be challenged by the industry for being unconstitutional, as it will contravene international trade agreements.
The DA has fought this Bill in committee and will continue to do so when it comes before the House, which is expected to happen next week.
Statements issued by James Lorimer MP, DA Shadow of Mineral Resources, March 6 2014
Click here to sign up to receive our free daily headline email newsletter