Mnyupe warns against draconian policies in oil and gas

 Green Hydrogen Commissioner James Mnyupe has warned authorities against formulating draconian laws relating to the oil and gas sector, saying such stringent legislation may scare away investors.

Mnyupe suggested that the government should be able to work hand in hand with the private sector when formulating laws because they are actual players in the industry and might be well placed to advise and strike a balance.

This comes as the government through the Ministry of Mines and Energy is formulating a Local Content Policy which seeks to provide an opportunity to Namibians to actively participate in the oil and gas sector through training, employment, the provision of goods and services as well as promoting beneficiation. 

"If a local content policy is too stringent or draconian, it can choke the industry. For instance, if it decided that 50% of goods and services should be sourced in Namibia, there may be scenarios where they might not be available or may be expensive. Thus, this can be an issue of concern, hence the need to balance," Mnyupe told a discussion on the Impact of Oil and Gas Discovery in Namibia hosted by the Stellenbosch Business School in Windhoek. 

He said this while untangling some of the risks that private parties face when investing in oil and gas including exploration and production; and whether there are any policy and legal frameworks in place as well as to de-risk.

"Policies are important, we may look at the Public-Private Partnerships. For instance, in the case of the construction of the Lüderitz port, which is likely to be done on a PPP. So, when an investor comes on board changes are made thereafter, this particular person or company may demand compensation if the amendments affect his business model as opposed to the initial regime agreement. These are some of the issues, that is why there is a need to collaborate," he stated.

He further emphasised the pivotal role the private sector plays in informing policy formulation of oil and gas because these are industry players with experience.

"We have done the same with synthetic fuel, the only difference is we were able to raise money through donors to acquire the 24% stake in the Hyphen Green Hydrogen project. That is why policy certainty is important. Also, the risk involved in the oil and gas is super expensive to drill these wells of which it is not a guarantee to produce hydrocarbons. However, if you succeed you may find an unstable market as some nations are moving away from fossil fuel and hydrocarbons thus may affect one's returns. So these are some of the risks one needs to assess before investing," stated Mnyupe.

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Last modified on Friday, 28 July 2023 15:52

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