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ANC's Upstream Petroleum Development Bill Sparks Outcry

Published October 31, 2023
1 years ago

The controversial Upstream Petroleum Development Bill recently passed by African National Congress (ANC) MPs is causing a stir as its outlying provisions for governing oil and gas projects in South Africa become clearer. Critics argue that the peculiar mix of greed, ignorance, and ideology that underpins the bill holds potential implications that could continue to maintain South Africans in poverty.


The bill, which outlines regulation for licensing of oil and gas projects, has provisions that are seen as potential deterrents to investment, including racial quotas and excessive discretionary powers. Consequently, this legislation could risk causing a setback in South Africa's resource development and economic progression by sacrificing opportunities for economic growth, increased state revenue, and job creation to political interests.


The ANC’s greed, ignorance, and ideology could perpetuate the nation’s struggles with poverty if the handling of the oil and gas resources follows the trend highlighted by critics, such as James Lorimer, who argue that the bill’s provisions could chase away investment and job opportunities.


Critics argue that while the oil and gas resources have the potential to dramatically improve the economic circumstances for every South African, the provisions in the bill could keep South Africans in poverty. Norway, the United Kingdom, or the United States are among the wealthy countries that have prospered thanks to sound legislation governing oil and gas reserves. Conversely, Venezuela, which has a massive petroleum endowment, struggles with extreme poverty due to mismanagement.


The question that arises is whether this bill will guide South Africa towards the prosperity of Norway or the destitution of Venezuela. This concern is heightened by the possibility of large volumes of oil and gas reserves off South Africa's west coast, and the high costs and expertise required to retrieve these complex finds.


The legislation could discourage major oil companies capable of undertaking the operations by enforcing race-based ownership quotas and allocating a significant portion of the project's ownership to the state. These provisions may promote crony enrichment while disadvantaging majority of South Africans, impacting investor trust in the industry.


With the bill granting the minister extensive discretionary powers, the potential for corruption is also deemed high. Overall, the concerns raised hold the potential to stunt the growth of South Africa's oil and gas industry by maintaining a veil of uncertainty and discouraging investment.



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