Draft law proposed to give state a share in petroleum

The Department of Mineral Resources and Energy is considering legislation that will give government a 20% free carry share in upstream petroleum, Parliament heard on Friday.

This is as the development of petroleum resources is being regulated under the Mineral and Petroleum Resources Development Act, which lapsed and created the opportunity for separate petroleum provisions.

The proposed legislation - which is yet to be presented before Cabinet or Parliament - seeks to give effect to state custodianship of the country’s petroleum resources, and to regulate upstream petroleum resources industries.

Speaking to the committee of mineral resources and energy, deputy director general of mineral policy and promotions Ntokozo Ngcwabe said a lack of petroleum upstream regulation had hampered development, and that the department was working on entrenching security of tenure in petroleum.

Ngcwabe said empowerment provisions in the draft legislation would make provision for 10% broad-based black economic empowerment participation at a project exploration and production stage.

"The minister will be empowered to reserve a block or blocks for 100% black-owned companies with relaxed requirements. The bill will also empower the minister to develop a Petroleum Resources Charter to pursue the transformation agenda," said Ngcwabe.

Ngcwabe said the bill proposed 20% carried state participation be applied to exploration and production rights in petroleum, with provisions for the state to be represented on boards of operations where it participated.

"Provision is made for cost recovery from the exploitation of the resources. Different models are being considered and the state interest will be held by a state-owned company," Ngcwabe said.

She said the while Cabinet was still to be fully briefed on the legislative proposals, the department was working with National Treasury to determine guidelines in various aspects of the provisions.

Members of the committee welcomed the submission but urged the department to have a draft bill ready so that Parliament could properly engage the proposals.

ZAR/USD
17.35
(+0.20)
ZAR/GBP
22.73
(+0.11)
ZAR/EUR
20.56
(+0.07)
ZAR/AUD
12.46
(-0.06)
ZAR/JPY
0.16
(-0.11)
Gold
1943.35
(-0.68)
Silver
26.38
(-3.85)
Platinum
943.00
(-1.66)
Brent Crude
45.01
(-1.03)
Palladium
2109.00
(-2.75)
All Share
57077.48
(-0.60)
Top 40
52737.48
(-0.65)
Financial 15
10156.41
(-0.69)
Industrial 25
75107.47
(-0.84)
Resource 10
58926.78
(-0.40)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1004 votes
It depends on how the funds are used.
74% - 6748 votes
No. We should have gotten the loan elsewhere.
15% - 1417 votes
Vote