Tag Archive | department of energy affairs

MPRDA Bill brings changes in BEE and exploration rights

BEE consolidated

coal miningMoses Mabuza, when briefing Parliament on the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill, told parliamentarians that amongst the many issues proposed by the new Bill an important issue was the setting up of penalties for non-BEE compliance across both the mining and liquid fuel sectors.

However, he said that he was confident that all stakeholders in the both industries would look back on a their association with black empowerment with understanding and pleasure, despite the opposition to the Bill on various differing and wide-ranging issues at present.

Bill will create right environment

Mabuza, who is deputy director general, mineral and policy promotion,department of mineral resources (DMR), said industry will be surprised see how much this legislation in the years to come will have contributed  to the country’s development, both in the mining, liquid fuels industry and business in general.    He told told the portfolio committee on mining resources, when briefing MPs on the Bill page by page, that it was important to understand government’s viewpoint as far as the oil and gas industry is concerned.

“We want to see that no partnerships created by the Bill are mutually exclusive or self interested”, he said. “We wish to create an environment where the state participates together with mining and gas industry with nation’s developmental objectives in mind.”

Blank cheque

“We give you the assurance”, Mabuza said, “that any regulations which are to follow will provide the kind of certainty sought in both the mining and petroleum industry”.

Opposition members still called to see the basis of the regulations first before further debate, since they claimed that at present, and as things stood, the wording of the Bill amounted to giving the state “a blank cheque” by not knowing what regulations were to be imposed.

The minister objected to this, saying that trust was called for and DMR would sit down with other departments and stakeholders and agree upon regulations within the framework  of the Act. “This is the only way things can work”, Mabuza said. “That is why the Act is a framework, with us all working from this plan.”

Working with stakeholders

In tracing the history of the MPRDA, deputy Mabuza and his co-presenter for policy development in DMR, Adrian Arendse, continually referred to stakeholder meetings throughout the process over the years, including stakeholder workshops where the various parties consulted were broken down into sectors such as environmental, petroleum industry, mining industry, finance and bankers and legal interests.

“We received commendable inputs from these workshops and in an overall sense, particularly where mining and petroleum was concerned and we have received both consensus and support for the proposals now before Parliament.”

Not conducive

Opposition parliamentarians denied this saying from what they had heard that there had not been overall consensus on many issues and the complete lack of uncertainty.   Lack of clarity on state motives was a total disincentive to investors, commented one MP.    Said another opposition MP, “Mining industry representatives have said in the media that this Bill will not grow the industry, so tell us why you think it will.”

Deputy director Mabuza, in response, again gave assurances from government that the proposed Bill represents no fundamental shift in government policy. He said clarity and certainty would follow in the course of time as regulations became evident.

Different horses on courses

Further on BEE matters, questions were asked on how government intended putting into force a parallel BEE charter that incorporated the liquid fuels charter, which called for less than 10% ownership as a target, and the mining charter which was at 27%, plus other anomalies.   One MP said that in gas exploration there were enormous developmental costs and the charter made no sense on these issues.

Mabuza said he was aware of the “vast differences” between the two documents and this would have to be discussed in rounds of talks to come and considered carefully. Some of those talks had already started, not referring with whom and on what particular subject.

However, he said there were also big differences in the industries themselves, in both matters of beneficiation and style of operations. DMR wanted to land up in a situation where nobody was disadvantaged, either the poor or the investor.

Exploration rights change

On exploration rights, Mabuza said where the Bill really differed from previous regimes was that the “first come first served” principle in exploration and rights licensing was to be abolished totally. “This system leads to mediocrity”, he said. “We have learnt much over the 15 years with such licensing regulations, during which time South Africa has lost it share in global resource exploration, going from 3% to a current 1%. We do not wish to go down this road any longer”, he said on licensing.

“The first person served often meets the absolute minimum requirements and in so many cases, South Africa has had years of brownfields investments and never the greenfields operations that number 5 or 20 in the queue might have offered for a license on the same project. Mediocrity resulted and South Africa has suffered consequently”, he said.

Mining and energy split

In answer to questions on the liaison between DMR and the department of energy (DOE), Mabuza described the sphere of control under the MPRD Act as being simply a question of “downstream” energy resources being for DOE and “upstream” matters on exploration mining licences and industry regulations being for DMR.  Obviously, he said, environmental issues were handled by those competent to do so.

Mabuza said that in coming up with the proposed Bill, DMR had consulted with, or observed, the practices of Canada, Angola, Ivory Coast, Russia and Gabon but opposition members complained that the process of consultation or observation meant absolutely nothing.   They want to know who DWEA had listened to in coming up with the current proposals.  Those before Parliament said they had made their own decisions and stakeholders had been involved along the road in discussions, particularly in the mining industry.

Planned for the future

Mabuza said that South Africa “remained the wealthiest mining and exploration production country in the world and with Africa reaching never-before, unprecedented levels of geo-political stability, the future was bright.   “We have designed legislation that takes both the state and our developmental economy into that future”, he said.

On the subject of penalties in the area of BEE non-compliance, opposition members complained that such contributed further to red tape, political uncertainty and investor complications.    Mabuza denied this and told parliamentarians that any penalties written into the Bill were a maximum sum only “and in any case”, he said, the 10% maximum still represented ‘just petty cash’ for most mining companies”.

“We had to bring in some form of penalty where shareholders were alerted to non-compliance otherwise management just carried on regardless of regulations or compliance issues”, Mabuza said.

Refer previous articles in this category
http://parlyreportsa.co.za//uncategorized/mineral-and-petroleum-development-bill-grabs-resources/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Posted in BEE, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Trade & Industry0 Comments

Mineral and Petroleum Development Bill grabs resources

The state muscles in…

offshore gasThe Mineral and Petroleum Resources Development Amendment Bill, approved by the cabinet in May, has now been tabled in Parliament and sections 80 and 84 of the anchor Act are to be amended, it is proposed, to provide for State participation in petroleum development carried out by the private sector.

The draft bill was published for comment in December 2012 and the proposed legislation, other than to extensively address the issue of re-describing many definitions and include petroleum and petroleum products in many of the issues covered by the Act such as beneficiation, also regulates extensively the exploitation of minerals and the legal movement and transfer of resource rights.

The new Bill also aligns the MPRDA with the newly assented Geoscience Amendment Act and “addresses shortcomings identified, whilst simultaneously streamlining the administrative processes in relation to the regulation of the mining environment management function”.

“New entity” to be formed

Two issues are of note in that under section 71 of the new Bill it is proposed that the minister forms a “new entity” which will “promote onshore and offshore exploration for and production of petroleum” and which will also “receive, store, maintain, interpret, add value to, evaluate, disseminate or deal in all geological or geophysical information relating to petroleum submitted” of the anchor Act, the MPRDA.

The new entity (and it is to be assumed those involved in “exploitation” of minerals and petroleum must through such an entity) must, it is proposed, “ bring to the notice of the Minister any information in relation to the exploration and production of petroleum which is likely to be of use or benefit to the state”. This clause will no doubt cause debate.

The background to the Bill clearly states that in terms of the new proposals, Sections 80 and 84 of the anchor Act are amended to provide for the state participation in petroleum development as described and that the state “has a right to a free carried interest in all new exploration and production rights”.

The proposal that matters

Section 84 of the MPRDA is further amended to include State board participation in the holders of production rights in terms of the proposals.

Section 2.9 of the background giving policy views also underlines the concept that the state will “exercise its rights and options having evaluated the applicable finance modalities to prioritise and optimise state participation in petroleum exploitation and in line with the national developmental priorities.”

The newly tabled Bill states that “specific details regarding the extent of the State’s free carried interests” will be published in a government gazette.

More background articles on subject
http://parlyreportsa.co.za//energy/south-africa-at-energy-crossroadsdoe-speaks-out/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Posted in Cabinet,Presidential, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry, Uncategorized0 Comments


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