Tag Archive | Minerals and Petroleum Resources Amendment Bill

MPRDA Bill to be amended urgently

Some form of compromise….

coal miningIn referring back to Parliament the Mineral and Petroleum Resources Development Amendment Bill (MPRDA) and acknowledging in his State of Nation Address (SONA) that in its present form it could be damaging to South Africa’s investment climate, President Zuma and his cabinet have introduced more certainty to both the mining and oil and gas industries.

At least a year and a half delay was a guess if the suggestion that two replacement Bills were to be drafted separating mineral resources from oil and gas in the light of the fact that both have separate BEE charters.

Certainty needed

However, mineral resources minister Ngoako Ramatlhodi has agreed with mining companies and also the point put forward by Chamber of Mines that the best and fastest way forward to bring certainty to theRoughnecks wrestle pipe on a True Company oil drilling rig outside Watford industry would be to pass the Bill subject to amendments based on a new approach to the mining beneficiation issue and the matter of state “free carry” in any successful gas exploration.

Originally, on an issue raised both in submissions and by opposition parties and, even a couple of ANC MPs, the presidency has also agreed to doubts expressed whether, once signed, the MPRD Act after amendment would pass constitutional muster on the basis of the amending Bill’s passage through Parliament and the process adopted.

Section 79(1) of the Constitution empowers the President to return a Bill to Parliament for reconsideration if reservations about the constitutionality of the Bill prevail.

Mining land

Subsequently pointed out as a further reason for the Bill not beingtrad leaders signed, raised in a presidency statment issued by spokeperson Mac Maharaj, was a concern of cabinet that the Bill had to be processed through the Council of Traditional Leaders.

Parliament passed the Bill all in a rush at the end of March 2014 after much lobbying by ANC whips and despite warnings and constitutional challenges from many parties.  Nearly a year has passed since sending the proposals off for presidential assent.

The subject of the regulatory environment has not even been touched upon or has come up in the debate at this stage.

During the parliamentary recess both the Chamber of Mines and others have complained of sustained uncertainty in their industries and in the investment world.

Two issues emerged almost immediately when the President announced he was delaying his signature. The first issue was a hefty warning from mineral resources minister Ngoako Ramatlhodi who said “the implications for companies that did not meet BEE targets set out in the mining charter would be severe”, inferring that this might eventually affect the granting of mining licences. He raised, once again, the issue of employee shareholding.

“Developmental” metals pricing

Consequently, it still remains somewhat foggy what government policy was in instituting such clauses other than an overall ambition for the state to have more ownership of strategic resources in both industries and the drive by minister of trade and industry, Dr Rob Davies, to assist smaller manufacturing metals industries becoming more viable at the cost of larger industries, therefore creating more jobs, he said.

On the subject of BEE and the two different charters affected, all that has been said officially was a remark by minister Ramatlhodi “We have to satisfy ourselves that the Act meets our broader socio-economic development activities.”

The second issue to emerge after the announcement of the return of the MPRDA to Parliament was further mention by the department of energy of“Operation Phakisa”, the speed-up process as part of a co-ordination exercise with the oil and gas industry to reduce reliance on oil imports.

Fracking and renewables

On a separate issue, further statements by ministers with regard to fracking and speeding of delays in the IPP world with renewables has also emerged, overshadowed by the urgent need of an energy plan from the newly formed energy “war room”.

Whatever happens, both industries should be prepared for another round of public comment, hopefully in the first parliamentary period after the Budget…… minister of finance Nene notably mentioning nothing of nuclear interest in his budget speech.
Other articles in this category or as background
Energy War Room formed to meet crisis – Parly ReportSA
Mineral and Petroleum Resources Bill halted perhaps – ParlyReportSA
Medupi is the key to short term energy crisis – ParlyReportSA

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PASA ready for fracking and sea gas

Gas regulator separate from others….

In a presentation to Parliament, the strategic role of the new Petroleum Agency of SA (PASA) was debated and government officials showed MPs that estimations indicated that at least 20% of PASA’ future effort would be spent on contributing to the legislative and regulatory framework surrounding shale gas in South Africa.

Two major areas of gas and oil exploration revenue for the new body were clearly indicated as income from shale gas operations, or “fracking”, and also from maritime gas investments mainly off the East coast of South Africa, and from current operations on the West coast which were also to be extended, PASA officials said.

Licensing revenue from gas

Current inland petroleum operations and possible extensions of exploration within the main body of South Africa would also continue as a source of revenue, PASA said.

The present mandate of PASA, parliamentarians were told, was to facilitate and regulate the exploration and sustainable development of oil and gas “for the benefit of all South Africans”.     Cash flows from licensing were expected to increase from the forecast R13.7m for 2013 to R147m by 2017 which would be used for oil and gas investments although this was not necessarily ring fenced according to national treasury.

MPRDA includes PASA

The licensing process in terms of the Minerals and Petroleum Development Act, under which PASA falls, includes receiving applications for oil and gas reconnaissance permits, technical co-operation permits, exploration rights and production rights.

In all instances, the major focus, PASA officials indicated, would be to advise and regularly report to the minister of energy affairs on recommendations regarding the industry and “to receive, maintain, store, interpret, evaluate, add value to, disseminate or deal in all geological or geophysical information related to petroleum”, such a data base being the most important part of current work being undertaken.

Skills to be acquired

The future includes the establishment of a force of a number of geologists with specific specialist knowledge, particularly in the near future to support South Africa’s current claim to the international agencies for the extension of its maritime territorial limits.

This is to include some 45,000 km2 off the West Coast of South Africa; about 560,000 km2 in the vicinity of the Prince Edward Islands owned by SA; an area 190,000 km2 south of Madagascar; and the largest area which includes sections of the Mozambique Channel amounting to 1,075,000 km2.

Mozambique Channel

Most of the current litigation involved the application for the area known as “Discovery Ridge” in the Mozambique Channel, where gas deposit realisations are expected to be high.

Income for the new function, other than from “exploration rental” and application for exploration fees, was expected to mainly come from the sale of data but, for the present moment, PASA is expected to operate, for the current year, at a major loss of some R74m as it establishes its mandate, awaits the legal outcome on the moratorium on shale gas exploration and continues to support South Africa’s application to extend its nautical offshore limits.
Refer previous articles in this category
http://parlyreportsa.co.za//cabinetpresidential/to-ignore-fracking-would-be-an-opportunity-lost/
http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/
http://parlyreportsa.co.za//energy/chemical-industries-plan-for-training-skills-in-fracking/

 

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Parliament: last chance to clean up

Last session of parliament….

Houses_of_Parliament_(Cape_Town)The final gathering of a Parliament is always an auspicious time. This is the thirteenth parliament of South Africa as a republic but currently the fourth under the ANC, this particular parliament having been started in 2009.   How time passes indeed.

Four times five is twenty and nobody can change the fact that this is the number of years we have had in South Africa to get things into first gear and pull away as leaders in Africa.

The poor still out there

But whilst security was always the issue in governments before 1994, service delivery to the poor has been the issue ever since, followed more recently by the need to fill the gap caused by inaction on infrastructure build.   When will the poor actually not be poor seems to be the question and in the case of South Africa the answer always seems to be within our grasp.

As do the energy, rail, transport and harbour, the communications, health and education issues seem to be equally just within our grasp.   Closing that gap is, of course, not helped by the lack of skills and training at the coalface and where it matters.

Up skilling in skills

Aspects to watch in Parliament over the coming weeks involve monitoring the reports of each department’s on the skills training aspect.  Expense was not been spared in the budget. Everybody has been given money. But the “work-hard, focused, skillful, get it done properly” Chinese mentality seems to be missing.

Where the Chinese score is through leadership and therein lies the rub in South Africa, from the top, to the most low worker.

Leadership vacuum maybe

With an extraordinarily long list of legislation to get through in the next session of Parliament it will be interesting to see if the qualities of leadership emerge at all, or the country remains driven, even at cost to basic economic structures, by imperatives to get votes.

Unusual has been the move by the President to return the Protection of State Information Bill back to Parliament, ostensibly in the light of some grammatical errors. Whilst this does not vitally affect the business world, other than perhaps a number of businesses or industries in a strategic role finding itself involved or suspected as being involved in the leaking of some highly sensitive subject – say nuclear or defence, this affair will play out noisily in our newspapers but is not really a serious business issue.

Last minute rush

Meanwhile, the last session of any parliamentary government period will always see MPs distracted by forthcoming elections whilst attempting to handle a voluminous amount of legislation that sincerely affects business and they would like to see passed before the period ends.    Consequently, the expression “fast-tracking” will occur again and again over the coming two months.

Ministers will also make many a speech from a podium aimed at the electorate, rather than adding substance to a legislative issue.  Much will involve sorting the wheat from the chaff when it comes to government policy on critical issues.

Shabangu drops a bomb

Critical issues are obviously the Minerals and Petroleum Resources amendments, bearing in mind minister Shabangu’s recent statement on “free carry” and the ability of the state  to acquire up to 50% shareholding in gas exploration successes; the combining of the liquid fuels and mining BEE charters; land reform; fracking, carbon tax and e-tolling.

Also a certain number of ministers will be attempting to justify their stay in the cabinet and the requirement of pleasing the electorate will feature more heavily on their minds than that of the international investment public. Much will have to be ignored.

This is always a bad period for South African public relations; the political lobby; government relations and for departmental heads who may get rough treatment as they report to MPs on their achievements and as Parliament progresses towards the period of the medium term budget.

Heads down.

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