Bank of Namibia (BoN) Governor Johannes !Gawaxab has called for the development of a transparent legal and regulatory framework to govern the country’s emerging oil and gas sector.
The Governor said the framework is needed in order to ensure a level playing field and root out the possibility of corruption or favouritism.
He said Namibia needs to build competent and accountable institutions to ensure a level playing field for all actors operating in the industry, while the integrity of government institutions is vital to ensure the country maximises the benefits of its oil industry.
“Namibia must build competent and accountable institutions to avoid the resource curse. International experience has shown that resource-rich countries tend to be more prone to corruption due to their large rents coupled with weak governance structures. The integrity of our institutions is a condicio sine qua non – an indispensable action and essential factor which Namibia cannot afford to compromise on,” !Gawaxab told a recent energy conference.
He said Namibia’s recent oil and gas discoveries present a transformational opportunity to shift the country’s economic structure and increase foreign reserves and transform the country into a major player within the regional energy market.
“Namibia has the potential to punch well above her weight and size and become an energy exporter. As we move forward in crafting the future of Namibia’s energy landscape, let us remember that our natural resources are not infinite, but the benefits they bring can be. Therefore, we must strive to develop a sustainable and equitable framework that maximizes the benefits to all Namibians, both now and in the future,” the Governor said.
“Under investment-related recommendations, targeted incentive packages are required to reduce the investment risks faced by early adopters in the oil and gas sector and related initiatives.”
!Gawaxab said the proposed local content policy should specifically aim to maximise the benefits of the oil and gas sector to Namibian citizens.
“This will be achieved by enhancing and developing strategies that will target the participation of Namibian labour, goods and services, companies, ownership and financing along the value chain,” he said.
The Governor, however, warned that while oil can provide significant revenue in the short term, it is imperative that the country’s economic structure is diversified in order to reduce Namibia’s dependence on a single commodity.
“There are many examples around the world where countries have obtained windfalls from oil and gas but eventually ended up poorer than before. As such, Namibia must avoid the resource curse by learning from the experiences of others and implementing the necessary recommendations and policy considerations early on,” he said.
This comes as in November the apex bank in November called for a review of the country’s oil and gas exploration licensing to allow for more transparency and accountability.
The central bank proposes the introduction of an Excluded Parties List System, an electronic directory of individuals and organisations, which would be excluded from being allocated EPLs because of their relationship and proximity to officials in the Ministry of Mines and Energy.
Global oil majors, TotalEnergies and Shell announced that they had made “significant” oil discoveries off Namibia, which the National Petroleum Corporation of Namibia (Namcor) estimates could generate US$5.6 billion in revenue for the country at peak production, which have the potential to double the country’s economy, which Bloomberg estimates at US$11 billion by 2040.
Consultant Wood Mackenzie estimates that Namibia’s discoveries could contain about 6.5 billion barrels of oil equivalent of recoverable reserves.
