National Upstream Petroleum Local Content Policy could be abused

The Institute for Public Policy Research (IPPR) has raised concerns that the envisioned National Upstream Petroleum Local Content Policy could be subjected to abuse.

The think tank called for transparency and accountability systems.

“The big fear is that politicians and officials will abuse that power and influence to use local content procurement plans to benefit their associates and family members,” IPPR Director Graham Hopwood said at the launch of their procurement tracker on Wednesday.

Hopwood said allegations of favouritism in the allocation of Petroleum Exploration Licences (PEL) do not provide any confidence in the ability to bring transparency in the country’s upcoming oil and gas sector.

“One of the points over the years is we feel that the PEL system has been granted to favour a very small minority of politically connected Namibians. If that’s already been happening in the petroleum exploration licence phase, we could see the same pattern or worse in the production phase, especially through local content,” he said. 

At the same time, the IPPR Director highlighted that there is a temptation from international oil companies to accept or pay bribes.

“In order to mitigate this, preventing corruption in local content requires a set of measures aimed at strengthening transparency and accountability systems. As a result, the IPPR has recommended action in some areas including anti-corruption clauses in contracts that spell out the behaviour expected from the contracting partners and send a strong signal with regard to the government’s or company’s commitment to fight corruption,” he said.

The IPPR has recommended that “dedicated and independent oversight bodies for local content policy including overseeing the selection of pre-approved local suppliers that can be vetted to ensure they have clean track records and are not linked to the politically connected” would help. 

The policy research institute called for transparency through public disclosure of those that will be awarded contracts and measures should be put in place to avoid overpricing and collusion.

“Procurement regulations in local content requirements should guarantee fairness throughout the procurement process and include measures to avoid overpricing, bid rigging, and cartel activity. Disclosure of beneficial ownership is instrumental to ensure that local content contracts are not awarded to political groups and that ‘front’ companies are not being used to circumvent local content requirements.”

Hopwood said during the workshop the Minister Tom Alweendo did not go deep into the issues concerning transparency and accountability, emphasising the importance of addressing these issues.

This comes after the Ministry of Mines and Energy recently had a stakeholder workshop on the draft National Upstream Petroleum Local Content Policy.

The draft policy highlights its objectives as the provision of a clear and stable regulatory framework for local content requirements and the identification of specific sectors for the development of local capacity. 

Minister of Mines and Energy Alweendo has also raised concern over corruption in the emerging oil and gas industry, highlighting it would be a boulder in the effective implementation of the petroleum local content policy.

The Bank of Namibia (BoN) has 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.

 

 

 

 

 

 

 

 

 

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