# Draft law proposed to give state a share in petroleum

- Link: https://dearsouthafrica.co.za/2019/09/16/draft-law-proposed-to-give-state-a-share-in-petroleum/
- Published: 2019-09-16T13:28:40+02:00
- Author: dearSA

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2019-09-16T132601.258.png "Screenshot - 2019-09-16T132601.258")

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.

[Article](https://m.fin24.com/Economy/draft-law-proposed-to-give-state-a-share-in-petroleum-20190913?fbclid=IwAR3qAiN7Qjp-EAHyezYOUOn5ieprQtPkBRGW7NURzmPIR2cUg8LRZvRkybE)
by Khulekani Magubane, Fin24