Public consultation the ANC way. ‘We tell – you listen.’


Author: Mike Cohen, Bloomberg|

20 March 2014 15:21

Mining law risks challenge if public not consulted

All nine provinces must have sufficient time to consult the public.

South Africa’s amended mining and energy law could be thrown out should the country’s nine provinces have insufficient time to consult the public, the opposition Democratic Alliance said.

The National Council of Provinces, given just 12 days to pass the changes rather than the required six weeks, “are going to open themselves up to constitutional litigation,” Elza van Lingen, leader of the party on the council, said today.

The ruling African National Congress is “hell-bent on getting this bill through,” she said by phone from the city of Port Elizabeth. “The provinces are saying we can’t do it.”

Amendments to the 2002 Mineral and Petroleum Resources Development Act, which include allowing the state to take a free, 20% stake in all new energy ventures, were passed by the National Assembly on March 13, before being referred to the NCOP, parliament’s second chamber. The law is backed by the ANC, which seeks a bigger role for the state in the economy.

The provincial legislatures are “in injury time,” Freddie Adams, the chairman of the NCOP’s Select Committee on Economic Development, Energy and Mineral Resources, said today by phone. The NCOP’s planned adjournment in a week’s time gives it little time to hold public hearings on the bill, according to Adams, who said it does have the option of calling an additional session after the normal parliamentary schedule ends March 27.

“We can always make a request to the presiding officers of parliament to have a special sitting” to pass the amendments, said Adams, an ANC lawmaker. Still, processing the bill before the May 7 general elections is going to be “very tight” and “will depend on the legislatures.”

The amended law would also enable the mines minister to declare some minerals strategic and force companies that produce them to sell some output locally. The bill has been opposed by groups including the Offshore Petroleum Association of South Africa, whose members say the law will deter investment.

©2014 Bloomberg News


Shale gas – Legal opinion weighs in on potential ANC gas grab

“Catastrophic” amendment threatens to make SA’s shale gas bonanza stillborn

Posted on March 13, 2014 in Interviews

My awareness of shale gas’s revolutionary potential started a couple years back at the World Economic Forum meetings in Davos. During a private dinner for technology pioneers, each table was asked to share what they believe will be the most transforming process for America over the next decade (the audience was mostly from Silicon Valley). The most popular vote went to 3D printing, but my ears pricked up when the chairman of a major oil multinational suggested it would be shale gas – which, he claimed, would re-industrialise the USA. As South Africa’s reserves are supposedly close to those that America possesses (and our economy one seventy fifth the size) I have been paying close attention ever since. Including reading the detailed research into SA’s shale gas potential by the late Tony Twine. When the way was cleared for Royal Dutch Shell to go ahead with a $200m exploration project in the Karoo, like many others I started to get really excited about the country’s potential game-changer. But in their eagerness to cash in – or perhaps ignorance of investment processes – South Africa’s politicians appear to have badly over-reached with a last minute amendment to proposed legislation governing oil and gas. On top of a free 20%  slice of all new shale gas businesses, the Government is now demanding the legalise an option to buy the balance of any project at “an agreed price”. The only local lawyer with a PhD in the subject, ENSafrica’s Luke Havemann, is appalled. He warned us yesterday ahead of the Parliamentary vote which approved the amended Bill. This afternoon’s interview began with my reference to DA shadow minister James Lorimer’s assertion that the amendment was catastrophic. – AH   

DR LUKE HAVEMANN:  ‘Catastrophic’ is a strong word, but in this situation, strong words are appropriate.  We’re sitting with a situation where the legislation is threatening the very existence of the South African oil and gas industry.  It is something you can use the word catastrophic for.

ALEC HOGG:  Just unpack it for us.

DR LUKE HAVEMANN:  Well, as you more than likely know, we have for some time been debating the Mineral and Petroleum Resources and Development Bill.  There have been many problems with that bill over the course of the last few months.  Many commentators have picked up on them, but the one that’s really sticking out at the moment is this one about the free trade interest and the additional further percentage that the government will be able to acquire down the line.  What you’re really looking at there is the taking over essentially, of the endeavours of the oil and gas industry by the government.  It has been described, as you know, as nationalisation by stealth but perhaps expropriation is a better term.  I don’t know if you’d perhaps like me to get into those percentages.

ALEC HOGG:  Sure, but just before we get there we had Rob Davies on CNBC Africa this morning actually, being rather flippant about the resistance to this, saying that there are companies lining up to get involved in shale gas.  So government doesn’t think it’s going to have any problems in finding new investors in this sector.

DR LUKE HAVEMANN:  Well, were those investors aware of the amendments made a week ago?  This current possible percentage of 80 plus 20 – 100 percent of your operation being taken away from you – that only came into being a week ago.  Yes, people have been lining up.  We were an exceptionally attractive frontier province for some time now.  The last few years have seen an explosion of interest in offshore and onshore acreage, but that was under a very different set of circumstances.  The new set of circumstances, which was brought before the Mineral Resources Committee without input from the industry and even without input from the DA members of that committee, is something that’s very new so Mr Davies’ opinion should perhaps be tempered by knowledge of the fact that the current situation only recently came into being.  We have yet to receive the industry’s comment on it.

ALEC HOGG:  It seems as though the media so far has been missing the point, certainly from the way you described it to us yesterday.  There’s a free carry of 20 percent and I don’t know if too many people can argue with that.  The country owns the shale gas, but the problem has been over and above the 20 percent.  If I understand it correctly: up until last Wednesday, Shell would do their exploration and whatever business it decided to create in shale gas, it knew that it would have to give 20 percent to the government?

DR LUKE HAVEMANN:  Yes, that is the free carried interest.  That was in the pipeline and that was understood.  There was some resistance to it, but it wasn’t unacceptable and it could be lived with, so yes, that was the situation.

ALEC HOGG:  In addition to that, there was a further amount that government would be allowed – or the state of South Africa would be allowed – to buy in the growing concern, and that amount was 30 percent – correct?

DR LUKE HAVEMANN:  That’s correct.  There was an option to acquire a further…in the amount of 30 percent and that has since changed.

ALEC HOGG:  All right.  So at least the investors were falling over themselves apparently – according to Rob Davies – when they knew they had to give 20 percent of their business to the government and government would have the ability, if it so chose at some stage in future, to go up to 50 percent to a joint partnership.  The problem is that 30 percent has changed.

DR LUKE HAVEMANN:  That’s correct.  You hit the nail on the head.

ALEC HOGG:  And the 30 percent is now…

DR LUKE HAVEMANN:  Eighty percent.  20 plus 80 and it gets you to 100 percent.

ALEC HOGG:  So it’s nationalisation, in other words.

DR LUKE HAVEMANN:  Well, that’s the word that’s been bandied about.  When it first came to light in that Mineral Resources Committee meeting, the relevant members from the DA said ‘but this is nationalisation’.  I think they were the ones who first used the word.  It certainly smacks of it.  It’s something that needs to be looked at very closely.

ALEC HOGG:  Let’s just understand this in terms that anyone can understand.  Shell is going to spend two-and-a-half billion Rand/250 million US Dollars exploring.  If it all comes out rosy, as we all hope as a nation, and then they might possibly spend another $10bn for argument’s sake, in creating a business here.  If that business becomes profitable, the way the law is now written the government of South Africa can buy back that business.  At what price?

DR LUKE HAVEMANN:  Well, the original position was that they’d have to pay Fair Market Value.  That has apparently since changed, under the latest Amendments to the Bill and is now going to be ‘acquisition at an agreed price’.  What is an agreed price?  What is it going to be?  That’s the next question, now.  That’s the latest Amendment.

ALEC HOGG:  So an agreed price between two parties in fact, could be quite a long way from market value.

DR LUKE HAVEMANN:  It could very well be a long way from market value.  The interesting thing is the new legislation says the state is entitled…has a right to exercise that option, so there’s a strength on the side of the law – on the state’s side.

ALEC HOGG:  So government has approved these Amendments.  What happens next?

DR LUKE HAVEMANN:  The Bill will now go to the National Council of Provinces to be voted on there.  After that, it needs to go to the President for his signature to become law, so there are still two steps left.

ALEC HOGG:  And if it does become law, what is your sense from the industry about how they will react?

DR LUKE HAVEMANN:  Well, the industry may well challenge it.  I know if many of them will be willing to do so, because you don’t ever want to bite the hand that feeds you.  At the end of the day, the state is the one that grants you the rights you need in order to exploit our resources, so to challenge them would not necessarily be in your best interest.  There may be a backlash.  What they may well do is simply relinquish their acreage, start looking elsewhere, and look for a favourable legal environment – further north perhaps.

ALEC HOGG:  So elsewhere on the continent – elsewhere in the world…

DR LUKE HAVEMANN:  Yes, elsewhere on the continent…I suspect East Africa.

ALEC HOGG:  But surely, there’s a Plan B in all of this from the government’s perspective.  If you are putting these draconian measures into law, that will get rid of most Western Investors.  Would it be someone in the east perhaps, who is ready to come in?

DR LUKE HAVEMANN:  Okay, this is all speculation.  I’d like to know what government’s Plan A is at the moment; let alone what Plan B is.  This sudden change of tack at the moment is leaving everyone with their jaws open, saying ‘what are we doing?  What’s the motivation?’  I’d love to understand it and many of us would.

ALEC HOGG:  Not quite everyone…Rob Davies says that they’re lining up to come in, but as you say, perhaps he’s working on outdated material.

DR LUKE HAVEMANN:  Look, I think what he needs to do is consult with the industry.  The industry – when the news broke – said ‘we weren’t consulted on this’, so let’s consult with the industry, unless he did so in the course of the last week.  Let’s hear what they have to say about it.




For Immediate Release

March 7 2014


“The lack of strategic management of the oil and gas industry by the Department of Mineral Resources appears to be exacerbated by impulsive and uncoordinated direction from the executive government. While we do not support the wholesale extraction of all available minerals, we do understand the need for a controlled and structured mining industry in South Africa. Every country needs its resources developed and distributed in a responsible way and in most cases this is achieved via the private sector in concert or partnership with government. We do not support the latest proposed amendments.”  This is the view of TKAG leader, Jonathan Deal referring to media reports on proposed amendments to the Minerals & Petroleum Development Act, (MPRDA). According to a Business Day report, African National Congress (ANC) MPs on Wednesday proposed that the state be entitled to take over the entire operations of any future offshore and onshore oil and gas ventures.

The idea, which was said to have ‘surprised’ DA MP James Lorimer, was contained within the proposed amendment of clauses 86A (1) and (2), which, if passed as they presently stand, would give the state, through a designated organ, a right to a 20% free carried interest on all new exploration and production rights of oil and gas. The ANC’s proposed changes to clause (2) say that in addition to the free carry interest, the state is “entitled” to further participation of up to 80%. Currently the clause imposes a ceiling on the state for an additional acquisition of 30% of the venture. According to the DA, if this proposal is adopted, it could clear the way for the State to effectively nationalise the mining industry. DA MP James Lorimer pointed out that if the amendments were voted on and adopted, the Bill could come before the National Assembly next week (March 1o-14) and then soon after at the National Council of Provinces, and practically law before the May 7 national elections.

TKAG commented that this latest move by the ANC served to highlight the confused and confusing approach of the State to addressing the management of the country’s mineral resources. Recent months have seen uncoordinated utterances by Cabinet Ministers, in conflict with Government Gazette notices and speculation on final regulations for oil and gas activities indicating a last-minute change of legislative direction.

“This activity by the ANC, appears to have left the Oil and Gas Industry reeling and other stakeholders bewildered. Stakeholders consulted by TKAG are of the opinion that much of this activity could be viewed as a ‘last-minute’ attempt by the ANC to garner votes. Whatever, the motivation, the fact is that this state of affairs clearly highlights the lack of a sensible, coordinated and transparent approach to managing South Africa’s mining affairs.”



Contact Jeanie Le Roux 072-959-1818 or Elzane Grobbelaar 021-824-2935

Links as references:


Trust us, we have honest faces …

Shell trust us landscapeI heard that Bonang Mohale was in Beaufort West recently, beating the same old drum about how much Shell cares for the people of the Karoo. Bonang is the same man who told listeners on SAFM that Shell would leave the Karoo with more water after fracking than there was before … And he almost topped that by claiming in the press that Shell would leave the Karoo better than they found it.

Really Bonang? Does Shell guarantee this?

Shell claims twice for the same cost – honest?

Shell Oil to Pay $4 Million for Taking Double Profits in Oil Spill Cleanup
Posted on March 3, 2014 by Alisha Mims •
Shell Oil Company has been ordered to pay $4 million to settle False Claim Act allegations that it requested double reimbursements for a hazardous waste cleanup in Massachusetts. The company sought payment from the Massachusetts tank cleanup fund as well as from private insurers, Law360 reports.

Shell and Motiva Enterprises LLC requested reimbursements from Massachusetts’ Underground Storage Tank Petroleum Product Cleanup Fund program for more than 100 gas stations throughout the state. The companies did not reveal to state authorities that it also requested and received reimbursements from insurers, according to the state Attorney General Martha Coakley.

The scheme of major oil companies profiting from oil spill cleanups recently came to light after it was reported that a former Environmental Protection Agency (EPA) engineer and an environmental and civil rights attorney partnered with a team of lawyers, investigators, and experts to conduct an ongoing investigation into the “double-dipping” practice.

Thomas Schruben, a Maryland environmental engineer and former EPA employee who specializes in storage tanks had long suspected companies of profiting off of oil spill cleanups. Along with attorney Dennis Pantazis and their team, Schruben has brought 20 such cases to state governments, demonstrating how oil companies defraud states in order to make a profit from underground storage tank spills.

“State governments set aside tank cleanup funds to cover the costs of replacing old tanks and extracting polluted soil and dirty groundwater, not so that multibillion-dollar oil companies can profit by double-dipping,” said Christopher Paulos an attorney with the Levin, Papantonio law firm who practices in the areas of qui tam or whistleblower and False Claims Act litigation. “Shell oil and other companies have essentially defrauded state governments by collecting both state special funds and insurance money for the same cleanup efforts.”

In 1993, Shell sued insurers seeking coverage for remediating environmental damage caused by leaking underground storage tanks at its gas stations across the state of Massachusetts, according to Law360. The company settled with insurers but did not disclose the settlement to the Massachusetts’ underground storage tank fund program until February 2012.

Other major oil companies including BP, Chevron, and ExxonMobil have used the scheme to defraud states and make a profit. Recently, BP was sued by the state of Minnesota for double-dipping. The state alleged that BP violated the Minnesota False Claims Act by collecting more than $25 million from the state tank fund as well as being reimbursed by insurers.

Alisha is a writer and researcher with Ring of Fire. You can follow her on Twitter @childoftheearth.

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