Sensible policies vital for Richards Bay oil investors

IF government does not stop spinning the policies ‘wheel of fortune’, South Africa’s economic outlook will go from bad to worse.

Economists have warned that constant changes to authoritative regulations such as the BBBEE (broad based black economic empowerment) rules and the Mineral and Petroleum Resources Development Act, continue to stunt economic growth, dangerous on the brink of a recession.

With oil explorers off KZN’s shores and two massive investors earmarking Richards Bay and Port Durnford for oil and gas storage facilities, it is especially vital for this region that government slackens their reigns on oil and gas provisions.

‘The proposed Mineral and Petroleum Resources Development bill in its current form requires a foreign investment company to provide the government a free stake of 20% in their company even before any oil or gas is found,’ said Deputy Dean in the Faculty of Commerce Administration and Law at the University of Zululand (Unizul) Dr Irrshad Kaseeram

‘Additionally, the act provides the state the right to buy back up to 100% of the oil or gas project.

‘No profit seeking investor will be willing to invest in a situation where their property rights are uncertain.

‘The former Mineral Resources Minister Ngoako Ramatlhodi was willing to send back the bill for amendment.

‘It is hoped that the new and inexperienced Minister Zwane will continue in the same vein as Ramatlhodi.’

Excuses axed

While the ANC recently acknowledged that government needs to review some of its policies to stimulate growth, leaders still regularly defend its position by blaming weak global conditions.

‘Global conditions are not conducive to economic growth, however, our problems are largely self-imposed,’ said Kaseeram.

‘The reason for the poor economic growth and the secular decline in private investment arises from investment risks that have arisen in the economy owing to policy inefficiencies and uncertainties ranging from changing BBBEE rules; bills that weaken private property rights in mining, farming and oil and gas sectors as well as the inability to implement the NDP (National Development Plan), poor planning resulting in under-provision of electricity and water and a bloated government that gives itself salary increases that the fiscus cannot afford.

‘Other concerns are the lack of foresight regarding skills shortages and the inconveniences to tourists when devising immigration and visa rules.

‘In the minds of conservative investors, all these factors grouped together points to serious investment risks.’

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