Open Letter to President Jacob Zuma About Mineral and Petroleum Resource Bill | Western Cape Government


Open Letter to President Jacob Zuma About Mineral and Petroleum Resource Bill

14 April 2014

Dear President Zuma,

Two weeks ago, after it was unconstitutionally bulldozed through Parliament by the ANC, the Draft Mineral and Petroleum Resources Development Amendment Bill was sent to your office for signature. If you sign it in to law, South Africans will have no option but to hold you personally responsible for the damage that will be done to our young Oil and Gas industry, which has the potential to deliver cleaner and cheaper electricity, and for all the jobs that may not be realised as a result of less foreign direct investment in this sector.

In its current form, the MPRDA Bill contains two highly problematic clauses which must be reviewed.

The first affords the state the right to a 20 per cent free carried interest, in essence a 20 per cent mandatory tax, on all new exploration and production rights of oil and gas.

The second “entitles” the state to a further participation for which it can either pay an “agreed price”, whatever that may mean, or enter into a production sharing agreement complete with voting rights.

Through this Bill, the South African government is legislating for itself first dibs on 100 per cent of all new Oil and Gas production initiatives by private companies. The effect of this on foreign investment may be devastating, especially in light of South Africa being up against its far more welcoming neighbours which are actively competing for FDI as a tool to generate growth and jobs.

For these reasons, signing this Bill into law makes absolutely no sense unless it is a deliberate ploy to kill the gas industry. My concern grows ever deeper on the back of widespread reports that your party, the ANC, once had significant financial interests in the multi-billion rand Medupi and Kusile coal-fired power plants. I am forced to ask myself whether the ANC is once again operating behind the scenes to enrich itself at the expense of ordinary citizens?

If our Oil and Gas industry takes an early knock, so too will our potential to reduce our reliance on oil imports, to reduce the volatility we currently face as a result of fluctuating prices and exchange rate shifts, and to reduce the current account deficit we’re stuck with as a result of our poor trade balance.

Most of all, this Bill will sink thousands of potential jobs for our people.

That is why I am urging you to send it back.

Mr Zuma, if you care about all South Africans, and if you are indeed dedicated to job creation, as you claim to be, you will not hesitate to heed my request.  Signing this Bill into law as it currently stands would be a crime against the unemployed people of our nation.

Media Enquiries: 

Bronwynne Jooste
Spokesperson for Minister Alan Winde
Ministry of Finance, Economic Development and Tourism
Western Cape Government
Tel: 021 483 3550
Cell: 082 454 4365