Bigger stake for state proposed in oil and gas Bill
Publish date: 16 September 2019
Issue Number: 841
Diary: IBA Legalbrief Africa
Category: South Africa
A draft Bill dealing with the regulation of the oil and gas sector proposes that the state get a 20% free-carry share in these enterprises, BusinessLIVE reports. The state interest in these projects will be held by a state-owned enterprise and the state will also have representation on the boards of petroleum companies. Provision is also made for the state to have reserve blocks for national development imperatives. The draft Bill also introduces a production bonus payable on the granting of a production right and proposes that this production bonus be 0.07% of the total recoverable petroleum resources at the prevailing oil price, and 0.35% for gas. Deputy DG in the Department of Mineral Resources & Energy Ntokozo Ngcwabe noted in a briefing to Parliament's Mineral Resources & Energy Committee on the department's legislative programme on Friday that the average production bonus internationally is 0.1%. A petroleum resource rent tax is also envisaged. The department anticipates that the Bill will be introduced into Parliament in the first three months of 2020.