SA is firmly embracing resource nationalism. As the country dives into this uncertain policy approach, hopes of substantial economic dividends from a new oil and gas industry are being vanquished.
The new Upstream Petroleum Resources Development Bill, published on Christmas eve, is the latest and clearest step towards resource nationalism in SA. The bill calls for a 20% free equity interest in all gas and oil exploration and production for the state, via PetroSA. The parastatal will have full voting rights attached to the 20% (known as a “carried interest”), which will presumably mean it will have board seats too. It must also have an operating agreement with the operator of the asset.
This entrenches resource nationalism further after the 2018 Mining Charter, which remains mired in litigation.
The bill fits the direction of evolution of wider African resources policy. The disastrous postcolonial statist model of resource development gave way to the Washington Consensus private sector-led model in the 1980s.
However, driven by domestic concerns that multinationals were getting rich in Africa amid a sea of poverty, a third way has been emerging over the past decade. It introduces the hand of the state to guide the private sector to ensure maximum domestic revenue and development spillovers into the domestic economy from resource extraction.
Resource nationalism of this sort has not yet been properly tested anywhere. Similar laws have been implemented in several African countries in the past few years, including Tanzania, the Democratic Republic of the Congo, Mali and Zambia. In most of these there has been sharply negative consequences for mining investment, and implementation has often been delayed or fudged.