Poor management of the oil and gas sector can drive corruption and inequality that in turn will fuel social tensions and threaten political stability, mines and energy minister, Tom Alweendo has warned.
Speaking at the recently held Namibia Oil and Gas Conference 2023, Alweendo highlighted that Namibia thus needs to learn lessons from some oil producing nations whose oil production has not resulted in a broad-based socioeconomic development.
“The duty is on us, especially those of us who are entrusted with the public responsibility to manage the sector, to ensure that the sector is managed in the best interest of the country – for the benefit of not only the current generation but importantly so for the generations to come,” the minister said further stating that oil is not an automatic remedy to all our socio-economic challenges.
He went on to say that the oil and gas discoveries in commercial quantities have raised our expectations for significant revenue flow and employment opportunities for Namibians, however, the development of an oil sector is inherently associated with uncertainties and complexities.
“One can think of uncertainties associated with issues of quantity, quality, production rate and oil price, and some of these uncertainties remain over the lifetime of an oil production project. It is therefore important that we manage our expectations and aspirations. We also need to be cognizant of the socio-political and economic complexities that can arise because of an oil discovery and the subsequent production.
“While potential significant oil investments are expected to flow into Namibia, it is not a given that prosperity will follow. Prosperity will follow only if the investments and the consequent oil revenue are well-managed. If not well-managed, the subsequent result could well be worsened socio-economic challenges,” further explained Alweendo.
Imperatively, the minister noted that governance of the oil and gas sector is imperative to ensure that potential economic benefits are shared equitably and fairly. Equally, governance failure can have far-reaching implications for the economy, social development, and political stability.
“Good governance of the sector requires all of us to play our respective roles. From the Government perspective, good governance entails that we should have clear national goals, we ensure sustainable exploitation, we have transparent processes, and we ensure accountability in decision-making and performance. However, apart from good governance processes, to effectively manage our oil and gas resources, it is imperative that the custodians of these resources possess the required skills and above all, that they must have high level of integrity.
“This is essential to reduce corruption in all its manifestations. It is also important that the investing companies in the sector play their role in such a manner that the economic benefits to be derived from the sector are shared fairly and equitably. In other words, the investing companies must earn their Licence to Operate. They need to present their manifestos to the communities and the people where they are operating from – clearly describing how they plan to make life better for them. This will include providing decent jobs, respecting local community cultures and customs, as well as immersing themselves as corporate members of that community and contributing to the broader advancement of that community,” he said.
To maximize the socio-economic benefits to be derived from this nascent sector, there is an urgent need for us to prioritize the development of our local capability to manage the sector, Alweendo alerted.
He added that Namibia needs to invest time and resources to understand and upskill itselves to be effective participants and managers of the sectors. Without the prerequisite skills and capabilities, Namibia not reap the full potential economic benefits of our oil and gas resources.
“In the development of the local capabilities, we urge the international oil companies to be active participants. We will not achieve the requisite local capabilities without the effective and serious participation of the international oil companies. Not long ago the Ministry of Mines and Energy organized a workshop to discuss issues related to the Local Content Policy in the sector.
We define local content as the active participation of Namibian workforce and entrepreneurs in the upstream oil and gas sector through training, employment and local procurement of goods and services. Local content will facilitate economic diversification, deepen backward and forward linkages from various segments of the oil and gas sector value chain, thereby fast-tracking our industrialization. Our local content policy will bear fruits only when all the stakeholders collaborate and pull together in the same direction,” he said.