South Africa, Mozambique, Kenya and Tanzania as well as other countries are due to either bring new legislation before government for approval this year or start the drafting process relevant in the Energy Sector.
Laws they are considering could raise tax rates, give state-backed oil companies automatic equity stakes in new projects and require companies to meet job-creation targets. These African governments are creating laws that give them more control over the energy sector in attempt to begin or enlarge oil and gas production. More than ever, African governments are under public pressure to safeguard that wealth.
In South Africa and elsewhere, calls for nationalizing the country’s mines have grown louder, reflecting frustration among the young and poor that foreign investment in the sector doesn’t spread far beyond politically connected elites.
The days of mining and oil companies walking into Africa dictating their own terms are over. The reality is that there’s more competition now and governments are more accountable to their people. There’s a heightened sensitivity to getting more out of the resource sector for the country itself.
Talks between government and companies continue and the final regulations should go before parliament by the second half of next year. South Africa could have the world’s eighth largest technically recoverable shale-gas reserves, according to U.S. Energy Information Administration data.
Mozambique’s state oil company already has a 15% stake in key projects and plans to further explore as a means to increase its stakes in gas fields. Amongst the push for gas development, Mozambique this year will also decide whether or not to increase its capital-gains tax on mergers and acquisitions to 32%. Currently, there is no uniform rate. Mozambique has the potential to become the world’s second-largest liquefied natural gas exporter by 2025.
Tanzania is set to begin amending its natural-gas legislation, potentially adjusting tax rates and the government’s stake in projects. The country passed a natural-gas policy in the fall that puts meeting domestic energy needs ahead of exports. Tanzania is gold producer, and natural-resource extraction is a sensitive issue following strikes and violent protests around its mines in recent years.