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Auction EPLs and Fix the Regulatory Environment- Says BoN

By:Nghiinomenwa-vali Erastus
Last week the country just learned that some precious mineral, lithium has been smuggled out of the country and some valuable EPLs are being contested.
At the same time, Canada toppled China as Namibia’s biggest importer of uranium, while the USA and European all declared interest in the country.
Amid all this, the country has discovered oil resources which has breathed optimism into the economy, and the Bank of Namibia’s assessment revealed that the discovery and optimism have the potential to assist the economy to recover from recent setbacks.
In its latest annual symposium, the country’s central bank director for research and financial sector development, Emma Haiyambo presented a paper, Overview of the oil, gas, and energy resources in Namibia.
In this paper, the central bank advised the country to reconsider the way it allocates access to the country’s rich minerals, with it recommending auctioning.
Currently, an EPL application costs N$10 000, for a local or foreign investor.
“A proper appropriation of exploration licences, through auctions and offers to high best bidders to improve the transparency of the EPLs allocation process in the country,” advised Haiyambo.
This recommendation came when early this year the mining ministry highlighted that it will be difficult to auction EPL when they do not know for sure if the area explored has any mineral deposit.
Haiyambo highlighted that Namibia will also need to review the current mineral royalties and taxes to ensure a balance between attracting investors and safeguarding optimal benefits for the country from the resources.
The central bank has also highlighted the issue of ensuring optimal local content in the exploitation of the resources that should remain prominent- the country has drafted a mineral beneficiation strategy that is yet to be utilised.
“Namibia needs to ensure that the resources are managed appropriately and that the benefits transmit to the ordinary citizens,” Haiyambo stated.
For the newly emerging sector such as green hydrogen, the central bank suggests that the country offer targeted incentive packages to reduce the investment risks faced by early adopters in the green hydrogen initiatives.
Moreover, cooperation on energy infrastructure development at a SADC regional level should be prioritised.

Various loopholes in the country’s mineral sector have been highlighted over the years, as the country keeps extracting and didn’t minimise to add value, while the value of the benefits being derived has not been satisfactory to many including policymakers.
The latest highlight is the green hydrogen projects that fall outside the scope of the various legislative pieces in existence.
Beyond article 100 of the country’s old constitution, there are only four legislative pieces that regulate the oil and gas sector, all of which are more than 30 years old.
The Bank of Namibia’s findings revealed that the country lacks specific regulations to regulate high-risk occupational health in the economy.
The bank scrutiny has also revealed that there are no requirements in the Petroleum Act for building the capacities of communities to understand the potential environmental & socioeconomic impacts presented in EIA processes.
While for value addition and beneficiation, the bank found that there is a lack of clear guidelines for local content requirements – (from the updated give to the bank the guidelines are being worked on).
Moreover, the country is also sailing blindly on how to facilitate wider benefits through procurement and participation of local suppliers.
Since the country is in the highest gear to attract investors locally and abroad, the central bank believes that more reforms are needed for the current legal framework to attract investors.
With a persistent budget deficit and the central bank drowning in debts, the central bank recommends that the country seriously address the fiscal regime in the extraction industry.
The monthly mineral sectoral report as prepared by the Namibia Statistics detailed how much the country is digging/extracting the raw material and sending it to Walvis Bay- while on a weekly basis the central bank is borrowing to fund government projects.
The presentation has also reminded the policymakers and relevant authorities to address the accessibility and cost of electricity in Namibia, currently, the country faces energy insecurity with its reliance on Eskom for baseload power and intermittent generation.
The oil discovery and other non-climate friendly resources have also come at the time the planet has been warmed up by the industrialised nations and now they are leading the call for decarbonization.
The central bank has advised the country to reconcile decarbonization efforts and oil discoveries. Email:

Nghiinomenwa-vali Erastus

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