Cape Town - Legislation giving the state a 20% free stake in new oil and gas ventures in South Africa may not see the light of day because parliament wrongly dealt with it as a normal bill – and not as a “money bill”, which the constitution requires.
While President Jacob Zuma’s office has referred the Minerals and Petroleum Resources Development Act amendment bill back to the national assembly because it could not pass “constitutional muster” – in layman’s language it contradicts the intention of the national constitution – he has not yet stated the reasons for coming to this conclusion.
Money Bill flaw
The Democratic Alliance, believes that the bill is constitutionally flawed for a variety of reasons. But one of the principal reasons was, it argues, that it was not tagged “a Money Bill”.
Money bills allocate public money for a particular purpose or impose taxes, levies or duties. Such a Bill can only be introduced and piloted through parliament by the Minister of Finance.
This Bill, noted shadow mineral resources spokesperson James Lorimer, was not handled in the correct manner when it went through the various stages in parliament in 2013 and 2014. It was piloted through parliament by the minister of Mineral Resources, which he says was wrong.
Tax imposition
The fact remained that it imposed a tax – requiring companies to effectively cede a 20% unpaid portion of their interest in new mining for oil, minerals or gas fields in South Africa, argued Lorimer. On top of that the government could purchase a further 80% of the interest.
“As yet I don’t know what reasons the president gave for sending the bill back to parliament,” Lorimer told fin24.
On 11 April last year a DA letter to the president listed certain other procedural problems with the bill. These included that there had been a lack of proper public consultation during which the process by which the bill passed through the national council of provinces – parliament’s second house and there had been no referral to the House of Traditional Leaders.
Webber Wentzel head of the mining regulatory group Peter Leon said the ministerial discretion – which Lorimer described as “overly broad” – “potentially offends the rule of law section of the constitution”. The minister of mineral resources is given powers to set amounts, percentages, quantities and time scales for beneficiation in regulations.
Bill undermines agreement
The Bill also undermined the GATT agreement signed by South Africa specifying that exports may not be limited – such as through beneficiation requirements.
Lorimer objected to the designation of certain minerals as “strategic” and the setting of their prices which, he argued, would amount to expropriation.
Last week presidential spokesperson Mac Maharaj confirmed the referral back to the national assembly of the bill on the grounds that it did not pass constitutional muster.
“After careful consideration of the bill and the submissions received, the president is of the view that the bill as it stands would not pass constitutional muster,” said Maharaj in a statement.