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Legal experts clash over constitutionality of minerals bill

Jun 29 2017 07:36
Liesl Peyper

Cape Town – Legal experts on Wednesday disagreed over whether the amendments to the Mineral and Petroleum Resources Development Act (MPRDA) would be allowed in terms of the Constitution.

The Legal Resource Centre’s Michael Bishop told the National Council of Provinces' (NCOP) select committee on land and mineral resources that changes to the MPRDA Bill – specifically those proposed by the Department of Mineral Resources – go beyond the reservations that had first been raised by President Jacob Zuma and are therefore not constitutional.

“The question this committee must ask itself is: if this Bill is signed by the President, would it be upheld by the Constitutional Court?” Bishop said.

The Legal Resource Centre, a public-interest, human rights law clinic, made a submission to the NCOP on the amendments proposed in the MPRDA Bill, and told MPs it would be best to scrap the Bill in its current form and start afresh with the process.

The Bill was passed by the National Assembly in November last year and sent to the NCOP for further deliberation and consultations at provincial level.

Bishop said the way in which both the National Assembly and the NCOP dealt with the substantial and procedural reservations raised by Zuma was flawed.

“You can’t go beyond the reservations that the President raised.”

The amended MPRDA Bill was first passed in 2014 and sent to Zuma for ratification. In January 2015 however Zuma sent it back to Parliament, citing concerns about the lack of consultation with communities and the possibility that the beneficiation provisions in the Bill were in contravention of international trade agreements.

The Department of Mineral Resources (DMR) has since introduced 57 amendments to the Bill, many of which are to address concerns of the petroleum and gas industries.

Bishop argued that Parliament needs to confine itself to the President’s concerns and cannot introduce amendments following from procedural defects, especially if the public participation process on the amendments were not adequate as is being alleged.

“It would be too much of a risk if you pass the Bill at this point,” he told MPs. “It can’t be fixed at this stage. Reject the Bill and start again.”

The Offshore Petroleum Association of South Africa (Opasa) however disagreed. A number of the amendments in the MPRDA was made as a result of negotiations the petroleum industry held with the DMR at Operation Phakisa.

Law firm Bowmans said in a company note on its website that the DMR agreed to relook the clause that deals with free carried interest in which the state would levy a 20% free carried interest in all new exploration and production rights, as well as a further participation interest in the form of acquisitions at either an agreed price or through production sharing agreements. 

Geoff Budlender SC, who argued on behalf of Opasa, said the NCOP has the power to remedy defects in legislation.

“Where there’s a procedural problem in a Bill the NCOP should remedy it by facilitating public participation and considering whatever comes out of that process,” Budlender said.  

“You can’t ignore the recommendations; you have to consider the recommendations from the participation. They can’t be limited to the substantive issues. You’re entitled to look at the whole Bill.”

Budlender added that the Constitution provides for “remedy” not “paralysis”.

He conceded that there may be questions regarding the amendments the DMR proposed on its own - changes that extended beyond those that emanated from Operation Phakisa.

Some of the DMR's amendments may not have been subjected to public consultation.

“You have two options,” he told MPs. “Consider both the 'Phakisa' amendments and the DMR’s, or only the ‘Phakisa’ amendments.”

He asked MPs to not “throw out the baby with the bathwater”.

The amendments that flowed from the Operation Phakisa negotiations are a model for democracy, he said. “That is what public participation is about.” 

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