Oil law gaps could cost Namibia dearly - expert

Namibia risks exposing itself to costly disputes with international oil companies if it moves into petroleum production without putting comprehensive upstream laws and regulations in place, Jenik Radon, an international development expert and adjunct professor at Columbia University's School of International and Public Affairs (SIPA), has warned.

Speaking at a Bank of Namibia (BoN) annual symposium public lecture last Wednesday, Radon urged Namibia to slow down and be deliberate as it prepares to transition from exploration to oil production, warning that gaps in the regulatory framework could create legal and financial risks for the state.

“One of the things that surprised me… was that your laws for upstream are really not there yet, nor are your regulations. "Wow, is all I can say,” he said.

“Because that can be used against you if you now give a permit for production. If you don't have it in place, that's an expectation," Radon stressed.

He said Namibia should study international arbitration involving governments and oil companies before finalising its laws, contracts and administrative systems.

“One of the things that was not mentioned today for Namibia is: have you looked at all the arbitrations that are committed around the world where oil companies have sued the states, sometimes on crazy theories?” he asked.

"You have to look at what else is happening in the world and adjust your laws and your administration and your contracts accordingly.”

Radon’s warning comes as Namibia works to overhaul its upstream petroleum regulatory framework through the proposed Petroleum (Exploration and Production) Amendment Bill, 2025.

The bill seeks to replace the existing ministry-centred administration under the 1991 Act with an Upstream Petroleum Unit in the Office of the President, headed by a director general and deputy director general.

The bill remains part of the parliamentary legislative process, meaning the proposed framework has not yet become the country's governing upstream petroleum law.

'Go slow'

Radon said Namibia should resist pressure to rush its petroleum development framework simply because major discoveries have created expectations around first oil.

“So the theme for me … be deliberate. Go steady. Go slow. Don't go too fast because you have a destination: prosperity for your country. Get it right,” he said.

Radon also questioned Namibia's royalty structure, describing the 5% royalty rate as very low.

“It was also mentioned by a prior speaker that the royalty rate is pretty damn low. I must say it's very low," he said.

Radon’s comments come against the backdrop of a growing debate over how much Namibia should retain from its emerging petroleum industry, including through government participation, taxation, royalties and local-content requirements.

Three weeks ago, Charles Mbeha, deputy director for compliance, regulation and local content at the Upstream Petroleum Unit, cautioned against judging Namibia's petroleum benefits solely by the government's direct equity stake.

Mbeha said government participation currently stood at between 10% and 15%, while noting that the government wanted to increase its participation over time.

“Government will receive income tax, which is about 35%, as well as royalties of 5% and Namcor's participation,” Mbeha said at the National Upstream Petroleum Local Content Policy Validation workshop.

The comments highlight the distinction between government ownership in petroleum projects and the broader fiscal benefits that can accrue to the state through taxation, royalties and participation.

Beyond first oil

President Netumbo Nandi-Ndaitwah has similarly framed Namibia's petroleum ambitions around broader economic transformation rather than simply producing its first barrel of oil.

Five months ago, she announced that Cabinet had approved, in principle, the country's upstream local content policy following nationwide consultations.

The policy is intended to increase Namibian participation through skills development, employment creation and enterprise growth as the country moves towards petroleum development.

“As Namibia transitions from exploration to development, the focus is on execution, timely project delivery and value realisation. Partnership remains central to achieving these objectives,” Nandi-Ndaitwah said at the 8th Namibia International Energy Conference.

“While first oil is a critical landmark, it is not the end goal. The objective is structural transformation, inclusive growth and long-term prosperity.”

Radon also stressed the importance of investing petroleum revenues in human development, arguing that Namibia's people should remain its most valuable long-term asset.

“Human development. That was mentioned by a number of speakers. That is your most important and valuable asset,” he said.

He urged Namibia to use its natural resources to build skills and education capacity, warning that developing human capital takes considerably longer than importing expertise from abroad.

“Education takes time. But you have to start. And I think that's the opportunity. Why are you doing it? Remember, I said you're doing it for a vision.”

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