Blessing and a curse

23 May 2013
Author  

The announcement by HRT this week that it has discovered oil in Namibia is perhaps a reason for cautious optimism about Namibia’s energy future.

 

We say cautious optimism because we need to temper our joy by looking at some of the harsh realities of the oil exploration business and remember that great oil wealth is not necessarily always a blessing.

Of course, HRT qualified its announcement by stating that the oil deposit was not large enough to consider economically viable.

Therefore, delirious and giddy celebrations because we think we may soon join the mega-wealthy, oil rich nations of the world are premature and we should not start counting our oil dollars yet.

If the oil find is genuine, it does create an entirely new paradigm.

It shows that offshore Namibia does have the potential to yield oil-bearing geological formations and is not merely ‘gassy’ as some international analysts have concluded.

Where there is even a little bit of oil, there might potentially be much more.

Many of us greeted HRT’s announcement with a degree of well-practised cynicism – and not without good reason.

If you have lived long enough in this country, you have seen and heard it all before and you tend to greet these supposedly earth-shattering announcements with a great big yawn.

How many times have we heard this story before; that the country is on the brink of discovering major oil reserves but only to have our hopes dashed.

Furthermore, it seemed too much of a coincidence, and the timing just too convenient that HRT should discover oil at this particular time.

The news came on the same day that the reputable Bloomberg news agency reported that HRT had decided to abandon its oil wells in Namibia after it found non-commercial volumes of oil.

It came barely two weeks after the shock news that HRT’s founder and CEO Marcio Mello had resigned for mysterious reasons.

Furthermore, the company’s share price had fallen by 90 percent since its all-time high in 2011 and plummeted 44 percent alone this year.

Inevitably, the flamboyant press conference had the appearance of hastily arranged damage-control exercise.

Some of course, questioned whether the purpose of the press conference might not have been to goose HRT’s share price long enough to allow key shareholders to off-load their shares before they became completely worthless.

This includes Namibian shareholders like Knowledge Katti and no doubt a number of other very influential Namibians.

Others condemned that kind of negativity, saying Namibians are their own worst enemies because they never want to believe anything positive about their own country.

There might be a certain amount of truth in this view, but in the case of the media people tend to forget that we have a duty to look at issues in a critical light.

It is not the role of the media to swallow everything officials, politicians or businesspeople tell us hook line and sinker without asking the hard questions.

Looking at issues critically does however not mean that journalist should have a jaundiced and vindictive outlook on life and use their positions to pursue personal vendettas.

The suggestions that Prime Minister Hage Geingob staged the announcement of the oil find to enhance his own reputation is a bit below the belt, and one would like to think unworthy of the profession.

The fact is that not only Geingob, but also the entire Government – perhaps rather unwisely – have tied their fate to and gambled their credibility on that one of the numerous exploration companies operating in offshore Namibia will find oil.

That is not a sound political strategy, and if any exploration company makes overblown or misleading claims let it suffer the consequences on its own.

We should not jeopardise the credibility of the Namibian government, or the country as whole, by tying our fortunes to such risky ventures and uncertain outcomes.

Our Government and we as Namibians are anxious, over-eager and sometimes resort to desperate acts to solve economic problems like unemployment and widespread poverty.

This makes us vulnerable to accepting the claims made by foreign investors at face value, and against our better judgement.

The question of whether we should allow individuals to use State House, and the presidency, as a means to advance their own private commercial interests is a legitimate question that warrants wider debate.

The HRT press conference is, however, neither a unique nor an isolated incident and there are many precedents where our Government has not exactly covered itself in glory.

Some of us still vividly remember how Founding President Sam Nujoma warmly received a group of shysters and con men at the old State House who promised to build an oil refinery at Usakos.

Against our better judgment, we were more than willing to accept that it actually made economic sense to build an oil refinery at Usakos rather than Walvis Bay, blinding us to the fact that the entire scheme was a sham.

State House also rolled out the red carpet for Pidico, an investment swindle that will live in infamy.

Finding oil is not always a blessing for a country, and many experts on governance and economic development refer to what they call they call the ‘oil curse’.

Stanford University professor Terry Karl wrote that oil-dependent countries, “eventually become among the most economically troubled, the most authoritarian, and the most conflict-ridden in the world.”

Tina Rosenberg writing in the New York Times points out additional hazards of vast oil wealth.

“Oil concentrates a nation’s economy around the state. Instead of putting resources into making things and selling them, ambitious people spend their time currying favour or simply bribing the politicians and government officials who control oil money.

“That concentration of wealth, along with the opacity with which oil can be managed, creates corruption.”

They are perfectly right about what has happened in the vast majority of oil rich nations, and quite frankly, we already have more than enough corruption in this country.

However, does it mean that we have to accept this as inevitability and the only possible outcome in every country?

No, because if we accept that it means we have lost faith in the future of humanity, and once we lose faith in humanity what do we have left to believe in.

We have to believe that the discovery of oil in Namibia can produce a different outcome and bring about a better country and improved living conditions for the people of the country.

For that to happen we need to start planning how the country will manage its oil resources, what institutions it will create to manage the oil money and prevent it from falling into corrupt hands.

For the time being, let’s welcome and embrace the good news that Namibia has discovered oil.

The little vial of oil HRT displayed at its press conference means we have to start the process of planning for oil now, today, not tomorrow.

2113 Views

WINDHOEK OBSERVER

The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

Contact Us

Windhoek Observer House
c/o John Meinert & Rossini Street
Windhoek West
Namibia
Tel: +264 61 411 800
Fax: +264 61 226 098
www.observer.com.na