By Lot Ndamanomhata
Namibians can argue over which office should sit atop the petroleum sector — the Ministry of Industries, Mines and Energy or the Upstream Petroleum Unit now housed in the Presidency.
That is a genuine governance debate, and reasonable people disagree on it. The debate in the National Assembly has commenced on the Petroleum (Exploration and Production) Amendment Bill, 2025, which seeks to restructure oversight of the country’s emerging oil and gas sector.
But on one point there should be little room for disagreement: the state’s right to change its own laws, tax its own resource, and protect its own people must never be signed away in a stabilisation clause.
Where Namibia stands right now
Namibia is at the exact hinge point where this fight matters most. The government has not typically agreed to stabilisation or economic rebalancing provisions in petroleum agreements, and there is an old cabinet resolution stating that economic stabilisation clauses should not form part of the petroleum agreement signed with the Kudu Upstream Consortium.
But as Namibia moves from exploration to development and production, calls for these clauses are growing precisely the moment industry lobbying is heaviest and the stakes for getting it wrong are highest.
This is unfolding alongside a separate, live debate: President Netumbo Nandi-Ndaitwah announced in March 2025 that the emerging oil and gas industry would be managed from the Office of the President “in the manner that maximizes benefits for all Namibians,” and has since established the Upstream Petroleum Unit to direct, manage and supervise all upstream operations.
Critics warn this concentrates power and risks politicisation; supporters say a new, high-value industry needs unified, high-level oversight to avoid the fragmentation that has hurt other producers.
Both concerns can be true at once — centralised oversight and strong statutory guardrails against stabilisation clauses are not in tension. If anything, they reinforce each other: whoever holds licensing power, that power is worthless if it can be contractually frozen the moment it’s exercised.
Why a stabilisation clause is the wrong trade
A stabilisation clause locks a country’s laws in place at the moment a contract is signed and forces the state to compensate the investor — or simply exempts the investor — whenever it later changes tax, environmental, labour, or local-content rules. Proponents frame this as ordinary investor protection.
In practice it has meant something narrower: a country cannot raise its own royalty rate, tighten a pollution standard, or strengthen a labour law without paying a foreign company for the privilege of governing itself.
Uganda is the case study to study closely, because it happened recently, in Africa, in the oil sector, and the contracts are public.
Investigations into Uganda’s production-sharing agreements with Tullow Oil and Heritage Oil found a sweeping stabilisation clause requiring the Ugandan government to compensate the companies for any future change in the law that affects their profits — language designed specifically to block improvements in environmental standards.
Campaigners who reviewed the deal concluded there is growing recognition that such clauses are detrimental to democracy, the environment, human rights and workers’ rights, and stand as an obstacle to development, and noted that Amnesty International made the same argument about the clause covering the Baku-Ceyhan pipeline — that it creates a “chilling effect” on a government’s willingness to legislate to protect its own people.
The core problem, as that analysis put it: what looks like a political risk to an investor is simply the state exercising its sovereignty.
The scholarly record backs this up. Lorenzo Cotula, one of the most cited legal scholars on natural-resource contracting, has argued precisely for rethinking stabilisation clauses to reconcile regulatory stability with the evolution of environmental standards — a polite academic way of saying the clauses as written freeze host countries out of their own regulatory future.
The issue reached the UN level too: the UN Special Representative on Business and Human Rights, John Ruggie, argued in a 2008 study co-published with the IFC that broad “freezing” clauses can chill legitimate regulation in labour rights, environmental protection and public health, effectively giving investors a veto over public-interest lawmaking.
Even arbitral history shows how far these clauses can bind a state — breaches of stabilisation commitments factored directly into findings of state liability in Texaco v. Libya and AGIP v. Congo. That is not a hypothetical risk. It is precedent.
Nigerian legal scholarship reaches a similar conclusion from the other side of the ledger, in a country that lived the experiment: given the high level of protection these clauses confer, they can put international oil companies directly at odds with a developing country’s ability to regulate for human rights and sustainable development.
Namibia does not need to import that outcome. It has the rare advantage of writing the rules before first oil, not after the wells are already flowing and the leverage has shifted to the companies.
The debate is happening in Windhoek right now
This isn’t an abstract or distant risk — it’s played out two weeks ago. Speaking at the Bank of Namibia’s oil and gas symposium on 25 September 2026, Columbia University adjunct professor and international lawyer Jenik Radon gave Namibia the plainest possible warning on TotalEnergies’ pending final investment decision on its Venus discovery: “one concept talked about everywhere is the stabilisation clause. No, no and no. It has a chilling effect on laws.
Do not accept a stabilisation clause, ever.” Radon’s broader point was about timing and preparation — he argued Namibia could benefit from delaying Total’s FID (originally expected by the end of July) precisely because international oil companies can take advantage of a country whose legal system isn’t ready to negotiate from strength.
That view didn’t go unanswered. Rand Merchant Bank’s head of oil and gas, Angelique Peake, pushed back that a company committing to a 25-year, capital-intensive project reasonably needs some form of assurance — while agreeing Namibia “can’t afford to get railroaded by investors.” Her proposed middle ground is worth taking seriously: not a freezing-style stabilisation clause, but an economic rebalancing mechanism, where the state keeps the right to change its laws but the project’s economics are cushioned rather than locked.
That’s a meaningfully different instrument from what Uganda signed with Tullow, and it’s the kind of nuance Namibia’s law should be precise about rather than treating “stability” and “stabilisation clause” as synonyms.
IPC shadow minister for international trade Rodney Cloete went further on sequencing, arguing the Venus FID should wait until parliament has actually settled Namibia’s petroleum law: “whatever the law says on the day the money is committed is what Namibia will live with for the next 25 years, and right now the law is not ready.”
His framing of what a stabilisation clause actually costs is the clearest plain-language version of the Uganda and Cotula critique above: it means a future parliament, elected by future Namibians, cannot pass a tax, an environmental standard, or a local-content rule without paying compensation for it.
Together, these three positions map the real choice in front of Namibia — not “welcome investment vs. reject investment,” but whether the country locks in today’s bargaining position for the next 25 years, or keeps the room to renegotiate as it learns what producing oil actually looks like.
What “more than jobs” actually looks like — the Norway comparison
The instinct in this framing is correct: jobs, taxes and royalties are the floor, not the ceiling. Norway’s model rests on four things working together, and Namibia’s own toolkit maps onto it almost exactly:
- Royalties and production-linked payments — the baseline charge for extracting a national resource.
- Corporate tax on top of ordinary tax — Norway applies a special petroleum tax layered over standard corporate tax, so profits from oil are taxed far more heavily than an ordinary business.
- Profit oil share under production-sharing agreements — a direct cut of the physical barrels, not just a cut of reported profit, which is much harder for a company to shrink through transfer pricing or accounting.
- State equity through a national oil company — Norway’s Equinor (formerly Statoil) gives the state a direct ownership stake, so it captures value as a shareholder, not only as a tax collector. Namibia already has the seed of this: NAMCOR receives a 10% participating interest upon the granting of an exploration licence, negotiated case by case with applicants.
The Norway lesson isn’t really about the specific percentages — it’s about sequencing. Norway built its fiscal and regulatory architecture, and its sovereign wealth fund, before production scaled up, and it kept full authority to amend its own petroleum tax law over the decades since without ever needing an investor’s permission. That authority is exactly what a stabilisation clause would trade away.
The resource curse is a policy choice, not a law of physics
Namibia doesn’t need to guess how this goes wrong — West and Central Africa has run the experiment repeatedly. Angola and Nigeria industrialised their oil sectors without securing energy independence at home, leaving both import-dependent on refined fuel from the very crude they exported — the textbook “paradox of plenty.”
The mechanism is well understood: a sudden wealth inflow appreciates the local currency, makes agriculture and manufacturing uncompetitive against imports, and — where oversight is weak — concentrates enormous, poorly monitored revenue flows in ways that invite graft rather than development. None of that is inevitable.
It is a direct function of how much control a government retained over its own resource, and stabilisation clauses are one of the clearest ways that control gets signed away.
The Dangote example — a more complicated lesson than it first appears
It’s worth being precise here, because the actual 2026 picture cuts against the simplest version of the “economic colonialism” story. Dangote’s refinery did face a real friction point with Europe in late 2025, when its diesel failed to meet EU winter fuel specifications — a technical standards issue, not a case of Brussels simply refusing Nigerian-refined fuel outright. And by 2026, the trend reversed dramatically: Dangote became Europe’s largest external supplier of jet fuel, supplying roughly 13% of Europe’s jet fuel shortfall in the second quarter of 2026, with diesel and gasoil exports also rising 23% as Northwest European fuel inventories fell to a 12-year low. The refinery has meanwhile cut Nigeria’s own gasoline imports from roughly 400,000 barrels a day in 2024 to just 83,000 barrels a day in 2026 — precisely the import-substitution outcome Dangote was built to achieve.
The real lesson isn’t that Europe locks African refiners out. It’s that African refiners had to meet European technical and quality standards to get in — and once Dangote did, it competed and won on genuinely favourable terms. That’s actually the stronger argument for Namibia’s position, not a weaker one: sovereignty over your own resource and regulatory standards is what lets you eventually compete on merit, rather than being permanently boxed into exporting raw crude while importing refined fuel at a markup — the Angola and Nigeria trap this article rightly names.
The bottom line
A foreign company that will only invest in Namibia’s oil on condition that Namibia can never again touch its own tax code, environmental law, or local-content rules is not offering partnership — it is asking for legal immunity from a sovereign state. Namibia’s cabinet was right to bar such clauses from the Kudu agreement in the 1990s, and it would be right to hold that line now, formally, in statute, as the sector moves from exploration to production and the pressure to bend intensifies. Companies unwilling to operate within Namibian law, amended by Namibians, for Namibians, are free to return their licences to companies that will.
Lot Ndamanomhata is from Ekoka. This article reflects his views and writes entirely in his personal capacity.
