A summary of this committee meeting is not yet available.
TRANSPORT PORTFOLIO COMMITTEE
31 October 2001
NATIONAL COMMERCIAL PORTS POLICY HEARINGS
Documents handed out:
Draft White Paper on National Commercial Ports Policy
SAFCOC Submission on Draft Commercial Ports Policy (see Appendix)
The presenters emphasised two things: there is a need for a ports strategy, which would not be isolated from a broader transport and industrial economic strategy. The other part was lack of competition and productivity hence introducing liberalization.
The other concern was the role-played by the Department of Transport and the Department of Public Enterprises with respect to ports policy and there is a need for clarity with respect to responsibility in terms of shareholdership and policymaking.
Mr Mngqibisa informed the Committee that the purpose of this White Paper was to establish the Port Authority to be responsible for maintenance and development of the infrastructure.
Also it is to establish an independent regulator and the creation of a competitive environment enabling the private sector to participate in port operations.
The Inter-Ministerial Coordinating Committee (IMCC) made a decision in November 1996 that the Department of Transport together with the Departments of Public Enterprises, and Trade and Industry should develop a ports policy. This would be a long-term guideline for the government, which also outlines the transitional institutional arrangements.
In developing this policy document, many other policy documents have been considered such as the National Transport Policy, Social and Economic policies of government, Trade and Industrial Policy on IDZs and SDIs, and the Constitution.
The ports vision is that it should be seamlessly integrated in the transport network of the country, be self-sustainable, enhance South Africa’s competitiveness and facilitate the expansion of the South African economy.
The objectives are as stated in the document: to promote an efficient and productive port system, facilitate international trade, establish an effective regulatory framework, establish institutions that would support the governance of the ports, and lessen the taxpayers burden on ports.
Institutional arrangements include the Ministers of Transport and Public Enterprise, the National Ports Authority (NPA), port regulator and port consultative committees.
Some of the duties of the Minister of Transport would be to develop and maintain the national commercial port policy, regulatory framework, port legislative framework, and appointing a national ports forum to advise the Minister of Transport on port policy matters.
The duties of the Minister of Public Enterprise would be to facilitate the smooth transformation and implementation of this policy together with other relevant policies and would be responsible for the NPA, in particular the appointment of the board of directors.
The NPA’s duties would embrace the landowner functions, control functions, port utility functions, and quasi-regulatory functions. Then there would be a ports consultative committee (PCC) made up of representatives from user groups and various levels of government.
It would be the duty of the NPA to consult the PCC on issues related to port expansion schemes, structural alterations and any other matter as directed by the board of directors or the Minister of Public Enterprise.
There would also be a port regulator to prevent the monopoly of power and ensure equity of access to the ports, monitor business relationship between Transnet and the port authority division to ensure that Transnet does not derive an unfair advantage over other transport companies.
Key interim regulatory framework recommendations include the following. the NPA should be established within Transnet and the Minister of Transport should establish a Port Regulator, which is to exercise oversight responsibility over the Port Authority and would be in existence until the NPA is established outside of Transnet
Ms Isabel Laubscher: General Manager, Trade & Logistics: NPA
The Ports Policy provides financial autonomy, which should not limit the sources of income on the NPA or the manner in which sources should be utilised. Government support might be required in certain circumstances and this is what their recommendation is in that regard.
The South African port system should remain financially autonomous. Government would not be available for the NPA except in cases of social necessity where the NPA, on request of government, must perform activities or seize to perform activities in circumstances where the NPA confirms that it is not in its commercial interest.
Meeting Market demands
The NPA feels that there must be a stronger marketing focus within the ports policy. This is because the market determines the way forward and there should be an emphasis on satisfying the demands of present and potential clients and the policy must ensure that the services delivered and offered are of the highest international standards.
More prominence should be given to the need for much better client orientation and better logistics support to proper organizational arrangements, more strategic management, planning and pricing.
Relations with NPA and operational port entities
The policy needs to clarify the relationship between the NPA and the Ports Operation Division (POD) and between the NPA and other private port users or providers. A large degree of private sector involvement in the provision of services is supported by the NPA through appropriate use of available mechanisms and techniques such as concessioning, licences and leases.
It is proposed that the Department of Transport dedicate a short section in the policy defining the transitional arrangement between the NPA and the POD. The NPA proposes that the POD be given the same treatment as any other operating in medium and long term.
The legacy of private sector involvement
The NPA is faced with a legacy of fragmented private sector involvement in ports related to land, allocation and leasing terms specifically to long term and ever green leases that do not provide or advance the improvement of competitive positioning and port optimisation.
Government’s intention is to level the playing field between existing port operators and to capture port operators. In order to make sure that this happens they are proposing that a section be included in order to make sure that neither the strategic essence of their ports nor the competitive thrust of port reform and development are compromised in any meaningful and enduring way.
The NPA would like the issue of port security to be expanded to include port policing, the port community system, which is e-commerce, to be mentioned within the ports policy. This ensures that the information is of high integrity and is available to all users.
There is also a need for a Ports Act to proceed with implementing the port policy. They felt strongly that it is necessary for government to quantify the expected socio-economic effects of the policy and strategies through a comprehensive economic impact, which is also the recommendation of Dr Gustav de Monie.
Mr SB Farrow (DP) observed that in the draft paper presented the port authority entity falls under Public Enterprises while the regulator falls under Transport. It is confusing that communication between Ministers needs to be dealt with separately. As he understands it the NPA is already established under the present framework. It is not a new proposal. Are the terms of reference still the same or have they shifted and how did the NPA come to be established?
Mr F Nolte (NPA) responded that within Transnet Ltd there are different divisions such as Spoornet, Petronet and Portnet, which last year split into the NPA and POD. The NPA is an entity without any legal personality and acts in the name of Transnet, which clarifies the present position of the NPA.
The policy proposed for the long-term is that a new parastatal would be created which would be called the NPA of South Africa.
The POD representative added that the interim regulator is necessary because the NPA is still in competition with the POD hence an independent regulator. However, but as they move forward and have a pure NPA they would not need a regulator.
On the issue of monopoly he said it was a myth that Portnet has a monopoly. In terms of container handling, yes, it was true that it has an upper hand but if one looks at bulk terminals, they don’t handle liquid bulk. There’s oil and fuel storage, all kinds of operators in the ports. The terminal at Richards Bay is a private terminal.
One needs to understand what is taking place in the ports otherwise there is a danger of coming up with a flawed policy and two or three years down the line after implementing this policy there are problems.
Mr S Nkula (POD) added that their view on restructuring was that it was not going to be exhaustive. There are other processes informed largely by agreement like the National Framework Agreement (NFA) on the restructuring of state owned enterprises (SOEs) which allows engagement with various stakeholders including organised labour.
The Department of Public Enterprise handles the process of restructuring itself and it would not be expedient for the policy to be exhaustive. The DPE is involved in some studies and is expected to arrive at a model of concessioning that would take everyone concerned forward. It would be expecting more from the policy to address such issues relating to the concessioning of the port system itself.
Mr GD Schneemann (ANC) asked the NPA how they were going to satisfy the clients by meeting international standards and who is responsible for that?
Ms Laubscher answered that most of the delays in ports are currently under the POD. This was why they strongly supported the idea of introducing competition within the ports as quickly as possible. The choice of a service provider and the natural competition between service providers would automatically improve performance as is noted in many of the international ports.
In terms of improving and ensuring international service standards they consider international benchmarks. They are incorporating most of those levels of service specifically pertaining to maritime services within their existing service deliveries and monitoring that on monthly basis. They are also encouraging comprehensive service and levels of agreement with most of the operators within the ports, which they are currently in the process of implementing.
Mr M Buthelezi (NPA) added that they have tight plans in terms of infrastructure provision going in parallel with the market trends. From that view they do not have bottlenecks in justifying the delays and they are on track with providing infrastructure in places like Durban.
Mr Wakeford (SAFCOC) asked for clarity on the evergreen contracts, which have no terminating dates, and if so what are the suggestions around leveling the playing fields in relation to those contracts. Secondly, is it in the jurisdiction of the current port operators to grant private sector contracts while this process is taking place and if so what is being done to ensure that there are no evergreen contracts?
Ms Laubscher answered that they have a wide range of problems in that regard and are having difficulty finding an amicable solution. Perhaps the POD could give an answer to that since it fell under their portfolio.
The POD representative responded that they have contracts and leases that date back a hundred years and were signed when the laws of this country allowed leases in perpetuity and yet the market and development needs within the ports have changed. They need a policy statement from government to enable them to address such issues effectively.
Mr AR Ainslie (ANC) thought that the presenter commented that there was no need for a long-term regulator, and as he understands the policy, there is not going to be a long-term regulator but would be one while arrangements regarding Transnet’s future are being sorted out.
Ms Laubscher said that the necessary expertise be added to some of those existing bodies already in place instead of creating another structure. This has the support of Dr Gustav de Monie that it should be a two to three men regulatory expertise of port management and take that forward.
In the long term there would still be a mandatory framework within which to operate and that would be sufficient. At the moment the whole function of the regulatory body is there while the NPA is still part of the Transnet family.
Mr Kevin Wakeford of SAFCOC
"Ports are the lungs of the economy as they inhale and exhale products and services". With these words Mr Wakeford began Safcoc’s submission to the committee. Extracting some information from the Internet, they looked at ports from Singapore and Rotterdam, Mombassa, Lagos, Accra in Ghana, and Maputo, to see what they did not want for South Africa.
A good gauge of productivity and efficiency is to monitor the movement of containers per hour. In South Africa the average is about 15 containers or TEUs per hour. Singapore is around 98 per hour. But Singapore is a harbour, with sophisticated technology, huge infrastructural investments and a variety of private operators, as does Rotterdam.
But it is not a function of equipment and technology, but also a function of management, supervision, maintenance and strategic productivity. For instance, what are the strategies for reinvesting in equipment, and future capital investment?
That was why they supported the intent behind the document but the intent is not good enough, the mechanics had to be right. In a port like Rotterdam, terminal operators would have knowledge of the ship a few hours away and would radio that ship and would compete in bidding for that ship to use that terminal. That’s how vigorous market places are created. On average the ports of Mombassa, Lagos and Maputo cost 700 percent more in most aspects of port operations than ports in the northern hemisphere. That’s not to mention delays and areas of malfunctions. Lack of market competition, maintenance and replacement of equipment, lack of supervision and accountability lags and that was why they would like to assume that this framework (the draft ports policy) is pointing in the right direction.
Safcoc welcomes this initiative and don’t share the view of labour that this would not deliver proper services to the poor. Safcoc does not believe the ports have any connection in servicing individual citizens in the main, as they service trade in the main. They believe that there should be inter port competition which this framework does not accept and that there is need for a transship hub in the Southern Hemisphere which has to be built into the overall strategy.
There is a great call from Safcoc for a clearly defined way forward which was not informed by the framework but by ten years of frustration pertaining to ports – who’s in charge whether there is ministerial competition around who’s a champion of the team leadership be.
What the framework needs to do is to define the roles of different players very clearly – Minister of Transport, the NPA, and the national ports regulator which Safcoc would support.
There are a number of crosscutting potentialities, for example NPA has the right to build and close ports and the Ministry of Transport bears the responsibility for national commercial ports policy which leads one to believe that this would include matters relating to building, developing and closing ports. However the closure of ports needs a Cabinet directive.
The private sector and the market forces would ultimately provide a "beachhead" for the establishment or ports or a port and should not be at discretion of a single developer where to develop and who will control that development.
Safcoc understands the need for a regulator. For example, if the port of Saldanha were to be owned by a particular mining company on the Saldanha fishing line and other mines in the area were precluded from using that port of exit and entry it would confound market forces in the Northern Cape.
Dr Gustav de Monie’s paper talks about institutional arrangements failing "to define institutional arrangements and relationships that have to be established between the NPA, POD and the private sector operators".
The concessioning of port operations is a welcome concept but the question is whether concessioning would be made available through private negotiations or through public tender? If one does not go through the tender process one should go through agreed proposals and the criteria for pre-selection and technical appraisal of bids with proper methodologies to evaluate. One could rank not only the financial proposals but the technical capacity of the institutions bidding for those opportunities that needs to come through clearly.
On regulations they would like to emphasise the need for short to medium term overarching ports regulator. Ultimately they believe NPA will in fact by its nature regulate activities between competitive players in the jurisdiction of ports.
While privatisation and restructuring of assets and operations takes place one needs an overarching authority to ensure that the process is fair.
There is also a school of thought emanating from many sectors that questions the role of the Competition Commission. Currently it does not have any competency over anything other than private sector players, which are active in a market place with limited regulation.
And there is already a quasi-Competition Commission in place through the NPA. They as Safcoc would advocate that the Competition Commission should not undermine the port regulatory body.
On the issue of competition, the framework talks about intra-port competition but not inter-ports competition. If the port of East London is the more efficient operator when moving vehicles on and off railway vessels why should it not compete with the port of Durban as a vehicle terminal?
Market forces would ultimately determine which port would be used. One should not attempt to regulate or prevent competition between different ports. They also support the notion of competing terminals as well. What they would not like to see is one company having control of one terminal in every port. One needs to diversify the level of competition. Private monopolies can just be as "evil" as public monopolies.
Why should the NPA be the official developers of ports? If market forces prevailed and markets had the inclination and the means to build ports then markets should be permitted within the rule of law.
The notion of PPP doesn’t come into the commercialization aspect and Safcoc believes there is huge scope for PPP aspect especially with the port of Coega where there is scope for PPP.
This indicates decentralisation of power. It is Safcoc’s belief that local independence and initiative for efficiency should be encouraged, not mass centralisation.
Safcoc would prefer to see institutions that are built with strong stakeholder participation, that are statutory of nature and have teeth. They should be balanced in terms of representation representing all role players and not only operators rather than consultative committees or broad forums.
They back the view that the Parliamentary Portfolio Committee should be active in selecting the stakeholders for participation. It should not be at the discretion of a single Minister.
City authorities are important players and are not stand alone entities". Ports are indices of economic activities in the cities and is against that background that they would encourage the participation and the inclusion of cities in whatever decisions are made around ports.
The movement from here forward required transparency and continued active participation on a around this policy framework must be encouraged.
Great care should be taken on how this potential legislation interacts with other legislation. An example will be the amendments to the Customs and Excise Act, which holds operators responsible for the payments of duties whereas in the past and elsewhere in the world it is not the duty of the operator but of the end user.
This process requires further investigation and would encourage on-going research.
Mr Slabbert (IFP) asked whether has there been an interaction between Safcoc and the Department and if to what extent? Secondly, it was said that the railway line from Cape Town to Saldanha is a monopoly, is the port of Saldanha also a monopoly? Thirdly, there had been restriction on private transport operators, allowing them to operate only from a certain distance from a port. Was that still the case or has it changed?
Mr Wakeford did not want to comment on this because the railway lines do not pertain to this debate. He was giving an example of if a port in a strategic area was linked to one particular company they would have serious problems.
Ms SK Mnumzana (ANC) asked for clarity on the issue of broad consultation being ineffective. Was he saying groups interested in ports should not be consulted; only those formalised should be consulted?
Mr Wakeford responded that the head of the NPA and POD have had direct consultation with him and with members of the Sacob transport committee and there is understanding of the principles of separating NPA and POD. The debate now is about commercializing and concessioning operations and the framework for that has to be very carefully shaped and customized to make sure that it builds in all the necessary imperatives including the imperative of enterprise development and empowerment because capitalism has to be broadened in South Africa. The level of consultation has been fairly robust but the process pertaining to this draft paper has not necessarily been structured well enough in terms of direct consultation around this.
Mr GD Schneemann (ANC) observed that the Safcoc document talks about niche market but does not identify particular niche markets at ports and has Safcoc got particular niche markets in mind that the ports could serve? Secondly, on inter port competition, how would that raise the levels of service?
Mr Wakeford replied that to come up with an overall view would be difficult but the assumption is that "you start with what you’ve got." For example, Richards Bay has a propensity for heavy engineering and coal terminal, Cape Town’s is becoming one of the greatest tourism port in the southern hemisphere but also has containers and bulk; Port Elizabeth export manufacturing and so on but the transport system needs to be remedied. But there are natural propensities for ports to have certain core competencies.
Mr SB Farrow (DP) said that in this process there was only one outstanding public participatory process that was due in Midrand sometime. How do they see the process going in terms of its finality? Secondly, on intra-ports competition, in the policy document it says the government’s report authority would ensure unbiased regulation of safety and quality in general, control of market access and regulate excessive tariffs in case of monopolies. What then is the role of the Competition Commission ?
Mr Buthelezi (Transport Department) replied that one of the reason for having public participatory process was to consult as wide as possible and generate as much comments as possible. The document that has been generates captures "the heart" of local issues, business, and everybody interested in ports. What has been presented today is a presentation that does not include comments generated. He suggested that it would be proper to revise the document and make a revised draft document available.
Mr JP Cronin (ANC) observed that two things were being emphasised: firstly an acknowledgement that there needs to be a ports strategy, which cannot be isolated from a broader transport and industrial economic strategy. Secondly, the lack of competition, lack of productivity and therefore introduction of liberalization. To achieve that balance is quite complicated and that is where intra-port/ inter-port distinction would be an example of a challenge.
The other concern was that the Department of Transport deals with policy but unless policy is connected to institutional capacity it becomes irrelevant. The logic here is that institutionalization of the policy would go through a port regulator and the NPA says it would like to see two to three person running it for four to five years and after that the Department of Transport loses any kind of dynamic interaction with ports. He thought perhaps that the way it should go. The Department of Public Enterprises would have oversight and would be responsible for the NPA.
Mr JH Slabbert (IFP) said he was against other departments like Public Enterprises and Trade and Industry being involved in transport issues. Furthermore, he saw no exports coming from Coega.
Mr Wakeford responded that he did not think they should bring the issue of Coega into this debate. The issue of transshipment has to be factored into the international strategy which requires back space, deep port capacity, proximity to the major shipping lines, taking into account that Latin America and Austrasia are giving strong consideration to transshipment infrastructure development. This country has natural propensity to cater for the bulk of the Southern Hemisphere and that needs to be capitalised on. This has nothing to do with inter-port competition and has everything to do with transshipping and that’s got to be factored in the overall strategy.
Mr AR Ainslie (ANC) hoped the could get their hands on some of the papers being quoted like Dr Gustav de Monie and asked how many retrenchments have taken place as the result of the establishment of the NPA and the POD? And are there any retrenchments being envisaged as the result of this policy unfolding? What plans are in place to deal with such retrenchments?
Ms Laubscher (NPA) replied that according to her knowledge there hasn’t been any retrenchment as the result of the split between POD and NPA.
Mr F Nolte (NPA) added that many governments in the world have started with port reform processes and as such have been talking to experts. Dr de Monie is one of those international ports experts utilized by institutions such as the UNCTAD and World Bank. His documents are on port reforms such as how to privatize ports, how to concession ports, how to deal with matters of strategic planning in ports and how to deal with policy matters in ports. When the Department of Public Enterprises started to look at matters of port reforms in South Africa they selected Dr de Monie to utilize his expertise an adviser to help them with port restructuring process.
Mr SB Farrow (DP) asked for clarity from the Department between the National Ports Forum and the NPA in terms of consultative committees as to whether are they two different bodies or one?
Mr Mngqibisa said he did not want to view the National Ports Forum as a different institution because its function is to advise the Minister of Transport on policy matters. When it comes to Ports Consultative Committees this is a framework that would be dealt with in the Ports Act whether it would fall under the NPA or somewhere else.
Mr Cronin explained that these consultative committees would be for example Cape Town where municipality and business would join hands.
He asked the Department what the cooperation was like on this matter between themselves and the Department of Public Enterprises?
Mr J Makokoane responded that this process started last year and through the process there have been quite a number of different opinions, which ultimately left them where they are after going through some serious debates more in particular on institutional arrangements.
They arrived at a compromise to make sure that this process goes forward. Together with DPE they have arranged to make a presentation to the Portfolio Committee on Public Enterprise but fundamentally the critical issues are institutional arrangements. It was necessary to clarify certain issues. Such as where does the responsibility lies in terms of shareholding and policy making.
SAFCOC SUBMISSION ON THE FINAL DRAFT OF THE NATIONAL COMMERCIAL PORTS POLICY
31 OCTOBER 2001
The South African Federated Chambers of Commerce and Industry (SAFCOC), represents the South African Chamber of Business (SACOB) and the National African Federated Chambers of Commerce (NAFCOC) who have achieved joint consensus in terms of this submission. These organisations jointly represent the largest number of businesses in South Africa, of both a small and large nature.
SAFCOC takes this opportunity to thank the Parliamentary Portfolio Committee: Transport, for the opportunity to make this submission on the Final Draft of the National Commercial Ports Policy.
The Final Draft of the National Commercial Ports Policy has been studied at length and in-depth consultations have taken place with Chamber members who include ship owners and shippers (large exporters and importers) and the clothing and textile federations who make use of South African Ports, either in their individual capacity or as part of wider representative bodies.
Insofar as this submission is concerned, we believe that the privatisation of South African Port operations is a means to improve port efficiency and the associated logistical effectiveness and virtually every port city in the world is following this course of action to a greater or lesser degree.
Although the privatisation of state assets in South Africa is being opposed by labour unions on the grounds that this will negatively impact on the availability of jobs as well as service delivery to the poor, this argument does not apply to ports. Ports do not provide the poor with direct goods or services and the real impediment to port privatisation and reform is the lack of an enabling environment and workable and sustainable institutional arrangements.
The Draft Policy covers restructuring of ports operations but fails to identify niche markets which each port could serve. We recommend that the Policy take this into account.
Reference in this submission is made to the recent investigation by Dr Gustav de Monie on behalf of the Department of Public Enterprises, entitled "Final Draft of the Conceptual Report on Ports Restructuring in South Africa."
Against this background, our response to the Draft White Paper on Commercial Ports Policy is as follows:
Requirement of a clearly defined way forward
The Final Draft Paper, although published under the auspices of the National Department of Transport, is a joint project, in particular with the Ministries of Public Enterprises, Trade & Industry and Finance.
It is crucial that the culmination of the current process will result in ministerial agreement on a clear way forward. This will ensure that all players will have a firm and common understanding of what is intended in respect of the restructuring of the ports and that immediate action will be taken to implement the policy.
This reasoning is motivated by the fact that uncertainty in respect of port policy over the past ten years has led to a paralysis in decision-making within South African ports as well as a consequent general demoralisation of port staff. This has, in turn, impacted negatively on port productivity.
Definition of Roles
Insufficient attention is given in the Final Draft to the respective roles of the Ministry and Department of Transport and the National Port Authority ("NPA") with regard to responsibility for national commercial port policy.
For example, the NPA has the right to build and close ports. It is stated that the Ministry and Department of Transport bears responsibility for national commercial port policy which leads one to believe that this will include matters relating to building, developing and closing ports. However, it is only the closure of ports that requires a Cabinet directive.
Exact and clear lines have to be drawn between the issues over which the Ministry and Department of Transport and the NPA will exercise control.
In this regard it is disturbing to note that the NPA has already been established even though the Ports Policy is still a draft. This raises the issue of whether comments will be seriously considered or if the policy has been agreed on and the consultation process is being undermined.
Relationship between the NPA, Port Operations Department & Private Operators
The manner in which the above three bodies interact during the licensing and concessioning transition is unclear. de Monie points out:
"The draft ‘National Commercial Ports Policy’ does provide for licensing and concessioning of terminal operations or related services, but it fails to define the institutional arrangements and relationships that have to be established between the ‘National Ports Authority’, the ‘Port Operating Department’ and private sector operators."
Government’s intentions in this respect should be clearly specified.
The Concessioning of Port Operations
Very little is said about the process of Government "reducing its direct involvement in operations and the provision of infrastructure." The draft white paper omits to deal to deal with the principles on which such "reduction" will be achieved. For example, will it be open to the NPA to concession off by private negotiation? Or will all concessioning be conducted by way of public tender? We concur with de Monie’s viewpoint:
"Licensing and concessioning need to be carefully prepared. Ideally, an action plan should be established and executed after decisions have been made on the number of facilities and services to be transferred to private sector management and operation. Crucial in the preparations for licensing and concessioning are the establishment of criteria for pre-selection and technical appraisal of the bids and the decision on the most appropriate methodology to evaluate and rank the financial proposals. Perhaps even more essential is the recommended content of the business plan that needs to be submitted by bidders, as this constitutes the core of the technical proposal."
The various regulatory rights of the different bodies are not clarified. De Monie is generally critical of the establishment of a separate Ports Regulatory Body and believes that regulation will not be necessary if the NPA’s statements of vision, mission, strategic intent and commitment are clear, and that any regulation that is necessary will be overseen by the contractual relationships concluded by the NPA and the Competition Authority.
Whilst we agree that de Monie’s attitude to regulation should be a long term goal, we take a different view over the short and medium-term situation and recommend the following:
A separate Ports Regulatory Body should be established, for, say, a five year period, its further existence to be reviewable in the fourth year of its existence. Policy statements (the NPA’s statements of vision, mission, strategic intent and commitments) will not be enough to negate the need for regulation in the short term although the draft policy should also make clear that such policy statements are required.
A regulatory body which is dedicated to dealing with port regulatory issues and which is well versed in port policy and confident of its expertise would be far preferable to the current Competition Authority.
The powers of investigation of the Port Regulatory Body should necessarily be wider than that of the Competition Commission. For example, it should be empowered to deal with issues relating to the ownership of harbour land (access to harbour facilities, disposal of harbour assets, construction and closure of harbours and harbour facilities) and to ensure that less profitable or unprofitable obligations of the NPA and other bodies are adhered to.
However, whilst supporting the establishment of a Ports Regulatory Body in the short term, we submit that the regulatory powers of the different bodies referred to in the draft policy ought to be considerably clarified. At the moment the Ministry and Department of Transport, the Ports Regulator, and the NPA, all have overlapping regulatory functions. This will lead to confusion unless the different regulatory functions are separated.
Whilst the draft white paper proposes intra-port competition it does not support inter-port competition. It is acknowledged that geographic and physical constraints may militate against inter-port competition but it is our view that wherever such competition can be stimulated efforts should be made to do so. It is only by competitive pressures both within and between ports that efficiencies will be enhanced.
The Final Draft creates the perception that the NPA will be the only body in the country that is permitted to build and develop ports. It is our view that Government should permit those with the necessary means and inclination to build and develop ports in the country to do so. This will stimulate competitiveness.
Furthermore, we agree with de Monie’s point relating to BOT and other public/private partnership type concessions. Clearly the NPA should be entitled to grant concessions and the draft policy should make specific reference to this ability so as to ensure that it is dealt with in the legislation.
We concur with de Monie’s view that the principle of subsidiarity should be incorporated in the Final Draft and quote him in this respect:
"What is, however, lacking in the present draft policy document and will prove to be critical to ensure the port operational efficiency that the government is aiming for, is the requirement for the National Ports Authority to apply the principle of "subsidiarity" and thus to delegate maximum possible power for planning, management and operations to the individual port branches. The relationships between the centre and the individual ports should either form a substantial section of the new port policy document or should be an essential part of the ‘Ports Act.’"
Of great concern is the fact that whilst a number of past investigations have advocated that, inter alia, port users have direct access to the NPA by way of seats on its board, the only access that is now specifically envisaged is by way of the National Ports Policy Forum and the Consultative Committees. Past experience of all forms of consultative committees is that they are ineffective. For that reason we are strongly of the view that it is absolutely necessary to ensure that all port users are given seats on the Boards of the Ports Regulatory Body and the National Port Authority regardless of their geographic location. These bodies should comprise representatives from all user groups including cargo owners, importers, exporters and transport operators including road and rail.
In addition, it is a widely accepted international best practice for city authorities to be directly involved in the administration of ports within their boundaries. While the precise nature of such interaction varies, the principle of direct and indirect city involvement is a well-established one. These arrangements are driven by an accepted approach to co-operative governance and by the obvious inter-dependence that exists between ports and their city/ hinterland areas.
Recent research into the most successful ports around the world has highlighted the importance of back-of-port activities as making an ever-increasing contribution to the competitiveness of ports. Many of these back-of-port assets/facilities/services are at the city-port interface. In many instances it requires joint initiatives and close working to realise the potential of such opportunities. In an increasingly globalised world, ports offer the potential to confer a significant measure of comparative advantage to a region. This can significantly improve the location's competitiveness and is therefore of paramount importance to both city and national Government alike.
Accordingly we believe that it is apposite that representatives of all port users sit on the boards, not only from the city and province, but also shareholders from further afield.
Requirement of Transparency throughout the process
It is clear that there will have to be a substantial amount of work conducted throughout the process envisaged by the Final Draft Policy. That work will involve, inter alia, the drafting of legislation such as the intended Ports Act, contract terms, et cetera. It is an imperative that lawyers who have a thorough knowledge of the workings of the South African ports and their current legal status prepare all draft documents.
These documents should then be circulated to all interested parties for comment to ensure a fully transparent process.
Integration of legislation
It is imperative that integration of all legislation that affects commercial ports policy takes place. An example of conflicting legislation is in some of the provisions relating to amendments in the Customs and Excise Act in terms of the Second Revenue Services Amendment Bill, which, in certain circumstances, will make the Wharf Operator responsible for the payment of duties. This will discourage private sector participation in this area.
The comments contained in this submission are based on sound economic principles and we are satisfied that no further investigation need be undertaken in implementing them. However, if this viewpoint is not acceptable, we accept the route recommended by De Monie, viz:
"To avoid unsubstantiated decisions and steer clear of interminable polemics it will be necessary for the Government to quantify the expected socio-economic effects of alternative future policies and strategies. This can be done by applying the EISâ methodology, based on modern input-output analysis, on selected policy and strategy scenarios and test for each of these the South African ports’ ability to meet existing or new demand by measuring production, capacity, productivity value added, service quality, employment and backflow to the government."
A detailed comment on the Final Paper on National Commercial Ports Policy will be forwarded to the Department of Transport under separate cover.
We look forward to further opportunities to contribute to the finalisation of an integrated Commercial Port Policy for South Africa.
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