Briefing by the Empowerment Evaluation Committee

Meeting report

This report is produced by the Contact Trust

PORTFOLIO COMMITTEE MINERALS AND ENERGY
02 OCTOBER 16
BRIEFING BY THE EMPOWERMENT EVALUATION COMMITTEE

Chair: Mr G Oliphant (Acting Chair)

Summary:
The Empowerment Evaluation Committee (EEC) Chairperson, Ms Almorie Maule gave a brief overview of the work of the Committee. The work done by the Committee is very 'low-key' at present, since the Committee has not been officially announced by the Minister yet. Members expressed concern that the presentations made by the oil companies to the Committee were confidential. They believed that as a Portfolio Committee they were entitled to information which would assist them in exercising their oversight role.

The following documents are available: Work-in-progress
Available at: www.contacttrust.org.za/parldocs/20021016min_Empowerment.ppt

Presentation by the Empowerment Evaluation Committee The presentation was made by Ms A Maule, the Chairperson of the Empowerment Evaluation Committee.

Ms Maule explained that the brief of the Empowerment Evaluation Committee (EEC) included advising the Minister in matters concerning the implementation of the Charter. These included (1) business transactions: where for example the empowerment company would buy into an existing company, and (2) transformation of the industry: on issues encapsulated in the Charter.

The brief also includes the requirement that the EEC be independent of the oil industry and other stakeholders. It should reflect impartial and informed points of view. It should be non-interventionist and as such be unable to compel anyone to act in a particular way. Furthermore the EEC should conduct informed and fair evaluations of transactions. In this regard it should take into account the impact of legislation and regulations, as well as the macro economic aspects of the oil industry on the transformation process. The industry should therefore be examined in a local and global context. The EEC should furthermore be alert to unintended consequences, e.g. the changes in regulations and in the macro-economic context as a whole.

The way in which the Committee is constituted is representative with regard to gender, experience and race.

PROGRESS REPORT
A preparatory team was set up by the Minister on an ad-hoc basis. The team has assisted in setting up three equity deals. The Minister also discussed procedures and terms of reference with oil companies and invited comments. This input was incorporated into the draft terms of reference. The EEC meets monthly, since it is operating in such a sensitive area, e.g. its work can impact on share prices since some of the companies affected are listed.

One of the conditions of appointment to the Board is that the person should at each meeting declare any potential conflict of interests. Another important condition is that the member agrees to respect the confidentiality of the process.

Evaluation criteria include all stages of the value chain. It covers all aspects of the Charter, e.g. employees (including capacity building and employment equity) and promoting a supportive culture (taking into account the fact that it is more difficult for Historically Disadvantaged SA's [HDSA's] to progress).

One of the major challenges has been around how to measure progress around each area of the value chain. The EEC is aiming to complete the assessment measurement matrix by the end of November.

Questions and Discussion
Mr G Oliphant, the Acting Chair (ANC) suggested that the entire EEC team should be invited back to the Committee once the evaluation criteria have been finalised.

Mr J Nash (ANC) said that there was a need for transparency. He asked what prevented the oil companies from withholding information from the EEC as they had done with the Portfolio Committee during the public hearings. He asked whether the oil companies are, as signatories to the Charter, obliged to disclose information to the EEC.

Ms Maule replied that the relationship which the oil companies have with the Portfolio Committee differs with their relationship with the EEC. There exists a signed confidentiality agreement with the EEC and it is also in the interests of the oil companies to share information with the EEC, since they are able to show compliance with the Charter.

Mr Nash asked if the EEC was bound by the agreement alone. Are the oil companies bound to disclose information?

Ms Maule responded that the very fact that the EEC is bound by the confidentiality agreement encourages oil companies to disclose information, since they have the assurance that the information will not be revealed to anyone outside the Committee.

Mr S Mongwaketse (ANC) asked whom the Black Economic Empowerment (BEE) companies apply to for strategic partnerships. To whom are they answerable?

Ms Maule answered that the EEC does not deal with the BEE companies. The ultimate responsibility of delivering with regard to the empowerment of BEE companies lies with the established oil companies.

Mr Mongwaketse asked if the EEC looked at ensuring the empowerment of the broad base of South Africans. One should bear in mind that the disadvantaged people have no access to skills and resources. The persons with money are therefore able to put together the more professional applications and therefore usually get first preference.

Ms Maule replied that EEC definitely will be looking at empowering a broad base of the population. There is no focus on any specific geographical area. The EEC would have to discuss the issue of lack of skills and resources with the oil companies.

Mr E Lucas (IFP) hoped that the EEC could adhere to the principles of integrity and declaration of interest.

Ms Maule said that she would do her best to ensure that everyone does the right thing. The other members of the EEC would probably do the same.

Mr Lucas found the introduction of consultants to be problematic, since it goes against the EEC's stated aim of cutting down costs. In addition, it would also then possibly make more sense to cut out the EEC altogether and to employ consultants instead in order to prevent duplication of functions.

Ms Maule understood this concern, but stated that it had merely been mentioned as a possibility. It would only be used as a last resort. The need for consultants was unlikely since members of the Board possess a vast range of experience. In addition the EEC also has the Department's resources at its disposal.

Mr Lucas asked if the EEC has studied the effects of the automation (of the work of petrol attendants) on the unemployment rate in SA.

Ms Maule responded that this issue does not fall directly under the brief of the EEC. It is closely linked to regulations and is therefore part of the Department's brief.

Mr Lucas suggested that new entrants should be encouraged to participate in all areas of the value chain. There should be a move away from entrants' participation being limited to dealerships. He was therefore very pleased with the formation of PetroSA.

Ms Maule welcomed the entry of PetroSA as well. While the focus is on the formation of new companies, one should not overlook the importance of the transformation of existing companies. This is because the market is too limited to have too many players.

Prof I Mohamed (ANC) reiterated that the Portfolio Committee should be allowed to ask questions and should receive answers from the oil companies in order to enable them to exercise their oversight role.

Ms Maule explained that there would always be specific transactions within which any oil company is engaged, which would be sensitive while the negotiations are taking place. While they may at this stage still be willing to disclose the information to the EEC because of the confidentiality agreement, the Portfolio Committee may have to wait until the deal/negotiations have been finalised and the information is no longer sensitive. The companies could perhaps provide aggregates rather than specify details when presenting the Portfolio Committee with potentially sensitive information.

Prof Mohamed asked if the Portfolio Committee could, by virtue of the Disclosure of Information Act, compel the Minister to make the information available to the Portfolio Committee.

Ms Maule said that this question had to be addressed to the Department's legal team.

Prof Mohamed referred to the unfolding crisis being experienced internationally. He asked if the EEC has assessed the impact of the crisis on the BEE.

Ms Maule replied that the implications have not been assessed yet. This will only be done once the measurement matrix has been finalised.

A member noted that the staff of big oil companies is still comprised mainly of older white males. Transformation in this regard is very slow. She criticized the fact that both the empowerment companies and the established oil companies are male dominated. Black Economic Empowerment is in reality Black Male Economic Empowerment. Are there any time frames in place to monitor progress?

Ms Maule agreed, saying that this was the reason that the Charter has introduced certain employment equity measures.

Ms Maule agreed that the companies are at present male dominated but stated that the EEC is monitoring these companies to ensure that BEE benefits all HDSA's. The EEC is looking at the introduction of time frames but these have not been discussed fully. There also needs to be further discussion with the oil companies.

The Acting-Chair stated that the Portfolio Committee could perhaps be presented with a full report after November. With regard to the issue of impartiality he stated that this would be difficult to accomplish and it is important that the EEC does not become a lobby group. He asked who funds the EEC.

Mr M Nduvane (Secretariat of EEC) stated that the EEC's budget falls under the Petroleum Policy Directorate of the Department.

Mr M Goniwe (ANC) stated that the Committee had decided to invite the EEC despite the fact that the process had not been concluded yet because it is necessary to establish a partnership in the early stages