National Ports Authority Bill: public hearings

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
4 March 2003
NATIONAL PORTS AUTHORITY BILL: PUBLIC HEARINGS

Documents handed out:
Department Memorandum on the National Ports Authority Bill (Appendix 1)
National Ports Authority Bill [B5-2003] (.pdf file)
Garlicke & Bousfield submission on behalf of Engen, Shell, Sasol, Total and Sapref (document will be available shortly)
Telkom submission
Telkom presentation
Telkom Audit of Provisions Impacting on Telkom/Second National Operator
Transtel submission
SA Local Government Research Centre submission

SUMMARY
The Committee continued their hearings on the National Ports Authority Bill, hearing submissions from Garlicke & Bousfield, Telkom SA Ltd, Transtel and the South African Local Government Research Centre.

The Committee heard that 80% of South Africa's crude oil is imported through the Single Buoy Mooring system just south of Durban. The oil companies operating this privately built and operated off - shore facility, such as Engen, Shell, Sasol, Total and Sapref, were concerned that it would be taken over by the National Ports Authority in terms of the Bill. Alternatively, that high fees could be imposed on oil imported there. Telkom and Transtel both made submissions that telecommunications should not be included in the NPA Bill, while the SA Local Government Research Centre was concerned that that the planning powers and functions of the NPA excluded local government from any part of the port process.

MINUTES
Garlicke & Bousfield submission
Mr Slack,on behalf of the oil companies concerned: Engen, Shell, Sasol, Total and Sapref, read from his submission and made the following additional comments. He pointed out that the Single Buoy Mooring (SBM) was a special installation, as the port of Durban could not accommodate tankers over 60 000 tons and oil transported in modern large tankers was cheaper. From 1970 a lease was signed with government, with no involvement from the SAR or Transnet. However, from the 1972 lease onwards, Transnet insisted on wharfage charges to compensate Durban harbour for the loss of revenue. These were calculated on an "ad valorum" basis, that is, based on the cost of the oil flowing through. The sudden escalation of the oil price meant that these charges increased to the point where Transnet received R180 million per annum for ten years, for which no services at all were provided.

After 25 years the original pipeline had deteriorated and it was necessary to construct a new pipeline, in a new position, with a new lease. The terms of the new lease included Transnet as a participant and costing was now based on volume with a gradual reduction of fees over time. Payments were made to government. The present replacement value was R380 million.

The companies were concerned that in terms of the Bill the SBM could be transferred to Transnet, or that the SBM charges could be used for port development elsewhere. They considered that licencing fees should bear a relation to the services rendered, and that the SBM should be excluded from the National Ports Authority Bill.

Discussion
Mr S Farrow (DP) asked whether this input had been provided at the White Paper stage.

Mr Slack replied that identical representations had been on 16 August 2002.

Mr R Ainslie (ANC) asked what the company's fears were regarding the Bill. Were they not reading in things which were not there?

Mr Slack replied that in Clause 1, Definitions, the "off-shore cargo handling facility" referred directly to the SBM. Clause 44 required this facility to be licenced and if the licence expires, for the licencee to remove the facility at its own cost. There is no question the SBM would be under the control of the NPA, which has never previously exercised any rights of control.
He also said that the Ports Regulator envisaged was badly established. The Regulator would not be independent and would be weak with no power over NPA decisions. The NPA had substantial power and obligations, and an independent Regulator with a proper structure, funds and an appointment process was needed.

He also submitted that the Competition Board should have authority over the NPA and pointed out that the oil company experience with wharfage showed that it was really a tax issue and nothing to do with the SBM.

Mr Mtuli (Department of Transport) said that Clause 59 of the Bill may not be adequate in detailing the Minister's right to make regulations, but it had been attempted. Clause 59(1b) gave port users the right to appeal to the Minister but agreed that the powers of the Regulator may need strengthening.

Mr J Cronin, Chairperson, suggested that there was still much to be done The Department of Transport is redrafting the White Paper to bring in private investment, as the new Bill was not clear on future developments. As the SBM was handling 80% of South Africa's oil it is a national asset. He felt that there was agreement on the broad picture of the Bill, but there was a need to correct the detail of the legislation.

Telkom submission
Mr Mphelo Mvunelwa, Specialist Parliamentary Liaison, Telkom, introduced the Telkom submission to the Committee. The formal presentation was made by Ms Carla Raffinetti, Specialist: Legislation and Policy Development.

Telkom had the following concerns with the Bill:
-The Bill inadvertently includes telecommunications services and facilities within the ports regulatory framework. This creates a dual regulatory framework: by the ports authority under the National Ports Authority Bill and by ICASA under the Telecommunications Act.
-The Bill requires the transfer of assets and liabilities of the NPA from Transnet to the Authority, without specifically excluding Transtel from these provisions. Telkom submitted that this would have the effect of undermining the Second National Operator (SNO) licensing process, as the Transtel private telecommunications network (PTN) will be transferred to the SNO once it becomes operational.

The Bill creates overlaps between the NPA, the ports authority, and ICASA, with regard to telecommunications services at ports, in three main areas:
-Granting of licenses, where the Bill permits the NPA to license the provision of ports services and facilities, which could include port telecommunications systems. This would be in conflict with the Telecommunications Act, which requires that telecommunications service providers be licensed by ICASA.
-Government has opened up authorisation of service providers of telecommunications, to include Sentech and the SNO, in addition to Telkom, which had historically been granted a statutory monopoly to provide telecommunications facilities. The Bill, however, empowers the Authority to "plan, provide and maintain port infrastructure, including port telecommunication facilities".
-The Bill permits the Authority to prescribe fees for port facilities and services, which would include telecommunications, and is in conflict with the Telecommunications Act.
-In addition, the Bill contains provisions which implies the setting of service standards. Telkom feels it is inappropriate to give the NPA this kind of power.

Ms Raffinetti made the following recommendations:
-Delete explicit references to telecommunications, and incorporate a clause into the definitions sections, "the definitions in Section 1 shall include telecommunications services and facilities which are subject to regulation under the Telecommunications Act (103 of 1996)".
-Transtel is to be transferred to the SNO once it is licensed. If Transtel's port communications system is transferred to the new body, this will be in conflict with the Act. To solve this problem, the Bill should expressly exclude the Transtel PTN from the transfer of undertaking provisions. In order to avert such a situation, it was submitted that the following subsection should be included in Clause 27: "Nothing in this clause should be construed as conferring a right of ownership on the Authority in any private telecommunications network maintained by Transnet".

Transtel submission
Mr Denzil Bowman: Parliamentary Liaison Officer, Government Relations and Regulatory Affairs, presented Transtel's presentation. He requested clarity with regard to the following terms used in the Bill: "port infrastructure" and "terminal infrastructure". Was it the Committee's intention that the telecommunications infrastructure installed by Transtel at the ports, be transferred to the ownership of the NPA?

With regard to the functions of authority under Chapter 3 Clause 11(e), he asked what the term "arrange" telecommunications means, within the context of the paragraph.

Transtel requested the removal of all references to "telecommunications" in the Bill, due to the fact that in terms of Section 41 of the Telecommunications Act, it does not permit a body to provide its own telecommunications infrastructure.

The Chairperson stated that the Committee would look at the points raised, with specific regard for the word "arrange" in Clause 3(e) of the Bill.

Mr Farrow mentioned that the role of the various stakeholders seemed to have been excluded from the process of drafting the Bill. It would save a great deal of time in the drafting of the Bill, if consultation was done beforehand.

The Chairperson agreed with this observation. However, the concession had already been made that the White Paper process had been incompletely done. Clearly, there was still quite a great deal of work to be done. That fact that public hearings were being held was helping. The public hearing process was not about rubber stamping decisions already taken, but rather about testing ideas.

Mr D Mkono (UDM) wanted it put on record that the consultation process had indeed been opened up. The Parliamentary process would serve to strengthen the initial process that had been embarked upon. No comments had been received from Telkom or Transtel on the matter in the initial stages.

The Chairperson concluded this particular section of the hearing by acknowledging the complexities of the communication process.

SA Local Government Research Centre submission
Mr Clive Keegan presented the Local Government Research Centre submission (attached). He summarised by saying that the central concern of the Centre was that the planning powers and functions of the NPA exclude local government. Ports are central to their host municipalities, yet the Bill looks at the ports in stark isolation with no reference to the industry and trade surrounding them. Instead of looking at the centrality of municipalities, local bodies were only given a weak advisory role. The only duty of the NPA would be to consult in a forum, with no obligation to react to municipal input, which could therefore be ignored. The NPA is constitutionally bound to the principles of inter government cooperation. The White Paper acknowledged Integrated Development Programmes but apart from a fleeting reference, they had been left out of the Bill.

As regards the closure of ports, no consultation is required with municipalities, whereas with the closure of mines a social fund to cater for job losses is required. The NPA would be an island of planning, and matters such as urban transport connections were ignored. There was good reason for a larger role for municipalities as ports were essentially part of the municipalities. The National Department has ignored local government in this Bill.

Discussion
Mr Farrow asked where the Metros would fit in. Did Clause 60 of the Bill not meet the requirement?

Mr Ainslie referred to the submission, which indicated the position internationally and noted that all the examples were from developed countries. As a developing country should South Africa not be different?

Mr Keegan replied that that the ports chosen in the Paper were from those with the highest volume of traffic and the ports joint role in development cannot be ignored.

Mr Cronin pointed out that South Africa is peculiar in the sense that the industrial heartland is inland. Competitive development would result in port concentrations at the nearest ports, while closures would occur at others. Coherent development such as Coega, was required. He suggested that the port - city interface was vital. He noted that Schedule 4B of the Constitution includes harbours as a matter over which local government has executive authority and the right to administer, in terms of section 156(1).

Ms De Lille (PAC) asked what part local government should play. Mr Mtuli (Department of Transport) suggested that Clause 13 of the Bill already covered the question of local government cooperation.

Mr Keegan pointed out how well the V&A Waterfront had worked with contractual agreements between Portnet and the city, and agreed with the Chairperson that there were good reasons for a national port authority. Clause 13 was not specific enough; a specific requirement should exist for the host city and port to interact.

The meeting was adjourned.

Appendix 1:
National Department of Transport
PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRANSPORT

Object of the Act

-promote and improve efficiency and performance in the management and operation of ports; and
-strengthen the State's capacity to:-
-to separate operations from the landlord function within ports;

National Ports Authority Bill Chapters

1. Definitions and objects of act
2. Establishment and incorporation of authority
3. Declaration of ports and functions of Authority
4 Board, staff and assets of authority
5 Ports regulator

Chapters

6. Provision of port services and port facilities and use of land
7. Development, environment and closure of ports
8. Commercial aspects
9. Safety aspects
10. Ministerial directions and port regulations
11. General

Definitions

1 Minister" means Minister of Transport or a duly appointed representative
2 Shareholding Minister" means the Minister of Public Enterprises or a duly elected representative

Establishment and incorporation of the Authority

1 Incorporation of authority
2 Authority's memorandum and articles of association
3 Non application of provisions of Companies Act
4 Certain provisions of Companies Act may be declared in applicable to the Authority
5 Authority's financial year
6 Judicial management and liquidation Act

Declaration of Ports and functions of the Authorities

1 Ports under jurisdiction of Authority
2 Functions of authority
3 Aim of Authority
4 Co-operative governance

Board and staff

1 Functions of the chief executive officer
2 Vacation of and removal from office of chief executive officer
3 Acting chief executive officer
4 Appointment and transfer of staff
3 Transfer of ports, land and other rights and obligations to authority
5 State guarantees

Provision of port services and port facilities and use of land

1 Agreements and partnerships in terminal operations and services
2 Licenses regarding port services and facilities
3 Conditions of licence
4 Restriction on transfer of licence
5 Suspension or cancellation of licence
6 Directives affecting licensed operators and other persons
7 Duties of licensed operators

Board and Staff

1 Composition of board
2 Nomination and appointment of members
3 Functions of board
4 Persons disqualified from membership of board
5 Terms of office of members
6 Disclosure of interest by members
7 Meetings of board
8 Delegations and assignment
9 Appointment of chief executive officer

Ports Regulator

1 Establishment of Regulator
2 Functions of Regulator
3 Members of the Regulator
4 Funding of the Regulator
5 Secretariat of the Regulator

Provision of port services and port facilities and use of land

1 Operations existing on commencement of Act
2 Off-shore cargo handling facilities
3 Restructuring and reform in Maydon Wharf Area

Development, Environment And Closure Of Ports

1 construction, development and maintenance of ports
2 Protection of environment
3 closure of port

Safety And Aspects

1 Safety of navigation and shipping in ports
2 Safety on land Within ports
3 Pilotage
4 Liability of pilot
5 Licensing of pilot
6 Lighthouses and other navigational aids

General

1 Port consultative committee
2 Port access
3 Co-operation with authorities
4 Offences
5 Amendment of law
6 Repeal of law and saving
7 Short title and commencement

Commercial Aspects

1 Commercial functions of Authority
2 Authority's Tariff book
3 Fees payable to Authority

Ministerial directions and port regulations

Ministerial directions
Port regulations

Consultation

Public consultation was conducted during 2002 through information sessions held in Durban, Cape Town, East London & Johannesburg The following organisations are among those who participated and submitted inputs:
ASABOSA; Garlicke & Bousfield; Island View
Shipping; NPA; Transnet; NPUF, Govt depts.;
SAPREF;SAPO; Unicorn Lines; R~CT;
SATAWU WCape) and many other individuals