National Ports Authority Bill: hearings

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
11 June 2003
NATIONAL PORT AUTHORITY BILL: HEARING

Chairperson: Mr J Cronin (ANC)

Documents handed out:
BP submission
National Ports Authority Bill with amendments
National Ports Authority Bill [B5-2003]

Department of Transport delegation: Mr Dumisani Ntuli, Director of Maritime Transport and Ms Khibi Manana, General Manager of Passenger Transport Policy.

SUMMARY
British Petroleum (BP) Southern Africa gave a submission on the latest draft of the Bill, specifically on its implications for the licensing of the Single Buoy Mooring (SBM) in Durban. The Committee will consider the matter of subjecting the Regulator to the Rules of the High Court if the Regulator acts as a judicial tribunal. No decision was made on the exclusion of petroleum storage and distribution facilities from Section 67.

MINUTES
British Petroleum (BP) Southern Africa submission
Mr C Germeshuys, BP Legal Advisor, made a submission to the Committee about the latest draft of the National Ports Authority Bill. BP was satisified with the amendments made to Clause 66(2) that had relevance to the continued undisturbed operation of the Single Buoy Mooring (SBM) lease at Durban:
 

Off-shore cargo-handling facilities
66. (2) (a) Any lease agreement covering off-shore cargo handling facilities in the Republic which existed on the date of commencement of this section is deemed to be a licence issued in terms of this Act.

However BP believed that further changes are required. Here is the outline of the submission:

● Licensing of the SBM at Durban
• BP previously proposed that the existing arrangements between the owners/operators of the SBM at Durban and Transnet and others be confirmed as a concession agreement, which would have made it unnecessary for them to apply for a license under the Bill.
• The introduction of a new section 66(2) in the latest draft of the National Ports Authority Bill ("the NPA Bill") proposes that the existing lease be deemed to be a license. This is an improvement on the BP proposal, but to secure the undisturbed operation of the SBM for the purposes envisaged for it under the proposed Pipelines Regulation Bill and the Petroleum Products Act, further changes to the NPA Bill is required
• Purposes to be served by the SBM under the Pipelines Bill and the Petroleum Product Act
- Ensuring the efficient and safe use of petroleum products
- Achieving an economy in the cost of distribution of petroleum products
These objectives are best achieved through application of the provisions of the Pipelines Regulation Bill, which provides for the Regulator under that Bill to be staffed by persons with appropriate skillls not contemplated by the NPA Bill

● Proposed changes to the NPA Bill
• Introduce a new definition of "port facility", and exclude from its ambit offshore cargo handling facilities and all facilities within a port area forming an integral part of an offshore cargo handling facility
• Introduce provisions under the complaints procedure covered by sections 47 and 48 that will make it clear that complaints about the content of and conditions attaching to licenses already granted under the NPA Bill will not be entertained under these provisions, and that only complaints relating to non-enforcement by the Authority of the terms and conditions of a license will be entertained.
• Introduce a provision that will make it clear that "regulation and control" of the SBM by the Authority under section 30 can only be done through application of the terms and conditions of the license created by section 66(2) of the NPA Bill

● Other concerns
The provisions of section 41 of the NPA Bill must ensure that decisions of both the Authority and the Regulator must in addition to the criteria already mentioned
- Be consistent with the Constitution and the NPA Bill
- Be in the public interest
- Be taken with due regard to the requirement of fair administrative procedures contemplated in statutory- and common law
- Based on facts and evidence that must be summarized and recorded with the decision
The instances where the regulator acts as a judicial tribunal must be made subject to the relevant Rules of the High Court if no rules appropriate to particular circumstances are made under section 52
The storage- and related facilities situated on land forming part of a port (like Durban) and used by the oil companies to store and distribute crude oil and petroleum products are part of the infrastructure that are required to serve the purposes of the Pipelines Bill and the Petroleum Products Act.

The terms and conditions at present in force around these facilities have been factored into the elements incorporated in the build up of the price prescribed for certain petroleum products, and any "renegotiation" of these terms could have a negative impact on such prices, and could introduce additional costs for the end user of petroleum products.
Storage and distribution facilities used for petroleum products should be excluded from the ambit of Section 67

Discussion
Mr R Ainslie (ANC) asked for clarity surrounding the choice of concession rather than licence. He recalled discussions in the past where BP had made mention of their support for concessions. Was this still the position, or did they wish to reverse their initial suggestion?

Mr Germeshuys agreed that a concessionary agreement would have been best, but he felt that for the overall purpose of the operation of the NPA Bill, it made legal sense to operate the SBM as a licence.

The Chair noted that the NPA Bill includes definitions of both 'port infrastructure' and 'off-shore handling facility', and asked why there is a need for a further definition of 'port facility' in the opinion of BP.

Mr Germeshuys said that port infrastructure does not cover equipment lying onshore and facilities which could be the subject of concession. Therefore the additional definition becomes necessary to complete the picture and distinguish between port facilities for storage of petroleum and other goods.

The Chair commented that this seemed more speculative and future-oriented in nature, while the concern of the committee was to ensure the integration of the current existing system.

Mr Ntuli (Department) agreed that the additional definition may be important and noted that the facility must be regulated by the landlord.

Mr Germeshuys said that while he does not want to exclude competition in the future, the added definition would encompass things that exist at present. However, his intention is not to 'mess around with something that is already working'. It was felt by himself and the Committee at large that this would perhaps hamper the normal course of commerce and competition. In light of this, the original decision was amended, and the definitions will remain as they are.

The Chair commented that it was important that the Pipelines Bill and the NPA Bill interface well with each other.

Mr S Farrow (DA) wished to know whether Mr Germeshuys was speaking on behalf on the whole petroleum industry.

Mr Germeshuys suggested that while 'we are all in the same boat', he cannot speak collectively for the oil industry, but rather only on behalf of BP.

Mr Cronin added that there are different facilities operated by the various petroleum companies, and that they would all have their own agendas on the points raised.

In reply to Mr Farrow asking if each petroleum company has a separate facility which is then serviced by one pipeline, Mr Germeshuys confirmed that this was the case.

In response to the Chair noting BP's proposed changes to Sections 47 and 48, Mr Germeshuys said that for BP it would be important to know that once licences have been granted, the terms and conditions cannot be the subject of a complaint.

Mr D Ntuli (Department) was on hand to take up the issue. He ascertained that terms and conditions of any licence are agreed to between the parties. Concerns about terms would indeed not be heard but only issues of non-performance that may arise out of it.

Mr Cronin believed that it was not a major issue of dispute, but he would follow up on it.

However, Mr Germeshuys maintained that under Sections 47 and 48, complaints real or imagined can be raised - once a licence is granted. He repeated that complaints on content and interpretation cannot be a cause of complaint.

Mr Cronin again agreed in general terms, but said that if any parastatal, through a licencing agreement, was seen to be monopolising or engaging in unfair practice, it would be wise for intervention at this point and a ruling. He recommended that a process be put in place prior to companies investing in order that goalposts are not moved a couple of years into the licence. Such a process would provide space for potential regulatory intervention. He realised that if such objections were entertained once licences had been granted, this may cause the private sector to avoid investing in the ports.

The debate moved on to the issue of the wording 'appropriate skills'. The Committee felt that the emphasis should be on developing ports worker skills, and perhaps people should be trained into positions, instead of employing those who already possess the 'appropriate skills'.

Mr Cronin at this point interrupted, and explained that the Bill was actually referring to those serving on the ports regulator, and not to ports workers. It is obvious that certain skills will be necessary for those on the Regulator, including a knowledge of liquid fuels, handling and shipping.

On the issue of the Regulator acting as a tribunal, it was agreed that the proposal made sense. It was generally felt that existing legislation made for an 'easy way out'. However legal opinion suggested that any changes at this point may place an unnecessary burden on the Regulator and that it was better to keep things simple.

Mr Germeshuys conceded that it could complicate the process, but that the incentive would be to play by the rules.

Mr Cronin flagged the issue and said the matter would be considered.

Regarding the proposed exclusion of storage and distribution facilities used for petroleum products from Section 67 restrictions, BP explained that any change in the terms and conditions in force around these facilities could have a negative impact on the prices of certain petroleum products. Mr Germeshuys said that while he recognised that this was an extreme proposition, it would remove a problem for petroleum companies.

Despite the possible overlaps with the Petroleum Products Act and Pipeline Bill, it was generally agreed that these should not be excluded, as it makes ample provision for the empowering of Authority to make decisions around the resources and facilities in the ports environment.

Mr Cronin acknowledged the overlap, but still felt that he wished for the Regulator to be able to marshall the ports resources.

Mr Ntuli (Department) explained that a process had already been discussed surrounding the issue, and just last week an agreement between regulators on the separation of authority was formulated. This he said would be made available to the Committee and to Mr Germeshuys. In short, it provided for the ports Regulator to enter into agreements with other bodies, to negotiate and conclude agreements with the Competitions Commission, with a view to better ports facilities handling.

The meeting was adjourned.