National Ports Authority Bill: deliberation

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
13 August 2003
NATIONAL PORTS AUTHORITY BILL: FORMAL DELIBERATION

Chairperson: Mr J Cronin (ANC)

Documents handed out:
National Ports Authority Bill 27July 2003 Working document # 2
SADSTIA, POCTFIA and SECIFA: Supplementary submission
SADSTIA, POCTFIA and SECIFA: Submission

SUMMARY
The organised fishing industry (SADSTIA, POCTFIA and SECIFA) expressed support for the Bill, but voiced concern that it could have unintended and destabilising consequences. The industry was uniquely situated in ports and requested that its inability to relocate should be born in mind in terms of licence allocation. Legal aspects of the industry's position were also discussed, focussing on leases conceded in the apartheid era, market conditions, licences and the role of the historically disadvantaged. The remainder of the meeting was devoted to deliberations on the NPA Bill with input from the National Department of Transport, National Ports Authority and Transnet. Issues covered included the Regulator, states of emergency, expropriation, the date of commencement, accelerating transformation, a three-phase transitional process, corporatisation, safety and security, and tax exemption.

MINUTES
SADSTIA (SA Deep Sea Trawling Industry), POCTFIA (Port of Cape Town Fishing Industry Association) and SECIFA (South East Coast Industrial Fishing Association) were represented by Mr Mervin Burton, Commercial Manager: Irvin & Johnson, Ms Coriaan de Villiers, Attorney, and Ms C.A.R. Bross, Secretary of SADSTIA. Transnet was represented by Mr Bax Nomvete, Group Executive: NPA, and Mr Gasant Orrie, Attorney. The NPA was represented by Mr Frik Nolte: Senior Manager: Policy and Research, and Mr Glenn Penfold, Attorney. The National Department of Transport (NDOT) was represented by Mr Dumisani Ntuli, Director: Maritime Transport, and Adv. Maribolla S. Mphahlele, Manager: Legal Services.

Supplementary written submissions on the National Ports Authority Bill and the NPA's role in the South African fishing industry.
Mr Burton said on behalf of SADSTIA, POCTFIA and SECIFA that the industry supported the objectives of the NPA Bill, but believed clauses 67 and 55-66 could have unintended consequences.

He then briefed the Committee on three issues: the location of the fishing industry in ports as opposed to fishing harbours; the site-bound nature of the fishing industry, and the impact of the proposed licensing provisions on the fishing industry. He stressed that the fishing industry was uniquely located in ports and that the Bill should make special provision for this in the allocation of licences.

Discussion
Mr A Ainslie (ANC) pointed out that the fishing industry was located in twelve fishing harbours, of which nine had real significance. The only port with no significant fishing was Richards Bay. About 2% of the industry was based in Durban and 1% in East London. Mossel Bay's port was almost entirely focused on the fishing industry. Cape Town was responsible for up to 33% of output. Referring to the special measures asked by the fishing industry, Mr Ainslie wanted to know what other measures were required, apart from those in the Bill.

The Chair indicated that the issues would be discussed in the course of the meeting. He said the industry seemed relatively happy, apart from the questions on leases and expectations.

Mr Burton said the fishing industry was concerned that the current structuring of the Bill would not give the industry a sense of stability in the coming years.

SADSTIA, POCTFIA and SECIFA draft submissions on NPA to Portfolio Committee on Transport
Ms De Villiers said there were constitutional difficulties in clause 67 referring to leases conceded in the apartheid era, market conditions and participation of the historically disadvantaged. In the case of negotiated long-term leases, interference by the legislator would not be appropriate. Even if the State made bad deals with rentals, it should not try to legislate itself out of them. Reference to "market conditions" was too vague and broad.

Discussion
Mr Orrie, Transnet's attorney, said one of more important principles of the Bill was that the actions taken by the Authority in terms of section 67 should be in line with the Constitution. Measures in the Bill would take care of the fishing industry's concerns.

Mr Penfold, NPA's attorney, said reforming the current situation served the public interest.

Ms De Villiers referred to a new provision in the section: "there should be no restriction on sub-letting". Fishing companies would not be able to change their use of ports. The use to which you put one's property was one of the key elements in a lease agreement. The industry accepted that if the NPA had real safety concerns, such concerns would be addressed.

The Chair explained that the key problem was that ports were being used for absolutely unrelated activities. It was not just a safety issue, but a usage issue embedded in long-term lease agreements.

Regarding the clause's reference to "historically disadvantaged people", Ms De Villiers said it was difficult to see how the suggested measures would work practically.

The Chair said the Bill was not intended to be a sledgehammer for transformation of the fishing industry. The issue was one of wording, not intention.

Ms De Villiers said the industry was not sure on what basis the Authority could refuse or grant a licence in clause 57. There was also concern about licensing terms and conditions in section 58.

Mr Orrie said the principles set out in this legislation were the only way to enable an environment that encouraged reform.

The Chair added that the Bill aimed to ensure people did not monopolise a large number of functions for which they were not licensed.

Mr Penfold said the decision to grant licences would be governed by Administrative Law.

Mr Ntuli from the NPA said the intention was that the Authority identified the types of services that required a licence to operate. The Authority would occasionally time identify situations where invitations to apply for licences might be applicable.

Ms De Villiers said the industry wanted to retain the ability to do these things in-house and have consolidated licences. She said they were more than willing to assist Transnet in working out some of these processes.

Mr P Sibande (ANC) stated that the discussed clauses are ultimately about bringing in all sectors not fully involved in transformation.

The Chair said everyone accepted the need for major port reform and transformation, but it needed to be done in ways that were not arbitrary and would not cause more dislocation.

Formal deliberation on NPA Bill
The Chair summarised previous discussions. A need existed for an effective Regulator - permanent or not - dealing with the NPA, not seven different authorities. The Regulator should not become a second Authority. It would be largely complaints-driven but also have some oversight functions, especially regarding tariffs.

Mr Farrow (DP) said the Regulator should not just be another manager interfering in the process as it could be too restricting.

Mr Ainslie (ANC) stressed that people with appropriate skills should staff the Regulator.

Mr Penfold pointed out that was not yet sure of the complexity of licences or licence applications. Period extensions might be needed for flexibility.

The Chair suggested that some consideration be paid to Cosatu's concern about the Bill's reference to states of emergency.

Mr Ntuli indicated that it pertained mostly to certain types of labour action.

Mr Farrow (DP) said it had only now become clear to him that this is not about the type of emergencies that presented an imminent threat to national interests.

The Chair raised Cosatu's critical stance about the powers given to the Regulator.

Mr Orrie said the section on expropriation should be amplified further. If a court found an application resulting in expropriation, the person affected should be entitled to compensation. Interested parties should see the exact procedure in the legislation. The Expropriation Act did not apply to a commercial ports authority.

The Chair said the Bill would try to empower the Ports Authority to enable transformation without creating a climate of instability. Even if it was not legally necessary, sections such as those dealing with expropriation could be decorated with a bit of administrative justice.

Adv. Mphahlele of NDOT cautioned that the Bill should not legislate on issues that had already been legislated elsewhere.

The Chair returned to vague wording around "market conditions".

Mr Penfold foresaw no difficulty in referring to market conditions in terms of property use. The only difficulty might be if usage was not port-related.

Mr Ntuli said the date of commencement of prior leases of port land (in relation to section 67.4) was a complicated issue. It could be political as some agreements or leases dated back to the apartheid era.

Mr Orrie said he would be very worried about choosing a date that might not be acceptable to many people outside the meeting.

Mr Farrow (DP) said discretion should be taken into account. There should be a mechanism to determine whether a current lease was market-related.

Mr Nomvete of Transnet said the spirit of the Bill was in line with black economic empowerment and the subsections of clause 67 relating to the historically disadvantaged should be left as is.

The Chair wanted to know whether reference was being made to leases that explicitly excluded the historically disadvantaged or to leases given to companies that had not sufficiently transformed. For instance, if an 'old guard' company had a lease but was not transforming, would the Authority have the power to give the lease to someone else?

Mr Nomvete said the Bill should enable the latter scenario, even when leases were signed after 1994. South African companies had often proven to be very slow to transform. This provision was an important legislative tool to accelerate black economic empowerment.

Mr Orrie said clause 67 (6) might not be sufficient. A quota system might be more advantageous. References to long-term leases that existed before the date of commencement might be given too narrow an interpretation by courts.

Mr Nomvete explained that from an operational and commercial point of view, the actual lease in a port environment was a critical asset. A long lease of one or two decades for a site allowed competitive advantage, but because of such long-term leases, many empowerment consortiums could not participate.

The Chair said that it generally seemed that stakeholders knew their transformation goals but there was uncertainty whether the Bill's wording matched the intentions.

The meeting was adjourned for lunch.

Formal deliberation on NPA Bill (continued)
Mr Ntuli referred to section 71, entitled "Commercial Functions of Authority" and said the amendments should be postponed for the next day because the amendments were still subject to final authorisation from his principals. The Chair agreed to flag the issue.

Mr Ntuli said the wording of section 71 should be seen as part of the three-phase transition process. It involved issues around the sustainability of Transnet between the commencement of the Bill up to when the Authority moved out of Transnet. The phases were informed by the role played by Transnet in the entire transportation sector.

The Chair reminded the meeting that Transnet said "if the NPA goes tomorrow, Transnet goes too". A second phase was introduced to create the possibility for cross-subsidisation. Eventually the Authority would be a stand-alone company controlling its own funds. The NDOT representatives wanted to clear with their principals exactly what understanding was needed. The Committee's understanding was that it was only in the third phase that the Authority's funds and assets became ringfenced. Therefore it needed rewording because, as it stood, it implied "throughout its existence". These implications had only been noticed now.

Mr Farrow (DP) wanted to know if the issue could be finalised tomorrow.

The Chair suggested the meeting look at next week Wednesday for finalisation. It was important for the NDOT to fairly represent its principals and tomorrow might be too soon.

Mr Nomvete expressed support for the NDOT's position. He said one should bear in mind that Transnet existed to ensure socio-economic development in terms of transport and logistics for SA domestically and globally, and as a key economic tool. The NPA was currently a critical cash cow enabling Transnet, through cross-subsidisation, to meet its capital investments in all other spheres. He fully supported that corporatisation of the timing conducive to maintaining national economic momentum.

Mr Penfold said the NPA would not have search and seizure powers and would not be able to inspect after hours. This seemed over-onerous. In terms of safety and security in ports, the reference in section 75, paragraph C, was to international agreements. The Bill should relax
the "must" requirements.

Mr Ainslie (ANC) pointed out that these were safety-related and regulations concerning general crime etc. Perhaps "must" should become "must strive or promote". Since policing mechanisms (e.g. inspectors) were already in place, he was not sure if the references in the Bill (section 25) were necessary.

Adv Mphahlele said South Africa has a dual system of international law. An Act of Parliament was required before any international law could be implemented.

The Chair said the Authority was the sticky issue. If the Bill said "the Authority should promote the safety of...", it could be saying there were other responsible bodies but the Authority was expected to promote their work.

Mr Orrie noted that section 75 ran the risk of creating a duality of responsibilities.

Mr Ainslie (ANC) pointed out that the word "ensure" meant "to guarantee", yet it was impossible to make guarantees.

Mr Nolte of Transnet said part of the aims of 75 (a) related to the terms of section 12, the promotion and enhancement of measures to promote safety.

The Chair asked, in the light of the above, why section 75 was included.

Mr Ntuli felt section 12 provided enough coverage.

The Chair suggested that section 75 be dropped completely.

Mr Ntuli then moved on to section 77, subsection 2, regarding the liability of the pilot.

The Chair said the NPA felt this was complicated and they were happy with the draft.

Mr Orrie expressed concern that subsections 1 and 2 of clause 77 contradicted one another.

Mr Penfold raised an issue in relation to clause 81, subsection 2. The word "regulation" had been changed to "rule".

Mr Herman Swart, State Legal Advisor, said the wording was changed to avoid confusion. If anything were done under this act, it would be in terms of rules and regulations. It authorised the Authority to make the rules.

Mr Orrie expressed reservations about the use of the word "confidential" in section 87, entitled "Confidential Information". He doubted if "information" should be qualified by "confidential". It could for instance be personal information, without it necessarily being confidential. The clause should apply to any information.

The Chair said it remained problematic even if one removed "confidential".

Mr Penfold pointed out there were already rules about personnel not disclosing information.

Adv Mphahlele said the concern was about information obtained from the Authority being protected.

The Chair said there was work to be done to clear this up.

Mr Penfold, referring to section 88 ("Offences"), wanted to know whether the Bill was going to distinguish between offences - should an imprisonment of up to five years apply to all?

Mr Orrie said the issue of provisions for tax exemptions for the transfer and formation of companies has not been dealt with.

The Chair said it would be covered in the NDOT report that would still be submitted.

The meeting was adjourned.