National Ports Authority Bill: deliberations

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
10 November 2004
NATIONAL PORTS AUTHORITY BILL: DELIBERATIONS

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Submission by the Fishing Industry
Executive Summary of Fishing Industry Submission
Fishing Industry Proposed Amendments to Bill
Supplementary Written Submissions
Department’s proposed amendments to Bill
National Ports Authority Bill [B5B – 2003]

SUMMARY
The Committee deliberated on various amendments to the National Ports Authority Bill [B5B – 2003]. The fishing industry presented its concerns and the Department of Transport presented proposed amendments. The role of the Regulator, the corporatisation of the Authority and its relationship with Transnet were some of the main discussion points.

MINUTES
The Chairperson began by explaining that the fishing industry was present as they had certain issues they wanted to raise with the Committee. The Department of Transport was also present to present the amendments it was proposing to make to the Bill. He hoped that the Department would be able to leave with some final suggestions and then the Bill could be finalised the following week.

Mr S Farrow (DA) asked if there was any timeframe for the infrastructural projections for Transnet as this would have bearing on the timeframe for the Bill. His party’s caucus had also requested this.

The Chairperson explained that the Department of Public Enterprises would have to answer that.

Ms P Molefe, head of Corporate Strategy and Structure, replied that this was being drafted. She could provide the Member with the work thus far, particularly concerning ports.

Mr Farrow DA) said that he was aware that something had been presented to one of the select committees. He said this would suffice. He said that he would like the information to present to his caucus. He asked when the Bill would be finalised.

The Chairperson said that he would like to formalise it at Committee stage by the Thursday of the following week. He asked Ms Molefe to supply Mr Farrow with the information the following day so that he could present it to his caucus.

Submission by Fishing Industry
Mr I Jamie (SC) explained that he was representing three associations: The South African Deep Sea Trawling Industry Association, The Port of Cape Town Fishing Industry Association and the South East Coast Industrial Fishing Association. He handed over to Mr M Kagee to present an overview of the submission.

Mr Kagee, CEO of Premier Fishing SA (Pty) Ltd, said that the industry supported the principles in the Bill, but had some concerns about some of the provisions. He continued his presentation as in the Executive Summary attached.

The Chairperson asked Members if there were any factual questions.

Mr A Ainslie (ANC) asked what the relationship between the industry and the ports were at present.

Mr R Williams, Financial Director of Viking Fishing, replied that they operated on purpose defined leases. These leases addressed the type of usage in the port. There were services that were needed and done in-house. These services were not offered to third parties.

The Chairperson asked how long the leases were.

Mr Williams said that they were for 25 years with an option for a further ten years.

Mr Farrow (DA) asked if the fishing industry had licenses from other departments as well.

Mr C Bross, Secretary of the South African Deep-Sea Trawling Industry Association, said that they had a number of licenses. No licenses however were needed at present for the activities which were essential for the industry.

Mr Jamie continued the presentation by saying that the fishing industry was a highly formalised, capital intensive and highly regulated one. He continued to address the concerns the industry had and the amendments that they proposed. This can be seen in the documents attached. The main area that they were not happy with was Clause 67(1)(a) which gave the National Port Authority (NPA) the authority to change use of an area in a port. They did not object to this but felt that reasonable attempts should be made to accommodate the lessee in the port.

The Chairperson said that he was sympathetic to what was being proposed. He added that the aim was not to remove legitimate uses of the port. It was rather to see that the port was being used efficiently. There were instances where there were businesses that had no relevance to the other port activities.

Mr L Mashile (ANC) asked if the words "suitable alternate locations" referred to the lessee or the port authority. It was important to know how the suitability would be determined as it could cause a dispute.

Mr Farrow (DA) asked for more clarity concerning the relationship of the industry and the ports. He felt that the Port Consultative Committee, which was part of the Bill, would be the place to raise concerns about relocation.

The Chairperson said that the aim was to create investment in the ports. There were some existing arrangements that were impediments to this. Port consultation was therefore very important. It was however important to have legislation as well that would prevent the removal of companies from one place to another. The Bill also provided for the Regulator that had been given more power. The Regulator could enter as well to deal with any kind of disputes.

Mr Jamie said that the term "suitable" could be used to remove those who did not belong in the port. The fishing industry did not think that it would be affected by this as its activity could only be done in the port. He felt that the consultative forum would not be the right place in which to deal with specific problems. This forum would deal more with general problems that concerned all parties in the port.

Mr D Ntuli, Director for Maritime Transport in the Department of Transport, said that the words "safety, efficiency and effectiveness" were the test for Clause 67(1)(a) to work. These words would have been built into the port’s strategic framework.

Mr Mashile (ANC) said that he was concerned that as development continued, the ports would become congested and if there was no other alternative place found for companies, development could be stifled.

The Chairperson suggested that perhaps the words "where appropriate" could be added to the clause. This might deal with companies that were not supposed to be in the port.

Mr H Smuts, State Law Advisor, said that this could be considered. He wanted to know if the NPA could still use Clause 67 if no other land was available.

The Chairperson said that they would leave it to an informal process and that the intention was not to remove the fishing industry from ports. He added that the Committee was sympathetic to the proposed amendment and it would be considered. It would then be considered in a formal way.

M Farrow (DA) said that the legislation embraced all other industries and would affect all of them. He agreed with the Chairperson’s suggestion of including "where appropriate".

Mr Ntuli said that the solution to the problem should not be dealt with in Clause 67.

The Chairperson agreed and said that if the words were added as he suggested it could be left as it was.

Mr Jamie then referred to Clause 67(1)(b) and said that they had difficulty with the expression "current market conditions". This was not clear and should be more precise. It was not clear how "unreasonable low rentals, no restrictions on sub-letting" was unrelated to "current market conditions". The way it was written, it would be assumed that the NPA could increase rentals if there was a shortage of space in the port. This could also mean that the lessee could ask for rentals to be reduced if the situation changed. They proposed that it be made more precise and that the phrase "unrelated to current market conditions including" be replaced with "prejudicial to the state because of". This would be more precise and would enable tenants to know and understand the circumstance under which this clause may be invoked. If certain provisions of a lease were found to be offensive, only these terms should be renegotiated.

The Chairperson said that they were being helped through this process. The suggestions seemed to relate more to other strategic approaches that they were trying to follow. The port would be regulated but also operate as a market. It should have a market dimension to it but also be regulated. He agreed that "current market conditions" was vague.

Ms N Msomi, DD-G Transport Regulations and Public Entity Oversight, said that they would look at the clause and consider.

Mr Ainslie (ANC) said that he would prefer that the word "including" remain instead of "because".

Mr Jamie referred to Clause 67(2) and said that it was linked to (a). If the Committee had agreed to the change in sub-clause (1)(a) it would see that a change in sub-clause (2)(b) would also be necessary. Clause 67(2)(b)(b) should therefore contain a phrase that made it necessary for the NPA to give reasons for relocating a company.

The Chairperson added that the suggested change in Clause 67(2)(b)(b) was consequential. He suggested that "proposed use" be added.

Mr Ntuli said that the location mentioned in Clause 67(1)(a) referred to a location in the port. He suggested that the word "consideration" be added to Clause 67(2)(b)(b).

The Chairperson said that the specific wording at this time was not important, but he understood what the Department was saying. The NPA would have to consider if there was other suitable space and would have to give reasons for moving the company but did not have to find alternative accommodation.

Mr Farrow (DA) suggested that there be a cross-reference to Clause 67(1)(a).

Mr Jamie continued with the proposed amendments and said that they wanted Clause 67(2)(a) deleted. Clause 67(2)(b)(c) would then be amended on the premise that sub-clause (2)(a) was deleted. This would give the lessee a chance to renegotiate with the NPA to that they could use the premises for the new use that the NPA proposed. This would prevent some other lessee from taking the lease over.

Mr Mashile (ANC) said that he did not see how clause 67(1)(a) was linked to clause 67(2)(a). A directive could still be issued and was not prohibited by the provisions.

The Chairperson said that this would need to be examined further. He explained that what was needed was that if there was a change use, the existing incumbent must have a chance to renegotiate the lease.

Mr Jamie agreed that this was the purpose of the amendment and added that they understood clause 67(1)(a) to mean that the use of the site could be decided by the NPA but not who the lessee should be.

The Chairperson said that the change of use must be a strategic decision. He thought that too many loopholes might be closed through the amendments.

Mr Ntuli said that clause 67(2)(a) was still relevant. This clause allowed for a directive to be issued with a deadline attached. There was thus a provision for a timeframe in which the use of the site could be changed and in which renegotiation could take place.

The Chairperson said that they understood what was wanted and asked Mr Jamie to continue with the proposed amendments.

Mr Jamie said that they wanted the insertion of clause 66 bis. This would cover the lease agreement and the many activities that the fishing industry currently did in-house. These services would not be competing with the NPA and therefore there should not be a need for extra licenses.

The Chairperson said that it was not the intention of clause 57(1) for the fishing industry to obtain more licenses. The intention was rather to have more control. He asked the drafting team to look at this before they met again. Perhaps the wording was not clear enough.

Mr Ntuli said that they would consider the concerns and would address them under clause 65.

The Chairperson said that this might be another route to go.

Mr Jamie that the concern was over the definition of "port services".

The Chairperson explained that the reason for the definition was because there were other things happening in ports which fell under other regulations. The options were therefore to go for the exclusion or address it under clause 65.

Mr Farrow (DA) asked whether the present leases could not be continued and then converted into licenses.

The Chairperson said that the key issue was that the state owned enterprises would shift back and that Portnet would take more of a developmental landlord role. The aim was therefore to restructure the role of the SOEs. There were other implications though for other companies in the ports.

Mr Jamie said that clause 65 did not convert the license indefinitely but only gave it for six months.

The Chairperson said he agreed and said that it provided for the lease to be changed into a license and not many licenses. He thanked the team though because it had highlighted other issues that they had not seen. He thanked the fishing industry for their input.

Department proposed amendments
Mr Ntuli began by saying that the amendments would assist the process in moving faster. These had followed the previous meeting with the Committee. Clause 3 confirmed that the responsibility of forming the NPA rested with the Shareholding Minster. Clause 4 had been rejected and a new clause was drafted. This was done because of the suggestions made by Members in the last meeting. This clause provided for the conversion of the NPA (Pty) Ltd from Transnet into a public company. At the previous meeting, it was suggested that clause 4(1)(b) be deleted as it mentioned that the State was the only shareholder of the company. No pronouncement is made on the shareholders of the NPA. This decision rested with the Government.

Mr Farrow (DA) said that the timeframe had been taken out of clause (3)(5) and that in clause 4, the phrase "the Minister must" had been changed to "the Minister may". He asked what the rationale behind this was.

Mr Ntuli said that in the previous draft the commitment had rested on Transnet to do the corporatisation of the NPA. It was now with the Minster that meant that the commitment was taken to a higher level. The removal of the timeframes was done in consultation with the relevant Ministers and Departments.

Mr Farrow (DA) explained that his concern was that in clause 4 the word "must" had been changed.

The Chairperson said that the legislation was saying that corporatisation had to take place by the Shareholding Minister and not by Transnet. The NPA would be within Transnet. There may be another step in which the NPA is outside of Transnet so that it becomes a public entity. This second step was still under review and therefore the word "may" was used.

Mr Ntuli added that there were financial realities with Transnet. If the word "must" were used, the responsibility would be on the Shareholding Minister to act quite quickly. The word "may" allowed for Transnet’s case to be considered. This however did not mean that the policy would not be done.

Mr Farrow (DA) said that the word "may" leaves it open. There was a need for more commitment.

The Chairperson said that there was a need to revive Transnet. This however could not be debated at the present moment. The NPA however could not be formed out of Transnet if it was going to cause Transnet to fail financially. He suggested that it be left as is and that the word ‘may" be left.

Mr Mashile (ANC) said that the word "may" made provision for the activity.

The Chairperson agreed and said that it should be left for the moment. Referring to clause 4(2) he said that the shareholding rights would be exercised by the two Ministers. The percentage of shares held by the State was still open.

Mr Ntuli agreed that this was what the clause meant. The Minister of Public Enterprises would look at the business aspect of the NPA while the Minister of Transport would look at the policy aspect and the portfolio responsibility.

The Chairperson asked if this would not create confusion and problems and asked if there was agreement between the departments concerning this.

Ms Msomi said that clause 4(2) had to be read with 4(1)(a). This meant that the incorporation would take place with both Ministers together. There was therefore concurrency between the Ministers.

Mr Ntuli said that there had to be co-operation. This did not remove the fact that the government was the shareholder. This was not something new. In some other countries this worked and provided for improved policy implementation.

A representative of the Department of Public Enterprises said that she felt that the Department of Transport would have more of a regulatory role. They would see that the objectives of policy would be reached. She felt that the proposed clause 4(2) would create a precedent for public enterprises. She felt that the statement was confusing and did not speak to the location but more to shareholder rights.

The Chairperson said that he felt that the Department of Transport was more than a policy Department. There may be other utility and regulatory functions that the Department also needed to do. He agreed that the two Ministers needed to co-operate but felt that if their jobs were not clearly defined, it could create problems.

Mr Farrow (DA) said that the use of the words "shareholder rights" and "Shareholder Minister" was ambiguous.

Mr Ntuli proceeded to clause 11(1)(s) and said that the word "regulation "would be removed as there might be other regulators.

Mr Farrow (DA) asked if the same would happen in 11(1)(g).

Mr Ntuli said this would remain as the context was the functions of the NPA.

Mr Farrow (DA) said that in sub-items (s) and (g)(v) cargo handling was referred to. It should therefore follow that both should change.

Mr Ntuli said that sub-item (g)(v) would be removed and it would then be addressed in (s)

Mr Mogale (ANC) suggested that the Committee move faster as he felt too much time was being spent on issues.

The Chairperson said that they were dealing with legislation and it was therefore important to deal with it effectively.

Mr Farrow (DA) referred to clause 11(1)(c) and asked if the control of land usage was not the function of the Regulator.

The Chairperson said that they had suggested an amendment and that the NPA had to look at the use of land.

Mr Ntuli referred to clauses 15 and 18 and said that this was the same as presented to the Committee at the previous meeting.

Mr Farrow suggested that clause 15(3) be linked to clause 14(2) to ensure continuity.

Mr Mashile (ANC) referred to the amendment in clause 18(2)(a) and said that it seemed that the chairperson could be appointed for more than one term of three terms.

The Chairperson agreed and said that this was a possibility.

Mr Ntuli said that for this reason the word "may" was used. He proceeded to clause 30 and explained that they had introduced a new sub-section 1 that captured the main functions of the Regulator.

The Chairperson suggested that clause 30(1)(a) be changed so that it included the words "in line with government’s economic growth and development objectives". This would give it a strategic edge.

Mr Ntuli said that he did not have a problem with the suggestion as long as it was not restrictive. He continued to explain that clause 30(1)(a) had been amended so that the Regulator would hear complaints and appeals relating to the performance of the NPA.

Mr Mashile (ANC) said that he was concerned as the same body would hear complaints and appeals. He questioned whether this was a good idea.

Mr Smuts said that clauses 46 and 47 separated the complaints from the appeals.

Mr Mashile felt that this needed to be clarified in clause 30.

The Chairperson said that the order needed to be reversed so that appeals came first and then a reference needed to be made to clauses 46 and 47.

Mr Ntuli explained that extra functions were included in clause 30(1). These were numbered (f) to (h)

Mr Mashile (ANC) said that he had no problem with the content of the clauses but felt that it needed to be redrafted as it was negative in relation to Transnet.

The Chairperson agreed and felt that the Regulator should be left to monitor the business relationship between Transnet and the NPA. The rest of the clause should be deleted.

Mr Ntuli said that this was fine. He explained that the new sub-clause (g) referred to competition within ports since they did not want competition between ports.

The Chairperson felt that there should be regulated competition.

Mr Ntuli said that he agreed with the suggestion.

Mr Farrow (DA) questioned the fact that there was no competition between ports.

The Chairperson said that there was a different focus at different ports. For example, East London was focused on the motor industry.

Mr Farrow (DA) felt that some ports might have a competitive advantage over others.

Mr Ntuli said that the challenge was that the infrastructure spending was coming from one source. If there were competition the spending would have to be different for each port.

The Chairperson emphasised his point that the Regulator should promote regulated competition. He suggested that the term "within ports" be left out. The Regulator could then decide how it would regulate the competition between ports.

Mr Farrow continued to say that the relationship between the NPA and Transnet must be looked at carefully. He did not think that the clause put Transnet in a negative light.

The Chairperson said that it was important that the Regulator monitor this relationship.

Mr Ntuli pointed out that this situation could be dealt with in the new sub-clause 30(1)(b) which was to ensure equity of access in the ports. Sub-clause (h) would also empower the Regulator with information.

A representative from the Department of Public Enterprises asked how this clause would help with efficiency. She also wondered if port operators would be willing to give their pricing to the Regulator.

Mr Ntuli said that the Regulator would hear complaints and for this it would need information.

The Chairperson said that it was important for the Regulator to have this information. For example if they wanted to go the concessionary route, they would need information about pricing.

Mr Ntuli continued and said that the Committee had agreed to clauses 31, 32 and 33 in the previous meeting. In clause 42 a sub-clause (1)(c) was inserted which said that funds could be obtained from fees charged when complaints were filed. Clause 80 had been dealt with so that only those that were the responsibility of the Minister would be listed here. It was felt that the present (1)(a) and (b) should be omitted and dealt with under the section dealing with appeals as it was a responsibility of the NPA. It was also proposed that (f) be omitted as the NPA was responsible. Sub-clause (h) would also be omitted as the NPA would propose regulations for this as well. A new sub-clause would be inserted in clause 80(1) that would give government the right to intervene when the issue of public private partnerships was considered.

The Chairperson said that at the previous meeting, they had asked for elaboration on this. He felt that the proposed amendments were the best way.

A representative from the Department of Public Enterprises said that private sector participation in ports was not necessarily linked to the market structure.

Mr Ntuli said that the Minster would decide if certain operations and services would be public private partnerships. He felt that it was clear what the term "market" meant. The exact words could be considered and they could come back to the Committee on that. He continued to explain that in clause 88(2), (a), (g) and (h) had been taken from the Minister so that it was now the responsibility of the NPA. He concluded by saying that there was a proposal that the name of the Bill be changed from the "National Ports Authority Act" to the "National Ports Act".

Mr Mashile (ANC) referred back to the change in heading for clause 32. He said that the new heading was only relevant to 32(3) as only this dealt with the conflict of interest. He suggested that instead of the heading being "Conflicts of interests", it should rather be "Disclosure of interests".

The Chairperson said that at the previous meeting they had suggested splitting clause 32. The first part would deal with nomination of Members and the second with conflict of interest. This would then become separate clauses.

Mr Smuts said that sub-clauses (1) and (2) would be omitted.

Mr Mashile agreed with this but emphasised that the heading be rephrased to "Declaration of interests" as it was similar to clause 19 that was entitled "Disclosure of interests by member of the Board".

Ms Msomi accepted this and said they would change it.

Mr Farrow (DA) said that if clause 32(1) and (2) was omitted the process of appointing the Regulator would not be transparent.

Ms Msomi said that it would be transparent although it was not built into the legislation. It would also be quicker if the Minister needed to change the Board in the event of a crisis. The Members of Parliament could also exercise oversight so that the Regulator was appointed according to procedure.

Mr Farrow (DA) said that he did not agree. The only way in which the Committee could decide was by asking the Minister. It should be in the legislation and should be in the public domain through the Gazette.

The Chairperson also felt that it should be in legislation. A timeline however should be included so that the process of appointment was not too long.

Mr Mashile (ANC) said that he did not see any provision for the Minister to extend the term of Board Members.

Mr Mogale (ANC) said that the issue of the title of clause 32 was raised the previous week and was corrected.

The Chairperson said that the issue of the heading would be looked at again. In the next meeting, which would be the following week, they would examine the issue of the extension of Board Members’ terms. Most of the amendments had been accepted. Some of the issues raised by the fishing industry had to be sorted out as well as some outstanding issues raised in the present meeting. He concluded by saying that the Committee would meet on the Thursday of the next week to consider the Bill once again with amendments.

The meeting was adjourned.