National Ports Authority Bill: adoption

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
18 November 2004
NATIONAL PORTS AUTHORITY BILL: ADOPTION

Chairperson: Mr J Cronin (ANC)

Relevant documents:
Department’s proposed amendments to the Bill
National Ports Authority Bill [B5B – 2003]

SUMMARY
The Committee considered various amendments to the National Ports Authority Bill [B5B – 2003]. The Department of Transport in response to issues raised by various stakeholders proposed some of the amendments. The Committee adopted the Bill with amendments, including that the short title of the eventual Act would be the National Ports Act.

MINUTES
The Department of Transport was represented by Mr L Montana (Parliamentary Liaison Officer), Mr D Ntuli (Director for Maritime Transport) and Ms H van Niekerk. Mr H Smuts (State Law Advisor) also attended the meeting.

Mr Ntuli presented the amendments to the Committee (see attached document). The Committee considered the Bill clause-by-clause and agreed to various amendments.

The Committee agreed to the following amendments:

Title
The Bill would now be called the National Ports Bill.

Clause 2: Objects of Act
The Chairperson proposed that paragraph (a) should become (c) and paragraph (c) should become (a). The Committee agreed to the proposal.

Clause 3: Process before establishment of Authority
On page 7, from line 4, to omit subsection (2) and to substitute:

"(2) As soon as this Act takes effect the Shareholding Minister must ensure that the necessary steps are taken for the incorporation of the National Ports Authority of South Africa as a company contemplated in subsection (3)."

On page 7, from line 28, to omit subsection (5).

Clause 4: Conversion of Authority
A new Clause 4 was added and would read as follows:

"Conversion of Authority
4. (1) Notwithstanding sections 32, 66, 190 and 344(d) of the Companies Act, on a date after the incorporation of National Ports Authority (Pty) Ltd, and with the concurrence of the Minister, the Shareholding Minister may take the necessary steps to convert the company into a public company, styled "National Ports Authority Limited", vested with the authority to own, manage, control and administer ports within the Republic.

(2) Where the National Ports Authority (Pty) Ltd is converted as contemplated in subsection (1) the State's rights as a shareholder of the Authority are to be exercised by the Shareholding Minister and, where required by this Act, with the concurrence of the Minister."

Mr Farrow said that the old Clause 4(1)(a) provided that the shareholding Minister "must" and the new Clause 4(1) used the word "may" instead of "must". He proposed the use of "must".

The Chairperson said that the issue had already been discussed in a previous meeting. The Committee rejected the suggestion by Mr Farrow.

Clause 11: Functions of Authority
On page 10, in line 18, after "body" to insert "or organ of state".

Mr Ntuli said that the reason for the insertion was to address issues raised by stakeholders like the fishing industry. The clause referred to a statutory body. The intention of the amendment was to include activities operated by agreement with an organ of State.

Mr Ntuli said that during the hearings there were suggestions that Clauses 11(1)(g)(v) and 11(1)(s) be deleted. The Department proposed the retention of the paragraphs. The words "and regulation" were deleted from paragraph (s).

The Chairperson asked the Department to motivate the retention of the paragraphs.

Mr Ntuli replied that the proposal for the deletion of (g)(v) was based on the interpretation that offshore cargo-handling facilities were well-regulated under legislation dealing with minerals and energy. The ensuring and controlling of safe navigation around offshore cargo-handling facilities was the responsibility of the Authority. Paragraph (s) related to activities that would take place in the future. All new proposals for the erection and operation of offshore cargo-handling facilities would have to be authorised by the Authority. Issues that were raised by the oil industry where covered elsewhere in the Bill.

Mr S Farrow (DA) asked if the paragraphs should not be moved to Chapter 9 since they dealt with navigation issues. Chapter 9 dealt with safety navigation and movement of ships within the ports.

The Chairperson said that the intention was to convey the message that issues dealt with in the paragraphs were the responsibilities of the Authority.

Mr Farrow said that paragraph (g) referred to the regulation and control of offshore cargo-handling facilities. Different companies owned the facilities. The paragraph seemed to suggest that the Authority would be able to dictate matters relating to the operation of the facilities.

The Chairperson said that private companies operated strategic national resources under lease agreements. It was not preferable to have a private company owning and controlling strategic national resources. There might be severe consequences to the economy if this was allowed. There were existing leases of the facilities. The relationship was well regulated and not arbitrary. There was no need for arbitrary State interference in a process that seemed to be working well. The Committee agreed to retain the paragraphs.

Clause 15: Nomination and appointment of members of Board
On page 11, in line 30, to omit "The" and to substitute "Subject to sections 14 and 17, the".

The amendment was aimed at linking Clause 15 (1)(b) to Clauses 14 and 17. The Committee had requested this amendment in a previous meeting.

On page 11, from line 32, to omit subsection (2).

On page 11, in line 38, to renumber subsection (3) to (3)(a) and to add the following paragraph:
"(b) The person contemplated in paragraph (a) must preferably have special knowledge and experience, contemplated in section 14(2)."

This amendment was to ensure that Clause 14(2) would guide the Minister as he or she considered nominations and appointments of members of the Board.

Clause 18: Terms of office of members of Board
On page 12, from line 36, to omit subsections (1), (2) and (3) and to substitute:
"(1) The chairperson and the other members of the Board hold office for a period determined by the Shareholding Minister, but not exceeding three years.
(2) (a) The chairperson may be reappointed for further periods not exceeding three years each.
(b) The other members of the Board may be reappointed to ensure continuity, but may not serve for more than six consecutive years."

On page 12, after line 53, to add the following subsection:
"(7) The Shareholding Minister may extend the terms of office of members of the Board upon the expiry of their terms of office for such period as may be necessary, not exceeding three months, to finalise the appointment of a new board."

This was necessary to ensure that the Authority continued to function whilst the Minister appointed new members.

The amendment by the Department did not refer to a period not exceeding three months. The Committee added the words following a proposal by Mr L Mashile (ANC).

Mr Ntuli did not believe the Shareholding Minister would intentionally delay the appointment of members. There could be problems in cases where the Minister could not finalise the appointments within three months.

The Chairperson said that the process of appointment was simple. He felt that the period of three months was reasonable.

Mr Mashile understood the Department’s concern. However, the clause referred to the finalisation of the appointment and not the commencement of the process of appointing members. The process of appointing new members should start towards the end of the terms of office of incumbent members. The Committee agreed to the recommendation.

Clause 27: Transfer of ports, land and other rights and obligations
On page 15, from line 50, to omit "National Ports Authority (Pty) Ltd" and to substitute "Transnet Limited or any of its Divisions".

Clause 29: Establishment of Regulator
On page 16, in line 29, after "body" to insert ", vested with legal personality,". The insertion confirmed the legal standing of the Regulator.

Clause 30: Functions of Regulator
On page 16, in line 32, to insert the following subsection:
"(1) The main functions of the Regulator are to-
(a) exercise economic regulation of the ports systems in line with government's strategic objectives;
(b) promote equity of access to ports and to facilities and services provided in ports: and
(c) monitor the activities of the Authority to ensure that it performs its functions in accordance with this Act."

Paragraph (a) would ensure that the Regulator would be able to look at the entire port system. This would also ensure that the Regulator performed its functions efficiently.

On page 16, in line 33, to omit paragraph (a) and to substitute:
"(a) hear appeals and complaints contemplated in sections 46, 47 and 48 respectively:"

The amendments by the Department did not include Clause 48. The amendment would ensure that the procedure laid down in Clauses 46, 47 and 48 applied to this clause.

On page 16, in line 34, to omit paragraph (b).

On page 16, after line 41, to add the following paragraphs:
" (f) promote regulated competition in ports;
(g) regulate the provision of adequate, affordable and efficient port services and facilities."

On page 16, after line 51, to add the following paragraph:
"(h) the filing of prices charged by the provider of any port service other than the Authority."

Mr Farrow was not comfortable with the use of the words "prescribed manner" in Clause 30(1)(e) of the Bill. He said that he did not like prescription of any sort.

Mr Ntuli replied that the Regulator would be able to make regulations with the approval of the Minister. The Regulator would be able lay down the framework for proposing charges to be contained in the tariff book.

Mr Smuts added that the word "prescribe" was defined in the Bill. The regulations would indicate the manner in which tariffs would be determined.

Mr Farrow asked what would happen if the Board of Transnet, for example, decided to increase the tariffs. Would the Regulator be able to prevent unfair tariff increases?

Mr Ntuli replied that the word "consider" in Clause 30(1)(e) did not mean mere receipt of the proposal and deciding whether or not to accept the proposal. The Regulator was responsible for regulating competition within the ports and ensuring the ports were affordable. There were various instruments that the Regulator would have to use in considering the proposals. The Minister would publish a framework to guide the formulation of the tariff book.

The Chairperson asked if the word "consider" meant that the Regulator would be able to say that the tariffs were too high. Would it be possible for the port authority to say that it was happy that the Regulator had considered them and it would in turn consider the Regulator’s views? It was important to know if the Regulator’s opinion would have any impact.

Mr Smuts replied that the clause should be read in conjunction with Clause 72(1)(a). There must be consensus between the Regulator and the Authority before the tariffs could be made.

Mr Farrow was concerned with the requirement of consensus. The independence of the Regulator would not be guaranteed.

Mr Mashile said that the tariffs would be considered in relation to an agreed and approved framework. If the tariffs were outside the framework the Regulator would be able to indicate this to the Authority.

Clause 31: Members of Regulator
On page 17 in line 18, to omit the heading and to substitute: "Nomination and appointment of members of Regulator"

On page 17, in line 19, to omit "of not more than four" and to substitute "a minimum of six and a maximum of 12,"

On page 17, after line 21, to insert the following subsections:

"(2) The Minister must call for nominations of members to the Regulator in the national media and appoint the members from the persons so nominated.

(3) Notwithstanding subsection (2), the Minister may appoint persons other than those nominated."

On page 17, in line 24, after "commerce," to insert "ports,"

On page 17, after line 42, to add the following subsection:
"(7) The Minister may extend the terms of office of members of the Regulator upon the expiry of their terms of office for such period as may be necessary, not exceeding three months, to finalise the appointment of a new board."

The amendments would ensure that the public participated in the process and that people nominated possessed knowledge about ports.

Clause 32: Nomination and appointment of members of Regulator
On page 17, in line 43, to omit the heading and to substitute: "Disclosure of interests and certain prohibitions"

On page 17, from line 44, to omit subsections (1) and (2).

Clause 33: Vacation of office of members of Regulator
On page 18, in line 17, to omit "given" and to substitute "giving".

Clause 42: Appointment of Regulator’s Chief Executive Officer
On page 20, after line 12, to add the following paragraph:
"(c) fees charged for the filing of complaints or appeals with the Regulator."

Clause 57: Licence regarding port services and facilities
On page 23, in line 31, after "body" to insert "or organ of state".

The clause referred to a statutory body and would now include organs of State.

Clause 64: Special powers in emergency
On page 25, in line 42, after "may" to insert ", with the concurrence of the Minister,"

Clause 66: Off-shore cargo-handling facilities
On page 26, in line 35, to omit the second "of".

Clause 67: Restructuring and reform of ports
On page 26, in line 41, after "safety," to insert "security,"

On page 26, from line 44, to omit paragraph (b) and to substitute:
"(b) the terms of a long-term lease which existed immediately before this section took effect are substantially prejudicial to the operation of a port, including terms providing for unreasonable low rentals or containing no restrictions on sub-letting or no provision confining the use of the property to a use relating to the relevant port, the Authority may in writing addressed to the lessee direct that the applicable terms be renegotiated in order to remove the prejudice; or".

This amendment addressed issues raised by the fishing industry. However, it referred to the terms of a long lease that had prejudicial effects on the operation of a port and not prejudicial effects on the State as was suggested.

On page 27, from line 3, to renumber subparagraphs (a), (b) and (c) to (i), (ii) and (iii), respectively.

Clause 73: Fees payable to Authority
On page 28, in line 18, after "fees" to insert ", in accordance with a tariff determined in terms of section 72,"

On page 28, in line 24, to omit "and", and to add the following subparagraph:
"(vi) port and ship security."

Clause 80: Port regulations
On page 31, from line 39, to omit paragraph (a).

On page 31, in line 41, to omit paragraph (b).

On page 31, in line 47, to omit paragraph (f).

On page 31, in line 49, to omit paragraph (h).

On page 31, after line 52, to insert the following paragraph:
"(j) a framework for economic participation in port operations and services by public entities, private entities and public-private partnerships;"

On page 31, in line 57, after "of to insert "safety, security and".

On page 32, before line 1, to insert the following paragraph:
"(a) the manner in which control of a port must be exercised and the grounds on which access to a port may be refused;"

On page 32, after line 13, to insert the following paragraphs:
"(g) the maintenance by the Authority of security within ports;
(h) places of refuge for vessels:"

On page 32, in line 34, to omit "properly" and to substitute "effectively and efficiently".

Clause 88: Amendment of law
On page 34, from line 19, to omit "National Ports Authority Act. 2003" and to substitute "National Ports Act 2004".

Clause 90: Short title and commencement
On page 34, in line 34, to omit "National Ports Authority Act, 2003" and to substitute "National Ports Act, 2004".

Memorandum on the Objects of the Bill
Mr Farrow said that some of the provisions under the Memorandum of the Bill would have to change given changes made in the Bill.

Mr Smuts said that the Memorandum was not part of the Bill. It was only for explanatory purposes.

The Chairperson read the Motion of Desirability and the Committee’s Report on the Bill. The Committee adopted the Bill with amendments. Given the importance of the Bill, the Chairperson proposed that there should be a debate on the Bill, even though there were no major disagreements between the political parties.

The meeting was adjourned.