National Ports Authority Bill: Department of Transport briefing

Meeting report

PUBLIC SERVICES SELECT COMMITTEE
2 March 2005
NATIONAL PORTS AUTHORITY BILL: DEPARTMENT OF TRANSPORT BRIEFING

Chairperson: Mr R Tau (ANC)

Documents handed out:
National Ports Authority Bill (B5D - 2003)

SUMMARY
The Department of Transport (DoT) briefed Members on the most significant changes in the National Ports Authority Bill (B5D - 2003) and the motivations behind these. The changes referred mainly to the establishment of a Ports Regulator for the purposes of ensuring fair access to the ports and for the regulation of tariffs. Consequently the National Ports Authority (NPA) would have its functions and jurisdictions redefined and limited. The Bill stipulated the transformation of the NPA to a subsidiary of Transnet and its eventual rebirth as a stand-alone company. These steps were aimed at revitalising the ports by fostering an atmosphere of fair access, thereby encouraging growth and development. Members raised the issue of equitable access to ports and the financial difficulties being experienced by Transnet Ltd. They also requested that the amendments be provided in document form before their next meeting so that they could familiarise themselves with the relevant details.

MINUTES

Department briefing
Department Chief Director, Ms N Msomi, apologised for the absence of the Director-General. She presented an overview of the changes the Bill had undergone. The most significant inclusion was that of a Ports Regulator and the definition of the relationship between the Regulator and the National Ports Authority (NPA). The latter was to have been excised from Transnet and to have formed a company. This step had been mandatory according to the original Bill. While Transnet was wholly state owned and played a significant role in transport logistics, it was expected to contribute towards development and investment in infrastructure. The Bill provided for interventions for the purposes of limiting monopolistic tendencies and their potential. This included any discrimination against other users of the ports. Access to the ports had to be fair and equitable in order create an environment conducive to investment in infrastructure. Long lead times and high costs made these assurances imperative.

The Bill provided for the creation of a Ports Regulator. It clearly outlined the powers of Transnet and especially of the NPA, in order to prevent any confusion between responsibilities of the Regulator and the NPA, since previously the NPA had played the role of regulator. This history held a potential for conflict and the Department would be monitoring the situation closely. The Bill aimed at encouraging reinvestment in ports and infrastructure. Fundamental changes had been made to the Bill since its original draft. The objects of the Act were key in encompassing these changes. One fundamental departure from the original draft of the Bill was the aim of converting the NPA into a corporation, initially as a proprietary company within Transnet and ultimately as a public company.

It had been decided through exhaustive inter-departmental investigations over the last three years that the NPA should remain within Transnet, but as a fully-fledged subsidiary. This change over would take place on a date determined by the Minister, as per clause 3(4)(a) of the Bill. This would give Transnet time to resolve its balance sheet issues, implement the Transnet Strategy, improve efficiency in the ports and to effect an overall revitalisation of the ports. It had been considered almost irresponsible to collapse the NPA, since Transnet relied heavily upon its revenues. The long-term goal was to convert the NPA into a public company.

Clause 11 listed the functions of the NPA. This section was critical in demarcating the area of authority the NPA held, especially in setting tariffs. This function would be performed by the Regulator in future and not by the NPA, as it had in the past. This could possibly give rise to debate, but the Regulator would provide the framework for setting tariffs, while the NPA would determine the actual amounts in line with that framework.

Chapter 5 of the Bill covered the establishment and functions of the Ports Regulator. The Regulator would set parameters for the tariff framework, incite, penalise and apply claw backs where appropriate and in consultation with the Minister. The Ports Regulator was expected to contribute towards development and economic growth. Another role was that of hearing any appeals or complaints relating to cases where operators felt they had been prejudiced by the NPA or by Transnet or had not obtained fair access to the ports. Clause 30 of the Bill provided for mechanisms in the event of overlapping between jurisdictions of the Competition Commission and the Regulator.

Chapter 10 of the Bill referred to Ministerial Directions and Port Regulations, giving the Minister power to intervene at any point, should it be in the interest of national security, the promotion of national, strategic or economic interests or to discharge an international obligation. The Bill also provided for the appropriation of funds should such an intervention require it, and the compensation of the NPA where appropriate. Finally, Ms Msomi referred to the clause on Offences, which were self-explanatory.

Discussion
Rev P Moatshe (ANC) asked in what way access to ports had been difficult and how the regulator would change matters. He asked why Transnet was facing financial challenges and whether it was still entirely state-owned.

Ms N Msomi said access to any port had always been difficult and costly. This was common all over the world. Therefore it had been decided to appoint a third party, the regulator, to ensure fair access and equal opportunity to all seeking access to ports. This would assist in liberalising the economy. Usually new entrants to a market would start eating into the revenue available in that market. This led to the entrant being bought out or squashed. This phenomenon prevailed in all industries. Ms Msomi said it was the regulator’s task to monitor these processes and watch out for undercutting tendencies or any potential tendencies of this kind.

Certain businesses within Transnet faced challenges. South African Airways and Spoornet had experienced backlogs in investment in infrastructure and required efficiency enhancement. These problems were often historic and had accumulated over time to the extent that they had become increasingly difficult and costly to remedy. Transnet was fully state-owned.

Mr Nguqu asked whether the Italians had a stake in SAA. Ms Msomi said that when Swissair went insolvent, they had bought back their share in SAA and that currently 20% of ACSA was Italian-owned. This was not part of Transnet.

Mr Tau asked for the changes in the Bill to be indicated in document form before the next meeting so that Members who had not been privy to the entire process could familiarise themselves. The meeting was scheduled for the following week.

Mr M Nguqu asked that the delegation also give feedback on contentious issues that had arisen during the consideration period. He asked them to explain how these issues had been resolved and how they informed the amendments to the Bill.

The meeting was adjourned.