National Ports Bill: deliberation and adoption

Meeting report

PUBLIC SERVICES SELECT COMMITTEE
25 May 2005
NATIONAL PORTS BILL: DELIBERATION AND ADOPTION

Chairperson: Mr R Tau (ANC)

Documents handed out:
National Ports Bill (B5D – 2003)
Department of Transport presentation

SUMMARY
Members heard a briefing from the Departments of Transport and Public Enterprises on the pending National Ports Authority Bill. The Department outlined the reasons behind the proposed legislation including key objectives and challenges. A crucial consideration was the envisaged removal of the Ports Authority out of Transnet to operate as a stand-alone state-owned enterprise. The Bill would also facilitate the creation of an independent regulator to monitor port activity. The Bill would play a key role in attempts to stimulate economic development. Various questions were asked including the anticipated impact on Transnet by the National Ports Authority's removal, the role of municipalities within the strategy, the impact on Black Economic Empowerment (BEE) opportunities, potential conflict of interest of board members and how existing challenges would be tackled.

MINUTES
The Chairperson stated that the meeting was the third and final in a succession of similar interactions with representatives of the Department to consider the envisaged National Ports Bill and pose relevant questions to both Departments of Transport and Public Enterprises.

Department of Transport briefing
Mr L Montana (Deputy Director-General, Public Transport) stated that representatives of Public Enterprises were also present to answer questions if need be. He provided an overview of the background to the pending legislation noting the desire to increase investments within ports, promote efficiency of operation and establish a competitive environment in relation to international standards. The role of Transnet as owner and operator was seen as problematic which prevented increased investment. Reference was made to increased trade volumes since 1994 which had exposed ageing and ineffective infrastructure. Some 95% of international trade was conducted by means of containers necessitating appropriate infrastructure. BEE requirements drove the intention to produce new legislation as major opportunities for equity expansion and economic empowerment would accompany the Bill.

The policy objectives and existing challenges of the Bill were explained including the wish to remove the Ports Authority from Transnet to operate as a separate state-owned enterprise. The Minister of Public Enterprises remained the shareholding minister responsible for deciding when corporatisation would occur. The removal of the Ports Authority would ignite significant investment in much-needed infrastructure and promote economic development. The new Bill would also herald the introduction of an independent regulator to monitor port activity. Equitable access to ports would be facilitated and imposed tariffs would be approved by the regulator. No overlapping of powers and functions between the regulator and the National Ports Authority would occur. The Bill should be seen as an important component of the government's economic development strategy. The Department had not anticipated the level of interest in the Bill at the beginning but the three-year debate had been constructive in fine-tuning certain aspects. The priority now was to complete the process and implement the legal framework to assist in economic development initiatives. The Bill would create a space for the expansion of black owned enterprises.

Discussion
The Chairperson asked if Members were satisfied with the input provided and acknowledged the need to move the process forward.

Mr G Krumbock (DA) accepted the reasons proffered to justify the Bill such as the need for new investment and efficiency but asked whether the removal of the Ports Authority from Transnet would result in heightened costs in other divisions to alleviate the shortfall. He asked whether all possible knock-on effects of the Bill had been considered.

Mr L Van Rooyen (ANC) asked whether port operations would be incorporated into Integrated Development Plans (IDPs) and local government structures, as the Bill did not identify a relationship with municipalities. The Bill made no mention of disaster management and asked what would occur in the event of a natural disaster. He also highlighted the lack of reference to international maritime law, such as the salvaging of ships within port confines.

Rev P Moatshe (ANC) asked for clarity on the economic certainty that the Bill would provide and how this would be achieved. The Bill's assertion that doors of opportunity for BEE would open implied that obstacles to this end within the specific sector currently existed. He asked for detail on the level of consultation arranged during the past three years and whether any major disagreements and complaints remained.

Mr M Mzizi (IFP) asked for clarity on proposed regulations relating to the disclosure of interests by members of the envisaged board. He asked what mechanisms would be in place to monitor this activity and ascertain whether board members did have certain interests to be declared. He asked for further explanation on the concept of the shareholder minister.

Mr Montana responded that extensive consultations had been held between Transnet and the Department and other stakeholders such as trade unions. Wide-ranging public hearings had been held within the National Assembly and submissions had been received from numerous entities including the National Port Users Forum and related private sector companies. All submissions had been considered although not all had been agreed with. All scenarios pertaining to the removal of the Port Authority from Transnet had been taken into account. The decision should be viewed in line with Transnet's overall strategy and the process would be managed to avoid disruption of other services. Significant BEE activity already characterised the Ports Authority but this would be extended even further as a result of the Bill. Issues of disaster management and the role of local authorities had been major debates. Ports were regarded as national assets with crucial impact on South Africa's economy and could not be contemplated within IDPs. The Bill made provision for consultative structures at the national and local level and therefore IDP proposals would be considered. Transport legislation empowered the minister to deal with natural disasters in consultation with the shareholder minister and thus no specific provision would be required within the Bill. The Bill sought to establish that there would be no conflict of interest amongst board members and ensure transparent management. Board members could not be prevented from acquiring a stake in the operation but the Bill would impose conditions and fiduciary duties on them.

Adv N Sobekwa (Chief Director, Maritime Regulation) added that the Bill had its own specific objectives in place to govern the purpose of the legislation and maintain a focus on relevant areas. The provisions of the Bill would not prevent the imposition of other prescribed regulations within the Bill's area of jurisdiction such as legal responses to natural disasters within national ports that fell under current environmental legislation. The Bill dealt specifically with economic issues related to the reorganisation of the country's ports. The Department was engaged in an audit to determine the extent of BEE activity within port operations and maritime-related economic affairs.

Ms L Kinley (Acting Deputy Director-General, Corporate Strategy and Structure) pointed to Transnet's strategy to enhance revenue generation within core sectors such as rail and transport and focus on efficiency and productivity. She stated that the removal of the Ports Authority should be viewed in this light.

Rev Moatshe asked how existing challenges as outlined in the presentation would be resolved.

Mr Van Rooyen asked for a progress report on the compilation of the ship owners' charter that had been initiated the previous year.

Mr Montana responded that the Bill would allow for the formulation of a comprehensive strategy to deal with all ongoing concerns and impose a legal framework to govern transition within the sector. The National Ports Authority would be monitored to prevent the unfair advantage of certain ports over others. The devised strategy would be constantly evaluated over the long-term to determine levels of success.

The Chairperson noted that no contentious issues had arisen from the question-and-answer session and he assumed that Members were satisfied with the responses. Thus the Committee would continue with the prescribed process for adopting the Bill.


Adoption of the Bill
The Motion of Desirability was read out and the Bill was considered on a clause-by-clause basis.

Comments on specific clauses:
Clause 28: State guarantees
Mr Mzizi referred to the number of options present within the clause regarding the accessing of money and asked whether the choices rendered the clause ambiguous.

Mr Montana responded that the Ports Authority would have to apply to the shareholding minister for approval before engaging in any prescribed process to acquire capital. The shareholding minister would have to decide in collaboration with the Minister of Finance. He concluded that all related activity would take place in accordance with the stipulations of section 66 of the Public Finance Management Act (PFMA).

Ms M Oliphant (ANC) concurred that the intention of the clause was to ensure that all financial activity remained within the confines of the PFMA.

Clause 78: Lighthouses and other navigational aids
The Chairperson proposed that the section "of the nature of the intended action" in subclause (2) be removed as this was a typing error and was not present in the original draft. This was agreed to by Members.

The Chairperson read out the motion for adoption as a Section 75 Bill and the Bill was adopted unanimously with the one technical amendment.

He stated that the Bill would help to improve the lives of the poor by facilitating easier access to goods designed to enhance standards of living.

Budget vote speech preparations
The Chairperson reminded Members of the budget vote on Transport to be held on 31 May. He pointed out that the Director-General had not briefed Members although briefings had been conducted by the Deputy Director-General. Various circumstances had contributed to the failure to arrange a meeting with the Director-General including the absence of the Committee secretary due to illness.

Ms Oliphant proposed that Members continue with the budget vote as scheduled and ensure that a meeting with the Director-General be arranged thereafter. She noted that the Department should have contacted the Committee to make arrangements as the Director-General had indicated an interest in addressing Members.

Rev Moatshe agreed with Ms Oliphant and insisted that the budget vote continue followed by a meeting with the Director-General.

The Chairperson agreed that the debate would continue on 31 May and a meeting would be arranged with the Director-General of Transport shortly thereafter. The Director-General had expressed a willingness to address Members and this desire would be accommodated.

The meeting was adjourned.