Transnet on Lexshell Agreement; National Environmental Management: Protected Areas Amendment Bill [B67-2008]: adoption

Meeting report

National Environmental Management: Protected Areas Amendment Bill (NEMPA or the Bill): Department of Environmental Affairs and Tourism (DEAT) briefing
Mr Ishaam Abader, Deputy Director General: Corporate Affairs, Department of Environmental Affairs, briefed the Committee on pertinent issues raised by the Committee in the last session on the National Environmental Management: Protected Areas Amendment Bill, noting that these concerns had been addressed and new wording had since been incorporated into the Bill.

The concerns around the flight corridor had been addressed. This had been provided for as an insertion into Section 47(d) of Act 57 of 2003 as amended. He noted that the environmental authorisation could include any spatial assessment tool.

The insertion on the winding up of South African National Parks (SANParks) was highlighted, and he commented that DEAT would not be able to accommodate the proposal that SANParks would only be able to be wound up if there was agreement by “the full house of Parliament”. DEAT advised against the wording proposed as the interpretation was unclear. They pointed out that even an amendment to the Constitution did not require the supporting vote of all members.

Mr Abader detailed the insertions, deletions and substitutions in the Long Title, Clause 3, Clause 4, Clause 5, Clause 6, as per the document attached. He read through them to the Committee.

Discussion
Mr G Morgan (DA) thanked DEAT for the clarification on Clause 4, as to how the legislation would apply. He wanted to confirm that Section 24 of the principle Act would apply to civil and military aviation, and queried what the provisions were that would differentiate military from civil aviation.

Mr Abader responded that the provision of any flight corridor was subject to environmental agreements. He stated that this was also covered in Section 24.

Mr D Maluleke (ANC) referred to the comments on the voting of the full House, in the amended section 54, and suggested that perhaps this should be changed to a reference of two thirds of the full House.

The Chairperson noted that the State Law Advisers did not seem to have a problem at the last engagement.

Mr A Mokoena (ANC) commented that he thought that the issue of the full House vote was one of semantics. He asked what was actually meant by the DEAT and the State Law Advisers. He suggested that the Portfolio Committee should apply their mind to the issue.

The Chairperson thought that Mr Mokoena was arguing a different point and that the difference was not just semantics. He took the point offered by Mr Maluleke and stated that perhaps the Committee should settle for a two thirds majority, if that would be more comfortable.

The Portfolio Committee agreed that it would be acceptable to include reference to the two-thirds majority..

Adoption of the Bill
The Portfolio Committee considered the Bill clause by clause. The Chairperson noted that each Clause of the Bill had been read out. He noted that a decision was still needed on the amendment to Section 54.

After conferring with the Parliamentary Legal Advisors, Mr Abader reported that DEAT had formulated the following wording:
”The South African National Parks may not be dissolved or wound up except by or in terms of an Act of Parliament and upon the supporting vote of two thirds of its membership.”

He said this would become Clause 5, sub paragraph (3) of the Bill.

The Committee accepted this amendment, and adopted the Bill, with amendments.

 The Chairperson read through the Report of the Committee.

The Committee accepted the Report.

Transnet Briefing on V&A Waterfront Sale
Ms Maria Ramos, CEO: Transnet, dealt with the allegations made by the Sunday Times in the article, “Transnet sold our sea to foreigners,” published on 24 August 2008. She explained that what had in fact been sold was the  Transnet’s 26% shareholding in the V & A Waterfront Holdings (Pty) Ltd, as well as three retirement funds’ 74% shareholding in the V & A Waterfront Holdings (Pty) Ltd. In terms of the sale agreement, Transnet and the three retirement funds sold all their shares and claims in the V & A Waterfront Holdings to Lexshell. In terms of the Governing Agreement, Transnet undertook certain contractual obligations relating to the reclamation of land from the sea that would be required for the remaining anticipated development of the V & A Waterfront. In the past, Transnet had relied on the provisions of the Sea-Shore Act to procure the reclamation of land from the sea-shore in support of its ports development programme. She emphasised strongly that no secret deals had been made.

She noted that of particular concern to the Portfolio Committee Environmental Affairs and the DEAT was the topic of the possibility of the Inter Coastal Management Bill (ICM) undermining Transnet's plans and its agreement with Lexshell. She felt that Transnet had tried to accommodate this by providing the facts of the agreement to the Portfolio Committee. She remarked that it was unfortunate that the report that had reached national prominence in fact did not contain the correct facts. Transnet's focus was on their port business as it represented a bigger concern. It was a fact that Transnet was to invest R40 billion into the ports over the next five years. For that reason they were concerned about the ICM Bill. They were also concerned about their legal commitments pending the ICM bill. These concerns did not arise in the Lexshell agreement itself, and Transnet hoped that this would be apparent, since the Portfolio Committee had been provided with the commercial agreements in the full interest of transparency.

(It was noted that these documents could not be provided to the public, as they had obtained under special permission to release them only to the Portfolio Committee Members).

Ms Ramos provided further background information with regard to the V & A Waterfront (V&A) sale. She reviewed the history of the V & A Waterfront, and the background to the land reclamation. The Governing Agreement and the Sea-shore Act were outlined. In terms of the Governing Agreement, sea areas earmarked for reclamation were identified in that agreement, and were restricted to the sea areas immediately adjacent to the V & A Waterfront.  She explained, by illustration with a diagram in the presentation, the proposed reclamation area. She detailed the sale of the V & W (see attached document).

Mr De Buys Scott, Governance and Monitoring Consultant: KPMG, read through KPMG's governance and monitoring report on the process of the sale, from initial bids to final sale.

Discussion
Mr Mokoena asked if there was approval from government for the sale of the 26% share, as Transnet was owned by government.

Ms Ramos replied that Transnet had obtained approval in terms of the Public Finance Management Act (PFMA) and would not do anything without the proper approval.

She further reported that, as evidenced by KPMG's opinion, the implementation process was reasonable and met the disposal objectives of transparency, good governance, consistency, fairness and compliance with the Department of Trade and Industry Codes of Good Practice.

After briefly outlining the structure of the Lexshell consortium, Ms Ramos emphasised that as of the date of sale, Transnet had no further interest in the business of Lexshell. She invited questions and comments.

Dr Monde Mayekiso, Deputy Director General: Marine and Coastal Management, DEAT, commented on integrated coastal management as it related to the ports. The aim of the DEAT was to limit the impact on the environment. This was important for two reasons: firstly, the safety of individuals and communities had to be considered, and secondly it was intended to limit irreversible damage to the environment. These issues had no impact on ownership as they dealt with the use of the environment. He commented that the ICM bill did not deal with Environmental Impact Assessments (EIA). It dealt with the existing legislation in the form of the National Environmental Laws Act.

Ms Radia Razack, Director: Legal Services, DEAT, remarked that to understand the impact of the ICM bill, it was necessary to focus outside the aspects of the sale. DEAT's concern was the wider impact on all the ports. Transnet voiced similar concerns. She stated that there appeared to be cross cutting mandates, and it would be the Portfolio Committee's task  to balance these mandates. The DEAT would make an effort to assist with this. She noted that the ICM Bill was not intended to discourage development or affect port operations. She pointed out that the Sea Shore Act (SSA) placed the sea and sea bed under the custodianship of the State President. This was a principle that derived from Roman law and stipulated that these areas were for the use of the people and were held in trust by the State. The SSA was not sufficient to meet these objectives and needs, and that was why the ICM bill was necessary. It was a move to place previously fragmented legislation together into one instrument. Portions of the coast were the mandate of Transnet, in the form of the ports. The DEAT was not insensitive to Transnet's mandate to operate the ports, but noted that its overall mandate was the protection of the sea and sea-bed for the public. She acknowledged that the processes in the SSA had been followed by Transnet, but reiterated that the purpose of the ICM bill was to ensure that South Africa's assets were conserved.

There was no guarantee of reclamation under the SSA and it was the same with the ICM bill. The issue that had to be explored was that of potential unintended consequences. The Bill was not intended to divest ownership and this was not a case of what was registered with the Deeds Office. The argument DEAT would put forward for consideration was that Transnet could not possibly “own the sea”. DEAT operated on the principle that ownership and control were two different things. The tool suggested to assist with this was something along the lines that approximately 90 km2 of sea and 20 km of coastline would fall under the control and jurisdiction of Transnet, under condition that they would be required to answer to the DEAT on the environmental impact of operations and development. DEAT and Transnet had held discussions that engaged on defined co-ordinates of the restricted port areas, in order to develop exclusions in the bill. The ICM bill created a new regime for protecting the sea and the DEAT could not be seen to be making broad exceptions.

Ms Ramos wanted to provide a correction to a possible misunderstanding and noted the need to clarify Transnet's position before the Portfolio Committee. Transnet supported the principles of the ICM Bill. A look at Transnet's financials and asset register would make it apparent that the areas outside the ports were not considered to be Transnet's assets. There were the designated assets of the National Port Authority (NPA), and these could be included in the ICM bill or any other future development. Transnet had jurisdictional control over the ports and the sea was not valued as a port asset.

Mr Vuyo Kahla, Group Executive: Office of the Group Chief Executive, Transnet, responded that Transnet’s engagements with the DEAT had not created the impression that they were dealing with these areas. The ports were already defined, and referred to as the port limits. He reiterated that Transnet had jurisdictional control over the ports. There were different assets within the port, but they were confined to the port limits. It was important to make this point clear to avoid future confusion. The ports would not be seen to be public property. This also did not mean that the ports were outside the purview of the DEAT jurisdiction.

Mr Morgan asked what the process was, before this Bill was tabled before Parliament. It had been on the table for seven years. He noted that the Bill was not creating a specific amendment that sought to accommodate the land reclamation, which was dealt with by the Sea Shore Act (SSA). He asked if what was in that Act was sufficient. He asked if there was an argument for the ICM bill to deal more explicitly with reclamation.

Mr Vuyo Kahla, an executive in Ms Ramos’s office, Transnet, responded that according to the ICM Bill, clauses 27(2) and (4) did not deal with reclamation. These dealt with exclusions of property from coastal public property. As to the question of whether ports should be excluded, he suggested that the definition of coastal public property was not correct. He added that coastal public property vested in the citizens of South Africa. It could never be the intention that those areas within the port constituted coastal public property. Exclusion of the ports from coastal public property did not mean that they were outside the realm of environmental regulation. He proposed that the exclusion of the ports take place after the passing of the Act.

Ms Razack replied that Mr Kahla was correct. The DEAT was awaiting co-ordinates from Transnet, in order to delineate these boundaries. She commented that they must ensure that the ports were not unduly hampered and to achieve this they would have to enact the exclusions simultaneously with the passing of the Bill. The process for reclamation must be a process for the land, and Transnet might not be the only applicant. The DEAT must cover the unintended consequences.

Mr Morgan requested clarification on the map provided and wanted to how many hectares in total were held as fixed property by V&A Waterfront Holdings. He proceeded to quote erf numbers and pointed out that they were not referred to in the asset register. He asked if it was possible that the due diligence report of Deutsche Bank and Investec Bank could be made available to the Committee.

Ms Ramos responded that she could get Transnet's property officials to answer the questions specifically. She responded that the number of hectares of possible reclamation areas could not be specified, as these were dependent on ongoing geo-technical and scientific work regarding environmental approval. As to the erf numbers quoted, she would have to come back with the precise answers.

Mr Maluleke asked how the legislation would impact on day to day operations.

Mr Mokoena wondered where the NCOP process was.

The Chairperson responded that the process of the Integrated Coastal Management Bill was now with the NCOP, but it was important to explore the impact of  Transnet’s position. He wondered if this would be acceptable in terms of Parliamentary protocol. He referred here specifically to protection in the case of litigation and that it was important to re-open a campaign of public hearings. He thought that they should publish and proceed after that. The Chairperson noted that he was mindful of the aforementioned concerns of the Committee.

Mr Maluleke wanted to make it clear that this meeting was aimed at gathering information, and nothing else.

Ms Ramos responded that Transnet had not come to make submissions on the Integrated Coastal Management process, nor was Transnet making any plea for representations on the ICM Bill. She said that Transnet had actually come prepared to answer questions on the Lexshell agreement.

The Chairperson noted that these issues were linked to the ICM Bill and that they could not escape dealing with this matter. He proposed that they get the information on all the issues regarding the ICM and the Lexshell agreement.

The Chairperson asked what the distinction was between exclusion and reclamation.

Ms Razack responded that coastal public property was the scope of the sea and coastline vested nationally with the citizens. Reclamation was the filling up of this land in order to make it habitable, and essentially involved reclaiming areas of the sea to turn them into habitable land. This was an involved process and it was necessary, in the legislation, to make this conversion process practical. An exclusion from coastal public property involved the greater net of coastal public property. In the legislation there were reasons for excluding the port area. These included the desire to avoid hampering mining, aquaculture or other activities. However, this kind of activity needed approvals in the form of leases or concessions from the DEAT, with conditions attached to the preserved area.

The Chairperson responded that he would have seen exclusions as related to reclamation. He commented that it would seem that there were safeguards in place, and asked for comments on where the obstacles were. He stated that Transnet could come back to him on this.

Ms Ramos remarked that she looked at this from the point of view of what made economic sense. The process and provisions discussed would make sense in the development of new things. Here, Transnet was dealing with  existing ports. The process seemed more appropriate to development of new ports. To try to apply that to existing operational infrastructure did not make commercial sense. Her sense was that a way forward was to note the present situation in the legislation, as regulation was not as powerful. All new developments would then fall under the ICM Act, once promulgated. It was, after all, intended to protect coastal public property resources, and this she regarded as a good thing. The DEAT was proposing a process that would add complexity. She was sure that in the end Parliament would make the right decision. Transnet would live with whatever it was, but requested that what was practical and beneficial should be kept in mind.

Ms Razack responded that she appreciated these comments and that once the co-ordinates were provided,  DEAT could use them as a point of reference from Transnet. She proposed that a simultaneous mechanism to allow this exclusion to go through the day that the Bill was passed, be included.

The Chairperson remarked that he hoped the co-ordinates would be made available soon.

Mr Morgan pointed out that his question on the erf numbers had not been answered and queried the indication that an answer would be provided.

Ms Ramos asked Mr Morgan to provide Transnet with the detailed numbers of the erfs, and they would then be able to provide a written response.

Mr Chris Wells, Chief Financial Officer, Transnet, responded that Transnet were prepared to release the due diligence reports to the Committee but that it was not up to the officials present at the meeting, and they would have to get permission.
 
Mr Kahla reiterated but it was important that the exclusions under Clause 27 (2) and (4) would require a public process to garner the views of the public.

The Chairperson remarked that these deliberations should have happened already. He added that the issues raised gave the Committee enough to work on and they would try to find a way to accommodate all.

The meeting was adjourned.