Minister request for exclusion from coastal public property into National Environmental Management: Integrated Coastal Management Act: approval

NCOP Land and Mineral Resources

17 March 2009
Chairperson: Rev P Moatshe
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Meeting Summary

The Committee agreed to the Environmental Affairs and Tourism Minister’s request that Parliament approve the Transnet application for the exclusion of nine ports (within the co-ordinates that covered the footprint of ports where the actual work was being done and not the  extended areas of each port) from coastal public property ito section 27(4) of the National Environmental Management: Integrated Coastal Management Act.


In their 17 February meeting they had decided that before they recommended ratifying the Minister's request, the matter be referred to the provincial legislatures for an opinion. At this meeting, there was feedback from some of the provinces, but there were some that had not been able to comment as a result of time constraints (due to ongoing election and campaign activities). The Committee agreed to the Minister’s request but stressed the fact they did so under protest. This was as a result of conflicting submissions by the Department of Environmental Affairs and Tourism and Transnet that had divided their minds and resulted in confusion.

Transnet gave a presentation at this meeting in an effort to address the questions that had been raised by the Committee in the previous meeting. These addressed three main issues: specific areas of the ports that were being excluded from the definition of coastal public property; the leasing of the ports, and investment in the ports and the types of investment loans that would be raised.

The Committee queried the necessity of including ports with no contractual obligations in the port exclusion; the length of the lease period; the distinction between land and water leasing; the likely impact of the global recession on these lease agreements and Transnet's capital investment programme.

The DEAT explained that the ports were critical in terms of maintaining trade patterns and expanding South African trade. The request for the exclusion from coastal public property was for the purposes of maintaining and expanding activities within those boundaries and improving on those. The South African ports were the window to the country in terms of international trade and one could not therefore simply stop planning and investing in the ports because of an economic downturn. Another reason from a port jurisdiction point of view why this exclusion was necessary was because Transnet still had a responsibility to ensure that ports were actually run and maintained according to international safety standards in order to comply with international shipping obligations.

Meeting report

The Chairperson invited the permanent representatives of each of the provincial legislatures to present their comments on the Minister’s request.

The Eastern Cape Province submitted that they were not in support of the request of the Minister for the exclusion from coastal public property because certain queries had not been addressed by the Department of Environmental Affairs and Tourism (DEAT).

Gauteng and Free State Province had been unable to sit and deliberate on the Minister’s request as a result of ongoing election and campaign activities. There was no submission from the North West Province.

KwaZulu-Natal and Limpopo Province submitted that they were in support of the exclusion from coastal property. Mpumalanga Province submitted that they were in support of the exclusion as long as the views of the 'coastal provinces' had been meticulously considered before a final decision was taken by the National Assembly. They also required assurance that the land and national assets within the coastal zone had to be protected during the administration of the lease agreements and that the citizens of South Africa would benefit from any such economic developments.

 

Both the Northern Cape and Western Cape Provinces agreed to the request by the Minister.

Discussion
Mr R Tau (ANC, Northern Cape) asked a question on parliamentary procedure. He noted that the report from Mpumalanga was a Committee Report signed by the Chairperson and not by the Legislature's Secretary or Speaker. He asked, therefore, whether procedurally, this would have any implications on the work that the Select Committee was supposed to be doing.
 
Mr A Watson (DA, Mpumalanga) responded that this was not a mandate as such but agreeing to a request.

The Chairperson agreed that it was not a mandate but a request from the Minister so that the provinces were taken on board in giving their consent.

Mr V Windvoel (ANC, Mpumalanga) pointed out that the committee was not dealing with legislation. He referred to what had been submitted by Eastern Cape Province, and discussed in the previous meeting, where certain questions had been put to the Department that had not been responded to by them yet. It was necessary for that response to be given, before the Select Committee made any decision.
 
The Chairperson asked the Department to fill in any gaps where this had been requested.

Adv Radia Razack, Director for Legal Services: DEAT, responded that she recalled that there had been specific questions about the financial implications and the Department had not been well placed to address them appropriately. They had then contacted Transnet via the Department of Public Enterprises (DPE) to ensure that they addressed those questions and it appeared that they had prepared a presentation to address some of the pertinent questions raised by members. It was more appropriate for Transnet to address the matter directly since they had that information which was not within the Department's knowledge. She would hand over to Transnet.

Ms M Oliphant (ANC, KwaZulu-Nata) was concerned that her province had prepared its opinion without any knowledge of a response from the Department since they had not been in possession of the presentation.

The Chairperson conceded that the Committee was operating under difficult conditions in as much as the election campaign activities were concerned and the time that was available for them to consider these matters.

Transnet presentation
Ms Sue Lund, General Manager: Policy and Resources (Transnet) introduced her team who included Mr Eddie Seaton from the Transnet Property Division and Mr Chris Matchett of Transnet National Ports Authority. She explained that they had been asked to address three specific matters arising from the last Committee meeting:
- The specific areas of the ports that were being excluded from the definition of coastal public property,
- The second had been about a number of issues around the leasing of the ports,
- Investment in the ports and the types of investment loans that would be raised.

The power point presentation included the mapped areas with all of the co-ordinate details. This had been done in conjunction with the Surveyor-General's Office to ensure that the boundaries and specifically the co-ordinates to do with the water areas, were correct.

She asked Mr Eddie Seaton to explain the diagrams to the Committee.

Mr Seaton referred to the shaded areas on the map diagrams as the water areas that were to be excluded from public property. The shaded areas represented water in all of South Africa's nine commercial ports and the areas to be excluded. The important features of the shaded area were generally, the entrance channel to the port area and the water area within a port. Therefore on any of the nine ports, one would see the entrance channel being excluded. The reason for the entrance channel being excluded was that it formed the entrance for all shipping entering the protected area of a port and that was generally deepened to accept the new generation fleet that visited every port. On the land side, above the high water mark, was the water area inside of a port area where you would generally find berthing and boat docking and everything else that had to do with the operations of a port area.

Discussion
Mr A Watson (DA, Mpumalanga) commented that he was more than ever confused by Mr Seaton's submission. Prior submissions had indicated that the reason why they wanted them excluded was that the ports were unable to enter into contracts with warehousing and other things on the ground. If the presenter now said that the excluded area only comprised of the water area then he could not understand where the buildings, the property and the long-term leases came into being.

Ms Sue Lund responded that according to how she understood it, the definition of coastal public property was specifically in respect of water areas and those were the areas that they were seeking to have excluded. She also clarified that there were some leases in the water area as would be revealed in the later part of the presentation.

Mr L Van Rooyen (ANC) also commented that the presentation was confusing citing page 17 of the presentation which indicated that in Cape Town, the water leased per port was 100%. This meant that all the water there was leased already. How then could it be excluded when it had been leased?

Ms Lund asked if they could explain the leasing table in its entirety in order to address these questions.

Mr Chris Matchett said that the whole idea was to show the percentage of the total leases that exceeded 20 years and those that did not exceed 20 years. This did not mean 100% of the area but the number of leases that had been made in terms of their longevity as either being over or under 20 years. The majority of these leases were long leases which was typical of the nature of these port activities. The short leases were often the ones for activities such as for small business, selling hot-dogs, for example, whereas the long term leases were the ones where investment in the property took place in order to conduct the business.

Mr A Watson (DA, Mpumalanga) responded that this answer did not assist in clearing the confusion since hot-dog stands and warehousing were activities that took place on land and not on the water areas pointed out by Mr Seaton.

Mr Windvoel said that the point of departure had been the matter of security of tenure with regard to the land. There had been controversy surrounding the land at the V&A Waterfront. The Committee had been told that this was only confined to the port area. But now there was another definition that did not correspond to the Act that had been passed recently. The way that Ms Lund had tried to explain “coastal public property”, looking at the Act, it did not apply only to (a) but included land in (b). The water existed on land and could not just exist on its own. In (c) the Act spoke about natural islands and so on. Therefore when speaking about coastal public property one had to avoid being selective and speaking about water only. He urged the Department to answer questions holistically to encourage the democratic process so that members could raise any question that they felt any member of the public, whom they represented, would have raised. This would also equip members in their decision-making and would enable justification to their respective provinces about why they had adopted a particular course of action.

Mr Ishaam Abader, Deputy Director-General DEAT, offered his interpretation of the diagram to assist his colleague. In his understanding the entire demarcated area was what was excluded. Anything in there was coastal public property. The shaded area was the water area where you could not have leases. But that entire area, that is, the white bits in the diagram were the bits where you would have the land leases.

Mr A Watson (DA, Mpumalanga) responded that it was helpful but did not assist the fact that his colleague had said that it only affected the water.

Adv R Razack said that to get clarity one had to go back to the actual decision which was exclusion. It was very difficult to make a distinction between land and water particularly if one looked at the definition of coastal water. Because one was dealing with an area that was so inter-linked and the activities there were so inter-linked, one had to take it as one thing. Thus one should look at the co-ordinates which were given to the Committee in the first instance and not these maps that gave an artificial distinction. For clarity and certainty it was advisable to go back to that. For purposes of the Committee, they just needed to focus on the co-ordinates that were provided for exclusion. 

The Chairperson complained that it was difficult for the Committee if Transnet and DEAT came with differing perspectives as this created confusion. It seemed as if the understanding of Transnet and that of DEAT differed, and that is why the Committee had to be skeptical.

Mr Van Rooyen (ANC, Free State) asked if he could be provided with an example of a wet (water) lease in simple terms.

Mr Seaton responded that the wet lease was a lease over the use of water for things like aqua culture or floating docks that are used by ship repairmen. A lease could be obtained for the piece of water in which the floating dock operated. It was for the use of a particular area of water for something that floated essentially. It could be a raft where oysters or mushrooms were grown for example.

Adv Sandra Coetzee, Deputy Director-General: Department of Public Enterprises, apologized for the unfortunate confusion that had arisen. She assured the Committee that both DPE and DEAT had made extensive consultations and there had been very clear consensus as to the boundary of the excluded area, that it covered both water and land in accordance with the definition of coastal public property. In so far as port functions were not only land based but were water based too, there was inter-dependency in terms of both water and land. She emphasized that in assigning these boundaries, the point of departure had been the question: What is required to execute port functions in terms of the National Ports Act? That had informed the determination of these boundaries. The Act in section 27(5) clearly stipulated that coastal public property that was excluded in terms of section 27(4) would remain state owned land. This addressed the request that such an assurance be given, and the Act was very clear on that. 

The Chairperson asked if there were any further questions from the members.

Mr Van Rooyen (ANC, Free State) stated that the Committee had raised the issue of finance and the investment problem at a previous meeting. He wanted to know why it was becoming a problem to secure the other half of the required funding of about 13 billion rand and why they had to go to a foreign market to raise funds.

Ms Lund responded that she required further information on how the problem had been put across to the Committee previously since she had not been present at that meeting. She indicated however, that they were continuing with their capital programme as planned and they continued to source funds through the normal debt facilities that were available.

Mr Van Rooyen responded that the Committee had been given to understand that the global financial crisis had affected the entity's creditworthiness.

Adv Coetzee responded that from the DPE's perspective, they had over the last 6 to 12 months detected a significant constraint on global liquidity and it was having an impact not only on Transnet but also on all state-owned enterprises. In terms of the global economic climate, the availability of debt was generally constrained and in securing debt, obviously the security of tenure and planning for those activities was a crucial matter in terms of the risk assessment of any lender to an activity. Any form of uncertainty increased risk and increased the cost of capital for the activity. The credit rating agencies did a regular assessment of the credit ratings of the state owned enterprises. For instance, Eskom's credit rating had changed recently. If one looked at the media, most of the big multinationals and South African companies were under strain to retain their credit ratings. As a consequence of the Act’s implementation, any risks related to its roll out would have a bearing on Transnet's credit rating.

Mr Windvoel commented that the question that Mr Van Rooyen had asked related to the outstanding issue that the Department had not answered to do with the global recession. How far would it have an effect in terms of some of the contracts? The other point had been the question why there was a rush to include all the ports even the ones that had contracts or leases that were not for more than 20 years.

Ms Coetzee responded that there were positive expectations that the downturn in the global markets would reverse at some point and pick up again. The ports were critical in terms of maintaining trade patterns and expanding South African trade. The part that was excluded here was for the purposes of maintaining and expanding activities within those boundaries and improving those. The South African ports were the window of the country in terms of international trade. One could therefore simply not stop planning and investing in the ports simply because of economic downturn.  South Africa had to prepare itself for long-range investments in the ports. Most of those sizeable investments had a longer range in terms of capital investment and had a longer range in terms of securing return on investment. The fact that there was an economic downturn did not mean essentially that they had to stop investment in the ports as that would actually be to the detriment of the country.  Another reason from a port jurisdiction point of view that this exclusion was necessary was because Transnet still had a responsibility to ensure that ports were run and maintained according to international safety standards. If the ports were not then South Africa would not have international shipping calling at its ports. For example, most international shipping was underwritten by insurance. If Transnet was unable to maintain these ports according to those international standards, the ships calling there would not be able to secure the underwriting in terms of insurance. The impact was therefore not just a commercial impact in terms of warehousing and so on but was also informed by international shipping obligations.

Ms B Dlulane (ANC, Eastern Cape) said that the responses that were now being given had not been available to the province when they had made their decision. She raised the protest that the department had not done justice to the issues raised at the previous meeting which was why the Committee was still debating the same matters. She did not understand the need to rush if the affected provinces had not received these explanations in good time.

Ms M Oliphant (ANC,KwaZulu-Natal) said that in terms of the document the lease period was stated as going up to 99 years. However in terms of Transnet responses, there was not one that indicated a lease of 99 years. She requested Transnet to answer the specific questions that had been raised by the Committee in that regard.

Mr Van Rooyen raised a concern about the investment issue. The original submission by the Department had stated that the capital investment programme was worth an estimated 80 billion rand over the next 5 years. However in the current presentation it stated that it was worth 22.5 billion rand. Which figure was correct?

Ms Sue Lund responded that the 80 billion rand was the figure for capital investment for Transnet as a whole whilst the table before the Committee referred specifically to the ports. This was the reason for the discrepancy between 22 billion and 80 billion.

The Chairperson noted that there were 5 provinces supporting the Minister's request. However there were some who felt that they could not continue with their submission and he requested guidance from the Committee as to how to proceed.

Mr Watson (DA, Mpumalanga) said that one of the 5 provinces had retracted its support, that is, Gauteng.

Ms M Oliphant (ANC, KwaZulu- Natal) responded that because of the difference in the information that had been presented to the province to that which was now before the Committee, her province could not support the request.

Mr Monde Mayekiso, Deputy Director-General: Marine Coastal Management at DEAT, responded that there could have been a misunderstanding. According to the presentation, there were leases that were greater than 20 years and those that were less than 20 years. Therefore the leases that were 99 years would be covered by the category of leases greater than 20 years. The second thing was that although they appeared to be a difference between what the DEAT had presented and what Transnet had presented there was in fact no difference since there were all talking about the same port area.

The Chairperson proposed an adjournment so that members could convene in study groups and debate amongst themselves and then reconvene with a position since there was a stalemate in the debate between members and the DEAT and Transnet.

[Adjournment]

After the adjournment, the Chairperson stated that committee members were in agreement with request but under protest since their minds had been divided by conflicting information coming from DEAT and Transnet. This had been unfortunate.

The meeting was adjourned. 

 

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