Empowerment Charter Compliance: South African Petrol Industry Association and South African Supplier Development Agency

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Mineral Resources and Energy

10 May 2007
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

10 May 2007

Mr E.N. Mthethwa (ANC)

Documents handed out:
SASDA presentation
SAPIA presentation: Transformation in the Petroleum Industry – the Journey
Petroleum and Liquid Fuels Empowerment Charter

Audio Recording of the Meeting

The purpose of this meeting was for the Committee to meet with both the oil companies and the South African Supplier Development Agency (SASDA) to review transformation in the oil industry, in accordance with the Petroleum and Liquid Fuels Empowerment Charter, and to understand why it had been so slow.

A presentation was made by the South African Petrol Industry Association (SAPIA), giving an overview of the transformation in the industry so far and pointing out the gaps in the transformation process, most notably the lack of women and a lack of transformation in the crude oil industry.

The South African Supplier Development Agency (SASDA) made a presentation which argued that the industry was not meeting certain challenges and objectives set out by the Charter. Five pilot projects had been set up by PETROSA and these projects had successfully undergone transformation thus creating the question why transformation was not possible throughout the industry.

The Chair commented that the SAPIA presentation was too broad an overview and did not address many of the issues which were raised in the SASDA report. He suggested another workshop be held at some stage once SAPIA had compiled a more comprehensive report.

The Chair explained the purpose of this meeting was for the MPs to engage with both the oil companies and with the South African Supplier Development Agency (SASDA) so as to understand why transformation in this industry had been so slow. It was important to get the industry’s perspective (from SAPIA) and to get SASDA onboard. One of the challenges faced by this sector was to meet the goals of the Charter in terms of empowerment.

Ms Gheneez Munian of Shell South Africa Energy (Pty) Limited delivered the SAPIA presentation prepared by Mr Connel Ngcukana (Director: SA Petroleum Industry Association). She conveyed Mr Ngcukana’s apologies for missing the meeting explaining that he was unable to reschedule a prior appointment. The SAPIA board were also engaged in this appointment. Ms Munian introduced her supporting panel: Ivan Collair (Regulatory Environment Advisor: Shell Southern Africa), Ebrahim Asmal (Black Economic Empowerment Strategy Manager: Engen Petroleum Limited) and Zwelakhe Mkhosibe (BEE and Government Relations Executive: SASOL Oil).

Ms Munian explained that the presentation had been put together solely by Mr Ngcukana. It was compiled from statistics which had been submitted by important members of the industry. The presentation was an evaluation at broad industry level and thus lacked specific detail. It also aimed to identify certain gaps in the industry. The Petroleum and Liquid Fuels Charter had been used as a means of evaluating the industry (see document for details).

Mr Mmbulaheni Mashanyu (SASDA CEO) gave the SASDA presentation (see document) after the following discussion.
Mr J Combrinck (ANC) asked whether black empowerment was occurring in the mother companies of the oil corporations or within the retail business.

Mr S Louw (ANC) agreed with Mr Combrinck’s questioning of which structures were benefiting. His concern lay with the crude sector as this was where he believed the “gem” to be. He acknowledged that the SAPIA presentation had noted that it was receiving urgent attention.

The Chair asked how urgent this “urgent attention” was.

Ms Munian replied that the strategy for BEE was broad-based. The seven levels alluded to in the presentation (under the regulatory objective) were aimed at transforming the different levels of the company. 

Mr Asmal (Engen) added that many crude deals were done at a country-to-country level. The challenge of crude deals benefiting those on the ground, was one which the industry was committed to.

Mr Louw commented that owners must be able to own different parts of the sector, not only petrol stations.

Mr Collair (Shell) replied that part of the government’s licensing conditions was that a certain percentage of ownership needed to occur and so companies were being forced to meet the objectives of the charter due to this pressure from both within and outside the industry.

Mr Combrinck stated that most of these companies are international and make their money before they land in South Africa. The Charter says that people should share in the wealth of the country but very few people were in fact benefiting from this arrangement.

Mr Asmal replied that other countries also wanted to do what would benefit their own people. What happens outside South Africa is a different story.

Mr Combrinck stated that most of these companies lend money from BEE and asked why this could not be given to the workers. The R70 million allotted for training was nothing in a R40 billion industry. He asked what, given the skills shortage, the industry was doing to address this shortage.

Mr Louw asked what was being done to canvas school children and rural areas for employees and talent of the future. He stated that there was a need to focus on learnership programmes. He also asked what the distribution of current students was throughout the different education institutions.

The Chair asked what the content of existing training was. To what extent did the skills development deal with the core of the industry versus the periphery.

Mr Louw commented that owners must be able to own different parts of the sector, not only petrol stations. In order to do so, proper training was required.

Mr Combrinck commented that the issue was one of management. The uppermost level of management may be black. However, these black managers were more “white” than Mr Combrinck himself – it was a question of wealth, not skin colour. Furthermore, whilst the uppermost level of management may be black, the second and third tiers of management were white. Whilst most of these were happy to endorse change, some were still stuck in the old regime. The first level of management was responsible for executive decisions and the second and third levels were responsible for the day-to-day management of the industry. Thus, change needed to occur at these levels if progress was to be made.

Ms Munian replied that lots of effort needed to be put in place to make sure that skills development was effective. There was a project manager who was working to ensure that the critical skills learnt by black employees were relevant and appropriate. These programmes were being run in accordance with the parameters set out by the South African Qualifications Authority (SAQA) Core business strategy was being focused on. There were programs specific to management so that the second and third levels of management could be transformed. At the same time, there were learnership and practical courses. People who went through training came out with a transportable qualification with transportable skills which could be used in other situations and sectors.

Mr Asmal added that there was specific career training, for example the training of accountants. In addition to this, R145 million was spent on artisan training which specifically benefited rural communities. In terms of the R70 million spent on skills training, this needed to be seen as a percentage of total salary expenditure. R70 million was 3 to 4 % of the total salary expenditure – which was the highest compared to other industries in the countries. The target in the Charter was 2 to 3 %, so the industry was meeting this target.

Mr Asmal added that many companies were investing in scholars in the form of bursaries, especially in Maths, Science and English.

Mr Louw asked if there were any forms available to send out to learners who could subsequently fill them in. Learners simply did not know about these opportunities.

Mr Collair replied that forms could easily be made available. Most of the companies operated on their own or through local non-government organisations in the area. However, the companies needed to make these opportunities better known and perhaps going through the parliamentarians would be a good way to do so.

The Chair asked the SAPIA representatives to define what the strategic conflict between the department and the industry was.

Mr Collair replied that the companies did not object to transformation or to fast-tracking that transformation. However, they differed from the department in how they wanted to do it. The Department had a far grander vision for SASDA. The companies wanted transformation to be specific in meeting the needs of the companies as well.

Mr Combrinck commented that 40% of the retail business belongs to BE, in other words petrol stations. He asked what percentage of these businesses were making money and how the companies were supporting them.

Ms Munian replied that the companies did not want to set up businesses which would fail as this would damage the branding of the companies. The companies wanted to support these businesses.

The Chair commented that the SAPIA presentation / overview was too general. Specific matters needed to be addressed. The lack of this addressing was why progress was so slow. He suggested that the department continue meeting with the oil companies and that the oil companies come up with a comprehensive report. Very specific issues had been raised in the SASDA report and these needed to be addressed, once a more comprehensive report had been compiled by the oil companies.

Mr Louw agreed with the Chair’s summary. It was important that the department take the two documents and peruse them thoroughly. It was also important to meet all the role players in the industry and to address all the challenges facing the industry. Another workshop was suggested.

Ms N Mathibela (ANC) seconded these proposals.

Mr C Kekana (ANC) asked for clarity on the issues of procurement and employment.

The Chair commented that this clarity would provoke further discussion. He concluded by remarking that, from the industry’s point of view, more needed to be done. There was not much to peruse with regards to the SAPIA presentation, whereas very specific matters had been raised in the SASDA presentation. The input of the department on issues was also necessary. The department was also doing its own visits to these companies.

The meeting was adjourned.


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