Electricity connections not making targets

No hope of meeting Zuma’s promises…

elec poleThe inability of municipalities and local government to bring electricity to the poor and for the department of energy (DOE) to meet its promised target of electricity to all households by 2015 was a subject which dominated the DOE’s annual report to Parliament recently. New Minister of governance and traditional affairs, Pravin Gordhan, will have this issue before him as he tackles local government problems as will new minister of public enterprises, Lynne Brown.

Ms Nelisiwe Magubane, DG of DOE was reporting on the activities of her department for the 2o12/13 period and neither the minister of energy, Ben Martins, or his deputy, was present, much to the chagrin of portfolio  committee energy committee chairperson, Sisi Njikelena, who reported angrily on the subject.      DOE was reporting on its annual report and second quarter achievements.

Success with avoiding Middle East for oil

In noting that the year had been dominated by fluctuating oil prices, Ms Magubane noted that South Africa had succeeded in switching 41% of its oil imports to the African continent.

DG Magubane also reported that the electricity supply situation had improved in the country and the department’s own household electricity connection programme had also improved, mainly thanks to Eskom, but there was a large backlog that still existed due to lack of accountability by municipalities. This was a worrying factor for the country, she said. On this subject, further reports followed.

Other DOE targets met

Dr Barnard

Dr Barnard

On clean energy as far as the year was concerned, she reported that in August financial close had been received from twenty eight of the independent power producer (IPP) bids: the biofuels blending regulations had been drafted; the draft pricing arrangements started; and a nuclear safety report compiled and submitted as a result of lessons learnt from the Fukushima disaster.
 Dr Wolsey Barnard took up the issue of DOE’s poor record on electricity connections and said that bearing in mind the lack of skills and training at local government, it “was a miracle that South Africa had achieved so much”.

Aside from the fact, he said, that the government financial year was different to the municipal year, which made a mockery of funding programmes and targets, he said dealing with municipalities was “extremely difficult”  but nevertheless “for each seventy seconds of each day there was a connection some here in South Africa”.

Treasury must ring fence local funding

On the problematic relationships with local government, Dr Barnard said DOE was doing as much as it could “but you can pull a rope but you can’t push it and that was the trouble in dealing with local government officials”.   He said he looked forward to the day when National Treasury’s promised Bill “ring fencing” funds was promulgated “and then we might get somewhere”, he said.

He noted that each municipality had to sign a contract to get funding in the first place, providing business plan, “but sometimes we get to a place to install for a lot of homes built and there is no sub-station or any hope of connecting to the national grid”.

Cabora Bassa dam debt at R1

nelisiwe magubaneMs Magubane confirmed that in the annual reports a loan to Mozambique for the Cabora Bassa dam had been written down to R1 with the permission of Treasury. This loan was in respect of money loaned in the ‘sixties and it was clear that the Mozambique government could not pay. However, the question of re-payment of this loan would be re-raised, she said.

On queries why there seemed so little interest in gas exploration by government in Mozambique, whereas other countries seemed to have “got their foot in first”, Muzi Mkhize, chief director of hydrocarbons, said that “unlike other countries, we do not subsidize our national oil exploration effort and, in any case, the quest of dealing with countries was a foreign affairs matter and country to country relationships had to come first.”

SA to meet Mozambique on gas exploration

Sisi Njikelana said that this was a totally unsatisfactory answer and called on Mkhize for a better explanation to his committee.  Mkhize admitted that South Africa was “meeting Mozambique on a government to government basis on gas exploration matters in mid-October”.

When asked what had happened to the nuclear safety report, deputy director general of nuclear, DOE, Zizamele Mbambo, said that this was a security document but it had been acted upon.

The Eskom representative was asked to speak on the subject when a question was raised about the Koeberg Nuclear plant by a Cape Town MP, and the Eskom official reported that a “fortnightly nuclear safety committee met in the area with all representatives present” and that the meeting was chaired by a person drawn from the local community.

Refer to articles in this category
http://parlyreportsa.co.za//public-utilities/municipal-free-basic-services-slow-build/
http://parlyreportsa.co.za//energy/dpe-

Posted in BEE, Electricity, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, LinkedIn, Public utilities, Trade & Industry0 Comments

One year to implement B-BBEE Codes

B-BBEE Codes of Practice far more onerous….

The final Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice (Codes) have been published. Companies will be granted a one-year transitional period to align with and prepare for the implementation of the revised Codes.

Trade and Industry Minister Dr Rob Davies has stated that the amended codes are a “new beginning” aligned to government’s transformation ambitions and follow a period of much debate and which were earlier released in October last year.

The revised codes deliver a reduction of elements, from seven to five, within the generic scorecard, comprising ownership, skills development, enterprise and supplier development, management control and socioeconomic development, and changes to the points required for compliance.

The codes set the minimum requirement for ownership at 40% of net value, with skills development accounting for 40% of the total weighting points, and enterprise and supplier development required a subminimum requirement of 40% within each enterprise and supplier development element, namely preferential procurement, supplier development and enterprise development.

Now five elements

All companies, barring micro enterprises, will be required to comply with the five elements of the B-BBEE scorecard including  all organs of state and public entities; and  “natural or juristic persons who conduct a business, trade or profession in South Africa, which undertakes any economic activity with organs of state or public entities.”

There is an increased threshold in points required to achieve a better B-BBEE status and exempted micro enterprises have now a threshold of R10m and general companies, known as QSEs, have a range of R10m to R50m.

On the new enterprise and supplier development enterprises totalling 40 points, 23 points are required as black ownership majority. Procurement is down to 12 points, of which only five points relate to all suppliers with black economic empowerment credentials, three points to qualifying small enterprise suppliers and four points for exempt micro enterprises with a 15% target each.

No help to importers

Commentators have pointed out that many companies acquire total, or at least most of their imported goods on international markets and this will place them a complete disadvantage. The amended codes outline in much more clarity that large companies are required to comply with all three priority scorecard elements – namely ownership, skills development and enterprise and supplier development.
Refer to articles in this category
http://parlyreportsa.co.za//bee/bee-comes-under-scrutiny/
http://parlyreportsa.co.za//bee/turnover-fines-employment-equity-breaches/
http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/
http://parlyreportsa.co.za//bee/new-b-bbee-bill-avoids-circumvention-of-the-law/

Posted in BEE, Trade & Industry0 Comments

B-BBEE Codes of Good Practice far more onerous

One year for implementation…

ladderThe final Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice have been published. Companies will be granted a one-year transitional period to align with and prepare for the implementation of the revised Codes.

Trade and Industry Minister Dr Rob Davies has stated that the amended codes are a “new beginning” aligned to government’s transformation ambitions and follow a period of much debate and which were earlier released in October last year.

The revised codes deliver a reduction of elements, from seven to five, within the generic scorecard, comprising ownership, skills development, enterprise and supplier development, management control and socioeconomic development, and changes to the points required for compliance.

Black ownership goes to 40%

The codes set the minimum requirement for ownership at 40% of net value, with skills development accounting for 40% of the total weighting points, and enterprise and supplier development required a sub-minimum requirement of 40% within each enterprise and supplier development element, namely preferential procurement, supplier development and enterprise development.

All companies, barring micro enterprises, will be required to comply with the five elements of the B-BBEE scorecard including  all organs of state and public entities; and  “natural or juristic persons who conduct a business, trade or profession in South Africa, which undertakes any economic activity with organs of state or public entities.”

There is an increased threshold in points required to achieve a better B-BBEE status and exempted micro enterprises have now a threshold of R10m and general companies, known as QSEs, have a range of R10m to R50m.

On the new enterprise and supplier development enterprises totalling 40 points, 23 points are required as black ownership majority. Procurement is down to 12 points, of which only five points relate to all suppliers with black economic empowerment credentials, three points to qualifying small enterprise suppliers and four points for exempt microenterprises with a 15% target each.

Commentators have pointed out that many companies acquire total, or at least most of their imported goods on international markets and this will place them a complete disadvantage. The amended codes outline in much more clarity that large companies are required to comply with all three priority scorecard elements – namely ownership, skills development and enterprise and supplier development.

Refer to articles in this category
http://parlyreportsa.co.za//bee/bee-comes-under-scrutiny/
http://parlyreportsa.co.za//bee/turnover-fines-employment-equity-breaches/
http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/
http://parlyreportsa.co.za//bee/new-b-bbee-bill-avoids-circumvention-of-the-law/

Posted in BEE, Facebook and Twitter, Finance, economic, LinkedIn, Mining, beneficiation, Trade & Industry0 Comments

Employment Equity Amendment Bill set to pass

Foreign labour gets look in….

legalIn an unusual turn of events  the Employment Equity Amendment Bill  allows for foreigners whose applications for citizenship were turned down before 1994 on the basis of their skin colour and such persons can be included in employment equity (EE) returns in future. Furthermore, all white, Indian and coloured women who had been gender disadvantaged in terms of statutory law at any stage will also qualify for inclusion in terms of equity reporting.

The next debate will possibly include a vote, the Employment Equity Bill being the third in a raft of four new labour bills presented recently to Parliament.

More of the same

The new EE Bill prohibits unfair discrimination in the workplace; regulates for the implementation of employment equity plans; gives more powers to labour inspectors; increase fines for non-compliance on equity issues for business; and ring fences such funds into a nominated national revenue fund.

Contraventions of some ten sections of the new Bill result in fines have a maximum penalty of R500,000 in cases where there are no previous convictions, to R900,000 in the case of four previous convictions in respect of the same offence within a period of three years.

Turnover based fines

Fines are, in fact, to be related to turnover of the entity in question, which can fall into eleven categories varying from agriculture to manufacturing, quarrying and mining to catering and transport and from wholesale, trade and commercial agencies to finance and business services. Electricity, gas and water are mentioned, as is construction and community and personal services – all with total annual turnover thresholds.

Other than a query from MPs to define further what constituted a “test” in terms of proposed provisions for regulations for psychometric evaluations to be carried out by the Health Professions Council, there were few objections or queries on the Bill when presented by DOL and the legislation looks destined for an easy passage through Parliament.

Refer previous articles in this category
http://parlyreportsa.co.za//bee/turnover-fines-employment-equity-breaches/
http://parlyreportsa.co.za//labour/employment-equity-bill-criminalises-offenders/
http://parlyreportsa.co.za//bee/rumblings-in-labour-circles-on-bee/

Posted in BEE, Facebook and Twitter, Labour, LinkedIn, Trade & Industry0 Comments

Objections to Minerals and Petroleum Resources Bill

Exploration investment threatened……

Roughnecks wrestle pipe on a True Company oil drilling rig outside WatfordProposed changes to the Minerals and Petroleum Resources Bill (MPRDA) were given the “thumbs down” sign by a number of international participants in the oil and gas industry who provided the minister of mineral resources with a solid indication that the amendments to the Bill are not acceptable as they stand if major investment is to be expected or gas exploration encouraged.

Shell SA was largely ambivalent, although calling for greater clarity on a number of issues.

Confrontation was clearly evident from some of the submissions made by members of the oil and gas exploration industry, however, to a number of principles contained in the MPRDA Bill, the most common issues being lack of clarity for investment purposes and objections to the consolidation of the B-BBEE charters for mining and liquid fuels.

Plenty to think about

oil rigWhilst the chairperson of the portfolio committee of mineral resources claimed there were over six hundred pages from the private sector on the subject which the minister of mineral resources already had stated would probably be a contentious matter, a number of exploration companies were quite vociferous in their objections, both in their oral hearings and when it came to questioning from MPs.

At the last minute the submission from PetroSA was withdrawn subsequently explained by the CEO of PetroSA to the portfolio committee on energy as being for reasons of signatures to various confidentiality agreements.

The amendments contained in the Bill are extensive, including proposals to seek to promote beneficiation of resources: extend government ownership into all ventures; place two state officials on the boards of companies to monitor BEE compliance; the combining of both industry BEE charters; the dissolution of the Petroleum Agency of SA (PASA) and to declare “certain minerals” as strategic resources.

Anadarko at sea over Bill

anardarkoAnadarko SA, a subsidiary of Anadarko Petroleum Corporation who stated they were one of the world’s largest independent oil and gas exploration and production companies with over 5,000 employees and were currently in partnership with PetroSA in Mozambique waters, said their primary areas of concern with the MPRD amendments were that they caused total fiscal instability and uncertainty, something they were not used to working with.

They preferred a dedicated regulator to deal with the oil and gas industry who dealt with only that, they said.   On the issue of fiscal stability, their CEO, Emil Ranoszek, stated that the new Bill “lacked robust economic stability provisions to protect the rights and legitimate expectations of existing rights and permit holders going from an exploration right through to a production right”.

Risk at unacceptable levels

Anadarko, he said, was “committed to establishing a mutually beneficial relationship with the South African state and that oil and gas companies and (they) were ready to make significant investments in South Africa but the Bill in its current form disturbed this balance and raised commercial risk to unacceptably high levels”.

Ranoszek noted that PetroSA was a 20% shareholder in the areas where Anadarko already had a license.    Anadarko was one of the few companies in the world, he said, which had the technical knowledge to “draw the water depths” where they were currently working. If the terms, conditions and risks were deemed to be too high and Anadarko decided not to proceed with operations, then the company would relinquish its licenses.

How PetroSA was going to decide to handle such a situation was unknown and he could not speak for them.

Money flowing to communities

When asked how Anadarko was contributing to the job creation situation in Mozambique, Ranoszek replied that this had been both in the form of direct and indirect jobs from services providers and other sourcing companies. The revenue generated was in the billions of dollars, he said, with the result that Anadarko “was literally building small towns along the coast.”

Anadarko was presently funding a programme in a Mozambican University for the study of petroleum engineering “to upscale the locals in terms of petroleum skills and knowledge.”

ExxonMobil says no clarity

Exxon mobileRuss Berkoben, president of ExxonMobil said the amendments would have several adverse consequences for the growth potential of the South African oil and gas industry. There was “much ambiguity as to the State’s intent”, he said.

Clarity was required regarding the concept that the state would be issuing so-called special shares if it exercised an option for an interest and the state’s right to appoint two directors to a management board of a production operation.”  The Bill gave no clarity on how such matters would be applied.

Berkoben said the minister had to recognise the differences between the petroleum industry and the mining sector and it was his opinion was that PASA should be retained as a body, an entity that understood many of the complexities of his industry, some of which he outlined.  The dissolution of PASA was unwise, he suggested, and with no idea of what regulations were intended, the situation regarding investment had become totally fluid.

BEE  and beneficiation a problem for industry

On the issue of the proposed fines for non-BEE compliance, ExxonMobil said that this would further compromise the viability of certain petroleum operations and discourage expenditure on exploration and development work programmes.  On beneficiation requirements Berkoben stated that he could not visualise how these were applicable to the petroleum exploration or gas industry in reality, other than the minister having rights to offer fuel to outlets with different pricing structures downstream.

When asked by MPs if ExxonMobil had consulted at ministerial level on the Bill and its proposals, Berkoben replied that the answer was simply that ExxonMobil had not been consulted as a stakeholder originally regarding the basis of the proposed changes and he felt that they were being imposed on the oil and gas industry. They were unwarranted, he said.

SA may loose opportunity

impact fieldSean Lunn, managing director of Impact Oil and Gas Ltd, told the committee that the company held an exploration right and three technical cooperation permits along the eastern coast of South Africa and prospects so far identified lay in very deep water and a long way offshore, with the Agulhas current which heavily impacted on exploration along the coastline.

He explained that the oil and gas exploration industry was a dynamic, worldwide business and countries were ranked by their “prospectivity” in fiscal terms, resulting in an industry that was willing to take such risks as proposed on South Africa’s East Coast, one of the most dangerous in the world, when it provided the rewards that were commensurate with the risks taken.

Impact was partnering with ExxonMobil, he explained, and the potential benefits for South Africa “were great, not to mention that the country could become self-sufficient in oil and gas.  South Africa was currently considered to have very high geological risk as no major oil or gas fields had yet been found.

If the current process was unable to find a mutually workable solution, the possibilities that existed offshore may, therefore, lie untapped for decades to come and the huge potential benefit to the country could remain unrealised, he concluded.

Perilous uncertainties

A briefing by the Offshore Petroleum Association of South Africa (OPASA) was made by the acting chairperson, Vusumuzi Sihwa, who re-iterated that the oil and gas exploration environment was challenging environment; high risk; had a surprisingly low success rate with a massive capital outlay to explore a hostile offshore environment such as the East Coast of Africa; and with no guarantee of commercial success.

South Africa’s potential resources, coupled with the current legislation, encouraged the industry to take these huge risks but the MPRDA Bill created “perilous uncertainty for the industry” through lack of stability, uncertainty, coupled with added confusion through the disbandment of PASA.

Sihwa said oil and gas companies could simply shift their focus to other global opportunities.  He suggested that a full working group of all stakeholders, not just some, be convened before the President signed the Bill and the group engage meaningfully and in good faith to reach a mutually agreeable way forward.

OPASA recommended that an upstream petroleum regulator be retained as one unit in one location.

Changing playing fields

Under questioning, the company said existing regulations and the operating environment were very favourable, which was why almost all the prospecting blocks were taken up. The current amendments had brought an element of uncertainty to the table; “the rug was being pulled from under the feet of the industry and this was now a worry, especially whilst projects were in process.” Companies had come into South Africa in terms of a set of rules which were now being decisively altered, he said.

With regard to the liquid fuels charter, OPSA complained that they have never been part of any matters involving mining charters and it was incorrect to impose regulations historically from one industry upon another industry.

Unintended consequences of Bill

sasolIn a separate presentation, Sasol, represented by Johan Thyse, said that Sasol was different to many in the oil and gas industry as it was present throughout the value chain. Consequently government policy and regulation affected the company extensively. Thyse warned the chairperson that the Bill, as it stood, would have serious unintended consequences for both industries.

He said the proposals if left unchallenged would severely affect Sasol’s ability to execute its strategy in South Africa and play its role in the National Growth Path and in the National Development Plan.

Sasol commented in detail on issues surrounding free carried interest and also the mining charter as compared with the liquid fuels charter; the concept of “concentration of rights” which they were highly critical of; the transfer of petroleum licencing; what was referred to in the Bill as regional regulators; the disbandment of PASA and beneficiation as it affected Sasol.

Environmental off beam

They were particularly and deeply concerned regard environmental management issues proposed and the authorisation of issues surrounding increasing the extent of a mining rights through amendments; the removal of prescribed time-frames on many issues and the matter of redefinition of strategic minerals and any consequent effect upon on exports.

Under questioning Sasol said there was total lack of clarity on many issues. Coal for example did not follow cadastral boundaries on the issue of rights as did maritime resources and there was confusion on beneficiation targets and time-frames as to whom and what it applied to.

When asked whether the Bill, with its uncertainties and bearing in mind Sasol’s stakeholders and shareholders, would make it easier or harder to operate in South Africa Thyse replied that “due to the lack of clarity on investment in the Bill, Sasol certainly would re-look at how and where it would invest.”

Investment climate threatened

shellJan W Eggink, Upstream General Manager, Shell SA, said their primary concern where matters equity ownership provisions in the mining charter and how this would the affect investment climate. He said that his company fully supported government’s B-BBEE agenda and matters related to a state interest in the petroleum and mining industry but he needed clarity on whether mining, offshore gas exploration on BEE issues could possibly be combined under one set of rules in view of their disparity.

Under questioning, Egglink called for “more constructive engagement with government” on the combining of matters affecting both the mining and onshore gas industry”.  His overall opinion was that it was difficult to say much on the MPRDA without any knowledge of how any regulations might work.

It was after the Shell presentation, that it was announced by the chair that the PetroSA submission had been withdrawn although the absence from the hearings had been noticeable.

Refer previous articles in this category
http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/
http://parlyreportsa.co.za//uncategorized/mineral-and-petroleum-development-bill-grabs-resources/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Posted in BEE, Energy, Enviro,Water, Facebook and Twitter, LinkedIn, Trade & Industry0 Comments

MPRDA Bill brings changes in BEE and exploration rights

BEE consolidated

coal miningMoses Mabuza, when briefing Parliament on the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill, told parliamentarians that amongst the many issues proposed by the new Bill an important issue was the setting up of penalties for non-BEE compliance across both the mining and liquid fuel sectors.

However, he said that he was confident that all stakeholders in the both industries would look back on a their association with black empowerment with understanding and pleasure, despite the opposition to the Bill on various differing and wide-ranging issues at present.

Bill will create right environment

Mabuza, who is deputy director general, mineral and policy promotion,department of mineral resources (DMR), said industry will be surprised see how much this legislation in the years to come will have contributed  to the country’s development, both in the mining, liquid fuels industry and business in general.    He told told the portfolio committee on mining resources, when briefing MPs on the Bill page by page, that it was important to understand government’s viewpoint as far as the oil and gas industry is concerned.

“We want to see that no partnerships created by the Bill are mutually exclusive or self interested”, he said. “We wish to create an environment where the state participates together with mining and gas industry with nation’s developmental objectives in mind.”

Blank cheque

“We give you the assurance”, Mabuza said, “that any regulations which are to follow will provide the kind of certainty sought in both the mining and petroleum industry”.

Opposition members still called to see the basis of the regulations first before further debate, since they claimed that at present, and as things stood, the wording of the Bill amounted to giving the state “a blank cheque” by not knowing what regulations were to be imposed.

The minister objected to this, saying that trust was called for and DMR would sit down with other departments and stakeholders and agree upon regulations within the framework  of the Act. “This is the only way things can work”, Mabuza said. “That is why the Act is a framework, with us all working from this plan.”

Working with stakeholders

In tracing the history of the MPRDA, deputy Mabuza and his co-presenter for policy development in DMR, Adrian Arendse, continually referred to stakeholder meetings throughout the process over the years, including stakeholder workshops where the various parties consulted were broken down into sectors such as environmental, petroleum industry, mining industry, finance and bankers and legal interests.

“We received commendable inputs from these workshops and in an overall sense, particularly where mining and petroleum was concerned and we have received both consensus and support for the proposals now before Parliament.”

Not conducive

Opposition parliamentarians denied this saying from what they had heard that there had not been overall consensus on many issues and the complete lack of uncertainty.   Lack of clarity on state motives was a total disincentive to investors, commented one MP.    Said another opposition MP, “Mining industry representatives have said in the media that this Bill will not grow the industry, so tell us why you think it will.”

Deputy director Mabuza, in response, again gave assurances from government that the proposed Bill represents no fundamental shift in government policy. He said clarity and certainty would follow in the course of time as regulations became evident.

Different horses on courses

Further on BEE matters, questions were asked on how government intended putting into force a parallel BEE charter that incorporated the liquid fuels charter, which called for less than 10% ownership as a target, and the mining charter which was at 27%, plus other anomalies.   One MP said that in gas exploration there were enormous developmental costs and the charter made no sense on these issues.

Mabuza said he was aware of the “vast differences” between the two documents and this would have to be discussed in rounds of talks to come and considered carefully. Some of those talks had already started, not referring with whom and on what particular subject.

However, he said there were also big differences in the industries themselves, in both matters of beneficiation and style of operations. DMR wanted to land up in a situation where nobody was disadvantaged, either the poor or the investor.

Exploration rights change

On exploration rights, Mabuza said where the Bill really differed from previous regimes was that the “first come first served” principle in exploration and rights licensing was to be abolished totally. “This system leads to mediocrity”, he said. “We have learnt much over the 15 years with such licensing regulations, during which time South Africa has lost it share in global resource exploration, going from 3% to a current 1%. We do not wish to go down this road any longer”, he said on licensing.

“The first person served often meets the absolute minimum requirements and in so many cases, South Africa has had years of brownfields investments and never the greenfields operations that number 5 or 20 in the queue might have offered for a license on the same project. Mediocrity resulted and South Africa has suffered consequently”, he said.

Mining and energy split

In answer to questions on the liaison between DMR and the department of energy (DOE), Mabuza described the sphere of control under the MPRD Act as being simply a question of “downstream” energy resources being for DOE and “upstream” matters on exploration mining licences and industry regulations being for DMR.  Obviously, he said, environmental issues were handled by those competent to do so.

Mabuza said that in coming up with the proposed Bill, DMR had consulted with, or observed, the practices of Canada, Angola, Ivory Coast, Russia and Gabon but opposition members complained that the process of consultation or observation meant absolutely nothing.   They want to know who DWEA had listened to in coming up with the current proposals.  Those before Parliament said they had made their own decisions and stakeholders had been involved along the road in discussions, particularly in the mining industry.

Planned for the future

Mabuza said that South Africa “remained the wealthiest mining and exploration production country in the world and with Africa reaching never-before, unprecedented levels of geo-political stability, the future was bright.   “We have designed legislation that takes both the state and our developmental economy into that future”, he said.

On the subject of penalties in the area of BEE non-compliance, opposition members complained that such contributed further to red tape, political uncertainty and investor complications.    Mabuza denied this and told parliamentarians that any penalties written into the Bill were a maximum sum only “and in any case”, he said, the 10% maximum still represented ‘just petty cash’ for most mining companies”.

“We had to bring in some form of penalty where shareholders were alerted to non-compliance otherwise management just carried on regardless of regulations or compliance issues”, Mabuza said.

Refer previous articles in this category
http://parlyreportsa.co.za//uncategorized/mineral-and-petroleum-development-bill-grabs-resources/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Posted in BEE, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Trade & Industry0 Comments

Turnover fines for employment equity breaches

Getting tough…

Ntsoaki+MamashelaFines that have been unrevised for a number of years for breaches in employment equity in terms of the Employment Equity Act are now proposed as being implemented on the basis of a direct link to balance sheet turnover, meaning a major increase in the size of penalty for medium and big business. The department of labour (DOL) have now briefed Parliament on the Employment Equity Act (EEA) Amendment Bill which was tabled during the last session of Parliament.

Hearings before Parliament from business are expected to be vociferous in their response. Business and industry have been facing a raft of new and more radical amendments to existing labour laws indicating a move from the voluntary nature of BEE participation through charters, to a legislative background of enforcement.

DOL suggested business and industry has been riding roughshod over the law which had been unrevised for nearly 15 years and it was  time now that provision was made in their budgets for considerably more than the “negligible fines” of the past.

New power to labour

The fourth of four of new labour laws, the EEA Amendment Bill, was presented to Parliament in a briefing to the portfolio committee on labour by the department’s equity director, Ntsoaki Mamashela (see picture).   The Labour Relations Amendment Bill, the Employment Services Bill and the Basic Conditions of Employment Amendment Bill have all be endorsed by the Nedlac process, following approval by cabinet; the Labour Relations Act changes failing to pass in the last parliamentary session due to lack of a quorum.

Ms Mamashela assured business that they had “nothing to fear” if they followed the basic rules which were now well-known throughout the country. The proposed amendments demand that the proportions of demographics on an employer’s staff role reflect the demographics of the territory in which the business or industry operates.

The proposed EEA changes apply to companies with 150 employees or more and the Bill makes it quite clear that the proposals refer to “black” people only.

Wording specific about racial categories

The wording of the new Bill states unambiguously “where under representation of people from designated groups has been identified by the analysis, the numerical goals to achieve the equitable representation of suitably qualified people from designated groups within each occupational [category and] level in the workforce, the timetable within which this is to be achieved, and the strategies intended to achieve those goals are not met”, the Bill states, then the minister may apply to the labour court for a fine to be imposed.

The fines are extensive, particularly where previous convictions are concerned, and reach nearly R3m. The department of labour  is also, the proposals state, given the right to refer those cases who have not made returns, or made false returns in respect of their employment equity registers, directly to the labour courts.

Public hearings before the portfolio committee continue.

Refer previous articles in this category
http://parlyreportsa.co.za//uncategorized/business-and-government-miles-apart-on-labour-laws/
http://parlyreportsa.co.za//cabinetpresidential/labour-nobody-at-top-biting-the-bullet/
http://parlyreportsa.co.za//cabinetpresidential/parliament-delays-process-on-labour-relations-bill/

Posted in BEE, Facebook and Twitter, Labour, LinkedIn, Trade & Industry0 Comments

BEE comes under media scrutiny

New BEE Codes & Bill to fill gaps…

rob daviesMinister of Trade and Industry, Dr Rob Davies, says the new BEE Amendment Bill and the revision of the Codes would go a long way in plugging the gaps that, in his view, businesses had taken advantage of with such moves such as fronting. The amendments would also avoid the “tick-box” manner of BEE compliance that seemed to be developing in the country, he said.

When asked about a time limit on BEE, he was clear in his reply.  “The eventual idea is to create a non-racial society in which these kinds of racial categories will no longer be considered. We are nowhere near putting a time limit on this happening”.

Now five code elements

He said that the new legislation and Codes would reduce the exorbitant amounts of money that small enterprises had to pay to consultants to prove BEE compliance. “The current generic scorecard contains seven elements and these have been reduced to five in order to align the elements more closely with the trajectory of the economic growth and development in the country.”

Minister Davies pointed out that in terms of the new Bill, about to be assented to by the President, had a total of 105 points assigned to the five elements.

Social imperatives

“Black economic empowerment is not just a social and political imperative”, he said. “We need to make sure that in the country’s economy, control, ownership and leadership are reflective of the demographics of the society in the same way the political space does. That’s why we are saying Black Economic Empowerment (BEE) remains an economic imperative.”

Minister Davies said the tandem launch of the Codes signalled the opening of a sixty-day period in which business and all other members of the public can submit their comments on the Codes for consideration before all the changes are finalised.

He concluded, when addressing a media conference on the subject, “We cannot expect to grow and develop as a country if the leadership of the economy is still in the hands of only a small minority of the society.”

BMF comes in

At the same meeting, Black Management Form’s Xolani Qhubeka, endorsed the amended Codes on BEE but warned “that whilst they area a step in the right direction, still more has to be done.”

The media asked whether, in stating that the new Bill had lightened the regulatory requirement for small business, whether this was because of the Bill or the new Codes.

Minister Davies indicated that the Codes were still under debate and this is “where reform would take place”. One of the areas being looked at was where bigger companies had to go through a lengthy verification process when dealing with smaller companies, he said.

“ Much of the comments are about the numbers, targets and the time to reach the targets but some of the fundamental principles will continue whilst the parameters and the timeframes are being discussed.”

All about fronting

When asked about the idea of incentivising plans for ownership as he perceived it, Minister Davies said this came back to the fronting question and what the problem with BEE, as it stood, was all about.

There was ownership as a proper and wholesome economic concept and there were also simple formal contract of some sort of shareholding, he said. “What has happened is that most of BEE is some kind of share transaction”.

He said his department was “weary” of empowerment of plans and new companies where  a kind of ownership had been established that was a share transaction deal. He said that BEE in its proper form had to deal with such subjects as procurement and skills training and added, “What we want to see is the entering into real ownership relationships with people who are empowered and can exercise the economic powers of ownership.”

BEE not a failure

On being asked whether, in introducing criminalisation to BEE legislation, he thought BEE had failed, Davies said “ We cannot conclude that BEE is a complete failure. I think that some aspects of it so far have showed some progress. We have seen the emergence of business people from historically disadvantaged communities playing leadership roles in business, state-owned enterprises, and government.”

“ What is lacking is the impact that was desired by the legislation originally. With any kind of legislation there will always be a need to tweak it. The fundamental difference between SA and other emerging economies is that people were subjected to racial categorisation. This had to do with social definitions. People were classified by the apartheid regime as white, black, coloured and Indian.”

“Depending on how one was classified through the Population Registration Act,” he went on, “ this defined your life chances; your education; your skills development and even for small business development. Apartheid neglected black small businesses until about ‘five minutes’ before the democratic transition.”

How long will it last

Questions then arose from the floor on the “sunset clause” issue, with one person saying that all this was 20 years ago, and people entering the economy had come through a new education system. Why could there not be term limits on this and why were there no deadlines, they asked on such legislation.

Minister Davies again referred to the past and brought up the 1913 Land Act and “the history of disempowerment of peasant farmers in the Transkei, who competed with white commercial farmers. One could clearly see how these farmers were disempowered and prevented from being commercial farmers so that they could be available to go work in the mines. Small black shop owners were not allowed to operate in the city centre and compete with the white shop owners.”

He acknowledged that it was twenty years since this had all had completely changed but the life span of disfranchisement effects has continued. “White people still have the best chances that other people do not have and this is the fact of the matter and is what have had to deal with.

Fronting penalties

When asked about the penalties on fronting, Minister Davies said at the moment as the law stood the only remedy was the common law offence of fraud; and, he added, fraud is criminally punished. “The only remedy at this point in time is the criminal one. And a maximum ten year sentence, subject to court process, is the legal process for cheating.”

Get rich quick

When it was pointed out by a questioner “that some people got richer through BEE regulations whilst a number of others stayed far behind”, Minister Davies responded by saying that BEE had to be got onto a “broader base” and this is why a Commission for BEE had been established.

He said, “You put somebody in a certain position so that you could pretend that the enterprise is something other than it is in terms of empowerment.” The Commission would look at this, he said, and in the worst case scenarios it would recommend that such cases go through the criminal justice system.

When asked when the Commission likely to be established the Minister explained the parliamentary process of legislation, the advertising of posts for a Commission and the setting up of procedures, all of which took considerable time.

More background articles on subject
http://parlyreportsa.co.za//bee/rumblings-in-labour-circles-on-bee/
http://parlyreportsa.co.za//bee/new-b-bbee-bill-avoids-circumvention-of-the-law/
http://parlyreportsa.co.za//bee/bee-bill-to-stop-fronting-tabled-in-parliament/

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Justice changing face of small claims courts

Small claims courts doubled…..

legalDeputy Minister of Justice and Constitutional Development, Mr Andries Nel, in his budget vote speech, gave an update on small claims courts in the country, stating that there were now 277 such courts as distinct from 120 in 1994 mostly in white and urban areas.

He told parliamentarians in the portfolio committee on justice that this meant his department was now more than half way in achieving the objective of having one in each of South Africa’s 393 magisterial districts countrywide.

These courts, he said, eliminate time-consuming adversarial procedures before and during the trial thereby providing speedy and cost effective justice, especially for the poor, he said, and a further nine had been established in June 2013.

Judgements made vastly increased

The number of people enjoying the benefits of access to justice through small claims courts “has increased steadily from a period in 2008 when 95,569 new cases were registered, 47,168 summons were issued resulting in 38,257 trials and 22,397 judgments and 9,405 out of court settlements”, he said.

“Meanwhile, the number of summons issued has increased by more than 21,137 to 68,305 and the number of trials also increased by more than 11,788 to 50,045.  Most significantly, the number of judgments jumped by 62,3% to 36,368 and the number of out of court settlements by 102,9% to 19,087.”

What is also notable, said deputy minister Nel, is the number of commissioners presiding over small claims courts and these have almost doubled in the past four years from 811 in 2009 to 1,546 currently. “However, this comprises 1,314 men and 232 women” and he added that serious attention is being given to the gender imbalance.

Equality court system running well

He also mentioned equality courts dealing with racism, sexism, xenophobia and related intolerance under the Promotion of Equality and Prevention of Unfair Discrimination Act, every high Court and magistrates court being designated as an equality court, 619 matters being dealt with for the 2012/13 financial year.

Deputy minister Nel also noted a “dramatic story of transformation” in the sheriff’s profession. In 1994 there were 475 sheriffs. An overwhelming majority of 400 were white men and there were only 40 African men who were located mainly in the so-called homelands

“In 2012 this picture started to change significantly with the appointment of 124 new sheriffs, 64 who were African. A further 120 vacant sheriffs posts will be filled by the end of June this year”, he said.    He thanked the South African Board for Sheriffs under the leadership of Mrs Charmaine Mabuza “for their good work”.

Posted in BEE, Justice, constitutional, Public utilities, Security,police,defence0 Comments

All not well in the trucking industry

Trucking dominated by large companies…

In answer to a call made by the portfolio committee on transport on the state of the trucking industry in South Africa, it became evident from responses by the department of transport (DoT); from the Road Freight Association (RFA) and examples given by an independent small operator, that large truckers dominated in an industry in an unfair manner that was rife with corruption.

Mawethu Vilana, deputy director-general DoT, said that going back to 2002/3, the department had begun an exercise to look at how to provide opportunities and also broaden the space for participation by smaller operators in the road freight sector. It became clear that smaller entrants lacked finance; that an “unscrupulous broking sector was part of the industry” and generally there was a lack of skills and know-how in the trucking industry generally due to poor provision of training facilities and an industry which was under capitalised except but a few large operators.

DTI main players

Vilana admitted that when it came to black empowerment opportunities, the main player was the department of trade and industry (DTI) and not DoT, DTI having the BEE verification control system in their court, DoT playing virtually no part in either reform of the industry or the development of SMME’s.

On the subject of crime, little could be done about bribery and corruption, Vilana admitted under questioning by parliamentarians, unless legislation was beefed up with proper powers and a full, properly constituted investigation carried out into the industry.

He also admitted that permit fees were high because of the principle of “user pays” which had been adopted by government “since road truckers caused great damage to the road system.”

RFA has its say

Gavin Kelly, RFA said his association had 385 members, with 109 affiliates and 40 associates representing different levels of possible enforcement and ability to develop skills and training but complained of massive permit fees (the last being 412%); large levels of corruption amongst government officers and no value being added by the government’s road agency to the industry in general.

RFA also stated that there appeared to be no proper government road freight strategy and single government officials determined policy without ministerial approval.    Kelly said “no real consultation exists between the state road agency and the industry” and it was the RFA view that DoT “was just going through the motions.”

One medium sized operator, Tramarco, said that despite heavy investment in trucks and bearing in mind the “ever rising price of fuel”, it was almost impossible to break into the transport business to obtain long-term “tangible” contracts from major mining groups and state utilities.   They appeared to feel “safer” using old contacts and larger companies and quite clearly favours were being granted, they said.

Their spokesman said that the entire industry was dominated by a number of large trucking groups and smaller entrants were effectively “locked out” of the industry because the industry was either not regulated properly.

Not happy with AARTO

They also said the licensing AARTO system was not working properly; there was a lack of legislative enforcement; too many corrupt officials had too much power and there appeared a lack of interest by large companies generally to uplift smaller operators, little interest in encouraging training and building the trucking job market.

Tramarco said that no favours or finance was called for by the medium and small sized companies but merely a fair chance to compete for tenders.   They called on government to provide leverage within its own government departments, state utilities and with industry to break up monopolistic habits and encourage more black empowerment opportunities.

“Large groups and utilities make lots of statements on freeing up the market but nothing happens”, Tramarco said.

Help SMMEs

MPs demanded of DoT that concrete steps be taken to assist small entrepreneurs and to provide proof of a record in the area of skills development. “It was clear that little had been done by the DoT in this area”, said one ANC member.

Opposition members said they were convinced that DoT “had no meaningful understanding of what the situation was on the ground.” One MP said the City of Cape Town had provided a solution by cutting the bigger contracts into smaller parts, supplying smaller quantities and increasing the number of entrants slowly. He called on DoT to start thinking of similar solutions on a national scale.

Chairperson Ruth Bhengu told DoT that the meeting had been called because an examples had been given to parliamentarians whereby “large companies gave small companies short-term contracts and rates that would not take them anywhere and businesses that were desperate could not only pay for their trucks but could not maintain them, the business going ‘broke’ as a result”.

There was also an immoral business broking sector emerging, she felt.

Roads deteriorating

Vilana of DoT said there was nothing government could do to protect such entrepreneurs and that this was the nature of the industry which was high capital risk with a road system that was deteriorating.

The committee found this all very unsatisfactory and called for further meetings with DoT stating that these matters had to be resolved and that the challenges facing the trucking industry were to be investigated further. Also cross-parliamentary meetings with public enterprises and trade and industry committees were to be called. DoT was told it would be re-called for further reports.

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Rumblings in labour circles on BEE

The B-BBEE Amendment Bill hearings…..

What is emerging during the current BEE hearings held by the trade and industry portfolio committee on proposed amendments to the Broad-Based Black Economic Empowerment (B-BBEE) Act is that there is a vast difference between how the department of trade and industry (DTI) want to manage black empowerment and what the department of labour (DOL) think of the way things are going under their steerage.

It appears the one is far more radical than the other, as was evidenced by the agreement of DTI’s director general, Lionel October, to take some of the more implausible definitions contained in the B-BBEE Act to his minister to re-visit as far as wording was concerned.

Reality perhaps

Probably, with DTI dealing with business and industry and investment issues on a continual basis they see some of the traps well ahead that are causing South Africa to drop on the investments listings globally and thus are more pragmatic or perhaps even phlegmatic when it comes to running BEE, their daily business.

It is a voluntary, non-racial issue, they maintain; it is up to the individual company wishing to secure business with government to verify their make up and enter the scoreboard game if they want government business, although government does set down its BEE ambitions in legislation.

Criminalisation

At the moment nobody goes to jail or pays heavy fines unless they cheat.   Each industry has been encouraged to have its own special charter to suit its own special circumstances.

But clearly, the Commission of Employment Equity (CEE) do not like sectoral charters, a fact backed by their partners on this issue, the Black Business Council, the latter having expressed this fact a number of times. Both want them scrapped or “trumped” by B-BBEE, more rigidly enforced.

Sectoral charters are voluntary

Whilst Manufacturing Circle, who make sensible input at most hearings, made the point that the very number of sectoral charters sometimes leads to confusion in large conglomerates whose activities stretch over many industrial activities, they were just calling for clarity on some issues.

However, the input of CEE to scrap the voluntary charters and rely totally on legislation to bring about the aims of black empowerment as perceived by them is worrisome.

BEE remains mostly outside the law

The whole point and acceptability of BEE in the past as a principle is that in the light of the country’s history, it is acceptable, and the whole point to date has been that black empowerment has not been legislated for in totality.

DTI have always empahsised this. The nearest the country has got to the criminalization issue is those who wish to defeat the principles of BEE by trickery and by “fronting”, which is deception in any terms, will be dealt with severely according to the law.

Otherwise the law as such is not over skin colour but has been kept mainly on the lines of past disadvantage and the unfairness of what 90% of the community had to put up with for years.

CEE get into the Act

So who are the Commission of Employment Equity or CEE?

It is a commission which was established in terms of section 59 (1) of the Basic Conditions of Employment Act (BCEA) with members on the whole appointed by the minister of labour whose task it is to advise the minister on any matters relating to sectoral determinations. They are part of DOL and carry the department’s logo on their website.

Basic Conditions of Employment

CEE deals with any matter concerning basic conditions of employment; any matter arising out of the application of the BCEA and generally the effect of government policies on labour matters and conditions of employment in the public service – a massive mandate but specifically within their ambit of labour issues.

It says that BEE for all business and industry should not be voluntary, which seems stepping well outside of their mandate. So what does the minister of labour say, who appoints the CEE members?

Posted in BEE, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

New B-BBEE Bill avoids circumvention of the law

lionel octoberB-BBEE legislation needs overhaul…

Director General Lionel October led the department of trade and industry’s (DTI) presentation on the new B-BBEE Amendment Bill  to the portfolio committee on trade and industry, stating that the anchor BEE legislation in place for some ten years badly needed a “proper mechanism to support the actual implementation of black empowerment and methods to deal with non-compliance and circumvention”.

He said the new changes resulted mainly from the work of the President’s Special Advisory Council charged with investigation into the areas where monitoring, evaluation and reporting were clearly ineffective, resulting in a need and to introduce penalties and criminalise those who purposely made false declarations.

Maximum penalty only set by Bill

The Bill, he said, set the maximum penalty but it was up to the courts to set penalties according to circumstances’.

The purposes of the new Bill was to give further effect to the aims and objects of black empowerment legislation, said October, and especially to improve monitoring and evaluation of SA business and industry on the subject; strengthen access to procurement opportunities for black business with focus on opportunities; and funding to improve the technical capacity of the verification industry.

NEDLAC, BUSA, Black Business Council and government departments had been consulted, including all departments in the economic and employment “cluster”, he said.

Most agree changes needed

October said that public hearings had also been conducted. On the whole, these  submissions in broad principle had supported the necessity for amending legislation with a certain number of changes being acknowledged as badly needed, mainly because of misunderstandings particularly in the area of verification and scoring and to clear up a number of unintended consequences of the original Act.

Nomande Mesatywa, chief director of B-BBEE at DTI, told parliamentarians that the objectives of the Bill were to line up other legislation impacting on B-BBEE and also to line up with the Codes of Good Practice.

The Bill established a B-BBEE Commission to monitor and evaluate black empowerment as practised; to deal with non-compliance issues and circumvention and give effect to government policy on the issue of black business empowerment.

Material amendments included a whole number of key definitions and re-definitions and matters regarding the establishment of the B-BBEE commission office.

MPs complain of racial bias

A number of MPs complained that definitions included that of black persons, defining them as black, coloured and Indian, which was simply re-introducing racially based legislation based on skin colour.

October said DG had no option but to follow procurement legislation where the scorecard used such determinations. He said that South Africa was not returning to such levels as had been practiced “in the bad years” but it was now the option or choice of business in terms of a scorecard system whether to do business with government or not.

He said that South Africa was not like Malaysia or Zimbabwe where only nationals of a certain skin colour or nationality could do business with government.

MPs still disagreed with DTI and said not only was the legislation racially based but it disenfranchised white persons from an opportunity that was their constitutional right.

Furthermore, there was a differential between national and foreign business where one’s nationality was prejudicial in dealing with government on tenders and this was bad for investors to see and contributed to the idea that South Africa was unfriendly to foreign investors.

Fronting the main problem

Again, DTI rejected such notions stated by opposition MPs, October defending the proposals in that the B-BBEE legislation before them was mainly aimed at those attempted to defeat the regulations on “fronting” and by supplying false information when submitting scorecard facts. It also remained purely an option for business whether it wished to comply or not with the scorecard system when applying for government business, which he confirmed amounted to some 45% of GDP.

He concluded that it was important for government to have a B-BBEE commissioner as a party to investigate, regulate and impose penalties on those who wished to defeat the purpose of the legislation and who wished to counter government policy on the necessity to empower middle class black development; black small business development and therefore improve the black contribution to GDP.

Posted in BEE, Earlier Stories, Finance, economic, Labour, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

coal mining: Eskom pushes for black ownership

Could coal become a “national asset”….

coal miningMinister Gigaba of public enterprises has made of number of interesting comments on coal mining in recent weeks regarding coal resources generally, stating in a public interview before the Manguang conference that declaring coal a national asset might be a possibility.

This could in turn, he said, be a precursor to imposing levies on exports, thus providing greater incentives to supplying coal to Eskom.  Gigaba also said that integrating emerging miners – which he wanted to see as defined as those with a 50%-plus-one-share black ownership – into the state utility’s supply base and this would assist in bringing black transformation in the coal industry to a new level.

Eskom itself told parliamentarians at the end of 2012 that it currently buys 130m tons of the 250m tons of coal produced a year in South Africa for use in its 13 power stations.

Eskom could focus on emergent suppliers

As the ANC conference at the end of last year went into gear, the issue of black participation in the coal mining industry arose when Gigaba stated that a request might come from Eskom to specifically assist in arrangements for coal supply from emerging black miners.

Gigaba said at the time that that coal production was currently concentrated in large mines with eight mines currently supplying 61% of the output. Engineering News commented on this remark quoting that there are 33 black economically-empowered (BEE) coal mines in South Africa if one used the definition of 26% black ownership. However, if one measured using minister Gigaba’s hoped for 50%-plus-one-share definition, the number would be negligible.

Levies not wanted

The question of levies on exports has not been debated in Parliament, only commented upon, but newspaper reports indicate that larger coal producers have complained, as one did publicly, that “any export levies would constrain their ability to invest in new coal mines as well as undermine efforts to improve infrastructure”.

Eskom says in its annual report  that it has contracted out 80% of its coal supplies to 2018 but beyond that there would have to be significant investment in coal mining by industry to meet future demand. It also says it has been working for the past few years to develop a long-term coal supply strategy which would ensure a secure supply of coal in the right volumes, at the right quality and at costs that South Africa could afford.

Eskom walks the talk

This was accompanied by a statement that Eskom was committed to ensuring that its procurement was accompanied by the emergence of black players into the industry. In a resultant conference held by Eskom with some 500 smaller miners and black entrepreneurial parties, Eskom told attending delegates “it would use its purchasing power to empower black-owned suppliers and increase equity stakes to 50% plus one share.”

Speakers also stated that “commercially acceptable levers would be used to increase black ownership.” Participation in discussion with established industry players, they said, had been achieved successfully in a case with Anglo American and BHP Billiton, resulting finally in one such a black owned mining venture, it was noted.

Posted in BEE, Electricity, Energy, Enviro,Water, Finance, economic, Fuel,oil,renewables, Labour, Public utilities, Trade & Industry0 Comments

Minister Davies finally gets his Cooperatives Bill approved

Cooperatives Bill will assist small business ventures…..

The Cooperatives Amendment Bill, promoted by the minister of trade and industry,  Dr Rob Davies and perceived by him as a critical legislation in the development of black business enterprises and rural development, has finally been approved by the National Assembly and no doubt will added to the statute book early in the New Year once concurrence is received by the NCOP.

Seen as integral part of New Growth Plan

Cooperatives represent a key aspect of the department of trade and industry (DTI) contribution to the New Growth Plan and DTI sees the new law as a major contribution towards the creation of jobs, poverty alleviation and economic growth.

Originally, two separate bills were tabled in parliament in May, one to deal with provincial issues known section 76 bill and the other as section 75 but eventually, for ease of legislative process and the necessity to speed up matters, a joint-tagging decisions saw both Bills combined as a result of a specialised committee report.

Much debate and long hearings

The bill has seen extensive hearings from many parties; alterations as a result of experience in other countries and the learning processes of the cooperative movement so far in South Africa, black co-operatives being in their infancy and white farming co-operatives having contributed to growth in the more developed areas of agricultural sectors for many years.

One of the primary aims of the legislation, the consolidated Bill states, is to create a co-operative agency to lead to a re-vitalised and more comprehensive co-operative movement in South Africa, establish a co-operatives tribunal to handle conflicts, disputes and to ensure compliance.

Government cooperative agency to assist training

A secondary objective of the agency would be to establish in the future and training academy and an co-operative advisory council to build the movement in field operations and development the potential of black emergent business.

 

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BEE Bill to stop fronting tabled in Parliament

Fronting control not passive participation is aim…..

Department of Trade and Industry (DTI) has published a notice stating that it has tabled a Broad-Based Black Economic Empowerment Amendment Bill before Parliament, the eradication of “fronting” being perceived as one of the main objectives of the proposals.

In a statement released at the time, the amendments seek amongst other things to establish a B-BBEE commission “to deal with compliance” in respect of B-BBEE-related legislation and  strengthen compliance-related monitoring and evaluation and providing for offences and a maximum penalty.

On the issue of fronting, DTI have referred to in a number of documents issued by the department, although by now suggesting criminalization of the issue a clearer legal definition is going to have to be found, commentators have noted. DTI in the past has said that any process of black participation in business must result in an increase in the ownership and control of the economy by black persons.

The BEE  scorecard currently being used by business gives points for direct empowerment which focuses on black ownership of enterprises and assets through shares and other instruments that provide the holder thereof with voting rights and economic benefits, such as dividends or interest payments.

Control means, according to DTI in their BEE statements, the right or the ability to direct or otherwise control the majority of the votes attaching to the shareholder’s issued shares; to appoint or remove directors holding a majority of voting rights at meetings of the board of directors of that shareholder and the right to control the management of that shareholder.

DTI has been particularly vocal on the subject that passive ownership by black people is in itself not sufficient to bring about “transformation” or where investors have very little control over the direction of investment decisions made by fund managers. Such passive ownership of enterprises can also lead to a form of ‘fronting’ “and this needs to be guarded against”, says DTI.

Minister of trade and industry, Dr Rob Davies, has referred to this matter and further consequences of the new Bill in a number of DTI press statements recently and conferences he has addressed.

The Bill also contains more regulations to control B-BBEE verification agencies involving an independent regulatory board of auditors is also part of the minister’s proposals contained in the Bill and the provision or creation of incentive schemes to support black-owned business. The Bill is notable in that it follows the BEE scorecard principle of specifically defining a “black person” as Africa, Coloured or Indian.

A draft bill was published for comment and no doubt the portfolio committee on trade and industry will announce public hearings before the committee in the new parliamentary session of 2013. The Bill as tabled is available on the DTI website.

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Davies hammers industry, commerce on BEE participation

Currently, the department of trade and industry (DTI) has in place a 60-day period for comment on the revised broad-based black economic-empowerment (B-BBEE) codes of good practice, i.e. until 5 December 2012. He has also tabled a new Bill on B-BEE in Parliament immediatelt before the Christmas recess.

With this in mind, Minister Davies said in a conference recently that BEE remained a vital cog in the development of South Africa, stating, “It is not just a social or political imperative . . . but an economic imperative as well”, he said.

Davies said it was the belief of his ministry that South Africa “could not expect to grow if business leadership remained in the hands of the small minority.”

The current generic scorecard in the new proposals for comment is reduced from seven to five essential elements with a total of 105 points assigned to these five elements.   All companies, except exempted micro enterprises, have to comply with all the elements of the scorecard as revised.

The introduction of sub-minimum targets for the priority elements is contained in the proposals with the proviso that if such minimum compliance is not achieved, large companies will have their status reduced by two levels and smaller companies by one level.

Davies said that issues surrounding fronting have been amended and added that DTI was investigating possibility of appointing a commission or body to investigate abuses and added, “We are also looking into penalties attached to those kinds of practices.”

This was something that was considered as last resort when BEE charters were first envisaged.

Despite having announced in a separate statement that DTI had been in meetings with vehicle manufacturers and that a target of 1.2m vehicles made in South Africa per year was the objective, he drew attention to the fact that the manufacturing sector as a whole was not “transformed”, by which it must be assumed he meant it had no B-BEEE charter.

However, he saw great development in the automotive industry as far as small business was concerned. “We need to look at how we can make localisation a tool and once that happens, we need to look at how we can get black-owned companies much more active in this space,” Davies noted.

DTI recently announced “an incubation support programme for small businesses to encourage private sector partnerships with government, whereby large companies assisted SMMEs, and even medium-sized undertakings, with skills and technology transfer.

Posted in BEE, Finance, economic, Fuel,oil,renewables, Justice, constitutional, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

Western Cape BEE figures disturbing, says labour minister

Releasing this year’s annual report on the Commission for Employment Equity (CEE) at a parliamentary media briefing,  labour minister Mildred Oliphant said that there were some trends which “were disturbing” which she had noted had come from provincial governments.

Oliphant said while figures as far as BEE were concerned were improving in the employment of blacks at top senior management level in both the public and private sectors, the report showed white males and females were more likely to be recruited or promoted and the Western Cape government was still performing poorly with regard to the representation of black people, particularly Africans.

She quoted from the report, “The Western Cape is the worst performing province in terms of race and gender in both government and the private sector, across every occupational level.”

Labour director general, Thembinkosi Mkalipi, said, when the issue arose of whether party politics was involved in the observation, that employers themselves had provided employment equity statistics and his department did not interfere in the capturing and compilation of data

Mkalipi said amendments clauses to the Employment Equity Act contained in the Bill currently before parliament would speed up the process of transformation. There were many companies still resisting change, he said, and fronting was still an issue. The amendments including criminalising certain issues, so that fines could be raised and that this might further rectify the imbalances in equity returns next year.

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Local government technical skills totally lacking, MPs told

Sisa Njikelana Chairperson

Despite relatively positive reports from both Eskom on skills training in the electrical engineering workplace and from SAPIA on petro chemical industry advancements in the same sphere, a report from the Association of Municipal Electricity Undertakings caused chairperson of the portfolio committee on energy, Sisa Njikelana, to remark that the country faced massive problems unless efforts to improve the quantity and quality of skills training in all spheres were re-doubled.

Present was the director general of the department of energy (DOE), Nelisiwe Magubane.

Chairman Njikelana remarked in conclusion of the meeting that nobody really seemed “totally coherent on the issue of skills transfer, mentorship and apprentice training as indeed they should be, some worse than others”, although he acknowledged that EWSWTA, the energy sector SETA, had fallen well behind in its targets mainly as a result of mal-administration in the past.

As the meeting progressed it became more and more evident that skills at local level service delivery level were a “crisis issue”.

Senzeni Sokwana, on behalf of EWSWTA’s interim board recently appointed, said that in the year under review this SETA had made a certain recovery; had identified a strategic direction with a revised corporate governance plan and that past performance in the recent short period had received unqualified audits. Nevertheless, MPs commented later, the SETA was still under-achieving.

Artisan learners registered for the energy and water SETA were 1765 with 1004 persons completing their courses and 649 wireman’s licences were issued. Included were projects such as that of Coega and a special emphasis that had been laid of “green energy” skills.  Clearly what EWSWTA was achieving, said Sokwana, was a “drop in the ocean compared with what was required” but MPs noted that it was pleasing that the turnaround in governance had been achieved.

A relatively positive contribution came from Dr Raymond Patel of the metal, engineering and motor retailing SETA, merSETA, which institution had received major funding from the German DIZ programme. He gave positive figures on learners enrolled on traditional-energy related programmes, sponsorships and programmes initiated as a result of international skills training agreements.

Training was reported with positive numbers in the metal and engineering; auto manufacturing; motor and retail management; tyre manufacturing and plastics industries. Of specific interest was their “green energy” programme and Dr Patel told parliamentarians of their first internally bench-marked forum being held at that time on the subject.   merSETA was part-sponsor of the VW-NMMU solar car being developed at Tshwane University; had signed photovoltaic skills development agreements in the Eastern Cape and was working with Eskom on the Kusile power project and Medupi power station.

SAPIA’s presentation came from Gerard Derbsy, CEO of BPSA, who told parliamentarians that the industry was going through “a period of transition as a new generation of engineers and operators entered the industry”.     The annual payroll if the industry was some R5bn with 1bn paid in tax, he said, and the industry offered 100,000 jobs both direct and indirect.

Survey findings clearly indicated, Derbsy said, that the industry was lacking high level technical skills and the reasons for scarce occupations in the petro-chemical industry were lack of experience and a lack of qualifications of equity candidates, especially black women.

There was a need, he said, to recruit people with petroleum industry-specific knowledge and “upskill” existing employees and replace those already trained but who had moved on.

At the end of 2010, 1215 artisans and process operators qualified and another 106 were completing training for qualification mid 2011. Such were funded jointly by the Chemical Industries Educational and Training Authority. 348 people, mainly black people and women graduated from the 2006-11 “Leadership in Oil and Energy Programme”. An advanced certificate in oil and gas management programme is to be launched next year, he said.

Parliamentarians noted the lack of a recognised qualification in the industry and BP’s Derbsy said that the possibility of an “institute of petroleum qualification” had been initiated and an MOU between Total, the French government and Sapia with Wits University was about to be entered into.

On the lack of women entrants into the industry, he answered that that one of the problems with the petro industry was its global nature.

On questions regarding skills training being given on oil procurement, he countered these by stating that most of the answers here lay with DOE, the future of and direction of renewable energy and a conclusion of the ISMO Bill..

Eskom showed a year 2013 target of 5,735 on stream for internal learners in training from apprentices to engineers and the utility had already achieved 7,110 persons, mainly because of the emphasis on power station building in the New Build programme.   In addition, they had achieved a total of 5,018 “external” learners mainly through the support of the sixteen Further Education and Training (FET) colleges in South Africa.

In addition, Eskom was supporting six universities in South Africa, each “leading” in a specific area of research and development, which programme was called the Eskom Power Plant Institute programme. For example, Wits University handled combustion engineering and high voltage (AC) subjects, UCT handled and energy efficiency, Stellenbosch University renewable energy; Pretoria University handled asset management and Kwa-Zulu University high voltage (DC).

Eskom said it had 4,950 artisans in the pipeline which represented 11.8% of the Eskom artisan headcount; they were investing R758m in skills training and 80% of the workforce was undergoing some form of training.

The Association of Municipal Electricity Undertakings reported that a crisis was developing at municipal level throughout the country insofar as training of electrical engineers and trade qualified artisans was concerned and the necessity to re-build staffing levels was critical.

CEO Rhodes said that South Africa had gone through a process of indecision over the REDs issue; underfunding, incoherent SETA programming and liaison; and a process of moving towards outsourcing to the private sector, all of which had left the cupboard bare in terms of local level staffing in municipal structures.

He called for a complete and national review of the needs to improve training and skills development at local government level and he was aware that SALGA was very active with the department of energy on this issue, who again were awaiting the outcome of the ISMO Bill to see what training emphasis was necessary.

Chairman Sisa Njikelana concluded that “the grim environment” in the local government area had to be investigated in the next parliamentary session.

 

 

Posted in BEE, Electricity, Energy, Fuel,oil,renewables, Labour, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

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