Tag Archive | oil industry

MPRDA Bill returned to National House of Leaders

Some sort of movement on MPRDA at last……..

sent to clients 18 March…..In a parliamentary document recently published it is shown that the Mineral and Petroleumcoal mining Resources Development Amendment (MPRDA) Bill has been sent on a token trip through the National House of Traditional Leaders for comment in thirty days and then to be returned to the Portfolio Committee on Mineral Resources.

This is probably for some temporary major changes to be made to the Bill after debate until such time as two new Bills, one for the mining industry and one for the oil and gas industry, are drafted in time to come.     No doubt this movement was initiated as the result of the recent meeting between President Zuma and business leaders.

The extraordinary affair of the MPRDA has been going on since the first draft of the Bill was published for comment in December 2012 regulating extensively the exploitation of minerals and resources and the legal movement and transfer of resource rights.    Both industries have their own and very different BEE charters and the single Bill deals with both and many empowerment factors.

Core issues


Two issues
of note were that in the new Bill as originally proposed the Minister was to form a new “entity” which will “promote onshore and offshore exploration for and production of petroleum” and which will also “receive, store, maintain, interpret, add value to, evaluate, disseminate or deal in all geological or geophysical information” relating to petroleum and gas exploration matters.

Secondly, sections 80 and 84 of the anchor Act were to be amended to provide for State participation in any successful minerals and gas/oil development exercises carried out by the private sector, the Bill providing for a State right to free carried interest in all such exploration and production rights.
Specific details regarding the extent of the “free carry” were to be published in a government gazette, a figure of 20%susan shabangu being bandied about at the time.   “We are on the path of changing the mining and petroleum industry in South Africa, whether you like it or not,” said Mineral Resources Minister Susan Shabangu earlier in 2014.

Strong views

Accompanied by a public outcry and strongly worded objections from private industry, foreign companies and other institutions, the Bill reached Parliament virtually unchanged.    Again, brought up before the Portfolio Committee on Mineral Resources in public hearings, were strong objections from Opposition MPs and institutionalised industry, neither of whom minced their words, describing the Bill, in one case, as a “self-destruction tool of South Africa’s investment climate.”

Nevertheless, the ANC Alliance continued on their course and the Bill was hammered through in a rush at the end of the parliamentary term, the ANC summonsing through its whip sufficient numbers.

In the background, as the Bill went through Parliament, was the fact that the Department of Mineral Resources and the Department of Energy were only just completing their split apart. Crossed wires were the order of the day.

Nothing happened

Since that date the Bill has sat in limbo; a new Mineral Resources Minister Ngoako Ramatlhodi Ngoako Ramatlhodiagreeing shortly after with the with mining companies and the Chamber of Mines that the best and fastest way forward to bring certainty to the mining and oil drilling industry would be to pass the Bill subject to amendments based on a new approach to the mining beneficiation issue.

Secondly, the matter of state “free carry” could be dropped.

At the time it was guessed that at least a year and a half would be the delay if two replacement Bills were to be drafted, separating mineral resources from oil and gas in the light of the fact that both have separate and very different BEE charters. The quicker alternative to bring some certainty was that temporary amendments to the existing Bill should be made.

Despite this, the Bill has just stuck right there, in the President’s office, until recently, now moving back togas exploration sea Parliament because, as is suspected, business leaders in their recent discussions with President Zuma must have drawn his attention to the continuing lack of lack of certainty in both industries because of unknown legislative changes about to occur and an apparent inability by Cabinet to give clear policy leads.

So where are we?

So as far as the MPRDA Bill is concerned, there is movement in the goods sidings but whether any train is about to start on a journey can only be known when a meeting is scheduled by the Portfolio Committee on Mineral Resources. Yet another minister is the train driver.

Previous articles on category subject

 

 

 

 

 

 

Posted in Cabinet,Presidential, Energy, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Special Recent Posts, Trade & Industry0 Comments

Oil industry stakeholders to meet on B-BBEE audit

Chairperson Sisi Njikelana told parliamentarians and those who attended the portfolio committee of energy meeting on the audit findings of the Liquid Fuels Charter (LFC), that all stakeholders in the industry will  meet to discuss the way forward  to improve the black empowerment stake in the oil industry.

His comments followed a presentation of the audit by Moloto Solutions by Tseliso Maqubela, deputy director general hydrocarbons for department of energy (DoE) together with Ms Gosetseone Leketi, the DoE liaison officer who had worked on the audit. It is understood that that such a meeting has taken place and that procurement by the oil industry was a major discussion point.

Maqubela told parliamentarians that DoE could now proceed on the subject of black empowerment within the oil industry without just anecdotal information but with extra basic facts and home truths garnered in an exercise, which, with the exception of a few companies, was marked by good co-operation amongst the industry.

DoE had placed the audit findings on its website a week earlier, the original survey of the LFC being commissioned in 2010 and its findings being only up to that date. The document was placed before cabinet in April this year, the audit having been completed by Moloto Solutions as late as April 2011.

In the light of the fact that the LFC had an expiry date of 2010, the purpose of the audit, as explained by the minister of energy at the time, was to establish the level of compliance with the BEE factors laid out in the charter before renewal was negotiated if it was to be, the industry not having its own B-BBEE sectoral agreement through the department of trade and industry.

DoE in its recommendations following its own summation of the audit suggested that a sectoral B-BBEE code be developed through DTI after agreement at the recommended stakeholder’s meeting and that the issue of penalties for non-compliance should be debated.

However, Sisi Njikelana said that his approach to penalties was that they were not going to be “important” if all co-operated and that DoE would not necessarily have to legislate for this necessarily. But he reminded all present that “we do not have another ten years like before.” There had to be some very urgent improvements, he said.

“We need a systematic way to track demographics but in order to get meaningful change” all involved have to apply their minds”, he said. An official ongoing monitoring body that was more effective and constantly updated progress amongst oil companies was suggested by Njikelana.

In presenting their views on the report, Gosetseone Leketi of DoE said that oil industry participants had agreed to the application of the LFC in its industry ten years before BEE legislation was applied in South Africa generally.

Presumably now DoE would have to consider how to amend the LFC after negotiation with oil industry participants or alternatively consider a separate document along the lines of other sector industry BEE charters, studying the success and failure of the separate oil industry scorecard factors in South Africa and its verification system to date.

Concern was expressed by Moloto Solutions in the audit that the department of trade and industry, with its current work load, could take on another sector industry BEE draft.

In very broad principle, Moloto’s audit findings indicated overall compliance with the charter at 48% with black shareholding averaging at 18.91%, albeit narrow-based, with a very low participation by black women as shareholders. Only one company has met the LFC target for shareholding control which participants at the meeting assumed to be Total whose French shareholders had made a major sale to black owners upon exiting.

As far as the audit was concerned generally, Leketi said skills development areas stood out with a poor record, as did employment equity and also preferential procurement in certain aspects. On the issue of procurement, the audit findings indicated considerable effort by Moloto to establish the background and factors behind the procurement of crude oil and the mechanisms involved, which they had clearly found difficult to establish in some cases due to competitive factors.

Leketi noted that this was an area where black employees had to gain more control and experience, according to Moloto Solutions. Leketi said that this was a DoE view.

The report separates, as a distinct entity, employees who are “foreign nationals” and Leketi pointed to the difficulty some companies had in reporting structures on product issues where responsibility and organogram management structures were constantly changing without any reference to the particular trading conditions in any country.

For example, Maquebela subsequently said on this issue in discussions later, “Suddenly an international company with its head office in Hong Kong could decide that Africa would report through Egypt for, say, LPG, he said, and the management in that area would have no understanding of (B-BBEE) conditions applying in this country”.

Leketi, in presenting the report, said the audit stated up front that that punitive measures should be designed against companies that do not make “the 25% cut” and that “some way” has to be found the develop supportive cultures for BEE within company behavioural patterns, especially in line management.

Companies, the report said, should place on notice boards employment equity achievements and targets and companies should urgently upgrade their black recruitment programmes, especially amongst black women  and improve the overall knowledge base of the their own staff at all levels regarding BEE employer requirements and targets if achieved or not achieved.

The findings were specific, Leketi said, on the need for “employee capacity building” at all levels with reward and achievement acknowledge programmes to accompany skills acquisition, especially in “scarce skills” areas.

Maquebela stressed in his comments that in his view, on the aspects of skills training which was so absent in most companies (particularly scarce skills needed in cleaner fuel development, he said) that the principle of “learning by doing” should be emphasised and that “internationals” should take a lot more advantage of their ability to send employees overseas on training courses.

The meeting concluded by chairperson Sisi Njikelana saying that bearing in mind the date of the findings, “the industry must have another platform to express itself”.

Tseliso Maquebela agreed with this route but warned that he rejected those findings where oil companies had said during the audit that they were not aware of the conditions that they or their employers had to meet with regard to black empowerment.

“Nobody could be in this industry and not be aware of exactly where they stood in regards to targets, timings and the details of LFC requirements in addition to BEE regulatory aspects.”    He rejected any idea that employees interviewed should have been ignorant of why the audit was being conducted and what the onuses were upon on their employers.

He stated however that he agreed with the findings of the report that there was great ignorance generally amongst employees of the urgency behind the need for industry to re-organise along BEE lines and noted the comments in the audit that much appeared to be done in an atmosphere of haste after initial interviews had been conducted.

 

Posted in BEE, Cabinet,Presidential, Energy, Finance, economic, Fuel,oil,renewables, Justice, constitutional, Public utilities, Trade & Industry0 Comments

Government dissatisfied with oil industry BEE progress

A veiled threat was made to the oil industry by the department of energy (DOE) by deputy director general, Tseliso Maqubela, who recently said in Parliament it was important for companies to comply with BEE laws and that one of the implications of the failure to do so “will be to curtail the capacity of those who violate the law (by limiting) their capacity to import products.”

He told reporters at a press conference held to announce the findings of the audit into the oil industry’s performance in terms of the Liquid Fuels Charter that the “results are extremely disappointing given the timelines” and he said that his department was going to create a unit that will specifically deal with compliance in terms of the Liquid Fuels Charter.

“We will ensure that there is compliance on a daily basis, not only with the charter, but with all the other requirements of the law”, he said.

Energy Minister Dipuo Peters said on the same platform that government was not to be held to ransom by companies in the fuel sector that do not comply.   “This is emotional, political, as well as economical blackmail,” she told the media.   The law was being ignored, she complained, and she added that DOE “needed to make sure that all comply with and respect the laws of this country.”

The minister reminded the media that the charter was drawn up in 2000 and called for 25 percent black ownership across the value chain within 10 years but according to the audit “the average effective narrow-based black shareholding is 18.91 percent”.

She continued, “Out of this 18.91 percent, representation for black women stands at a meager 6.72 percent, while only one oil company, Total South Africa, has fully complied with the obligation for ownership by black shareholders.”

Two years ago, minister Peters said, DOE had called for amendments to the Liquid Fuels Charter and the Petroleum Products Act to give black players in the retail fuel industry access to the fuel infrastructure.     What was evident then was that the representation of women in all strategic areas listed in the charter was of great concern, when compared to the expectations of equity norms.

The audit had confirmed this fact and what was needed was for industry players to work together to correct that which was wrong, she said.

The energy department would study the findings and contact different role players to plan the way forward and address problems. The audit findings had been presented to Cabinet, she told reporters, and that matters would be referred to the economic cluster for further review.

SAPA reports that the SA Petroleum Industry Association has said it would speak to the department after an opportunity to review the findings.

Posted in BEE, Cabinet,Presidential, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry, Transport, Uncategorized0 Comments


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