Tag Archive | Trade & Industry

Uncertainty is the only certainty in 2012: BUSA

In presenting an “economic perspective” on 2012 – presented one week before the Budget- Prof. Raymond Parsons of BUSA told the NA economic committee in Parliament that the “only certainty in 2012 was the continued uncertainty in the global economy.”

He said the situation in the Eurozone highlighted how continued procrastination by economic leaders led to all kinds of uncertainty and therefore in the case of South Africa, the year of 2012 had to be “a year of implementation” and delivery.

High interest rates in South Africa had led to an influx of foreign capital in 2011, he said, keeping the rand strong but, in contrast its strength and volatility had to some extent hampered exports.

Parsons said that BUSA saw South Africa lagging behind developing economies in 2012 and it was not helping that the country had dropped its positioning on the global table of countries with a good record “of ease of doing business”.

BUSA had also noted a recent Grant Thornton survey, Parsons said, that recorded that “over-regulation and red tape were the “biggest constraints to expansion in South Africa” and he believed, like BUSA and many respected business groupings with him, that SMMEs are the best hope in such times for job creation and innovation.

South Africa had to boost its SMME activity since “80% of new jobs could come from this direction.”   He told parliamentarians that “South Africa’s fiscal space was shrinking” and that focus had to be on “structural factors” that would give economic returns in the long run.

Balancing welfare payments against a limited tax base would a major problem in the coming year, Parsons said, and an outcome of the nationalisation debate was critical he said in order to settle down an unsure foreign investing market.

As growth would be insufficient to meet socio-economic challenges, Parsons commented that co-operation with the private sector became all that more important in 2012.

Posted in Trade & Industry, Uncategorized0 Comments

Brief on new draft energy and electricity bills

The director general of the energy department, Nelisiwe Magubane, has now briefed Parliament on the impending tabling of both the National Energy Regulator Amendment Bill and the Electricity Regulation Amendment Bill which, according Magubane will beef up NERSA giving it the regulatory power to control “the entire energy space”.

She told the parliamentary committee on energy that that an independent appeal board headed up by a judge would replace the existing tribunal so that NERSA did not have to play both judge and jury in regulatory matters, where a decision on tariffs or regulatory procedures were involved. Appeals would therefore conducted in a fairer environment.

Both bills have been the subject of public comment and it remains to be seen what the final Bills tabled before Parliament look like. On electricity, much involves independent power producers (IPPs) and may sort out the anomalies that exist in the procurement of land for power line erection and the difficult liaison with the department of public works over such issues.

As far as the Energy Regulator Act (ERA) is concerned, the amendments proposed to parliamentarians were stated as being designed to “improve the credibility of the decision making process by establishing an appeals board; to improve the governance and accountability of the board and to improve the working relations amongst regulator members.”

The department of energy said that the energy sector had to be regulated more effectively “given the current need that has now arisen to increase private sector participation”.

Present at the briefing were officials of NERSA who also claimed, as did the department, that both new Bills would enable them to have the ability to work in a less fragmented environment with not so many departments having regulatory control over different issues.

NERSA at no stage discussed matters relating to fuel pricing and neither did the department. Further meetings are to follow.

Posted in Cabinet,Presidential, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Labour, Land,Agriculture, Mining, beneficiation, Trade & Industry0 Comments

Obama talks energy

USA president, Barak Obama, mentioned taxes thirty four times and jobs thirty two times in his State of Nation Address to the American public in mid January, according to a review of his speech by Business Day but in reading his speech it becomes evident that much was also said on matters relating to energy and climate change.

He claimed that nowhere in the world was the promise of innovation greater than in it was with USA-made energy and said he was instructing his administration “to open more than 75 percent of our potential offshore oil and gas resources.”  He said that American oil production was the highest right now than it has been in eight years and the USA now relied less on foreign oil than in any of the past 16 years.

He acknowledged that the USA “had only 2 percent of the world’s oil reserves and the country needs an all-out, re-defined strategy that develops every available source of American energy.”  He was apparently referring to the possibility of developing the natural gas resources of the USA, which was, he said, “a supply of natural gas that can last America nearly 100 years.”

He said in his address listened to by millions across America, “The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. It  was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock”    He said that this “was one of the places where we are going”.

He went on, “What’s true for natural gas is just as true for clean energy.  In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries.  Because of federal investments, renewable energy use has nearly doubled, and thousands of Americans have jobs because of it. “

On energy, Obama concluded, “Our experience with shale gas and our experience with natural gas shows us that the payoffs on these public investments don’t always come right away.  Some technologies don’t pan out; some companies fail.  But I will not walk away from the promise of clean energy.  We’ve subsidized oil companies for a century.  That’s long enough.”

He said he was directing his administration also to allow the development of clean energy on enough public land to power 3 million homes, with the USA navy purchasing enough capacity to power a quarter of a million homes a year. He then announced a plan to eliminate energy waste by manufacturers with incentives, and for businesses to upgrade their buildings on energy factor lines, also using tax incentives to do so.

Posted in Cabinet,Presidential, Energy, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Gas Act changes closer to implementation

Following the November 2011 LP Gas conference in Johannesburg, the minister of energy , Dipuo Peters, has revealed in a written reply to a parliamentary question that  the energy department is in the process of finalising a liquefied petroleum gas (LPG) strategy in the form of a new Bill to be introduced shortly.

Cabinet’s approval will be shortly sought and the result opened up for public comment, she said.

The minister indicated that she intended to table the bill in Parliament before the end of the current financial year, saying that the review process at the conference in 2011 had enabled her department to study “some of the challenges experienced by current and prospective players in the gas industry, as well as shifts in the industry landscape”.

At the end of the conference, she told the media that a strategy was being drawn up as part of government’s response to challenges of over-dependence on electricity and greenhouse gas emissions and that she wished to encourage low income households to move from paraffin and “biomass” to LP gas, wanting to see1.5 million households using LPG by 2016.

She also told the National Assembly in her responses that clarity had to be sought on issues involving the importation, storage and distribution of both LNG and CNG and that PetroSA and iGas would consider importing LNG.   Dealing with another question, minister Peters confirmed that her department was drawing up a “road map for the energy sector” on energy and climate change, which plan would be implemented in the next financial year.

Posted in Communications, Energy, Finance, economic, Fuel,oil,renewables, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

New fuel pipeline will come at a cost

Brian Molefe, CEO of Transnet, told his audience at opening of the 550 kilometre multi-product fuel pipeline between Durban and Johannesburg that the cost of the new installation “will have to be recovered”.

In his opinion, the new pipeline “was one of the most cutting-edge and innovative infrastructure investments in the world”, the cost involved being given at R23.4bn at this stage, he said. It is understood that Transnet has applied to NERSA for a further 22% increase in tariff charges for the coming year, according to reports.

Last year’s tariff increase for fuel pumped is understood to have been just short of 60%. January 2012 has seen the new installation working alongside the older pipeline but the new line is only configured for diesel at this stage, with limited pumping facilities along its length.

Coming on top of a recent 43c per litre fuel price increase and the minister’s November call for “an audit” into refinery shortages, both fuel and electricity supply problems would seem to be moving in the same dismal direction leaving government and suppliers further apart.

On an up-beat note, Molefe told his audience that “the state-of-the-art pipeline” would also transport 93 and 95 octane petrol, low sulphur and ultralow sulphur diesel and jet fuel at a rate of “about three-million litres an hour”.  He said that eventually the capacity of the line was expected to be in the region of 26.7-billion litres of fuel a year.

Transnet pipelines head Charl Möller said the new pipeline would be upgraded in five phases up to 2032 as more pumping stations and metering points were added.

Posted in Cabinet,Presidential, Energy, Finance, economic, Fuel,oil,renewables, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

Davies to re-introduce his ailing BEE

Following the gazetting of a draft Broad-Based Black Economic Empowerment Amendment Bill in December 2011 for comment (60 days), trade and industry minister, Rob Davies, has recently indicated his view that the planned  amendments to BBBEE legislation would “seek to strengthen access to procurement opportunities and to assist with black enterprise development.”

He also indicated in his statement that fronting was a practice that had to be eliminated and penalties for non-compliance as far as regulations were concerned would be introduced in the legislation, which included jail sentences. How this would relate to the Liquid Fuels Charter is not clear. . In terms of the draft BBBEE Act Amendment Bill, the cabinet statement set out the proposed amendments, some of which included amendments including the penalties mentioned for non-compliance in terms of enterprise development, or lack of it, fronting and procurement elements not complied with in terms of the BBBEE scorecard.

Definitions of what is termed as fronting are given in order that legislation may apply and the appropriate regulations enforced. On this issue, much was passed on by minister of energy, Dipuo Peters from the energy conference in November 2011.   Minister Davies said that more emphasis was to be placed on enterprise development and procurement within key sectors, in terms of both the IPAP and new growth path plans. Incentives were to be created for broad based black ownership and the use of such tools as employee share ownership, co-operatives and community ownership.

Relevance to the Employment Equity Act was an important factor, Minister Davies said, as was aligning skills requirements to current and new skills development strategies involved in the new growth path and elsewhere. Targets for this, for procurement matters and enterprise development had to be “adjusted” accordingly, he said.

Meanwhile, Minister Dipuo Peters also welcomed the BBBEE legislation as contributing towards the objectives of the liquid fuels charter. Challenges facing her department were irregular monitoring of compliance, pockets of poor performance within the value chain and lack of financially sound BEE deals, she said late last year.

She also added that her department was looking at ways to strengthen liquid fuels strategic stocks to cover any emergencies that might arise.

She advised the media in November the compliance report on the liquid fuels charter had been submitted to the cabinet for approval. At the time, she expressed her view that current shareholding was not spread uniformly across the value chain and total assets spread in line with demographics, noting that whilst technical issues such as access to storage facilities was a significant problem. In general, she complained that the participation of women, procurement and enterprise development lagged behind targets.

She also added that her department was looking at ways to strengthen liquid fuels strategic stocks to cover any emergencies that might arise. Her recent comments on the new BBBEE legislation were made in the light of Minister Davies announcement.

Reference to both BBBEE legislation and the Liquid Fuels Charter is expected to come up in President Zuma’s address to the nation.

Posted in Cabinet,Presidential, Education, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Health, Justice, constitutional, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Security,police,defence, Trade & Industry, Transport0 Comments

Transport regulatory mess to be sorted out

At an initial meeting of the parliamentary transport meeting, mention was made of  a new Transport Planning and Implementation Bill that was in draft form to act as a regulatory backdrop for the proposed shake up in the national transport as it applies to all three tiers of government.

Government planners advised they were undertaking an overview of current transportation systems, an analysis of different scenarios for land based transportation and an implementation plan.

The committee heard that existing transport legislation had to be totally overhauled because much in the way of regulatory control was being handled badly or not at all at local government level and that even at national level some aspects of transport law were not being implemented at all.

The committee was told that in terms of the Constitution, it was imperative that all spheres of government co-coordinate and co-operate on matters of government policy and execution  and, consequently, new, all embracing legislation that applied to all levels of government as far as road transport was concerned, was to be introduced shortly.

Posted in Energy, Finance, economic, Mining, beneficiation, Trade & Industry, Transport0 Comments

Dividends withholding tax arrives on time

In a government gazette, Treasury has confirmed that the promised dividends withholding tax is to come into operation on 1 April 2012.    This is concurrent with the Taxation Laws Amendment Bill, currently before president Zuma for assent, calling for the replacement with new regulations of the secondary tax on companies.

The dividends withholding tax will place a 10% tax on dividends declared and paid by domestic companies, also applying to foreign companies listed on the JSE.    Companies must now pay shareholders the gross dividend minus the withholding tax, a number of exemptions applying.

Comment has been to note that tax liability shifts away from the shareholder, giving Treasury a greater chance to increase its receipts. A “withholding” system is provided for, hence the name.

Dividends for tax purposes will not apply to (inter alia) government bodies, micro-businesses where revenue is less than R200,000, where the beneficiary is a “resident company” or where the dividend is paid by a foreign company listed on the JSE to a non-resident beneficiary.

Posted in Finance, economic, Trade & Industry0 Comments

DTI to form multi-billion rand incentives fund

The Minister of Trade and Industry has released the Special Economic Zones (SEZ) Bill for public comment. The SEZ Bill is expected to be tabled in Parliament later this year and Minister of trade and Industry Rob Davies says that in his view it is one of the most important developments of 2012 in order to achieve the objectives of the country’s economic planning programme.

DTI has now briefed the parliamentary trade and industry committee on the concepts behind the proposed legislation. According to the minister, the main objectives of the SEZ bill are:

• for the designation, development, promotion, operation and management of SEZs

• for the establishment of the SEZ board

• to regulate the application and issuing of SEZ operator permits • for the establishment of the SEZ fund

• decentralisation in the economy-broaden location of industrial development

Whilst claiming, as did the minister, that “the country now has a really effective plan to offer the investment community”, Lionel October, DTI’s director general, admitted the exact amount of finance at his department’s disposal to fund new special economic zones (SEZs) in South Africa still remains to be negotiated, although the matter has been agreed to in principle at cabinet level.

Nevertheless, he countered questioning at a parliamentary trade and industry committee presentation on this subject ,by saying that “Whilst we still have to fight a significant battle with Treasury on the size of a multi-billion rand incentives fund, it was significant that the DTI now has a proposal along the lines offered in China, Brazil and India”. (BRICS)

This plan, he said, will be supported by a Bill shortly to be introduced to Parliament and which would provide “the necessary predictability to such financing.”

October said the main problem in the past was that the present IDZs were not driven by incentives.   Only one development had taken place at Richards Bay, for example, he noted.  “Although any business plan must make economic sense as a first priority, we have learnt that any growth plan, as in BRICs countries, must be attached to incentives. “In the past, we were de-incentivising many potential areas just because they did not have a port, for example”.

In the new proposals, said October, the country would move away from very long plans and do what the Chinese have done successfully and focus on five-year plans.  He added that the competitive factor, where IDZs competed with each other, had to be stopped and that a “joint marketing proposal approach” had to be adopted for the whole country.

“This was the purpose of dividing the country into SEZs”, he said, and to build a national team to market the country’s proposals.

In terms of the new Bill, there were to be different categories of SEZs, such as industrial development zones, industrial parks or estates, science and technology parks, spatial development corridors and sector development zones.   October quoted successful examples of SEZs in Shanghai, Oman and Malaysia.

Problems had been encountered, October said, with the previous concept of the smaller IDZs over the past few years and the idea had not worked particularly well. Main problems had been that previously designated areas favoured those with international airport or seaports and penalized other areas for not having such.

The DTI’s contribution into the four areas of Richards Bay, East London, Coega and OR Tambo and Saldanha for forty projects had been 5.3bn or an approximate 5.7% return.

Lionel October emphasised that the IDZ programme had not been incentive driven. There had also been too much emphasis on infrastructure, whilst other issues such as logistics, marketing and skills supply had been on the back-burner.

The IDZ programme had “lacked a unique value proposition”, he said, and too many messages were going out to the investment community. There needed to be a single strategy and message from one place, said October.

He noted that now, with the promise from Treasury in October’s medium term budget that R10bn would be put aside for investment purposes, the new plan, supported by legislation, had become an exciting prospect and the new national regulatory environment would not only give the host zone but the whole region total involvement and the added ability to put in place longer term planning for an entire area.

The new Bill also provided for five parties to be involved in the process; namely, the DTI, Treasury, all three tiers of government, Eskom and Transnet, all parties being involved on a SEZ board set up by the new Bill. Other important parastatals could be added if relevant, October said.

MPs commented that no such plan would work unless government parastatals were on board to help plan infrastructure needed.

When asked by an ANC MP why labour was not represented in the planning structures, Lionel October responded frankly by saying that such a planning process could not be subjected to the issue of collective labour bargaining at that stage of the investment process, although the supply of skilled labour was a major issue.

He detailed the financing instruments as a fund to be established by the minister of trade and industry in consultation with the ministry of finance and development finance institutions (DFIs), which would play a major role in the development of a particular SEZ, liaising on marketing, capacity development, skills strategies, infrastructure, business incubation, environmental protection, technology and R&D and, finally, quality and productivity.

He would not talk on the subject of specific incentive numbers, saying that incentives had always been granted in the past but that in the future any incentives and incentive programmes would be the subject of far more focus with proper funding to make more things possible.

Posted in Cabinet,Presidential, Communications, Education, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Health, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments


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