Tag Archive | Transport

Road and Rail South Africa

Minister comments on taxi and rail plans

Taxi recap slows, rail plans behind….

Transport minister, Dipuo Peters, told parliamentarians during the annual budget vote debate during a transport portfolio committee meeting that she had to re-look at the failing taxi recapitalisation programme; encourage Gauteng road users to pay e-tolls by announcing incentives; tackle urgently the upgrading of roads; and consider methods to restore freight rail transport as a the primary carrier for the Durban/Gauteng corridor.

The minister said that she recognised that the taxi industry played a critical role in the South African economy by providing 300,000 jobs and contributing an estimated,R40bn to the economy, she said.

Taxi industry must change

The need to modernise the taxi industry still remained as an urgent issue, she continued, and also there was a need to further deploy taxi drivers to other industries, including the bus rapid transit system, possibly aviation and to ports and shipping.

She attributed the slow pace of the recapitalisation programme to the fact that heavily indebted taxi operators chose to remain with old taxis rather enter the process of recapitalisation.   Also, the scrapping allowance had been overtaken by rising prices of new taxis. The entire system needed a priority overhaul, she said, since the safety of the South African passengers was at risk.

Later it became evident during debate that the taxi recapitalisation programme had for all intents and purposes stalled, since only 2,752 vehicles had been scrapped in some eighteen months.

E-toll dispensations

On the subject of e-tolls, Minister Peters said that in order to “make things easier” for the public, DoT was providing an extension of the payment period from seven days to fifty one days; a 48% e-tag-holder discount; 60% discount on the alternative tariff if a non registered user paid within the same 51 days; time-of-day discounts applicable in certain cases; frequent user discounts and a cap on class A2/light vehicles

The minister was asked if SANRAL intended to continue its “prosecution and possibly criminalisation of some one-million people who have not paid their e-toll bills”. She replied that she hoped the new arrangements would assist in reducing the financial burden for motorists. She urged Gauteng users of tolled roads to “accept their responsibilities in the interests of better roads for South Africa if SANRAL were to perform their duties and meet their targets.”

She asked MPs to take the lead and say publicly that they were.

How it works

The total DoT budget was R48.7bn. for 2014/15, rising to R53.9bn. in 2015/16. This amount included allocations to provinces, municipalities, state owned companies and agencies. Road transport received 43.7%, rail transport had 34.9% and public transport 21%, whilst civil aviation and maritime each received 0.4%. DoT was responsible for transfer of payments and conditional grants to provinces and municipalities.

On the issue of road conditions nationally, DOT heads stated that only 10% of roads were in “poor” condition and the department indicated that it would provide R21.9bn in critical support to SANRAL who were the roads delivery agent for DoT.

Metrorail must improve

On rail issues and rail transport, Mawethu Vilana, acting DG for DoT, said passenger rail accounted for a large slice of the commuter transport used by the national work force, R15bn being allocated to the railways accordingly.    He said DoT was trying to reduce the cost and to improve the services of Metrorail, as well as accelerate implementation of integrating rail services with other transport services.   A White Paper would be issued on rail integration issues.

This was enlarged upon by Mathabatha Mokonyama, DG of public transport, who said the focus was on accelerating integrated transport systems “so as to improve its overall productivity” and DoT would to allocate R81m to the integration process, expected to increase to R84m in 2015/16 and again to R89m in 2016/17.

Mokonyama reconfirmed that whilst rail transport played a major role, DoT had to focus on reducing the cost of public transport generally and it would also monitor the progress of the Passenger Rail Agency in its objective to restore to the country national rail passenger systems.

Focus must be on freight

He indicated that rail freight transport had to play a larger role in order to compete with road, particularly the Durban/Gauteng corridor and to service industry in Mpumalanga.

Mokonyama again pointed to the new draft updated White Paper on Transport which was on its way as a framework for public discussion. DoT would also update the Moving South Africa plan and the seven-year old rural transport strategy. This new planning called for further updated legislation.

Minister Peters, in conclusion, conceded under questioning that DoT urgently needed to update scholar transport policies and re-introduce urgency to programmes to reduce road fatalities.

Where is the merchant navy

In an odd ending to the debate, when discussing the budget vote on maritime issues, it was said by the DoT maritime services DG that there was a need to establish a maritime shipping sector. The chair promptly asked, “What has happened to the country’s ships?”

The deputy minister of transport, Sindisiwe Chikunga, replied “All our ships were sold on the eve of democracy to make sure that the current government did not participate in the international shipping industry”.

This position was to be reversed, she concluded.

Other articles in this category or as background
http://parlyreportsa.co.za//finance-economic/prasa-says-upgrade-of-rail-transport-will-involve-local-industry/
http://parlyreportsa.co.za//finance-economic/bumpy-road-for-e-tolling-bill-continues/
http://parlyreportsa.co.za//uncategorized/transnet-says-freight-rail-operations-coming-right/
http://parlyreportsa.co.za//energy/transport-subsidies-to-business-are-wrong-says-parliament/

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Transport ministry studies taxi, e-tolls and rail

Minister briefs on transport…..

dipou petersTransport minister, Dipuo Peters, told parliamentarians during the annual budget vote debate during a transport portfolio committee meeting that she had to re-look at the failing taxi recapitalisation programme; encourage Gauteng road users to pay e-tolls by announcing incentives; tackle urgently the upgrading of roads; and consider methods to restore freight rail transport as a the primary carrier for the Durban/Gauteng corridor.

The minister said that she recognised that the taxi industry played a critical role in the South African economy by providing 300,000 jobs and contributing an estimated,R40bn to the economy, she said.

Upgrade of taxi industry

The need to modernise the taxi industry still remained as an urgent issue, she continued, and also there was a need to further deploytaxi industry  taxi drivers to other industries, including the bus rapid transit system, possibly aviation and to ports and shipping.

She attributed the slow pace of the recapitalisation programme to the fact that heavily indebted taxi operators chose to remain with old taxis rather enter the process of recapitalisation.   Also, the scrapping allowance had been overtaken by rising prices of new taxis. The entire system needed a priority overhaul, she said, since the safety of the South African passengers was at risk.

Later it became evident during debate that the taxi recapitalisation programme had for all intents and purposes stalled, since only 2,752 vehicles had been scrapped in some eighteen months.

Easing off the pressure

On the subject of e-tolls, Minister Peters said that in order to “make things easier” for the public, DoT was providing an extension of the payment period from seven days to fifty one days; a 48% e-tag-holder discount; 60% discount on the alternative tariff if a non registered user paid within the same 51 days; time-of-day discounts applicable in certain cases; frequent user discounts and a cap on class A2/light vehicles

The minister was asked if Sanral intended to continue its “prosecution and possibly criminalisation of some one-million people who have not paid their e-toll bills”. She replied that she hoped the new arrangements would assist in reducing the financial burden for motorists. She urged Gauteng users of tolled roads to “accept their responsibilities in the interests of better roads for South Africa if SANRAL were to perform their duties and meet their targets.”

She asked MPs to take the lead and say publicly that they were.

Breakdown

The total DoT budget was R48.7bn. for 2014/15, rising to R53.9bn. in 2015/16. This amount included allocations to provinces, municipalities, state owned companies and agencies. Road transport received 43.7%, rail transport had 34.9% and public transport 21%, whilst civil aviation and maritime each received 0.4%. DoT was responsible for transfer of payments and conditional grants to provinces and municipalities.

On the issue of road conditions nationally, DOT heads stated that only 10% of roads were in “poor” condition and the department indicated that it would provide R21.9bn in critical support to SANRAL who were the roads delivery agent for DoT.

Commuter rail focus

metrorailOn rail issues and rail transport, Mawethu Vilana, acting DG for DoT, said passenger rail accounted for a large slice of the commuter transport used by the national work force, R15bn being allocated to the railways accordingly.    He said DoT was trying to reduce the cost and to improve the services of Metrorail, as well as accelerate implementation of integrating rail services with other transport services.   A White Paper would be issued on rail integration issues.

Integration of systems

This was enlarged upon by Mathabatha Mokonyama, DG of public transport, who said the focus was on accelerating integrated transport systems “so as to improve its overall productivity” and DoT would to allocate R81m to the integration process, expected to increase to R84m in 2015/16 and again to R89m in 2016/17.

Mokonyama reconfirmed that whilst rail transport played a major role, DoT had to focus on reducing the cost of public transportcity deep generally and it would also monitor the progress of the Passenger Rail Agency in its objective to restore to the country national rail passenger systems.

He indicated that rail freight transport had to play a larger role in order to compete with road, particularly the Durban/Gauteng corridor and to service industry in Mpumalanga.

Draft White Paper on way

Mokonyama again pointed to the new draft updated White Paper on Transport which was on its way as a framework for public discussion. DoT would also update the Moving South Africa plan and the seven-year old rural transport strategy. This new planning called for further updated legislation.

Minister Peters, in conclusion, conceded under questioning that DoT urgently needed to update scholar transport policies and re-introduce urgency to programmes to reduce road fatalities.

In an odd ending to the debate, when discussing the budget vote on maritime issues, it was said by the DoT maritime services DG that there was a need to establish a maritime shipping sector. The chair promptly asked, “What has happened to the country’s ships?”

The deputy minister of transport, Sindisiwe Chikunga, replied “All our ships were sold on the eve of democracy to make sure that the current government did not participate in the international shipping industry”.

This position was to be reversed, she concluded.

Other articles in this category or as background
http://parlyreportsa.co.za//finance-economic/prasa-says-upgrade-of-rail-transport-will-involve-local-industry/
http://parlyreportsa.co.za//finance-economic/bumpy-road-for-e-tolling-bill-continues/
http://parlyreportsa.co.za//uncategorized/transnet-says-freight-rail-operations-coming-right/
http://parlyreportsa.co.za//energy/transport-subsidies-to-business-are-wrong-says-parliament/

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Troubled bus industry goes to Parliament

SA bus industry operators in trouble

lowveld-bus-The South African bus system is on the verge of collapse, says the Southern Africa Bus Operators Association (SABOA) and, as the second largest mode of transport in SA behind only taxi transport, this fact was bad news for both commuters and those in industry and commerce whose workers use it extensively, Parliament was told.

Professor Jackie Walters, of the University of Johannesburg and strategic advisor to SABOA, told the portfolio committee on transport that, by its nature, the bus industry in South Africa was partially subsidised and was one of the only countries in the world that seemed to manage on month-to-month contracts.

Subsidies out of date

The bus industry in the past, in order to receive it’s subsidies, worked its calculations on the basis of commuters carried but the industry had slowly switched to contracts where kilometers covered are now the basis for calculation, a preferable system in the industry.  However there had been no extensions or expansion allowed in kilometers covered by subsidies for thirteen years.

Prof. Walters maintained that the bus industry performed a critical role in balancing demand and the pricing system within the public transport system.

The policy applicable to the commuter bus industry was founded on the White Paper on National Transport Policy of 1996, and in a number of other documents such as the Moving South Africa Strategy (MSA), the National Land Transport Transition Act of 2000 (NLTTA) as well as a Model Tender Document and the Heads of Agreement (HOA) between organised labour and the Department of Transport (DOT).

Money disappearing

He told parliamentarians that it was the Southern African Bus Operators Association (SABOA) that regulated aspects of the tendering system but the industry was under stress due to the unintended consequences of Division of Revenue Act (DORA) and the bus contracting system to the government, which was supposed to provide financial stability for industry. Whilst funds may be allocated under DORA to provinces, what happened after that was out of control of central government.

The financial stability intended for the bus industry to provide for commuters was a theory but on the ground quite the opposite was happening, he maintained.   This short-term horizon for the industry made longer-term investment decisions difficult and banks were reluctant to provide funding because of the uncertainty over the future of the contracts.  “No industry can operate on this basis‚” Prof. Walters said.

No windfalls, no shortfalls even

He attributed the problem again to the negative effect of DORA, which left it to provinces to make up the difference between the public transport operations grant allocated to provinces by national treasury and an agreed-upon escalation rate‚ which was linked to increases in the consumer price index.  Provinces continually claimed that they did not have the money to make up the shortfall.

Prof. Walters said the government had not taken into account at any stage the onerous operational cost increases that bus companies had to bear; namely 44% for labour‚ 28% for maintenance and the national escalation on fuel. There had to be risk sharing between government and the operators, he said.

 

No conformity

There were different types of contracts in the industry, he went on to explain, some which were seventeen years old and which were supposed to have been transformed after three years with competitive tendering and negotiation of contracts.

He said that in all there were 39 interim contracts in operation, 66 tender contracts and 10 negotiated contracts. The contract types in operation were based on a user-pays principle regarding the subsidies.

In conclusion, Prof Walters said that above all it was important to get national treasury to acknowledge the contracts and not leave things to the provinces.

DOT to investigate

MPs generally agreed that in the longer term, common ticketing systems over all services in the country generally had to be introduced, similar to that in the BRT system but a short term answer also had to be found to keep the industry alive in terms of the explanations from Dr Walters. 

DOT was told to  report back to Parliament.

Refer previous articles in this category
http://parlyreportsa.co.za//energy/transport-subsidies-to-business-are-wrong-says-parliament/
http://parlyreportsa.co.za//bee/all-not-well-in-the-trucking-industry/

Posted in Finance, economic, LinkedIn, Public utilities, Trade & Industry, Transport0 Comments

Transport to get one transport regulator

Transport legislation to be revised.

In a written reply to a parliamentary question on the subject, the minister of transport, Ben Martins, says that his department of transport is considering setting up a single transport regulator to consider all matters relating to tariffs; the protection of the public as far as transport matters are concerned and to consider the revision of a number of regulations.

He emphasised that lessons learnt from the energy and communications sectors showed that regulators should be incorporated into the transport process itself and the “the new model might entail merging several economic regulators currently operating in the transport industry into one”.

According to the minister, he will now have an investigation commenced which will look at regulation of tariffs across the transport sector; regulations regarding quality of service  and matters regarding the protection of the public interest.

“Predictable tariff structures had to be put in place”, he said.

Minister Martins reply included the fact that necessary regulatory and legislative framework would be in place by 2014 to allow for the setting up of a single transport regulator, who would then be responsible for all transport infrastructure pricing including roads, aviation, rail and maritime matters.

The proposed regulator would be created via legislation and a position paper was to be drawn up by the end of the first quarter next year and draft legislation to follow.

He concluded that the idea was also to provide a better climate for investors.

Posted in Finance, economic, Public utilities, Security,police,defence, Trade & Industry, Transport0 Comments

e-tolling on a user pay basis mapped out

 From “Q&A” replies….

The minister of transport, Ben Martins, in a written reply to a parliamentary question asking if the decision to fund e-tolling out of the public pocket was final and whether his ministry would consider alternative forms of road financing,   replied that “toll financing on a user pays basis provides infrastructure earlier than would have been possible through general taxation. As a result, the benefits of increased roadway capacity are available to the public sooner.”

His reply stated that in 2005, when the implementation of the Gauteng Freeway Improvement Project (GFIP) was under consideration, the then minister of transport, Jeff Radebe, required the proposal to be evaluated by an inter-governmental municipality working group. The working group at that point considered the need for the project, policy, project principles and funding options.

Funding options considered were:

  •  fuel taxes where it was not ring fenced
  • vehicle registration/license fees and traffic fines
  • development impact fees
  • shadow tolling – no tolls are levied from road users under this approach. Instead, the shadow tolls are paid by government to the operator based on traffic counts on the road, an agreed rate per  vehicle/vehicle type and an agreed set of performance criteria.
  • tolling – a user-based funding mechanism for road infrastructure development. It enables the mobilisation of substantial capital funds upfront, usually through debt equity, for the construction of infrastructure such as freeways.

It was agreed at that time that the GFIP would be implemented using the user-pay principle (tolling), the reply states, so that there would be sufficient money on hand to start, the main principle being that with a user-based funding mechanism for development, the mobilisation of substantial capital funds upfront is enabled, usually through debt or equity, for the construction of large infrastructure such as freeways.

Toll financing, the minister said in his reply, had the distinct advantage of providing infrastructure earlier than would have been possible with financing through general taxation. As a result, the benefit of increased roadway capacity would be available to the public sooner, he said.

In general, tolling is regarded by the ministry, said minister Martins, to be an equitable way of funding large infrastructure projects and did not compromise fiscal integrity.

He pointed out that South Africa had a total estimated road network of 740 000 kilometers in the form of paved and gravel roads.      The provincial and national road network comprises 82 000 kilometers of road.        In all, only 3120 kilometers of this road network are toll roads.

Parliamentary hearings are now to follow.

Posted in Finance, economic, Fuel,oil,renewables, Public utilities, Trade & Industry, Transport0 Comments

Transnet doing better but resists carving up its assets

Loans a major feature of Transnet balance sheet………

Brian Molefe, CEO of Transnet, on speaking to the  portfolio committee on public enterprises, noted that already South Africa’s freight volumes were threatened by the euro-crisis and Transnet could not absorb this and any other threats, such as reducing its asset base “ if it was to continue without re-negotiating with its lenders.”

Anoj Singh, acting chief financial officer, Transnet, earlier this month, told the portfolio committeethat the rail containers portion of its business was of “ significant focus” and volumes increased by 13.2%, and market share increased to 34%, representing a significant shift from road to rail.

Its general freight business grew by 2.2%, despite a loss of volumes due to industrial action, cable theft and rolling stock related faults. Overall productivity and service were of concern, Singh noted, and delivery turnarounds had deteriorated from the prior year, but measures have been promised and now put in place to turn that around.   Domestic coal volumes grew by 12.4% despite operational challenges and a key focus area for the next five years was to meet Eskom’s domestic coal requirements. Magnetite volumes increased by 3.7 and export manganese volumes increased by 23.1% compared to the prior year.

CEO, Brian Molefe, said that export coal volumes (62mt) reflected marginal growth, but overall productivity and service delivery deteriorated from the prior year, mainly due to the impact of industrial action as well as rail infrastructure problems and operational challenges.

Export iron ore volumes (46.2mt) increased by 3.4% despite an unprecedented number of derailments that resulted in lost volumes and impacted on operational performance levels. Ship loading rates increased at 9.7%, due to the successful implementation of dual and staggered ship loading process installed at the Transnet iron ore terminal .

Concerns were raised by parliamentarians regarding on-time departures and arrivals of freight and their impact on productivity and efficiency, noting that the number of delays had risen according to figures presented.   Mr Molefe responded that the general freight business, by and large, had improved dramatically over the past year. There was a 7.5% increase in containers on rail last year and, for the first time in the history of Transnet, more than 200 million tons of commodities were transported by rail. Over the next seven years, R200 billion of the R300 billion that Transnet was spending on capex would be going into rail.

There was a 1.5% increase in petroleum volumes from the prior year, despite the constraints presented by the existing Durban-Johannesburg pipeline and Transnet spent R21.5 billion on capital investment, with the biggest portion in the rail and pipeline sectors. 94% of the planned spending was achieved.   MPs asked what the future plans were for the Port of Ngqura, and how the Eastern Cape would benefit from that. Molefe responded that there had been a decision to establish a manganese terminal at the Port of Ngqura, with a budget of R300 million.

This would be developed as the transhipment hub. Manganese was currently exported through Port Elizabeth, but would be moved to Ngqura. Cranes and equipment were bought, and paving was finished. Transnet had recently negotiated more transhipment traffic for the Port of Ngqura from Europe.

Brian Molefe said that in order to foil piracy off Somalia, some of the larger world sea vessels, consuming a great deal more fuel to do so, were travelling at high speeds using a Mediterranean Sea to South Africa route direct and reaching the safety of South African waters with its defence frigates and aircraft, to the benefit of SA port facilities.

MPs asked the reason for the decrease in revenue in the pipeline division in 2010/1, which was some 2%.  Molefe responded saying this was largely because of industry issues and that Transnet had received less revenue than projected but that the “pipeline was ready, commissioned and functioning very well” and the situation would soon reverse.

In a subsequent meeting with parliamentarians of the portfolio committee on economic affairs, CEO Brain Molefe warned that changing Transnet’s asset base by selling of assets would change its gearing and thus its ability to finance its expansion plans.

He referred again to the restructuring of the general freight business which depending upon its ability to borrow funds and said that any plans to break up Transnet so that it became an operator competing with the private sector on certain sections of line were to be rejected, he said.

Molefe noted that already South Africa’s freight volumes were threatened by the euro-crisis and Transnet could not absorb this and any other threats, such as reducing its asset base “if it was to continue without re-negotiating with its lenders.”   The general freight business of Transnet, which depended upon its ability to borrow funds, said Molefe, was at a critical stage that any plans to break up Transnet so that it became an operator competing with the private sector on certain sections of line were to be rejected.

 

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Transport dept moots idea of SA maritime fleet

In a document tabled before Parliament, the CEO of the SA Maritime Safety Authority (Samsa), Tsietsi Mokhele, called for a policy framework to enable the establishment of both a coastal and a blue-water merchant fleet.

The meeting with Samsa followed a request by National Assembly Speaker Max Sisulu who called for more information on where South Africa stood with regard to maritime affairs internationally.

Mokhele told Parliament’s transport portfolio committee that about 98 percent of South Africa’s total import and export trade was currently carried by foreign ships and currently South Africa does not have a single own-flagged commercial vessel on its shipping register,

“South Africa has no ships on its register and paid in 2007 about R37 billion in maritime transport services to foreign owners and operators and had approximately 12,000 vessels visiting the country’s eight commercial ports each year”, he said.

Some 264 million tons are moved by sea at an estimated cost of R45bn to the country, the committee heard, and in the BRICS group South Africa stood alone with no vessels whilst Brazil operated a fleet of 172 merchant vessels, India 534, China 2044 and Russia 1891.

“We are almost 100 percent dependent on foreign shipping to get our goods to market, despite South Africa being a maritime country, with over 3000km of coastline and a vast seaward economic exclusion zone.”

Mokhele told parliamentarians that the country’s sea-borne cargo constituted a “significant” 3.5 percent of global sea trade. “Yet all the benefits of shipping cost overheads to export destinations in the case of South Africa accrue to the nation from which the ship transport emanates “, he said.

Posted in Finance, economic, Labour, Public utilities, Trade & Industry, Transport0 Comments

Passenger trains only start rolling by 2015

In the light of Transnet’s enormous future expenditure, PRASA, the newly-established Passenger Rail Agency of South Africa – combining South African Rail Commuter Corporation, Metrorail, Shosholoza Meyl and road transport operator Translux under a new name – recently told the parliamentary transport committee that only two-thirds of the rail passenger fleet in the form of coaches were currently in operation owing to reliability issues.

Group CEO Lucky Montana advised a 20-year procurement process that would be split into two portions, the first being a ten-year contract of coach deliveries running from 2015 and a second contract commencing 2025.

The R136-billion contract renewal programme would be for the design, building and shared maintenance of the rolling stock and final arrangements would be in terms of strict black economic empowerment criteria.

He admitted that the delivery timelines were “very tight” and he told parliamentarians that on top of this approximately 4,500 units had to be “retired” in three to five years.   Montana said that a good number of the old coaches had to be scrapped when the new fleet started arriving. Some of the older coaches are aged between 47 and 52 and with the rail passenger crisis building he told parliamentarians, “We have to move with speed”.

He said that some local sub-Sahara African rail operators had indicated that they would be interested in acquiring a number of working units from PRASA.

PRASA was to retain its present gauge and not revert to international standard gauge as implemented on Gautrain. The rolling stock programme, which also included new depots, would then also add to already existing projects, such as the current roll-out of a new signalling system and the improvement of station infrastructure.   Some of the first corridors targeted for a major overhaul by PRASA were Johannesburg to Naledi, and Khayelitsha to Cape Town. PRASA’s enterprise programme management office head, Piet Sebola, said that the new passenger trains would be 12-car units and that they would have to feature on-board wi-fi access and closed circuit television cameras to ensure commuter safety

As far as indigenisation was concerned, PRASA said the localisation target on the new rolling stock would be 65% and possibly in some cases reaching 80%. Local components could include the car body shell, door system, axles, wheels, lighting, interior cladding, bogie frame, windows and seats.

The first train is to be delivered to PRASA in 2015 and the new fleet in the first ten-year contract would be split between Gauteng, which would receive 2 400 coaches, the Western Cape 1 800, eThekwini 936 and the Eastern Cape 228.

Formal tender processes would begin in March and the successful bidder would be announced by the minister in June 2013

Posted in Finance, economic, Labour, Public utilities, Trade & Industry, Transport, 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

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

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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