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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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Liquid fuels industry short on BEE charter

Fuel industry attacked on BEE …

On the subject of black economic empowerment  (BEE), acting director of the department of energy (DoE), Tseliso Maqubela, told Parliament, before it went into short recess, that the major target for his department was to ensure a more immediate transformation of the liquid fuels industry.   Economic transformation in the energy sector was a top priority, he said, and he told the portfolio committee on energy that much more was needed to be done by this sector to improve the situation.

This was reminiscent of similar complaints made of the mining industry under the same BEE charter by the director general of the department of mineral resources.

Victor Sibiya said, as DoE’s  deputy director of petroleum products, also acting, that one of the three pillars of his department’s programme was compliance, monitoring and enforcement and whilst 30% of petroleum licensing permits showed around a 50% compliance factor this was not enough and new legislation was on its way to “toughen up” on B-BBEE regulations.

New code called for

The challenge at present, he said, was that the process of penalisation was far too cumbersome and did not deal sufficiently with repeated offenders.   A revised code was urgently required, he added.

On a separate subject, Sibaya said that as far as the basic fuel price (BFP) was concerned all calculations were based as if the final product had been produced in South Africa.  DoE was at work, he said, on a paper studying the various elements that contributed to the BFP, particularly with regard to smoothing out fluctuations to the consumer and attempting to align municipalities to the magisterial zones which governed the distribution.

Retail margins were also being studied in a second round of estimations working with operations carried out by what was referred to as the “DoE model service station”. Other factors included the shortly to be published biofuels price schedule which would govern the mix with petroleum products.

Reaching out

Further to economic transformation programmes, Sibaya spoke of a programme to establish fuel stations in deeper rural areas supplying other forms of energy needed by households such as LPG and extending services to include food, household retail goods and community services to improve quality of household life amongst the poor, another NDP priority.

In broad terms the acceleration of LPG supplies to rural areas, in fact to all areas in general, would contribute greatly, he said, to this objective.

Acting DG Tseliso Maqubela said he would respond to the parliamentary enquiry on the volatility of fuel prices in a prepared paper shortly, as this issue was also in the process of being studied at present. When asked about the levy on purchase of vehicles and where the funds went, Maqubela said this was in national treasury’s domain and was “probably an attempt by treasury officials to mitigate on carbon emissions”.

Refinery decisions

Touching on petroleum issues, DG of energy policy, planning and clean energy, Ompi Aphane, told the committee that a decision would be taken during 2016 on expanding oil refining capacity in South Africa based on the conclusions of the liquid fuels infrastructure plan.

Contributing to the basic costs of energy at the moment in South Africa, he said, were current world tensions particularly in the Middle East.   Self-dependency, however, was unfortunately only a long-term goal, he said.

A similar plan to increase refining was an increase in gas supplies based on the current gas usage master plan that had been started and this programme would be concurrent with an urgent expansion of gas storage facilities in the country.

Minister weighs in

Most of parliamentary question time was occupied by the new minister of energy, Tina Joemat-Pettersson, who spoke broadly on energy issues; the fact that she recognised the need for urgent decisions by her ministry; and the necessity for her recently launched ministerial advisory committee on energy to receive input “in order that the opinions of all stakeholders can be considered.”

Such a ‘brains trust’, she said, should also include representation from the portfolio committee on energy itself.

Other articles in this category or as background

http://parlyreportsa.co.za//?s=bee+liquid+fuels

http://parlyreportsa.co.za//bee/eskom-black-owned-coal-mining/

 

 

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New Road Accident Benefits Scheme based on “no fault”

Schedule of benefits

A revised draft Road Accident Benefits Scheme Bill, designed to provide a social security scheme for the victims of road accidents, is to be tabled in Parliament to provide a set of defined benefits on a no-fault basis for injury or death arising from car accidents.

At this stage, a draft has been published by the department of transport (DoT) for comment by early July 2014.

The idea of a no-fault approach to compensation is in part to respond to the problems identified with the current fault-based approach, and also to improve and simplify claims procedures so that claims are more speedily dealt with.   This is distinct from the present “insurance-based” procedure where the question and quantum of liability can drag on for years in the courts, the department says.

No civil actions

DoT says the proposals will remove the possibility of civil action for damages in respect of injury or death arising from road accidents instituted against the owner or driver of a vehicle as well as the employer of the driver.

The scheme envisaged by the draft Bill lists a number of stated benefits which can be applied. The administrator of the scheme and his department will have six months in which to accept or reject a claim.   If accepted, payment will be to the claimant within 30 days.

Some of the benefits include health care services, income support, family support and funeral expenses. Payments will be made in respect of medical bills direct to medical parties.

Scheme administrator

Department of transport says a road accident benefit scheme administrator (RABSA) will be appointed and placed in charge of compensation of defined benefits, rather that drawing court awards with legal costs from the road accident fund (RAF), which in turn will fall away.
The key change proposed by the draft legislation is a move away from the insurance-based system of compensation which has been largely unchanged in South Africa since its inception in 1946, to a system of defined and structured benefits.

Legal experts dealing with past claimants requesting payment from the RAF have commented that no compensation will be payable in terms of the proposed schedule of benefits for pain and suffering; loss of amenities of life; disfigurement and emotional suffering.    Also they warn that the cost of running the administration of such a system as RABSA is likely to “eat up” reserves.

More importantly, they say, the legislation “suggests” that only state healthcare and state tariffs would be provided for.

Insurance-based system out

On the subject of the key changes from the insurance-based system, DoT says the proposals state that “no civil action for damages in respect of bodily injury or death” in the case of a road accident be pursued against owner’s vehicles involved, drivers or employers of drivers.  Rather, payment is made in terms of the defined benefits of the new scheme regardless of who caused the accident.

DoT says the new Bill forms part of an initiative to replace the third party compensation method with a system that is “reasonable, equitable, affordable and sustainable”.

Other articles in this category or as background
http://parlyreportsa.co.za//finance-economic/road-accident-fund-mess-continues/

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Minister Davies continues with IPAP 6

 IPAP equals “smart” industry…

The minister of trade and industry, Dr Rob Davies, before the elections, published his further Industrial Policy Action Plan (IPAP) with a theme of “smart re-industrialisation” taking South Africa to 2017.  He now returns to the same cabinet post to implement his proposals.

His department, DTI, talks in the document of integration of the region with both SADC countries and the continent as a whole, giving emphasis in SA on manufacturing rather than relying on commodity exports.

In presenting the plan, Minister Davies said the objective was to grow the economy; enhance manufacturing; and tackle poverty alleviation.    He said the new IPAP was aimed at the revitalisation of industry, with focus on competitiveness and the “labour-absorbing capacity of the manufacturing sector – especially in the traditional and non-traditional tradable and value-adding sectors of the economy.”

Tough times ahead

He warned that “ahead lay a tough, incremental process, during which there will be advances and setbacks” but he believed in the last five years the department of trade and industry (DTI) had placed the manufacturing sector in a much stronger position than before to take advantage of “emerging positive factors on the local economic scene”.
The minister said the latest IPAP has a guiding mission, which is to take South Africa’s potential for industrial growth to “greater intensity”; firstly with the infrastructure spend of R840bn over the next three years and also with localisation focusing on government procurement to support local manufacturing.    He called on all business and industry to support this process.

He named beneficiation as an important “driver” of the latest IPAP, moving away from dependency on export of primary commodities and developing its “enormous resource endowment by developing strategic partnerships in the burgeoning regional oil and gas economy.”     He said this would be a game changer.

Moving into Africa

As far as regional integration was concerned, Minister Davies said the new IPAP saw a move from primary and semi-processed products exported outside the continent, to the building of regional markets for a growing domestic manufacturing base and the manufacture of competitive products for global export.

To this end, he said, there had to be “accelerated development of a free trade area linking SADC in Central Africa with COMESA in the East.”

Minister Davies laid great stress on the need for the development of strong economic incentives for competitiveness, involving concessional industrial financing and mechanisms that promoted upgrading.    He said he saw the new Special Economic Zone (SEZ) incentives, building on the previous IDZs system, as a priority.

Customs catch up

Collective action by state institutions against the “illicit economy” – especially illegal imports – must be the subject of greater focus and action by government and DTI will continue to emphasize this, he said.

The minister continued, “We came into office in 2009 having lost a million jobs, 200 000 of those in manufacturing . . . and I think if we had not done what we have done, we would have been sitting here and talking seriously about the loss of industries across the board in this country.”

He added, “We have far too few black industrialists . . . and far too many people who are looking to go into business who are generalists; who are looking to any contracts coming from government and then subcontracting that to somebody else.”

The desire now, he said, supported by amendments to the Broad-Based Black Economic Empowerment Act and the associated codes, was to develop “deeper entrepreneurship” in the productive sectors of the economy.

Getting going

“This IPAP must belong to all of us”, minister Davies said, “from departments of state to the state utilities; from industry stakeholders and associations to organised labour and the academia”.    He concluded there was much to do in the next three years and “there was no room for complacency”.

He now returns in the new government to do just this.

Other articles in this category or as background
http://parlyreportsa.co.za//cabinetpresidential/ipap-focuses-on-jobs-to-beat-current-economic-problems/
http://parlyreportsa.co.za//cabinetpresidential/get-sadc-free-trade-agreement-right-first-davies-warns/

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Was National Road Traffic Bill passed legally?

Query on status of National Road Traffic Bill….

Perhaps a more serious constitutional threat to e-tolling has now emerged than just simply public objection to the new road tax imposed by the National Road Traffic Bill based on information captured on camera mounted on road gantries, to pay for roads development and maintenance in South Africa.

This has emerged as a query on parliamentary procedure of the National Road Traffic Amendment Bill, the legislation passed by Parliament before becoming a necessary amendment to the Act thus allowing e-tolling.

Was Bill a section 76 Bill for provincial debate?

The query comes from the Democratic Alliance as to whether the Bill was correctly “tagged” when it was debated in Parliament and approved. Whilst the Bill was also objected to by COSATU, the DA maintains that the legislation was presented as a section 75 Bill, thus allowing approval by the National Assembly alone with simple concurrence from the NCOP.

The DA maintains that as e-tolling affects all motorists and vehicle operators throughout the country, the Bill should have been “tagged” as a section 76 Bill, which would have meant that the Bill should have been referred to all nine provinces and debated at a local level, provincial mandates for approval being obtained.

The DA is also aware that there is strong objection to e-tolling in the Western Cape where main national highways affect township transport, the winelands industry and tourism.

Purely national or provincial as well?

It is possibly a moot point whether National Road Traffic Amendment Bill is a national issue alone involving the minister of roads having the authority and public finance, by a public tax, to develop roads classified as “national” or whether the consultation process in the passage of the Bill was not correctly followed to allow for consumer opinion.

All would seem a little late however. In any case this, such a major change to legal procedure, would have to go to the Constitutional Court, an expensive process presumably needing to be funded by the main objectors, the Opposition to Urban Tolling Alliance (OUTA).

SANRAL has stated that “investors (in the system of e-tolling) are awaiting information as to their success in recovering the toll income from users, as this will determine whether they invest further or withdraw their current investment”

SANRAL commenced e-tolls, or electronic tolling, in Gauteng province, after a series of delays caused by opposition from road users and trade unions but from revenue so far received has said “although the numbers must still be verified, from the initial indications we are satisfied that we are on track to meet our debt obligations”.

Refer previous articles

http://parlyreportsa.co.za//finance-economic/bumpy-road-for-e-tolling-bill-continues/
http://parlyreportsa.co.za//finance-economic/transport-laws-bill-on-e-tolling-amended/
http://parlyreportsa.co.za//cabinetpresidential/e-tolling-transport-laws-bill-held-over/
http://parlyreportsa.co.za//finance-economic/transport-laws-bill-enabling-e-tolling-tabled-in-parliament/

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SAA turnaround plan involves flight changes

A strategy that can be achieved…..

SAAMonwabisi Kalawe, the newly appointed CEO of SAA, told parliamentarians that that the new long term strategy for SAA, four months in the making, “is within the reach of SAA and that a turnaround in the fortunes of the national airline can be achieved.” His subject was the SAA annual report, Minister Gigaba having introduced him and endorsing the turnaround plan.

Noting that the twenty year long-term turnaround strategy (LTTS) had no financial figures attached, a fact questioned by MPs a number of times, Kalawe responded with the reply, “Since we are still deep in discussions with national treasury and matters relating to guarantees and estimates of cost, it would be both ill advised and premature to discuss numbers. We are still in the middle of a bid to recover the balance sheet.”

Public Enterprises “comfortable”

Both the new CEO and the plan itself were introduced by the minister of public enterprises, Malusi Gigaba, together with the chairperson of SAA, Duduzile Myeni, both of whom said they were also “comfortable” with the plan.

The strategy plan, Kalawe said, had been drawn up in time to meet an April 2013 deadline in production and was approved by cabinet in August. MPs noted that in the last few years, no less than nine strategic plans for SAA had been presented to Parliament costing many millions of rands.

The consensus of opinion from MPs was that SAA’s new plan looked hopeful, particularly bearing in mind that no less than seven outside groups had been used in this round of consultations and other international airlines had also been contacted for opinion.

New routes on flight plans

The minister said he had instructed that a “new route network had to be designed and that SAA’s procurement programme had to be re-thought out. An “Africa” strategy had to be evolved, fully cognisant of the facts that the airlines market was characterised by low margins, constantly increasing fuel costs and changing geo-politics.”

“There has to be a turnaround in the fortunes and profitability of SAA and any strategy had to be a holistic document that is both aimed at developmental needs and financial accountability to the shareholders”, the minister concluded.

Kalawe said that on analysis SAA had an “impeccable safety record” and that technical needs of SAA were to be contracted out to Denel and that this would allow that state body to build its services throughout Africa.   He said that an assessment of SAA had indicated at present high cost factors running the airline that were intolerable; “a sub optimal capital structure” and he described the airline as having been run on a “value destructive business model”.

Re-branding on the way

“South Africa”, he continued, “was a long way from market centres and there had been a failure in the past to recognise the geographic situation”.  A new group would be formed to handle the SAA brand and information technology, updated to compete properly in the international market, Kalawe told parliamentarians.

Savings of R100m this year would be effected, he said, and a complete review of all non profitable routes debated with government departments to establish what was necessary in the national interest and what could be discontinued. Emphasis would be on developing cargo carrying in Africa, localised regional sub-Saharan traffic. Mango would open a service to Zanzibar.

Voyager to be tackled

Kalawe noted that the new LTTS would focus on a sustainable economic future for SAA and said, “We have set up a body that will track the implementation of our strategic plan”.  He said the Voyager customer service division was undergoing major changes with various customer improvement, aviation being a key developer in the National Economic Plan, supplying as it did some 35,000 jobs and R6.8m to GDP.

The financial controller of SAA admitted there had been too much “ad-hockery” in the past with regard to decisions on routes, “with an ambassador always somewhere in the globe calling for an SAA service to their area”.

Three in one

From now on, Kalawe promised MPs, there would be on-going focus on cost efficiency and the creation of an integrated group by combining SAA itself; Mango as a low-cost carrier; and SA Express as a regional operator; all into one cohesive unit serving the globe and particularly Africa. “However, it could take us well into next year to sort out both the business, loan and legal implications of such a move”, he concluded.

Minister Gigaba finally noted that a “re-worked route network” would be completed in stages over the next twelve years, having established priorities with government policy but the next stage was to satisfy Treasury with a long term and sustainable budget before any major capital injections would be considered.

Neither party would be drawn into any form of discussion on such costs.

Refer previous articles in this category
http://parlyreportsa.co.za//cabinetpresidential/aim-prc-report-connect-tiers-public-service/
http://parlyreportsa.co.za//cabinetpresidential/public-enterprises-reports-on-a-rocky-and-controversial-year/

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PRC report out on SA’s public service..

Lack of liaison throughout….

The presidential review committee’s (PRC) report on state-owned enterprises (SOEs) is now in the public domain.

The report clearly lays out in writing what has suspected by many for a long time; that in the opinion of the PRC there is major disconnect between government departments in form of liaison over national objectives; a total lack of common  data to work with and that there is a similar disconnect between SOEs and the different tiers of government service – national, provincial and local.

The recommendations precede a Bill which to be tabled by the minster for performance monitoring and evaluation, Collins Chabane, called the State Owned Entities Bill, which will relate to all SOEs, their planning and decision-making processes, as well as their relationships with government departments in general.

All this is to be in an effort to overcome the problems enumerated in the report.

Governance issues

In a statement issued at the time, the minister stated that cabinet had approved the final report at the end of April 2013, the original committee to make such a report, having set this up in 2010 with the objective of auditing all SOE’s to “review the current governance arrangements”.

It was also expected of the process to review government’s development objectives, particularly in so far as the New Growth Plan was concerned and comment on possible improvements in SOE contributions.

Auditing 700 units

The committee was given 21 terms of reference covered in the general topics of development and transformation; governance and ownership; their business viability and their strategic management and operational effectiveness. A total of 715 SOE units were listed for audit.

“Crucial weaknesses within SOEs were that whilst SOEs have an indispensable role to play in service delivery and also have crucial performance and transformation potential, there are grave impediments to their optimum contribution”, the minister said.  It is now proposed to set a SOE inter-ministerial committee to guide implementation of the recommendations.

One of the crucial issues to emerge from the report was whether SOEs were responding to the South Africa’s developmental agenda and assisting in a meaningful way towards the need for government departments to deliver. The report also recommends, aside from the fact that government should enact a single overarching law (State Owned Entities Act), it should also establish a central remuneration authority (CRA).

Mixed objectives

It was clearly established that there are “no commonly agreed strategic sectors and priorities across the three spheres of government as well as a common database on the SOEs.”  “There are also challenges”, the report says, “and an endemic tension with balancing the trade-offs between commercial and non-commercial objectives of SOEs including the funding those mandates and as well capitalisation model for the SOEs.”

After enunciating on eight pages of reforms needed, the PRC report concludes that “government must ensure the requisite capacities to implement these SOEs reforms are in place, including visioning and strategy-setting, appropriate human capital and structures, as well as an effective electronic oversight systems to enabling monitoring and evaluation of SOEs.”

It calls for the establishment of an SOE Council of Ministers to drive implementation of the recommendations of the PRC to achieve effective state oversight  by cluster grouping but specifically states that any “commercial” SOE should be overseen by two distinct cluster authorities.

Thirty one specific issues that need immediate attention are identified and certain “critical challenges” isolated, which included “an endemic tension with balancing the trade-offs between commercial and non-commercial objectives of SOEs including the funding those mandates and as well capitalisation model for the SOEs.”

Tiers disconnected

It also noted that there were “no commonly agreed strategic sectors and priorities across the three spheres of government.”

The authors had studied similar structures in New Zealand, Canada and Sweden “where SOE reforms have proved to be reasonably successful. They were amongst the first to focus on formulating a clear overarching legislative framework for SOEs and setting out objective for the management of SOEs”, the PRC reports says.

“In many SOEs”, the report concludes, “there is a current need for massive injection of capital and the finance policies of many SOEs require close re-examination. Ownership policy and funding models for social and economic development mandates of SOEs are in some instances are blurred and bewildering, at times leading to undercapitalisation; a factor which completely impedes the SOE’s ability to meeting national challenges it has been set.”

Refer previous articles in this category
http://parlyreportsa.co.za//cabinetpresidential/presidential-review-committee-calls-for-overhaul-of-soes/
http://parlyreportsa.co.za//cabinetpresidential/public-enterprises-reports-on-a-rocky-and-controversial-year/

Posted in Cabinet,Presidential, Education, Facebook and Twitter, Finance, economic, human settlements, Justice, constitutional, LinkedIn, Public utilities, Trade & Industry, Transport0 Comments

Green Paper on nautical limits to make SA oceanic nation

SA to extend its nautical limits…

South Africa’s claim to resources from the sea bed currently extends some 400 nautical miles but with claims by government now submitted to international authorities, this could well run to 700 nautical miles, adding nearly two million square kilometers to South Africa’s “continental shelf”, making the country a nautical and oceanic resource nation of some consequence.

This fact emerged in Parliament recently on the tabling of a Green Paper on the subject but the warning was added by Adv. “Johnny” de Lange that at the same time South Africa must find the resources, both in skills and finance, to administer a “national data base” of resources, weather, oceanic data such as currents and tides, fishing factors and maritime general information that was available to and contributed to by all sectors of government and industry to manage such an additional load .

More environmental changes

With only four submissions to Parliament emanating from the public, department of water and environmental affairs (DWEA) specialist in monitoring, Ashley Naidoo, briefed the parliamentary committee on water and environmental affairs on the new Green Paper on a future South African policy framework falling under the National Environmental Management Act for the management of ocean sectors.

Primarily motivated by the enormous oil spill in the Gulf of Mexico and the fact that issues like liabilities and the basis for governance of the oceans are still outstanding, DWEA said it has been motivated of late to engage urgently in policy regarding the management of the ocean sector generically, a policy which will be developed shortly and submitted to cabinet as a White Paper.

Other countries

The process, said Naidoo, involves studying the policies of about twelve other countries, such as Norway, Korea, Brazil and Russia which already had frameworks in place whilst including in their deliberations the USA and the United Kingdom who are developing theirs.

Involved also as an ongoing process is a review of sectoral stakeholders, such as mining, fishing and gas exploration; a review of international agreements across all departments that South Africa is subject to; and, finally, shipping policies.

Most important would be the development of a national inter-departmental data base for all to consult with and a regulatory base on which to consider activity applications.  South differed from most nations, Naidoo said, in that 95% of its oceans in the continental area of South Africa were pristine and benefited also from strong currents. South Africa was lucky in this regard, he said.

Fishing, oil, shipping involved

It was noted, Naidoo told parliamentarians, that  whilst each sector, such as the fishing, the oil industry in its many aspects and merchant shipping all had their own conventions and agreements, it was time for SA to develop its own overall policy framework to which all could refer to and fall under.

“Whilst there was a good knowledge base on fishing and on the currents and climate factors, we have very little knowledge on what minerals and where they are located and also pharmaceutical resources”, said Naidoo.

Present situation

The current position, he said, was that South Africa had a line representing a 400 nautical mile ownership on waters adjacent to its coastline; a line which was mapped and fixed. At present, South Africa was negotiating a claim through the relevant international bodies for an 1,800,000 sq kilometers additional ownership over the next five years in the Atlantic and Indian Oceans, which would classify South Africa as an “ocean” country of some significance.

Naidoo said that there were some 15,000 ships passing through our waters a year with about 9,000 ships calling at SA ports.   “We have few competitors in the Southern Oceans wanting to gain space, although there are existing zones “owned’ by countries and South Africa will have to learn to live with some of its new oceanic neighbours, such as Norway.

Looking ahead

Naidoo said that with 70% of the globe being covered by water, climatic effects are the major issue affecting the oceanic eco-system at present and consequently there is a need to build on general environmental governance principles in order to handle governance on the high seas.   Provisions had to be made for sea trade; fish and fishing; minerals, pharmaceuticals, sewage and waste disposal.

Also, he said, regulation had to cover environmental issues, climate response, weather matters and the recycling of carbon and nitrogen and heat issues.  Support had to be provided for niche projects on bio-diversity such as mangrove development and delta management and cultural aspects had to be considered. All this would be found in the White Paper.

Naidoo outlined the guiding principles and strategic objectives, Adv. De Lange chairperson the portfolio committee concerned, emphasising that the priority in his view was a national data base across all departments which had to be costed in properly so that Treasury was involved, otherwise regulation of the high seas managed as a national policy would just be a “pipe dream”.

“Government was designing too many policies and not enough working systems and the time has come to deliver”, he said.

Mossel Bay objection

Of the submissions presented orally, notable was the submission from REVAG, an environmental group from Mossel Bay, vehemently objecting to the PetroSA LNG tanker depot and unloading facilities moored offshore within a few hundred metres of the coast at Pinnacle Point, next to Mossel Bay.

REVAG said that they could not wait for such a Bill as envisaged by the Green Paper and called for a moratorium on the PetroSA LNG activities at Mossel Bay and an immediate halting of such operations.

REVAG said that PetroSA’s first application in the form of a land-based EIA to undertake this project was withdrawn in the light of objections initially but it is understood that such an application has now been re-submitted. REVAG said that the projects would be an environmental disaster of major proportions for the area from many aspects.

Adv. De Lange said how surprised he was that only four submissions from the public on the Green Paper had been received by Parliament.
Refer previous articles in this category
http://parlyreportsa.co.za//uncategorized/integrated-energy-plan-iep-is-not-crystal-ball-gazing-says-doe/
http://parlyreportsa.co.za//uncategorized/better-year-for-petrosa-with-offshore-gas-potential/

Posted in Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

Coastal Management Bill stirs up waters

Who owns the seabed…

A  warning was issued by Adv “Johnny” de Lange, chairman of the portfolio committee on water and environmental affairs, during a debate on the subject of National Environmental Management Coastal Management Bill, that nobody, including Transnet, could own seabed other than the nation itself and that he or his committee would not hear of counter-proposals to this fact.

The subject of the debate was a briefing on the Bill was conducted by the department of water and environmental affairs (DWAF) prior to hearings from the public on the proposed changes. A major submission regarding ownership was known to be coming from Transnet regarding its installations at Durban port.

The  Bill, said de Lange, was attempting to legislate on border or property issues dealing with the changing forces of nature, a fact which was always going to hit problems.  In defining an area of South Africa’s coastal waters so that  a narrow strip of ecologically sensitive land and sea along the outline of the coast falls under the aegis and environmental control of the state, an attempt had been made legislatively and this, as suspected, had become an issue, he said.

Previously rejected

DWAF, as a result of previous committee meetings, had found the Bill rejected on a number of issues particularly involving state lines to be drawn up and affected by high tides, estuarine re-alignments and coastal degradation and the Bill was returned but not rejected for the purpose of re-writing definitions and re-wording various clauses.

The Bill originally was put to public comment in November 2012, receiving 330 submissions on contentious issues that mainly involved the impact of the Bill on coastal state property, definitions that affected the rights of private owners  and disagreements with the environmental objectives of the Bill.

New suggestions

In a series of re-definitions proposed by Adv. Raznack of DWAF, such as removing reference to “water courses”; dealing with definitions of flood levels in terms of ten years phases; and re-defining estuaries issues on the basis of whether they are closed to the sea or not; a compromise set of definitions was put to the portfolio committee on water and environmental affairs.

Canals, which may or may not have an ownership issue, carrying water to the sea were another issue under debate and answers appear to have been provided along lines how sea water backs up and the extent to which it backs up in the canal under question. Various re-definitions and wordings throughout the Bill are now proposed.

Western Cape queries

The new proposals were queried by Adv. Gary Birch of the Western Cape provincial water and environmental affairs, who disagreed with the major re-definitions but who made in his submission with a number of counter-proposals on the wording regarding high-tide water marks.

He pointed to the fact that whilst property lines on a river were generally regarded as being at a middle of a river, this could not apply to massive, changing estuarine areas and called for a new look at this problem, also making certain suggestions. These were found acceptable for discussion by the chair.

Further suggestions by Prof. Jenny Whittall of University of the Western Cape, a renowned expert on such matters, were also taken on board by the portfolio committee with particular reference to estuarine areas.

Transnet yet to submit

Adv. de Lange, the committee chairman considered all the inputs by experts particularly refreshing and useful, since he said he was sure that this Bill could be resolved shortly. When MPs raised the question that Transnet had various port structures that were on the sea bed falling under the ambit of the Bill, Adv. de Lange said he was prepared for this.

He said that whilst he awaited the submission of Transnet, the SOE was quite entitled to own such structures at their risk below sea level or even affected by high tide marks. However, he said, “No way can Transnet, or any such body, own the sea bed. That is South Africa’s and that will be the end of that discussion.”

Refer previous articles in this category
http://parlyreportsa.co.za//health/coastal-environment-proposals-getting-clearer/
http://parlyreportsa.co.za//mining-beneficiation/tougher-rules-ensvisaged-with-new-environmental-law/

Posted in Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry, Transport0 Comments

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

Fuel prices: SA remains at mercy of global facts

No relief at present….

cl;eanerfuels1In the light of vacillating fuel price but with a strong upward trend, Robert Maake, hydrocarbon energy chief, department of energy affairs (DOE), briefed the portfolio committee on energy on fuel prices and why these were so volatile at present. There was little relief in the short or medium term, he said. The discussion was part of a generalised overview of the liquid fuels industry in South Africa.

He pointed to the fact both the Egyptian and Iraqi situations, coupled with unrest in Southern Sudan, illustrated the fact that South Africa, as a net importer of oil, was highly sensitive to such geopolitical instability. A combination of other factors also contributed to a lack of major relief on the horizon.

Fixing the price to continue

There was no escaping the fact that in a country such as South Africa, which is likely to remain as a net importer and where both the price elements and formula used to reach to adjust pricing are published, the import parity system, i.e. fixing prices based on a comparison of what it would cost to import refined fuel and land same, would continue into the foreseeable future, Maake said.

Over and under recoveries by the importers at the month’s end would therefore continue to affect the consumer coupled with the appropriate time lag to carry out monthly adjustments. There were a number of issues totally out of the importer’s control such as demurrage where loading and unloading due to weather and port inefficiencies; the rand/dollar rate and the cost of levies – a lot of countries having far less factors contributing to cost –  and a lot having unrelated cost levies, such as road accident fund contributions.

Subsidies not for us

However, the major fact affecting costs at the moment was geopolitical instability, Maake said, and the playing fields being altered completely insofar as purchases were concerned. Some countries, such as Nigeria, had tried subsidization but in that environment enormous quantities of fuel were moving across borders and smuggling was a big industry, he noted.

Maake said that in South Africa, both Singapore and Amsterdam remained major refining and wholesaling/storage zones and prices were very much correlated or bench marked to these areas and how much they were selling their refined fuel for. On illuminating paraffin there was a strong possibility that a price reduction of two rand would shortly be signed off as agreed to by the minister.

State mostly outside fuel infrastructure

When asked why the government was not buying oil for consumers from cheaper suppliers in Africa, DOE replied it did not buy foreign oil from any country for consumer use. Only the private fuel companies imported for consumer use and government bought only for strategic oil stock reserves.

He added that it was difficult to move the private companies to African crude since crude as presently purchased was geared to refining abilities, since oil differed much in its makeup and nature. Consequently, the type of crude and what zone it came from was critical since most SA refineries were geared to Arabian light crude as distinct from heavier crude from other areas.

Cushioning fund

Also asked was whether price hikes could be avoided by building up reserves when the price dropped and not passing these on to the consumer, DOE said they were rather looking at the issue of having an annual adjustment with more notice of change in order to assist business and industry generally by creating more stability and planning ability .

Also asked was why DOE “could not assist in cleaning up the LPG gas value chain with some use of a similar reserve and also doubling up on safety”, the reply was that there was a government review, including stakeholder workshops, in progress and expected outcomes were that some form of consumer assistance would result.

Sasol profits

Again, the question was asked that in the light of the fact that Sasol was using a natural resource, in this case coal, and producing profits because of lower costs, why could this additional margin of profit achieved not be used to protect the poor as a state subsidy. The reply was that Sasol’s contribution was so low in terms of market share in fuel sales that such plans as introducing any radical market changes were not either feasible nor did it make market sense.

DOE said that a much more interesting proposal would be the eventual introduction of shale gas to local market product figures, bringing up issues such as export parity pricing. But at present he said, and in the short term, the local production factor was only about 6% and therefore Sasol did not really feature in such economics.

Competition

 The principle therefore still applied, Maake said, as had been the case for many years, that if Sasol were to offer a branded pump price on a competitive basis for lower prices they would be presumably be totally stripped of their ability to supply at all in a very short time and thus would be threatened financially as a valuable contributor to exports. Such a situation was a non-starter, he said

The chair asked whether, as in Australia, more emphasis could not be given to ensuring that no collusion takes place in the industry and asked the DOE what their relationship was relationship was with the Competition Commission locally. DOE said that they were most interested in the Australian system and how they monitored import costs with a double check system to ensure no collusion. However, the lack of players in South Africa has led to the belief the collusion is not such a major issue in this country.

Parliamentarians again complained that department of energy was still failing to produce a national energy strategy to underwrite the entire industry in all its aspects. More certainty was called for, said one opposition member.

Refer previous articles in this category
http://parlyreportsa.co.za//energy/south-africa-at-energy-crossroadsdoe-speaks-out/
http://parlyreportsa.co.za//uncategorized/south-africa-to-stick-with-published-fixed-fuel-pricing/

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

Oil pollution in SA waters to be tackled

Oil pollution clean up fund….

oil_tankerWith a series of Bills on merchant shipping, South Africa is about to fall into line with international conventions on oil pollution at sea. The department of transport has now briefed the relevant parliamentary committee on two bills, the last of four now being dealt with designed to fund South Africa’s ability to clean up on any future oil spills in regional waters.

Opposition members pointed out that the minister of transport, who tabled the Bill, appeared not to have consulted with environmental parties in the drafting of the Bill and in subsequent discussions with stakeholders, being merely concerned with SA’s international obligations and the collection of levies by SARS for a fund, they said.

Getting the law right

Advocate Adam Masombuka, chief director for legal services, department of transport (DOT), said that before them were the tandem Merchant Shipping (Civil Liability Convention) Bill and the Merchant Shipping (International Oil Pollution Compensation Fund) Contributions Bill, the first being designed to enact the International Maritime Organisation Protocol of 1992 and the second to create mechanisms for companies to pay into a fund for oil pollution damage.

Both would ensure that the amended International Convention on Civil Liability for Oil Pollution Damage of 1969 becomes law in South Africa, he said.   He added that the other two Bills were Money Bills, separately being tabled by Treasury to deal with the collection of tariffs by SARS and consequent distribution.

Polluter pays

“The purpose of the fund is to pay compensation to victims of pollution damage and the fund is to be financed by cargo owners, namely those who transport more than 150 000 tonnes of oil per annum”, Adv. Masombuka said.   He gave the assurance that the Bill was fully supported  by the fuel companies importing oil and by the SA Petroleum Producers Association.

The two Bills are in tandem; conform to international best practices and complement each other, he said. He told parliamentarians that enactment of the Bills would provide a fund for insurance against damages from shipping accidents; the ship owners carrying the oil cargo being covered by insurance with a fee into the fund and the cargo owners, mainly the fuel companies or their agents who imported oil products, paying a levy.

The fund itself acted as a “top-up” insurance to pay the outstanding balance for any pollution damages, said Adv. Masombuka. The portfolios committee did not present any objections to either Bill.

Like carbon tax

Hamida Fakira, deputy director general, DOT explained to MPs asking questions that in reality that ship companies  conveying the goods paid an insurance for liability for any accident but the oil companies, the cargo owners importing petroleum, had to contribute as it was a pollutant.   It was a similar issue to that of carbon tax, she said.

Opposition members pointed to the fact that whilst the oil companies, DOT and the relevant international agreements seemed to be all lined up, nobody had consulted with environmental bodies and obtained their views. “This will come out during early August parliamentary hearings”, commented the chairperson.

Refer previous articles in this category
http://parlyreportsa.co.za//energy/merchant-shipping-bills-on-oil-pollution-levies-approved/
http://parlyreportsa.co.za//energy/cef-still-has-its-troubles/

Posted in Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Justice, constitutional, Land,Agriculture, LinkedIn, Public utilities, Trade & Industry, Transport0 Comments

Illegal diesel coming in from Mozambique

DOE working with customs……

Department of energy (DoE), admitted to the portfolio committee on energy that they knew of illegal diesel fuel imports emanating from Mozambique and that the department was working with customs and excise officials to track down culprits. DoE was reporting on its third and fourth quarter performance figures.

DoE confirmed that in many cases tanker transport was being used and in most instances the fuel itself was sub-standard, sometimes being a mixture of diesel and other fuels such as paraffin. Most of the fuel was being offered to farmers at cheap rates.

The subject arose when Mr L Malaudzi, acting chief operating officer, was outlining to members many of the issues involved in DoE’s programmes on governance and compliance. He explained the department’s inability to hold a planned anti-fraud workshop due to time constraints and other more pressing issues but promised that such a workshop would be conducted in the first quarter of 2013/4 and he would call stakeholders.

Focus point Mpumalanga

Questions arose from opposition members that fuel was being offered for sale in some areas of Mpumalanga from such sources. Tseliso Maqubela, deputy director general, confirmed that DoE was aware of such incidents and that the department of customs and excise had many problems with goods passing through this “porous border” nearby and that cheap and sometimes “dirty” fuels were on the list of issues.

Maqubela confirmed in his report to parliamentarians on petroleum regulations during the final quarter of 2012/3, that 92 site inspections over and above the target of 1500 sites had been completed but that no fuel sample testing was conducted due to a lack of budget for this function. This subject was to be deferred to next year, he said.

No budget to investigate

In discussing fuel specifications generally, Maqubela confirmed that DoE would “speak to industries to see if we can re-prioritise the matter”. He did not elaborate on this as to whether he was talking about capital projects or fuel mixes generally. He said, however, that on border transfers, particularly by road, had to be investigated and a budget of R50m had been requested next year from the fiscus to follow up on this. At the moment, only diesel imports were being followed up in investigations, such investigations also being limited.

On fuel pricing generally, he said that a desk top study on basic fuel pricing (BFP) was being undertaken, the stakeholder discussion portion of the study having been completed in March of this year.   BFP was a major issue nationally at the moment, he said, as were various items that went to make up its structure. He hoped that most of the issues would be resolved with stakeholders towards the end of this year.

Crude oil priorities

On existing crude oil matters, Saldanha, Milnerton and Durban were the current priority areas at the moment for infrastructure development, he said, and whereas before 28% of crude imports came from Iran, he said, “We haven forced to diversify which is exciting because it introduces the issue of African trade”.

The US is now producing considerable quantities of light crude which again has reversed trends and “there is an opportunity for Africa, particularly Angola and Nigeria, to deal with us and take up slack.”

Clean energy savings

On clean energy issues, Ompi Aphane, deputy director general, said that that so far major savings in terms of the municipal energy saving plan had been recorded with fifteen of the twenty eight participants in the DoE programme having registered savings, which Aphane said had translated into some R37m a year and 31,000MWh to the national grid.

However, he reported that the intended strategy plans for biomass, biogas and biofuels had got nowhere and DoE were looking at taking away from SANEDI the responsibility for this undertaking.

Posted in Fuel,oil,renewables, Justice, constitutional, Public utilities, Trade & Industry, Transport0 Comments

Mozambique One Stop Border Post almost there

One Stop Border Post (OSBP) agreement ready

moz flagGovernment has told parliamentarians that indications are that the Mozambique government will finally sign the final portions, or annexes, to the One Stop Border Post (OSBP) agreement between South Africa and Mozambique in the very near future.

Mr Kosie Louw told the standing committee on finance that an original document of intention was signed in September 2007 by both parties but now consensus on all issues had been reached between the two countries, covering all the departments affected by cross-border issues.

Two countries, one clearance

There were three annexes, Louw said, and indications were that the Mozambique Minister of Finance was signing immediately.  The benefit of the OSBP was that goods would be inspected and cleared by the authorities of both countries with only one stop, which would speed up the movement of goods in the interests of facilitating trade.

Background

Louw, who is chief legal officer at SARS, introduced the briefing by explaining the difference between bonded and state warehouses. The main purpose of bonded warehouses, he said, which were privately managed and licensed subject to certain conditions, was to allow imported goods to be stored temporarily in order to defer the payment of customs duties.

Duties and taxes were suspended for an approved period – generally two years, Louw said, but these had to be paid before the goods entered into the market or were exported.  The licensee bore full responsibility for the duty and taxes payable on the goods, which could be removed only after all the customs requirements had been met.

State gets the illicit goods

State warehouses, on the other hand, Louw said, were managed by SARS for the safekeeping of uncleared, detained, seized or abandoned goods.  They provided a secure environment for the storage of goods in which the state had an interest.

Goods that had not been cleared within the specified timeframes, for instance, had to be removed to a state warehouse; otherwise the ports would become clogged up.  Counterfeit and dangerous or hazardous goods were moved to specialised warehouses.

Storage was normally allowed to remain for 60 days and if the goods were not collected, after fulfilling all the legal requirements, they could be sold with the proceeds applied to any duties, expenses or other charges due.  Any surplus would be paid to the verified owner, but if it was not claimed, it would be paid into the national revenue fund, Louw said.

Where the goods go

Goods that were appropriated to the state, or that were condemned and forfeited, could be sold, destroyed, transferred to another state organ, or made available for disaster relief, basic human necessities for the poor, or for donation to any country in need of aid in such circumstances, Louw concluded.

MPs noted that had taken over six years for the Mozambique OSBP to be finalised, so would it be possible, with the experience gained to negotiate with other countries to obtain one stop agreements and move at a faster rate?

The response was from SARS that South Africa was looking at the establishment of more such posts and had already had two discussions with Zimbabwe.  It was hoped it would take less time to reach an agreement, as many lessons had been learnt through the Mozambique experience.  Because an OSBP involved South Africa and a foreign country operating in a specific area, the main issue was ensuring that South African law applied in the foreign country.  This was a difficult area at international law, Louw said, and explained that this was why the Mozambique process had taken so long.

What is earned as revenue

When asked by members what the average revenue per year was from import taxes, a figure was supplied of between R15bn and R20bn being generated by customs alone, while import VAT was well over R100bn, and the overall income generated annual was more than R150bn.  A substantial amount of the VAT income was refunded, however, because of the input-output system.

When asked about losses, Ms Rae Cruickshank, group executive, customs operations, SARS, said losses obviously occurred through customs avoidance and evasion, so it was consequently very difficult to provide an overall figure on customs duty not being paid as evasion was evasion. Estimates varied as well according to the different border posts but such losses could possibly be anything from 10% to 30%, depending on whether it was a developed or developing country that was transacting.

Short of staff

Avoidance again was about approximations, she said, and this involved the smuggling of goods such as narcotics, or copper, which could only be quantified on the basis of what had been seized.   Although SARS had 3,000 customs officers and 72 dogs, the prevalence of smuggling was very high.  It was not unusual to apprehend up to 10 kg of cocaine a weekend.

Ms Cruickshank said it was impossible to process all containers coming into the country, more than 4 million a year, through scanners alone.  A scanner’s maximum capacity was to scan six containers an hour and this translated into 52,416 containers a year.   More scanners were being considered for Durban, Cape Town and Beit Bridge, where cigarette smuggling in the last named case was a serious concern.

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

President Obama and Power Africa

Power Africa and a $7bn involvement

In an excellent speech to a young audience at the University of Cape Town but seen the world around, the words “Power Africa” were heard by many for the first time from none other than the President of the US and although by no means did the financial implications have any comparison to the US Marshall Aid plan to Europe in 1945, this is without doubt a much played down mini-version in energy terms.

It comes with an initiative already started; US business plans in energy to Africa already in motion to an estimated tune of $9bn….. and thats just a start, said President Obama.    Energy, he said, is the key to Africa and electricity to all homes is the hope for all Africans. Without electricity there is no possibility that education can take root and therefore no way out of the poverty cycle, he said.

Electricity for all

If anything of value therefore from a business viewpoint came out President Obama’s trip other than some very warm-hearted gestures of friendship, it was certainly the extraordinary news that he personally, and that presumably means in fact the US Administration, has plans for a state $7bn initiative to enhance access to every household with electricity across Africa by tapping the continent’s vast energy resources and plenty of money by attracting international US investment.

By reading up on Forbes Magazine, which presumably has one of the best lines on what the US Administration is up to financially, their story on Power Africa appears to be already a well established initiative in the US.    For the most part, it is most detailed.   The story ends, however where perhaps it should have started.

In the last paragraph, after a giving a picture of the structure of the Power Africa programme and the names of the many partners US partners contributing to the initiative with finance and skills, the Forbes article ends with the observation……

“The recent discoveries of oil and gas in sub-Saharan Africa will play a critical role in defining the region’s prospects for economic growth and stability, as well as contributing to broader near-term global energy security.  Yet existing infrastructure in the region is inadequate to ensure that both on- and off-shore resources provide on-shore benefits and can be accessed to meet the region’s electricity generation needs.”

And there, possibly, we have it.   A sort of Mozambique Channel gold rush.   Yet we are assured by no less than President Obama himself that the USA has enough shale gas not to be importers but shortly exporters.

The Chinese robotic approach

However, to assume the US is looking for new oil fields for its own use or not would be to miss the point.   Trading in Africa with Africans was the point in Obama’s speech and hopefully, as the US President says, the USA can add value to what is made in South Africa before it is exported and not just exploit the resources in Africa, as does he says China and others of their ilk. The general feeling remains that China will put in power plants just to get out the resources. Either way, we get power – but the US way seems more sustainable and of use to economic and social needs of Africa in the long run.

Power Africa, Obama says, will, in, addition also “leverage private sector investments” beginning with an additional $9 billion in initial commitments from private sector partners in sub-Saharan Africa.   Most of the talk is about land-based electricity grid support, off grid projects, renewable energy projects and supplies to marginalised communities and there was a clear inference in the article that nobody in the US was going out of their way to invest in more coal mines.

The article says most importantly, “Although many countries have legal and regulatory structures in place governing the use of natural resources, these are often inadequate.  They fail to comply with international standards of good governance, or do not provide for the transparent and responsible financial management of these resources.”

“Power Africa”, Forbes continues, “will work in collaboration with partner countries to ensure the path forward on oil and gas development maximizes the benefits to the people of Africa, while also ensuring that development proceeds in a timely, financially sound, inclusive, transparent and environmentally sustainable manner”

In other words there has to be certainty.

ParlyReport this week focuses on the introduction to the South African  public of the Mineral and Petroleum Resources Development Amendment Bill on that very subject. One would hope that the intentions of government to have a stake in oil and gas exploration success stories do not frighten investors off and that the amendments to the Act stay fixed when agreed, give certainty and are properly regulated and the MPRDA changes are not the precursors of the mess that such regulations are to our North.

Posted in Cabinet,Presidential, Electricity, Energy, Enviro,Water, Finance, economic, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

Merchant Shipping Bills on oil pollution levies approved

International merchant shipping protocols met…..

oil_tankerAccording to a cabinet statement, a number of draft Merchant Shipping Bills from the minister of transport dealing with South Africa’s signature to international conventions on oil pollution have been approved, thus giving effect to obligations under the international maritime protocols regarding damage, loss through oil pollution at sea and the collection of levies.
The first draft Bill is the Merchant Shipping (Civil Liability Convention) Bill relating to the International Maritime Organisation Protocol of 1992, giving effect to law to in South Africa which will be in terms of the International Convention on Civil Liability for Oil Pollution Damage, a centralised body dealing with oil pollution at sea and compensation to a point, it appears.

Access to body of funds

Also approved by cabinet is the Merchant Shipping (International Oil Pollution Compensation Fund) Bill which has as its purpose the implementation of aligning to the Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, known as the Fund Convention.

This important legislation gives South Africa access to the Fund Convention, an internationally resourced compensation fund which contributes to damages arising from oil spills and which is basically financed and run by cargo vessel owners.

The Bill defines the work of this fund further by stating that such “is to pay compensation to victims of pollution damage where they have been unable to obtain compensation, or compensation in full, under the provisions of the Civil Liability Convention”, described in the first draft Bill.

Liabilities defined and oil defined

Both of these Bills, inter alia, deal with questions of liability, compensation, loss or damage caused by contamination of oil from tankers.

Also proposed and approved by cabinet are two more Bills, the Merchant Shipping (International Oil Pollution Compensation Fund) Contributions Bill and the Merchant Shipping (International Oil Pollution Compensation Fund) Administration Bill, the first named Bill allowing for the inclusion of South Africa in the International Maritime Organisation Protocol and for it to be implemented.

SARS get in

The last named Bill, the Merchant Shipping Administration Bill, enables SARS to collect levies and for them to pay over to the International Oil Pollution Compensation Fund such contributions in terms of the Contributions Bill, this therefore being “a money bill” in terms of the Constitution.

Posted in Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Public utilities, Trade & Industry, Transport0 Comments

Environmental Affairs speed things up with SEAs

SEAs for major infrastructure projects…..

Environmental minister Edna Molewa said during her budget vote speech that strategic environmental impact reports (SEAs) would be shortly introduced, saying that she was aware that her department may be holding things up with outstanding environmental-impact assessments (EIAs) which applied to specific localised projects.

The idea is to speed things up “without undermining sound environmental-impact management principles”, minister Molewa said and such a strategy for environmental-impact assessments generally to address key national concerns “is well under way”.

National overiding interests

SEAs, she said, are typically carried out on one or more large national projects or programmes, as distinct to environmental-impact assessments (EIAs), which apply to specific localised projects. The idea is to hasten the process “without undermining sound environmental-impact management principles.” Such a strategy for environmental-impact assessments generally to address key concerns “is well under way,” minister Molewa said.

On the subject of major national infrastructure projects, DEA’s Lize McCourt said, in a separate presentation to Parliament, that the department had undertaken an evaluation of the eighteen Strategic Infrastructure Projects (SIPs) which the cabinet has named as essential to the National Development Plan (NDP).

Presidential overwatch on SIPs

“We have looked at what will be the best approach in terms of environmental regulation for each one in terms of the departmental clusters involved and made a preliminary evaluation”, she said.     She indicated that a “streamlined” environmental authorisation process was to be introduced by DEA to facilitate the implementation of all the SIPs projects being overseen by the Presidential Infrastructure Coordinating Commission (PICC).     The idea of the SEA was born.

1,300 EIAs outstanding

There are currently some 1,300 active EIA applications being considered by the nine provinces and here again DEA stressed they were attempting to sped up processes with these, with possibly a single approval process involved, rather than several separate processes.

Posted in Earlier Stories, Energy, Enviro,Water, Finance, economic, human settlements, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

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