Department of Transport NATIONAL PORTS BILL NCOP 10 MARCH 2005

Outline of presentation BACKGROUND CONTEXT: CORPORATIZATION OF NPA INDEPENDENT PORTS REGULATOR REVISED NATIONAL PORTS BILL ROLE OF THE REGULATOR VS THE NPA THE CREATION OF FLEXIBILITY IN THE REVISED BILL RESOLVED ISSUES IN THE NATIONAL PORTS BILL AS RAISED AT NCOP ON 2 MARCH 2005

BACKGROUND The White Paper on Commercial Ports Policy was drafted in the light of government trying to achieve the following: Increase investments Improve efficiencies Introduce competition The NPA Bill sought to pave the way for introducing competition in certain port operational areas.

CONTEXT Current situation: NPA Bill: First Tabling NPA, as a subsidiary of Transnet is both landlord and regulator – gives rise to inherent conflict between the two roles Transnet’s balance sheet reflects the cross subsidization of port revenues for other Transnet business not relating to ports NPA Bill: First Tabling Sought to achieve the introduction of the Independent Ports Regulator, with the main function of regulating the relationship between Transnet and NPA To corporatize the NPA out of Transnet within a specified period

CONTEXT – continued… First version of the Bill – mandatory clauses to corporatize the NPA out of Transnet. Revised Bill allows flexibility for coporatization and the forming of a public company outside of Transnet, as they are no longer mandatory at this point in time In the event of NPA corporatizing: Next Step for NPA: To corporatize while still remaining within the Transnet stable = National Ports Authority (Pty) Ltd End State: Shareholding Minister may take the necessary steps to convert the (Pty) Ltd company into a limited company outside of Transnet Government’s position – does not want to constrain itself in establishing a transport sector regulator and therefore wishes to remain flexible on the corporatization route.

CURRENT STATUS OF REVISED BILL Corporatization of NPA: To take place as follows: Within Transnet as a (Pty) Ltd company As a public company outside of Transnet The position of the regulator thus had to be strengthened in order to accommodate the corparatisation of the NPA within Transnet. Revised Bill therefore allows for a greater flexibility as the requirement to form a public company outside of Transnet.

FUNCTIONS OF THE REGULATOR The main functions of the Regulator are to: Exercise economic regulation of the ports system in line with government’s strategic objectives Promote equity of access to ports and to facilities and services provided in ports Monitor the activities of the Authority to ensure that it performs its functions as prescribed by the Act The Regulator is responsible to: Hear complaints and appeals, investigate on such complaints Negotiate and conclude an agreement with the Competitions Commission in order to harmonize jurisdiction over competition matters

FUNCTIONS OF THE REGULATOR VS FUNCTIONS OF NPA Current regulatory framework as contained in the Bill is sufficient and there are no duplications of powers eg. Tariffs will be considered by the regulator as proposed by the NPA Current regulatory functions of the NPA will cease once the port regulator has been established. Former will set the parameters.

FACTORS CONSIDERED FOR ALLOWING FLEXIBILITY IN REVISED BILL Backlog in infrastructure investments To minimize potential monopolistic behaviour Grow the ports sector in light of the growth in import and export markets Government recognizes and appreciates the present status of Transnet’s balance sheet, but these challenges cannot disappear within a short space of time Socio-economic developmental aspects of ports

RESOLVED ISSUES IN REVISED BILL Triple Regulation Complimentary regulatory framework is proposed for Port Regulator; NPA and Competitions Commission. All three institutions have unique and specific areas of regulation. Maydon Wharf The revised Bill has restructured land-use and non-market related rentals and has general application as opposed to the initial Bill. The Bill is now in line with the constitution Licensing Off Shore Cargo Handling Facilities The revised Bill gives recognition to existing licenses for off shore cargo handling facilities. It provides that all future licenses must be sanctioned by the NPA

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