PARLIAMENTARY PORTFOLIO COMMITTEE - ENERGY COMMENT ON DRAFT PETROLEUM PRODUCTS AMENDMENT BILL MAURICE RADEBE AMEF CHAIRPERSON 18 AUGUST 2003

CONTENTS Overall Comments Key Comments on the Bill Conclusion Prioritize the Objectives of the Bill Licensing to facilitate HDSA’s Replacement of the RATPLAN Regulations are key to success Key Comments on the Bill Review of major aspects of the Bill Conclusion

OVERALL COMMENT The Bill creates the potential for a balanced industry and ensures the managed transition of the oil industry Prioritize the Objectives of the Bill Promote HDSA’s - (c) to (a) Create employment opportunities and develop SMME’s – (d) to (b) Ensure countrywide availability of fuel at competitive prices – (e) to (c) Promote efficient petroleum industry – (a) to (d) Facilitate investment - (b) to (e)

OVERALL COMMENT Cont… If correctly implemented licensing can go a long way in facilitating HDSA empowerment Implementation of site licensing will replace the current RATPLAN, regulate site development and facilitate HDSA empowerment Regulations arising from the Act will be crucial in ensuring objectives are met and bring more certainty to investors

KEY COMMENTS Powers of the minister may be perceived to be excessive and possibly open to abuse, however, we do believe that they are necessary to practically manage the transitional process Potential conflicts with other legislation must be carefully considered Appeal process should be simple and practical – consider independent review board

KEY COMMENTS Cont… Effectiveness of the licensing system is key – Separate Licensing – renewal and issuing of licenses conditional on BEE credentials – specifically empowerment of women Definition of “Hold” – property holds site license Differentiate between “Wholesalers” and “Resellers” – Ensure HSE and retail service station viability Pricing – at the pump Storage – costs must not be prohibitive Vertical Integration – at retail level to promote SMME’s Transitional Licensing – established players must also comply with the objectives of the Bill Compliance with legal requirements – opportunity and time to comply Approval before major investment decisions

KEY COMMENTS Cont… The impact on crude and white product transport costs has not been adequately addressed in the Bill The principle of transport cost neutrality of the Inland refineries need to be carefully considered. Legislation should provide for the orderly entrance of synthetic fuel producers

CONCLUSION Expedite the passing of the Bill taking into account key issues raised Commence with drafting regulations and ensure consultation with AMEF in formulating regulations to ensure: Regulations empower HDSA’s & BEE companies There is no risk of unintended consequences impacting negatively on HDSA’s and BEE companies Regulation does not prevent or slow down investment That we do not over regulate

On behalf of AMEF THANK YOU