PROPOSED INPUT BY SHELL SOUTH AFRICA
Underlined bold text within document
Based on representation delivered to the Portfolio Committee on 6 June 2001
GAS BILL (As introduced in the National Assembly as a section 75 Bill; explanatory summary of Bill
published in Government Gazette No 22162 of 23 March 2001) (The English text is the
official text of the Bill)
(MINISTER OF MINERALS AND ENERGY)
BILL To promote the orderly development of the piped gas industry; to establish a national regulatory framework; to establish a National Gas Regulator as the custodian and enforcer of the national regulatory framework; and to provide for matters connected therewith.
B E IT ENACTED by the Parliament of the Republic of South Africa, as
follows:—
CONTENTS Sections CHAPTER I
DEFINITIONS AND OBJECTS
1. Definitions
2. Objects of Act CHAPTER II
NATIONAL GAS REGULATOR
3. Establishment of Gas Regulator
4. Functions of Gas Regulator
5. Constitution of Gas Regulator
6. Disqualifications and requirements regarding appointment to Gas Regulator
7. Vacation of office and termination of appointment
8. Meetings of Gas Regulator
9. Duties of members of Gas Regulator
10. Decisions of Gas Regulator
11. Personnel of Gas Regulator
12. Funds of Gas Regulator
13. Accounting by Gas Regulator
14. Reporting by Gas Regulator
CHAPTER III
GAS LICENCES AND REGISTRATION
15. Activities requiring a licence
16. Application for licence
17. Advertising of application for licence
18. Particular information to be supplied by applicant
19. Finalisation of application
20. Licence to entity controlled by State
21. Conditions of licence
22. Non-discrimination
23. Term of licence
24. Amendment of licence
25. Revocation of licence on application
26. Contravention of licence
27. Revocation of licence by court
28. Registration with Gas Regulator
CHAPTER IV
GENERAL PROVISIONS
29. Entry, inspection and gathering of information by Gas Regulator
30. Voluntary resolution of disputes by Gas Regulator
31. Investigations by Gas Regulator
32. Expropriation of land by Gas Regulator
33. Rights of licensee in respect of premises or land belonging to others
34. Regulations
35. Transitional provisions
36. Mozambique Gas Pipeline Agreement
37. Short title
SCHEDULE 1 EXEMPTION FROM OBLIGATION TO APPLY FOR AND HOLD A LICENCE
CHAPTER I
DEFINITIONS AND OBJECTS
Definitions
1. In this Act, unless the context indicates otherwise— ‘‘chief executive officer’’ means the person appointed in terms of section 11(1); ‘‘customer’’ means a person purchasing gas, or purchasing re-gasification, transmission, storage
or distribution services; ‘‘Department’’ means the Department of Minerals and Energy; ‘‘distribution’’ means the distribution of bulk gas supplies and the transportation thereof by pipelines with a general operating pressure of more than 2 bar gauge and less than 15 bar gauge to points of ultimate consumption or to reticulation systems, or to both points of ultimate consumption and reticulation systems, and any other activity incidental thereto, and ‘‘ distribute’’ and ‘‘ distributing’’ have corresponding
meanings; ‘‘distribution company’’ means any person distributing gas; ‘‘eligible customer’’ means a customer who in the prescribed manner may buy gas directly from suppliers without the intervention of a distribution company; ‘‘gas’’ means all hydrocarbon gasses transported by pipeline, including natural gas, artificial gas, hydrogen rich gas, methane rich gas, synthetic gas, coal bed methane gas, , compressed natural gas, re-gasified liquified natural gas, liquified petroleum gas or any combination thereof; ‘‘Gas Regulator’’ means the National Gas Regulator established by section 3; "import" means the purchase of gas from a source outside the Republic of South Africa, procured either by transmission or re-gasification, and "importation" has a corresponding meaning; ‘‘licensee’’ means any person holding a licence granted by the Gas Regulator in terms of this Act; "liquefaction" means the process whereby a specific class of gas, namely natural gas, is converted from a gaseous state to a liquid state known as liquefied natural gas, at a factory designed and constructed specifically for this purpose at a harbour or coastal export terminal, linked to, or at, the point of production; ‘‘mine’’ means ‘‘ mine’’ as defined in the Minerals Act, 1991 (Act No. 31 of 1991); ‘‘Minister’’ means the Minister of Minerals and Energy; ‘‘person’’ includes any organ of state as defined in section 239 of the Constitution; "Portfolio Committee" means the Parliamentary Portfolio Committee on Minerals and Energy; ‘‘prescribed’’ means prescribed by regulation; ‘‘production’’ means the recovery, processing, treating and gathering of gas from wells in the earth up to the boundary of the mine, or the manufacture of synthetic or artificial gas, or the manufacturing of any gasses in the refining process up to the boundary of the factory and any other activity incidental thereto, and ‘‘ produce’’ and ‘‘ producing’’ have corresponding meanings; "re-gasification" means the process whereby a specific class of gas, namely liquefied natural gas, becomes a source of supply after it is converted back from a liquid state to a gaseous state at a factory designed and constructed specifically for this purpose at a harbour or coastal import terminal; ‘‘ regulation’’ means a regulation made under section 34; ‘‘ reticulation’’ means the division of bulk gas supplies and the transportation of bulk gas by pipelines with a general operating pressure of no more than 2 bar gauge to points of ultimate consumption, and any other activity incidental thereto, and ‘‘ reticulate’’ and ‘‘ reticulating’’ have corresponding meanings; ‘‘ service’’ means any service relating to the liquefaction, re-gasification, transmission, distribution or storage of or trading in gas; ‘‘ specification’’ means the chemical and physical composition, calorific values and Wobbe Index of the gas that conforms to recognised international standards and the pressure of the gas at point of entry to shared systems; ‘‘ storage’’ means the holding of gas as a service and any other activity incidental thereto, but excludes storage of gas in pipelines which are used primarily for the transmission and distribution of gas; ‘‘ storage company’’ means any person storing gas but not holding title to the gas; "supplier" means any person who produces gas or owns and operates a re-gasification factory;
‘‘ tariff’’ means a written statement of rates and terms and conditions under which gas or gas services are sold to any customer; ‘‘ this Act’’ includes the regulations; ‘‘ trading’’ means the purchase and sale of gas as a commodity, with transfer of title and risk in the gas, by any person and any services associated therewith, excluding the construction and operation of liquefaction, re-gasification, transmission, storage and distribution systems, and ‘‘ trading services’’ and "trader"have corresponding meanings; ‘‘ transmission’’ means the bulk transportation of gas by pipeline supplied between a supplier and delivered or re-delivered to a trader, distributor, reticulator, storage company or eligible customer, or any other activity incidental thereto, and ‘‘ transmit’’ and ‘‘ transmit-ting’’ have corresponding meanings; ‘‘ transmission company’’ means any person transmitting gas but not holding title to the gas; ‘‘ uncommitted capacity’’ means such capacity determined by the Gas Regulator in a liquefaction, re-gasification, transmission, storage or distribution facility as is not required to meet contractual obligations.
Objects of Act 2. The objects of this Act are to— (a) promote the efficient, effective, sustainable and orderly development and operation of gas liquefaction, re-gasification, transmission, storage and distribution facilities and the provision of efficient, effective and sustainable gas liquefaction, re-gasification, transmission, storage, distribution and trading services; (b) facilitate investment in the gas industry; (c) ensure the safe, efficient, economic and environmentally responsible liquefaction, re-gasification, transmission,
distribution and storage of gas; (d) promote companies in the gas industry that are owned or controlled by historically disadvantaged South Africans by means of licence conditions so as to enable them to become competitive; (e) ensure that gas liquefaction, re-gasification, transmission, storage, distribution and trading services are provided on an equitable basis and that the interests and needs of all parties concerned are taken into consideration; (f) promote the development of competitive markets for gas and gas services; (g) facilitate gas trade between the Republic and other countries; and (h) promote access to gas in an affordable and safe manner.
CHAPTER II
NATIONAL GAS REGULATOR
Establishment of Gas Regulator
3. The National Gas Regulator is hereby established as a juristic person.
Functions of Gas Regulator
4. The Gas Regulator must, in accordance with this Act— (a) issue licences for— (i) construction of gas liquefaction, re-gasification, transmission, storage and distribution facilities;
(ii) conversion of infrastructure into liquefaction, re-gasification, transmission, storage and distribution facilities;
(iii) operation of gas liquefaction, re-gasification, transmission, storage and distribution facilities; and (iv) trading in gas; (b) gather information relating to the production, liquefaction, re-gasification, transmission, storage, distribution and trading in gas; (c) issue notices in terms of section 26(1) and, if necessary, take remedial action in terms of section 26(2); (d) undertake investigations and inquiries into the activities of licensees; (e) consult with government departments and other bodies and institutions regarding any matter contemplated in this Act; (f) consult with government departments and gas regulatory authorities of other countries to promote and facilitate the construction, development and functioning of gas liquefaction, re-gasification, transmission, storage and distribution facilities and services; (g) regulate tariffs in terms of section 21(1)(n) in the prescribed manner; (h) monitor and approve, and if necessary regulate, transmission and storage tariffs and charges and take appropriate action when necessary to ensure that they are applied in a non-discriminatory manner as contemplated in section 22; (i) expropriate land or any right in, over or in respect of such land as is necessary for the performance of a licensee’s functions; (j) promote competition in the gas industry; (k) promote the optimal use of available gas resources; (l) take decisions that are not at variance with published Government policy; (m) perform any activity incidental to the performance of its functions; and (n) exercise any power or perform any duty conferred or imposed on it under any law.
Constitution of Gas Regulator 5. (1) The Gas Regulator consists of five part-time members appointed by the Minister from a list proposed by the Portfolio Committee after calls for public comment.
(2) The Minister, after consultation with the Portfolio Committee, must designate one of the members appointed under subsection (1) as chairperson of the Gas Regulator.
(3) If the chairperson is for any reason unable to perform his or her duties, the other members must choose another person from among themselves to act as chairperson until the chairperson can resume his or her duties or another chairperson is appointed by the Minister after consultation with the Portfolio Committee.
(4) (a) A member of the Gas Regulator holds office for a period of four years. (b) The Minister, after consultation with the Portfolio Committee, may reappoint a member. (c) If a member of the Gas Regulator ceases to hold office, the Minister may, after consultation with the Portfolio Committee, appoint another person in his or her place for the remainder of the term of office of that member.
(5) Members of the Gas Regulator must be paid for their services such remuneration and allowances as the Gas Regulator may determine with the approval of the Minister
and the concurrence of the Minister of Finance.
Disqualifications and requirements regarding appointment to Gas Regulator
6. (1) No person may be appointed as a member of the Gas Regulator if that person— (a) is not a South African citizen resident in the Republic of South Africa; (b) is an unrehabilitated insolvent; (c) has been convicted of an offence involving dishonesty; (d) is in the employ of, acts as a consultant to, or has any relationship with any person, firm, association or company engaged in the exploration for gas, liquefaction, re-gasification, production, transmission, storage or distribution of gas or trading in gas, or has any pecuniary interest in any such firm, association or company; (e) is in the employ of, or affiliated to, an organ of state in any sphere of government; or (f) has any other conflict of interest in this regard. (2) The Portfolio Committee must recommend to the Minister as candidate members of the Gas Regulator, persons who— (a) have adequate legal, technical, business, economic or other experience relevant to the liquefaction, re-gasification, transmission, storage or distribution of gas or trading in gas; (b) are collectively representative of South African society as a whole; (c) are committed and available to fulfill their role as members of the Gas Regulator; and (d) demonstrate impartiality and objectivity,
in such a manner that a fair balance between continuity and capacity building is achieved.
(3) All members must— (a) disclose their personal, professional and business interests to the Minister and the Gas Regulator on appointment to the Gas Regulator; and (b) notify the Minister and the Gas Regulator when those interests change. (4) Before appointing members to the Gas Regulator, the Portfolio Committee must by notice in the Gazette call for nominations from members of the public.
Vacation of office and termination of appointment
7. (1) A member of the Gas Regulator must vacate his or her office if that member— (a) becomes of unsound mind; (b) has been absent from more than two consecutive meetings without leave of the chairperson for each absence; (c) resigns by written notification to the Minister; (d) materially breaches any duty imposed on him or her in terms of this Act; or (e) becomes disqualified from being a member on any of the grounds referred to in section 6(1).
(2) The Minister may terminate the appointment of a member of the Gas Regulator if such member behaves in a manner contrary to the provisions of section 9.
Meetings of Gas Regulator
8. (1) (a) The Gas Regulator must meet at such times and places as may be determined by the chairperson. (b) The chairperson must call such meetings of the Gas Regulator as are necessary for the proper performance of its functions.
(2) The chairperson shall, upon a written request of the chief executive officer or two other members, convene a special meeting to be held within two weeks after the date of receipt of such request.
(3) Unless other procedures are prescribed, the chairperson of any meeting of the Gas Regulator must determine the procedures to be followed at such meeting.
(4) The quorum for any meeting of the Gas Regulator is a majority of its members.
(5) (a) The decision of the majority of the members present at a meeting constitutes a decision of the Gas Regulator. (b) In the event of an equality of votes on any matter the person presiding at the meeting has a casting vote in addition to his or her deliberative vote.
(6) No decision taken by the Gas Regulator is invalid merely because of a vacancy on the Gas Regulator or because any person not entitled to sit as a member sat as such member at the time when the decision was taken if the rest of the members present at the meeting and entitled to sit as members at the meeting constituted a quorum and the decision was taken by a majority of those members present and entitled to vote.
(7) (a) Any meeting of the Gas Regulator is open to the public unless confidential, proprietary or commercially sensitive information is tabled for discussion, in which case an affected person must convince the Gas Regulator as to why such information should not be disclosed to the public. (b) If the Gas Regulator takes a decision in any other manner than at a formal meeting, such decision comes into effect immediately but must be reduced to writing, signed by a majority of the members and submitted for noting at the first formal meeting of the Gas Regulator following the decision. (c) The Gas Regulator must cause a record of all of its proceedings to be kept.
Duties of members of Gas Regulator
9. Members of the Gas Regulator may exercise all their powers under this Act and must— (a) perform all their duties in terms of this Act; (b) act in a justifiable and transparent manner whenever the exercise of their
discretion is required; (c) at all times act in the interest of the Gas Regulator and not in their own or
sectoral interests; (d) act independently of any undue influence or instruction; (e) recuse themselves from and refrain from voting on or discussing any matter
pending before the Gas Regulator in which they have a direct or indirect
interest; and (f) act in a manner that is required and expected from the holder of a public office.
Decisions of Gas Regulator
10. (1) Any decision of the Gas Regulator must be— (a) consistent with the Constitution and this Act; (b) in the public interest; (c) within the powers of the Gas Regulator, as set out in this Act; (d) taken within a procedurally fair process in which all affected persons have the
opportunity to submit their views and present relevant facts and evidence at
their own expense to the Gas Regulator; (e) based on facts and evidence that must be summarised and recorded with the
decision; (f) in writing; and (g) explained clearly as to its factual and legal bases and the reasons therefor.
(2) Any decision of the Gas Regulator and the reasons therefor must be available to
the public.
(3) Any person adversely affected by a decision of the Gas Regulator may bring such
decisions under review by the High Court.
Personnel of Gas Regulator
11. (1) The Gas Regulator must appoint a chief executive officer for the Gas
Regulator.
(2) Subject to the directions of the Gas Regulator, the chief executive officer is
responsible for— (a) the day-to-day management of the affairs of the Gas Regulator; and (b) administrative control over the employees appointed under subsection (3).
(3) The chief executive officer may appoint employees, or contract with any person,
to assist the Gas Regulator in the performance of its functions.
(4) The chief executive officer and other members of the personnel of the Gas
Regulator must be paid such remuneration, allowances, subsidies and other benefits as
the Gas Regulator, with the approval of the Minister and the Minister of Finance, may
determine. (5) Notwithstanding subsections (1) and (3), the Minister, after consultation with the Portfolio Committee, may determine that the Gas Regulator appoint or make use of persons employed or contracted by another licensing or regulatory authority falling under the Minister’s jurisdiction. (6) Section 9 applies to any member of the personnel of the Gas Regulator, with the
changes required by the context.
Funds of Gas Regulator
12. The funds of the Gas Regulator consist of— (a) appropriations from the National Revenue Fund; (b) levies imposed by or under separate legislation; and (c) charges for dispute resolution and other services rendered.
Accounting by Gas Regulator
13. (1) The Gas Regulator must perform its functions in accordance with the Public
Finance Management Act, 1999 (Act No. 1 of 1999).
(2) The Gas Regulator must open one or more accounts in its name with one or more
recognised financial institutions and deposit therein all money received from the sources
contemplated in section 12.
(3) The financial records of the Gas Regulator must be audited by the Auditor-General.
(4) The financial year of the Gas Regulator starts on 1 April of one year and ends on
31 March of the following year.
Reporting by Gas Regulator
14. The annual report for public entities required in terms of the Public Finance
Management Act, 1999 (Act No. 1 of 1999), must be accompanied by information on the
following matters: (a) Licences granted, amended or withdrawn; (b) regulations made and directives issued; (c) the envisaged strategies of the Gas Regulator; (d) the existing position and envisaged commercial developments with respect to
the liquefaction, re-gasification, transmission, storage or distribution of gas and the gas trade; (e) the position regarding health and safety in the industry; and (f) such other matters as the Gas Regulator may deem necessary.
CHAPTER III
GAS LICENSES AND REGISTRATION
Activities requiring a licence 15. (1) No person may without a licence issued by the Gas Regulator— (a) construct gas liquefaction, re-gasification, transmission, storage or distribution facilities or convert
infrastructure into such facilities; (b) operate gas liquefaction, re-gasification, transmission, storage or distribution facilities; or (c) trade in gas.
(2) Notwithstanding subsection (1), a person engaged in an activity referred to in
Schedule 1 is not required to apply for or to hold a licence to engage in such activity, but
a person engaged in an activity referred to in items 1 and 2 of that Schedule must register
the operation as contemplated in section 28.
(3) The Gas Regulator may— (a) determine whether any person is engaged in any of the activities requiring a
licence as contemplated subsection (1); (b) direct any person engaged in any of the activities requiring a licence in terms
of subsection (1) who is not in possession of the necessary licence to cease
such activity.
(4) (a) Nothing in this Act precludes any person from discussing the contemplated
construction of, or conversion of infrastructure into, gas facilities, the operation thereof
or the envisaged trading in gas with the Gas Regulator prior to filing a licence
application. (b) The Gas Regulator must, subject to section 29(4), furnish a person contemplated
in paragraph (a) with such information as may facilitate the filing of an application.
Application for licence
16. (1) Any person who has to apply for a licence in terms of section 15 must do so
in the prescribed form and in accordance with the prescribed procedure. (2) Any application contemplated in subsection (1) must include— (a) the name, company number (if any) and principal place of business of the
applicant; (b) particulars of the owners or shareholder of the applicant if the applicant is not
a natural person; (c) documents demonstrating the administrative, financial and technical abilities
of the applicant; (d) a description of the proposed facility to be constructed or operated, or the
proposed trading to be conducted, including maps and diagrams where
appropriate; (e) a general description of the type of customers to be served and the tariff and
gas price policies to be applied; (f) the plans and ability of the applicant to comply with all applicable labour,
health, safety and environmental legislation, including, but not limited to –
- with regard to applicable labour legislation: the Occupational Health and Safety Act, 1993; the Compensation for Occupational Injuries and Diseases Act, 1993; the Labour Relations Act, 1995; and the Basic Conditions of Employment Act, 1997;
- with regard to health: the Atmospheric Pollution and Prevention Act, 1965; the Hazardous Substances Act, 1973; and the Health Act, 1977;
- with regard to safety: the Mine Health and Safety Act, 1996; and
- with regard to the environment: the Environmental Conservation Act, 1989; the National Water Act, 1998 and the National Environmental Management Act, 1998; (g) a detailed specification of the gas that will be traded under the licence; and (h) such other particulars as may be prescribed.
Advertising of application for licence
17. (1) When application is made for a licence as contemplated in section 16, the
person concerned must publish a notice of the application in at least two newspapers
circulating in the area of the proposed activity in any two official languages, one of
which must be English.
(2) The advertisement must state— (a) the name of the applicant; (b) the object of the application; (c) the place where the application will be available for inspection by any
member of the public; (d) the period within which any objections to the issue of the licence may be
lodged with the Gas Regulator; (e) the address of the Gas Regulator where any objections may be lodged; and (f) that objections must be substantiated by way of an affidavit or solemn
declaration.
(3) The advertisement contemplated in subsection (1) must be published for such
period or in such number of issues of a newspaper as may be prescribed.
Particular information to be supplied by applicant
18. Before considering an application for a licence in terms of this Act, the Gas
Regulator— (a) if it is of the view that the proposed construction of gas facilities or the
proposed provision of gas services should be altered to provide access to third
parties, must inform the applicant of that view and request the applicant to
supply reasons as to why the application should not be considered subject to
the imposition of such condition; (b) may direct the applicant to alter the plans for the proposed construction of gas
facilities or the proposed provision of gas services in order to comply with
applicable health, safety or environmental legislation; (c) must furnish the applicant with all substantiated objections contemplated in
section 17(2)(f) in order to allow the applicant to respond thereto; and (d) may request such additional information as may be necessary to consider the
application properly.
Finalisation of application
19. (1) The Gas Regulator must decide on an application in the prescribed manner
within 60 days— (a) after the expiration of the period contemplated in section 17(2)(d),if no
objections have been received; or (b) after receiving the response of the applicant to objections as contemplated in
section 18(c).
(2) The Gas Regulator must provide the applicant with a copy of its decision as well
as a list of the factors on which the decision was based.
(3) The Gas Regulator must issue separate licences for— (a) the construction of gas liquefaction, re-gasification, transmission, storage or distribution facilities or the
conversion of infrastructure into such facilities; (b) the operation of gas liquefaction, re-gasification, transmission, storage or distribution facilities; and (c) trading in gas.
Licence to entity controlled by State 20. (1) The Minister may, after consultation with the Gas Regulator and consideration by the Portfolio Committee with publicly stated reasons, direct that a
licence be issued to a State-controlled entity responsible for the establishment, ownership and
operation of specified gas transmission pipelines— (a) if it is in the national interest; (b) in order to promote regional growth; or (c) for other social objectives. (2) Such consideration by the Portfolio Committee referred to in subsection (1) must include an assessment of -
(a) the desirability of joint private sector participation in the establishment, ownership and operation of the specified gas transmission pipeline; and (b) the impact of the specified gas transmission pipeline on any existing or anticipated contractual agreements or negotiations for the trading of gas.
(3) Any licence issued in terms of subsection (1) must for all purposes be regarded as
a licence issued in terms of section 19.
Conditions of licence
21. (1) The Gas Regulator may impose licence conditions within the following
framework of requirements and limitations: (new a) Licensees shall provide information to the Gas Regulator of the commercial arrangements regarding the participation of historically disadvantaged South Africans in the licensee’s activities, in particular details of any equity participation, skills and technology transfer, procurement policies and compliance with employment equity; (a) The gas liquefaction, re-gasification, transmission, storage, distribution and trading activities of vertically
integrated companies must be managed separately with separate accounts and
data and with no cross-subsidisation; (b)third parties must have access to uncommitted capacity in transmission pipelines on commercially
negotiated terms between willing customers and the transmission company; (c) interested parties must be allowed to negotiate changes with transmission
companies in the routing, size and capacity of proposed pipelines; (d) interested parties must be allowed to negotiate with transmission companies
for increases in compression of existing transmission pipelines and all
pipeline customers must benefitequitably from reduced costs resulting from the increased volume; (e) transmission companies are not obliged to incur any additional capital expenditure to provide the changes referred to in paragraphs (c) and (d), and the resultant pipeline tariff for accessing the pipeline must be costed equitably between the existing customers of the transmission company and the parties requesting the change, using combinations of total operating and capital costs, capacity and commodity charges and the specifications of the co-mingled gas; (f) licensees must allow interconnections with the facilities of suppliers,
transmitters, storage companies, distributors and eligible customers, as long
as the interconnection is technically feasible and the person requesting the
interconnection bears the increased costs occasioned thereby, which must be
taken into account when setting their tariffs and prices; (g) third parties must have access to uncommitted capacity in storage facilities on commercially
negotiated terms between willing customers and the storage company; (h) interested parties may negotiate with storage companies for changes in the
capacity of storage facilities; (i) storage companies are not obliged to incur any additional capital expenditure to
provide the changes contemplated in paragraph (h) and the resultant storage tariff for accessing the
storage facility must be costed equitably between the existing customers of the storage company and the
party requesting the change, using combinations of total operating and capital costs, capacity and commodity charges and the specifications of the co-mingled gas; (j) apart from direct sales via physical by-passes to eligible customers who may
alternatively have access to the distribution network at the distributor’s
discretion, a distributor will be granted an exclusive geographic area, but only
for a particular range of specifications of gas determined by the Gas
Regulator; (k) a distributor will be granted the trading licence within its exclusive geographic
area for a period determined by the Gas Regulator; (l) an exclusive geographic area must be based on the distributor’s ability to
supply present and future potential consumers at competitive prices and
conditions; (m) gas must be supplied by a licensed distributor within its exclusive geographic
area to any person on request, if such service is economically viable; (n) tariffs for consumers and distributors must be set by the Gas Regulator where
there is inadequate competition as contemplated in Chapters Two and Three of
the Competition Act, 1998 (Act No. 89 of 1998); (o) an advisory service with regard to the safe and efficient use, handling and
storage of gas must be provided to customers other than eligible customers, by
the trading licensee; (p) licensees must maintain their facilities in a fully operative condition; (q) the time period within which gas facilities will become operational must be
fixed; (r) licensees must provide information necessary for the Gas Regulator to
perform its functions.
(2) (a) Any person aggrieved by a condition imposed by the Gas Regulator in terms
of subsection (1) may in the prescribed manner apply to the Gas Regulator to have the
condition reviewed. (b) If the aggrieved person is not the licensee the Gas Regulator must inform the
licensee regarding the application for review. (c) Whenever there is an application for review in terms of paragraph (a) the Gas
Regulator must conduct an investigation and may for that purpose summon witnesses to
appear before it.
Non-discrimination
22. (1) Licensees may not discriminate between customers or classes of customers
regarding access, tariffs, prices, conditions or service except for objectively justifiable
and identifiable differences regarding such matters as quantity, transmission distance,
length of contract, load profile, interruptible supply or other distinguishing feature approved by the Gas Regulator. (2) Any likely distinguishing features approved by the Gas Regulator contemplated in subsection (1), specifically with reference to the pricing of gas by a trader, should give further recognition to the total cost of energy to a trader’s customer based on –
The types of fuel that can be used in the customer’s application of energy;
the efficiency of an energy type in the customer’s application;
operating, capital, storage and handling costs associated with the choice of an energy type; and
(d) any environmental considerations, penalties or benefits that accrue to an energy type in the customer’s application. (3) The prohibition of discrimination referred to in subsection (1) applies to actions by
licensees in favour of their related undertakings in particular.
Term of licence 23. (1) Any licence issued in terms of this Act is valid for an indefinite period subject to the provisions contemplated in sections 24, 25, 26 and 27.
Amendment of licence
24. (1) The Gas Regulator may vary, suspend or remove any of the licence conditions,
or may include additional conditions— (a) on application by the licensee; (b) with the permission of the licensee; (c) upon non-compliance by a licensee with a licence condition; (d) if it is necessary for the purposes of this Act; or (e) on application by any affected party.
(2) The procedure to be followed in varying, suspending, removing or adding any
licence conditions is as prescribed.
Revocation of licence on application
25. (1) The Gas Regulator may revoke a licence on the application of a licensee if— (a) the licensed facility or activity is no longer required; (b) the licensed facility or activity is not economically justifiable; or (c) another person is willing and able to assume the rights and obligations of the
licensee concerned in accordance with the requirements and objectives of this
Act, and a new licence is issued to such person.
(2) Licensees must give the Gas Regulator at least 12 months notice in writing of their
intention to cease their activities.
(3) The form and procedure to be followed in revoking a licence under subsection (1)
is as prescribed.
Contravention of licence
26. (1) If a licensee contravenes or fails to comply with a condition of a licence or any
provision of this Act, the Gas Regulator may serve a notice on such licensee in which the
licensee, is directed to comply with the condition or the provision of the Act within a
reasonable period specified in the notice.
(2) If a licensee fails to comply with a notice contemplated in subsection (1) the Gas
Regulator may sit as a tribunal and, with due regard to section 10, decide on the matter
and may impose a penalty of a fine not exceeding R2 000 000,00 per day for each day
on which the contravention or failure to comply continues.
(3) Any person adversely affected by a decision of the tribunal contemplated in
subsection (2) may bring such decision under appeal to the High Court.
(4) The Minister may by notice in the Gazette amend the amount referred to in
subsection (2) in order to counter the effect of inflation.
Revocation of licence by court
27. (1) The Gas Regulator may by way of application on notice of motion apply to the
High Court for an order suspending or revoking a licence if there exists any ground
justifying such suspension or revocation.
(2) The court before which an application is made under subsection (1) may grant or
refuse the application and may make such order as to costs and maintaining the services
of the licensee as it may deem fit.
Registration with Gas Regulator
28. (1) An owner of an operation involving any of the following activities must
register the operation with the Gas Regulator: (a) The production or importation of gas; or (b) an activity referred to in items 1 and 2 of Schedule 1.
(2) The owner contemplated in subsection (1) must provide the Gas Regulator with
such information concerning the activities of the operation as may be prescribed.
(3) Any application for registration in terms of subsection (1) must be submitted in the
prescribed form.
CHAPTER IV
GENERAL PROVISIONS
Entry, inspection and gathering of information by Gas Regulator
29. (1) For the purposes of this Act, any person authorised thereto in writing by the
Gas Regulator may— (a) at all reasonable times enter any property on which a licensed activity is taking
place and inspect any facility, equipment, machinery, book, account or other
document found thereat; and (b) require any person to furnish the Gas Regulator with such information as may
be necessary for the proper application of this Act.
(2) The Gas Regulator may require that the accuracy of any information furnished in
terms of subsection (1) be verified on oath or by way of a solemn declaration.
(3) A person authorised by the Gas Regulator as contemplated in subsection (1) must
show the authorisation to any person requesting it.
(4) No information obtained by the Gas Regulator in terms of this Act which is of a
non-generic, confidential, personal, commercially sensitive or of a proprietary nature
may be made public or otherwise disclosed to any person without the permission of the
person to whom that information relates, except in terms of an order of the High Court.
Voluntary resolution of disputes by Gas Regulator
30. (1) (a) The Gas Regulator may, with the approval of the parties to a dispute, act as
mediator or arbitrator in any matter concerning the trading of gas or the rendering of
services. (b) When acting as arbitrator the Gas Regulator must issue a decision on the matter.
(2) (a) The Gas Regulator may, on request of the parties involved, appoint a person,
suitable to the Gas Regulator and such parties, to act as mediator or arbitrator on behalf
of the Gas Regulator in any matter contemplated in subsection (1). (b) Any decision of an arbitrator so appointed must be regarded as being the decision
of the Gas Regulator.
(3) Any decision taken by the Gas Regulator acting as arbitrator or by an arbitrator
contemplated in subsection (2) is binding on the parties to the dispute.
Investigations by Gas Regulator
31. (1) The Gas Regulator must conduct investigations into complaints by— (a) customers relating to the supply of gas; and (b) any person concerning unreasonable differences in the supply of gas or gas
services by licensees or unreasonable differences in the price, rates, charges or
terms and conditions of such supply.
(2) Notwithstanding subsection (1), the Gas Regulator may not conduct investiga-tions
into disputes concerning breach of contract between a licensee and an eligible
customer.
(3) A complaint contemplated in subsection (1) must be submitted within the
prescribed period and in the prescribed manner and be accompanied by— (a) supporting information; and (b) a description of efforts made to resolve the dispute beforeresorting to the Gas
Regulator.
Expropriation of land by Gas Regulator 32. (1) In pursuit of the objects of this Act, the Gas Regulator may expropriate land,
or any right in, over or in respect of land on behalf of a licensee for gas liquefaction, re-gasification, transmission, storage or distribution facilities in accordance with section 25 of the Constitution.
(2) The procedure to be followed in giving effect to subsection (1) must be prescribed.
(3) The Gas Regulator may exercise the powers contemplated in subsection (1) only
if it is satisfied that— (a) a licensee is unable to acquire land or a right in, over or in respect of such land
by agreement with the owner; and (b) the land or any right in, over or in respect of such land is reasonably required
by a licensee for gas liquefaction, re-gasification, transmission, storage or distribution facilities which will enhance the Republic’s gas infrastructure.
Rights of licensee in respect of premises or land belonging to others
33. (1) Subject to subsection (2), any person authorised thereto in writing by a
licensee may at all reasonable times enter any premises to which gas is or has been
supplied— (a) in order to inspect, repair, replace or alter any pipe, meter, fitting, work and
apparatus belonging to such licensee; (b) for the purpose of ascertaining the quantity of gas consumed; or (c) where a gas supply is no longer required, for the purpose of removing any
pipe, meter, fitting, work and apparatus belonging to such licensee.
(2) Any person entering a premise under subsection (1) must— (a) except in cases of emergency, make arrangements with the occupant or owner
of the premises before entering such premises; (b) adhere to all reasonable security measures of the occupant or owner of the
premises; and (c) exhibit his or her authorisation at the request of such occupant or owner.
(3) (a) Subject to subsections (4) and (5), a licensee may break up any street within its
licensed area of supply and may lay and construct pipes for the distribution of gas under
or over any such street, and may from time to time repair, alter or remove any pipes so
laid or constructed. (b) The licensee is responsible for any restoration necessary as a result of the acts
referred to in paragraph (a).
(4) Before exercising a power contemplated in subsection (3), a licensee must consult
and coordinate with the authority in whose area of jurisdiction the street in question is
situated, except in cases of emergency.
(5) A licensee must exercise a power contemplated in subsection (3)— (a) in accordance with a route and in terms of specifications approved by the
authority concerned; and (b) except in cases of emergency, under the supervision of the authority
concerned.
(6) Any pipe, meter, fitting, work or apparatus belonging to a licensee and lawfully
placed or installed above or under any land or upon any premises not in the licensee’s
possession remain the property of and may be removed by such licensee.
Regulations 34. (1) The Minister may, after consultation with the Portfolio Committee, by notice in the Gazette, make regulations regarding— (a) the procedures to be followed at meetings of the Gas Regulator; (b) the keeping of records by the Gas Regulator; (c) ensuring fair administrative action by the Gas Regulatory; (d) the form and manner, and contents of licence applications; (e) the publishing of licence applications and the contents thereof; (f) the form and manner and timein which objections to licence applications must be
lodged and the furnishing thereof to the applicant for his or her response
thereto; (g) the procedure to be followed in considering licence applications; (h) the qualifying thresholds and other requirements that must be met by a person
in order to qualify as an eligible customer and the conditions under which such
eligible customer may purchase gas from a supplier or trader (i) the publishing of information relating to uncommitted capacity by the holders
of liquefaction, re-gasification, transmission or storage licences and the publishing of tariffs for gas supplied to customers other than eligible customers by the holders of distribution licences; (j) the rehabilitation of land used in connection with the liquefaction, re-gasification, transmission, storage or
distribution of gas or the trading therein, the provision of security for
rehabilitation purposes and the composition and amount of such security; (k) the determination of classes of gas; (l) the procedure to be followed in the variation, suspension or removal or the
revocation of licence conditions; (m) the form in which registration must be lodged; (n) the procedure to be followed and fees to be paid in mediation and arbitration
proceedings; (o) the procedures to be followed in investigations, including the summoning of
witnesses and the payment of witness fees; (p) the procedure to be followed at expropriation proceedings and the time within
which such proceedings must be conducted; (q) the inspection of and enquiry into the construction and operation of any gas
facility or any trading in gas; (r) the rendering of information to the Gas Regulator; (s) price regulation procedures and principles; (t) consultation with interested and affected parties; (u) mechanisms to promote historically disadvantaged South Africans; and (v) any other matter that may or has to be prescribed or determined or provided
for by regulations in terms of this Act.
(2) Before promulgating regulations contemplated in subsection (1), the Minister
must— (a) consult with the Gas Regulator; (b) invite public comments on such regulations; and (c) duly consider the comments.
Transitional provisions
35. (1) Any person owning or operating gas facilities or trading in gas prior to the
commencement of this Act must, within six months after the commencement, submit to
the Gas Regulator an application for a licence in terms of this Act.
(2) (a) The Gas Regulator must grant a licence contemplated in subsection (1), unless
it finds that the applicant is unable or unwilling to own or operate gas facilities or to trade
in gas in a manner consistent with the objectives and provisions of this Act. (b) Any licence issued in terms of paragraph (a) must for all purposes be regarded as
a licence issued in terms of section 19.
Mozambique Gas Pipeline Agreement 36. (1) In this section, ‘‘ the agreement’’ means the Mozambique Gas Pipeline
Agreement, as it existed immediately before the date of commencement of this Act,
entered into between the Minister, the Minister of Trade and Industry and Sasol Limited
concerning the introduction of natural gas by pipeline from the Republic of
Mozambique into the Republic.
(2) Despite anything to the contrary in this Act, the agreement binds the Gas
Regulator until 10 years after natural gas is first received from Mozambique.
(3) From the date of the conclusion of the agreement, the terms of the agreement
relating to the following matters constitute conditions of a licence issued in terms of
section 19: (a) Exclusive rights and periods granted in respect of transmission and
distribution of gas; (b) third party access to the transmission pipeline from Mozambique and to
certain of Sasol’s pipelines; (c) prices charged by Sasol for gas; (d) Sasol’s obligation to supply customers, distributors and reticulators with gas;
and (e) administration of the agreement.
(4) The Gas Regulator must formally issue licences to the entities contemplated in the
agreement and may impose such conditions in respect of each licence in terms of this
Act as are not contrary to the agreement.
Short title
37. This Act is called the Gas Act, 2001, and comes into operation on a date
determined by the President by proclamation in the Gazette.
SCHEDULE 1
EXEMPTION FROM OBLIGATION TOAPPLY FOR AND HOLD A LICENCE
(Section 15(2)) 1. Any person engaged in the transmission of gas for that person’s exclusive use.
2. Small biogas projects in rural communities not connected to the national gas
pipeline grid.
3. Gas reticulation and any trading activity incidental thereto. 4. Any person engaged in the intermediate transmission, distribution or storage of gas by means of existing privately owned pipelines or storage facilities for –
loading or discharging gas at harbours and depots; or
loading or discharging gas to and from harbours and depots; where
Such intermediate activity does not deliver gas to, or store gas at, the ultimate point of consumption.
MEMORANDUM ON THE OBJECTS OF THE GAS BILL, 2001
Background and objects For several decades South Africa has had a relatively small gas industry based on gas
produced from coal. The gas industry is now set to enter a period of rapid expansion
based on natural gas fields in South Africa and Southern Africa. However, the lack of a
legislative framework is a barrier to the development of the gas industry. The Gas Bill
will provide the legislative framework and will establish an independent Gas Regulator.
The objects of the Gas Bill are to— (a) promote the efficient, effective, sustainable and orderly development and
operation of gas liquefaction, re-gasification, transmission, storage and distribution facilities and the
provision of efficient, effective and sustainable gas transmission, storage,
distribution and trading services; (b) facilitate investment in the gas industry; (c) ensure the safe, efficient, economic and environmentally responsible trans-mission,
distribution and storage of gas; (d) promote companies in the gas industry that are owned or controlled by
historically disadvantaged South Africans by means of licence conditions so
as to enable them to become competitive; (e) ensure that gas transmission, storage, distribution and trading services are
provided on an equitable basis and that the interests and needs of all parties
concerned are taken into consideration; (f) promote the development of competitive markets for gas and gas services; (g) facilitate gas trade between the Republic and other countries; and (h) promote access to gas in an affordable and safe manner.
Investor decisions concerning a project to import gas from Mozambique are being
made in the absence of specific legislation. In order to accommodate this the Minister of
Minerals and Energy has negotiated an Agreement with the company concerned and the
Gas Bill makes provision for this agreement to be made binding on the Gas Regulator
until 10 years after gas is first received from Mozambique.
Financial implications for State The Department of Minerals and Energy budget does not provide for the
establishment and running of a Gas Regulator. Therefore, when the Gas Act is
promulgated, the Department will require an extra R2 100 000 to run the Gas Regulator
for the financial year 2001/2002, with an equivalent amount for the following years.
Bodies consulted Bodies consulted on the Bill are:
*Afrox Limited, *BP South Africa, *British Gas; Camala, Central Energy Fund,
Chevron; *Cinery Global Power (Egoli Gas); *Cosatu; Department of Constitutional
Affairs; Department of Finance; *Department of Labour; *Department of Trade and
Industry; DNCH Mozambique; Durban Electricity Department; *Easigas; Econ,
*Energy and Development Research Centre; *Energy Africa Ltd.; *Energy and Utility
(Pty) Ltd.; *Engen; *Engineering Council; *Enron Corp; *Eskom; *Fedusa; Forest
Exploration International (South Africa); International Energy Agency; *L P Gas
Association; *Mossgas (Pty) Ltd.; Namibian Ministry of Mines and Energy; Namcor;
Nampower; National Electricity Regulator; *Petroleum Agency; *Petronet; *Phillips
Petroleum South Africa, Ltd.; *Pioneer Natural Resources South Africa; Ranger Oil
Ltd.; Sacob; Sadelec; Sasol Gas; *Sasol Oil, Sasol Petroleum International; *Shell
Exploration & Production Namibia; *Shell South Africa (Pty) Ltd; *Soekor; *Texaco
Namibia Resources Inc.; *USADepartment of Energy; *World Bank. (The names of the
bodies that submitted written comments are marked with an asterisk.)
Parliamentary procedure The State Law Advisers and the Department of Minerals and Energy are of the view
that this Bill must be dealt with in accordance with the procedure established by section
75 of the Constitution since it contains no provision to which the procedure set out in
section 74 or 76 of the Constitution applies.