4.2.1 Interim Arrangements

In his opening address to Parliament, the President committed to improving national competitiveness through liberalising the transport sector with the objective of lowering costs and enabling technological advances and innovation throughout industry. Cabinet confirmed the President’s views at a ‘Lekgotla’ in January 2001 when Action Plans for the Economic Cluster were approved. These Action Plans highlight the transport sector as a key contributor to South Africa’s competitiveness on the global markets and also acknowledge various export sectors as a major thrust for growing the economy. Infrastructure development, which clearly includes seaports, is also considered as an essential component of the Integrated Framework approved by Cabinet, Clearly, therefore, this Ports Policy supports this commitment in laying out a broad but decisive policy for the future governance of commercial ports in South Africa.

The South African government is committed to building the economy. The basis for pursuing a national commercial ports policy is the recognition that trade, distribution, transport and logistics are among the most vital facets of the South African economy and should play a crucial role in the realization of sustainable economic development, both as a link in the value chain of businesses and because of their own economic significance.

Ports are integrated and crucial nodal points in a transport system, and play a strategic role in the country’s economic growth and social development. By virtue of being part of the transport network, port activity facilitates the meeting of the demand of the international market with means of production available in the country. In other words, the ports system, by virtue of being nodal points in the transport system, facilitates trade, which in turn fosters greater national economic activity. To maximise the benefits alluded to above, the aspects of efficiency and effective management have to be introduced to the transport system.

This section describes the policy environment underpinning the formulation of this national policy on ports. This policy has to be consistent with, and, complement the Government’s broad developmental, strategic, economic and social objectives. For this reason, it is necessary to consider the broad policy framework within which this policy has been formulated. Broad government policy is contained in various policy documents, and implemented through various Acts of Parliament.

The following four policies had a major impact on the formulation of this policy these were:

The Government’s policies on social and economic aspects are contained in a number of documents, some of the more salient being:

The White Paper on National Policy reflects the Government’s transport priorities in the context of its broad social and economic policies. Ports are critical and integral key nodes in any transport system; and, to this end, a more detailed summary of transport policy objectives and principles is presented later in this section. The recently passed National Land Transport Transition Act, 22 of 2000, is also an important document, especially in the context of integrating land transport planning processes.

The following transport related legislation has also been taken into consideration during the drafting of this policy:

Due to this importance, relevant provisions in the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996), are discussed in more detail in the following section.

The Constitution of South Africa, which came into effect on 4 February 1997, provides for the supremacy of the Constitution and states that any law or act inconsistent with its provisions of the Constitution shall be of no force and effect to the extend of such inconsistency. Attention is given to the provisions of the Constitution as far as it has an effect on this policy. The Constitution specially refers to shipping matters when allocating functions to national, provincial and local governments. Furthermore, some of the other functions allocated to the various spheres of government, in terms of the Constitution, also impact on commercial ports.

Schedule 4 of the Constitution lists functional areas of concurrent national and provincial legislative competence. The functions which impact on ports include environmental management; industrial promotion; pollution control; disaster management; nature conservation; policing; public transport; regional planning and development; road traffic regulation; tourism; trade, urban and rural development.

In terms of the Constitution of the Republic of South Africa, commercial ports fall within the exclusive competence of National Government and its structures. Commercial ports also do not fall under the concurrent national and provincial legislative competence. The power to control commercial ports is excluded from the jurisdiction or powers of local authorities.

Nevertheless, there are indeed aspects in the administration of commercial ports that impact on both the Provincial and Local Government spheres, and it is obviously in the public interest and in accordance with both the letter and spirit of co-operative government that these aspects be meaningfully addressed. The constitution stipulates that all spheres and all organs of Government must co-operate with one another in mutual trust and good faith by fostering friendly relations, assisting and supporting one another, informing one another of, and consulting one another on matters of common interests.

Chapter 11 of the Constitution refers to the role of the security services. In particular, the South African National Defence Force (SANDF) is tasked to defend and protect the Republic. This role of the SANDF affects this policy and needs to be considered.

The Reconstruction and Development Programme (RDP) and the Growth, Employment and Redistribution strategy (GEAR) are government’s primary policy and strategic frameworks outlining its socio-economic plans. The RDP is an integrated, coherent socio-economic policy framework. It seeks to mobilise all the people and resources of South Africa and represents a vision of fundamental transformation. Five key programmes underpin the RDP, namely:

In order to deliver on this vision a number of broad goals need to be pursued. These are:

The basic principles and strategic objectives listed above are accepted as the guiding framework for this National Commercial Ports Policy.

Transnet Limited currently owns the real estate of South African ports. The port authority function is delegated to Portnet, an operating arm of Transnet, and services within the ports are provided by either Portnet or a private enterprise. The incorporation of such a pseudo port authority into a transport company has resulted in the formation of several undesirable conditions that has detracted from the primary purpose of ports, skewed pricing, misallocated port revenues and created a suspicion in the maritime and transport industries about the impartiality of the port entity and its extensive integration with a transport company.

There is at present no external port regulatory and monitoring authority. Portnet, through Transnet, enjoys a natural and legally structured monopoly and also acts as a regulator.

The White Paper on National Transport Policy has defined the policy in addressing these challenges. Four fundamental port policy guidelines were recommended. These are briefly:

Government will reduce its direct involvement in operations to allow for a more competitive environment.

Government, through the Port Authority, will ensure unbiased regulation of safety and quality in general; control of market access where this is necessary, and to regulate excessive tariffs in cases of monopolies.

The institutional positions of non-governmental statutory bodies, such as Transnet are still under review as part of the process of restructuring state assets, and their policy direction will be finalised in the near future.

The Ministry and Department of Transport bears the responsibility of ensuring that efficient and effective, seamless inter-modal transportation is achieved in the national interests of South Africa.

With regard to the commercial ports, that responsibility is fulfilled by:

The Ministry and Department of Enterprise will facilitate the smooth transformation and implementation of this policy together with other relevant policies. The National Port Authority will remain within Transnet Limited until Transnet’s restructuring is completed.

The National Port Authority is a body that will be responsible for the management of the national commercial port system

The general corporate characteristics of the envisaged National Port Authority shall be:

The National Port Authority shall be directed and controlled by a Board of Directors answerable to the Minister of Public Enterprises.

The Minister of Public Enterprises shall appoint the National Port Authority and its Board of Directors.

The National Port Authority shall be responsible for the landowner, control, utility and quasi-regulatory functions detailed below.

The landowner functions entail:

The control functions entail:

The above control functions of the National Port Authority entails amongst other things that the National Port Authority is entitled to monitor the performance of the terminal operators.

The implementation of a concession/lease agreement imposes on the part of the National Port Authority an agreed level of supervision of the operational results of the contract’s execution. The aims of such supervision are:

In essence, the above control functions of the National Port Authority represent regulation of operational activities within the port confines. All activities within the ports, particularly terminal operations, will be ‘regulated’ by the National Port Authority directly.

The port control functions will involve substantial powers given by the State to the National Port Authority, the majority of which will be by appropriate port legislation.

The port utility functions entail:

The quasi-regulatory functions entail:

The extensive public investment in port infrastructure does not provide an adequate return to port users and taxpayers, therefore Government will concession port operations to enable users of the system to have more say in how they work.

A National Commercial Ports System has been identified that will be financially self-sufficient ports vital to domestic, regional and international trade. All the existing commercial ports, i.e. Richards Bay, Durban, East London, Ngqura, Port Elizabeth, Mossel Bay, Cape Town, Saldanha Bay, Port Nolloth, and offshore cargo handling facilities as well as all future ports and facilities to be constructed, will be managed and administered by the National Ports Authority (NPA) and it will instill commercial discipline in South African major ports and pave the way for efficiency gains necessary for ports and users to remain competitive in the global economy.

It is necessary for the National Commercial Ports System to be guided by the Consultative committees, which will be made up of representatives nominated by user groups and various levels of government. Government funding will not be available for the National Ports Authority.

The commercial ports of South Africa will be operated on a national commercial port system basis, with the ports complementing each other rather than competing with each other. Government encourages beneficial intra-port competition between port operators within a port.

Port development cannot be considered in isolation, but should be integrated into any national, provincial and local economic and spatial development initiatives, and also support the RDP. There should be synergy among port development, and national and provincial economic and development strategies. Long-term location planning for ports should run parallel to provincial and regional economic development plans.

The development of commercial ports must be integrated in nature, with port facilities being planned together with other elements of the transport system. The planning and integration of port facilities into the broader transport network should be co-ordinated at the appropriate sphere of government.

The port’s national development framework plans should inform and be included in a provincial transport plan which, in turn, should form part of an economic development plan for the province. Naturally, they should also conform to any national spatial, economic and other initiatives. Proper integrated planning must be done to ensure greater efficiencies are delivered by the transport system.

This policy advocates port and city co-operation through planning structures that will be facilitative and enabling of that particular intent. This shall be achieved by:

The White Paper distinguished between elements of "economic" infrastructure and operations which are able to provide a measurable economic or financial return, and elements of infrastructure and operations which cannot, or should not, be paid for by the user, but which provide social benefits. The first category includes infrastructure, such as primary roads, railways, airports and ports, where the principle of user pays or cost recovery from direct users will be applied as far as possible, which would include a fair return.

The Government will, in the case of such infrastructure and services, strive to prevent any actions form distorting pricing. In the case of socially necessary infrastructure and services, the Government will contribute or guarantee financing. It will also strive to level the playing fields in this case, and may promote competition where appropriate.

Due to the strategic importance of the commercial ports to the entire economy of the country, no person, other than the National Port Authority, shall build, own or exploit any commercial port including future offshore cargo handling facilities to be used or intended to be used by sea-going vessels, for load or off-loading of trade cargo or passengers.

In the event that any port becomes non-profitable, the National Port Authority might close that port only after the Cabinet has issued such a directive based on the finding of an inquiry pertaining to the reason for such a closure.

Competitiveness is defined as ensuring that the port and transportation system can meet the requirements of its users. Competitiveness is a key aspect that influence South Africa’s place in global markets. To compete successfully for business in domestic and international markets, ports and other transport operators must have the ability to move people and cargo efficiently, reliably, and at a reasonable cost, without infrastructure impediments or congestion delays.

For exporters and importers, competitiveness translate into a demand for intermodal services that provide speedy movement through ports and terminal transfer facilities to landside transportation. It also translate into a demand for ready access to the transportation information that is needed by all parties to the various transactions involved in trade. There is a sense of urgency among some port stakeholders who maintain that there is not enough spending on construction, operations and maintenance for ports.

The future competitiveness of the port system and infrastructure will be influenced by the following capacity issues:

Thus, there is a need to improve the productivity, throughput capacity and accessibility to meet the expected growth in international trade.

The port authority’s tariffs in future should be based on the principles of user pays, cost-based tariffs and adequate return on capital employed. The South African port system should remain financially autonomous and not require subsidisation from the State.

As the policy aims to achieve long-term benefits for the country as a whole, government encourages beneficial intra-port competition but cautions against destructive competition.

The primary function of the port system will be, as gateways to the world, to operate with modern infrastructure provided by dependable funding sources, using optimal technology. In terms of capacity, efficiency, safety and security and environmental enhancement, the ports will be world class. The inland transportation capacity will match the ports throughput.

In order for our ports to truly become globally competitive, and thereby enhance the competitiveness of South African enterprises, the economy and the region, the port system must be encouraged to develop and progress to the status of the most modern ports internationally, within a reasonable period of time. The National Port Authority of South Africa will pursue this agenda with vigour and Government will do all it can to support the port authority in its endeavours, particularly with regard to creating a unified port community, integrating the port with trade and logistics chains in the transport network and the development of world class technologies.

This implies that ports:

Ports needs to act as creative partners in international trade development and facilitate trade processes at sea / land interface. Policies dealing with transport infrastructure must therefore ensure that cognisance is taking of trade and economic policies, strategies and programmes and that alignment between what the economy requires and what the transport system provides are more coherent.

The logistics system needs to support trade by facilitating the efficient movement of goods, by providing visibility of where goods are in the logistics chain and by providing a seamless administrative process. In facilitating trade, customs regulations and practices need to be improved and streamlined. Government will assist in facilitating the design and implementation of efficient, enhanced communication, and information systems. Further Government will assist in trade documentation harmonization efforts. In particular, Ports will be required to supply service providers with adequate technology infrastructure to enable the efficient management of trade processes.

Government’s industrial strategy seeks to harness regional complementarities with the aim of promoting economies of scale and developing an integrated regional production system. This strategy depends on our ability to leverage knowledge and technology to integrate backward and forward linkages with production processes. Although this strategy is relevant to all manufacturing, government has identified certain priority sectors for implementation. Integrated logistics, as a key component of the supply chain process, will play a critical role in the success of this approach.

The Ports Authority will ensure that the National Ports Development Strategy and that individual Ports will prioritise and be responsive to the physical and technology infrastructure that is required to support the integrated industrial strategy. In particular, the Authority will prioritise the provision of infrastructure to those manufacturing sectors that government has identified as strategic.

These concepts cover environmental, economic and financial issues and form the basic premise on which this policy is based. Sustainable development in its simplest form is development that will endure, whereas another definition states "sustainable development is development which meets the needs of the present, without compromising the ability of future generations to meet their own needs". Viability requires that benefits exceed costs. Benefits and costs include economic and social-economic concepts as well as the multiplier effects. Socio-economic matters include job creation, the promotion of SMMEs, increasing the national skills base through capacity building and training of employees, increasing trade and tourism.

Environmental sustainability emphasises the interdependence of social and economic development and environmental protection. It is an accepted norm that all transport infrastructure development investment decisions consider the environmental implications through a process that entails the identification of the factors, and assessment thereof. For new projects, these assessments should be done at an early stage and should influence the design of individual projects. For existing port facilities however, this process is ongoing at agreed upon frequencies and when significant shifts due to growth are experienced.

The Government’s new policy for environmental management indicates that all development that might have an impact on the environment, will have to follow the Integrated Environmental Management (IEM) process, thereby providing sufficient information to decision-makers as to the impact of the development on the environment. Different tools may be used to ensure IEM, which could range from Strategic Environmental Assessments and Plans, which take place on a more strategic level, to Environmental Impact Assessments (EIA), which are more project specific assessments.

This policy on commercial ports is in line with government’s policy on environmental management, as indicated above, and asserts that the environmental sustainability of ports should be assessed as a prerequisite, whether on strategic planning level or for individual projects, using the appropriate tool. The new EIA regulations list ports as an activity for which an EIA will be compulsory in any case.

Any development of a new port, or major developments at an existing commercial port, will have to be environmentally sustainable and conform to the norms, standards and regulations of national and provincial environmental policies and legislation. Environmental assessments will take into account national and provincial legislation, the regional effects and induced economic impacts, as well as the potential consequences of broad economic conditions.

The development of ports and transport infrastructure in general coupled with the development of associated value adding industries can yield significant economic and socio-economic benefits for the region and for the country as a whole.

The majority of workers in the port operations are unskilled with a high level of illiteracy, thereby limiting their ability and the industry to adapt to technological change and improve efficiency and levels of service.

The Government will, through the Sector Education and Training Authorities (SETA), move towards a culture in which labour is seen as a resource and not merely a production cost. The Government will assume some responsibility for enhancing capacity and for improving the human resource pool in the transport sector. The Government, however, does not accept sole responsibility for human resource development, and looks to all stakeholders inclusive of the private sector and labour to assist in overcoming the challenge.

To enable sustainable development, it is vital to have adequate consultation and discussion on the port facilities development and operations with relevant stakeholders. At present the processes and responsibilities for communication and consultation on port and port operation should be better defined.

International relations are the responsibility of the national Government. These include relations with SADC member states, other foreign countries and multilateral organizations. Where necessary, the provinces should also be able to communicate internationally through the NDOT.

Because of the influence of the larger ports on their environment and the important transport and economic role they fulfill, there are a number of authorities and organisations that have an interest in, or are affected by, ports and their operations.

There should be a consultative forum for such authorities and role players, where consultation could take place and information be made available. These local port consultative committees shall comprise of representatives of the port management and port based institutions whose elected members should comprise port, province, city and local business interests.

The Port Authority shall, specifically, consult the port consultative committees on the following: -

The National Department of Transport will be responsible for the co-ordination of relations with:

In determining relative roles and responsibilities of government and other institutions, it is important to consider both existing legislation and location of expertise. While considerable expertise will have to be developed in South Africa, cognicance must be taken of the need to meet obligations in the short to medium term. Appropriate plans must be put in place to ensure that adequate skills are developed.

NDOT will be responsible for national policy, legislation and strategy formulation with regard to the national port system. NDOT will also be responsible for the following aspects-

The establishment and enforcement of norms and standards covering the following:

In performing its functions and responsibilities, NDOT will consult with stakeholders. NDOT may delegate some of the operational aspects of the above to an appropriate institution.

In discharging this responsibility, the National Port Authority will perform landowner, control and port utility functions so as to ensure safety, security, operational efficiency and environmental sustainability; and contribute to the growth of the economy and the achievement of the RDP objectives.

The Department of Public Enterprises, Department of Environmental Affairs and Tourism, Department of Minerals and Energy, Provincial and Local Councils, SARS, SAPS, SAMSA and other relevant institutions should co-ordinate themselves and adapt their policies and practices so as to advance the implementation of this policy.

It is the Government’s prime responsibility to focus on policy and on substantive regulation. The Government will reduce its direct involvement in operations and in the provision of infrastructure. In so doing, the Government will allow for a more competitive environment to ensure that efficiency is achieved in the port operations in the interest of the entire national commercial ports system and international trade logistic chain.

The State, through its securities, has the overall responsibility for ensuring port security. Port security needs to be enhanced further by various means. The National Port Authority shall develop policies and deploy resources in the existing and future commercial ports to enhance port security.

This will be enhanced in a holistic fashion through integrated transport planning. Transport planning will have to be co-ordinated between National, Provincial and Local / Municipal Government together with the Port Authority and relevant Railway Authority. This will be carried out in a regular basis in terms of Section 27 of the National Land Transport Transition Act, 2000 (Act No 22 of 2000) and the Local Government: Municipal Structures Act, 1998 (Act No 117 of 1998).

Integrated Transport Plans will include all modes and infrastructure, including new or amended roads and commercial developments having an impact on the land transport system, and land transport aspects of the ports. These transport plans, integrated with the National Port Development Framework Plan, will be developed so as to enhance the effective functioning of cities, towns and rural areas through integrated planning of transport infrastructure and facilities, transport operations including freight movement, bulk services and public transport services within the context of those integrated development plans and the land development objectives.

After approval of this national commercial ports policy, a framework for the future of commercial ports will have been provided. Those elements of the new policy, which require only administrative action, will be implemented immediately. Those elements of the new policy, which require major changes from existing practice, may not be implementable immediately.

No relevant institution should embark upon the formulation of policy or the adoption of practices that run contrary to the implementation of this policy. The divisionalisation of Portnet and the restructuring of Transnet Ltd by the Department of Public Enterprises may continue to proceed towards the implementation of this policy.

The Department of Public Enterprise will facilitate the smooth transformation and implementation of this policy together with other relevant policies. The National Port Authority will remain within Transnet Limited until the completion of its (Transnet’s ) restructuring.

The National Port Authority shall have considerable power and influence over all commercial ports of the Republic. It is considered expedient to introduce some form of regulatory oversight to ensure that the strategic essence of our ports; the competitive thrust of port development and reform; and the competitiveness of South African commercial ports and businesses, particularly exporters, are not compromised in any way.

An act of Parliament will establish the Port Regulator to exercise oversight in respect of the Port Authority by making recommendations to the Minister of Transport. The Minister of Transport will decide upon the constitution and composition of the Port Regulator mandated and accountable to government.

The Port Regulator will focus on areas requiring technical expertise, but will consult with the Competition Commission on matters falling within the ambit of the Competitions Act.

Appropriate regulation of the Port Authority is necessary therefore in order to:

The key objectives of the independent port regulator will be to ensure:

Accepted role of the Port Authority post Transnet’s restructuring is:

The National Department of Transport is committed to the economic and social development of the South African transport system. In pursuit of the vision for the national commercial ports policy, the Department seeks to prioritise the policies contained in this policy document and translate these priorities into strategies.