1. Introduction

1. On 6 March, 2002, the White Paper on the National Commercial Ports Policy ("the White Paper") was adopted by Cabinet and published in the Government Gazette on 8 August 2002. Pursuant to this, the National Department of Transport drafted the National Ports Authority Bill [B5 - 2003] ("the Bill"), which was introduced in the National Assembly by the Acting Honourable Minister of Transport in early February 2003. We submit that the Bill should ultimate be a culmination and reflection of the intent as expressed in the White Paper. Any deviation could result in a major policy departure which may not be the intent of the Bill.
2. The Portfolio Committee on Transport invited written submissions from interested parties. Pursuant to this invitation, the National Ports Authority of South Africa ("the NPA") has set out its comments on the Bill below. In making this submission, we first want to express the NPA's appreciation for the effort that has gone into the Bill. We further believe that the National Ports Authority Bill will significantly impact on the NPA and its activities and therefore we view ourselves not only as an interested and affected party but also as a significant stakeholder.
3. The NPA is currently a division of Transnet Limited ("Transnet"). In terms of the Bill, the NPA will effectively be transferred out of Transnet and will be established as a separate company wholly owned by the State, by the Minister of Public Enterprises ("the Shareholding Minister"). The Bill provides, amongst other things, for the establishment and incorporation of the National Ports Authority Limited ("the Authority"); the functions of the Authority; its composition and functioning; the concessioning and licensing regime which will be controlled by the Authority; the Authority's commercial functioning; and safety aspects for which it is primarily responsible. In short, the Bill establishes the Authority as a landlord Port Authority required to perform a wide range of functions relating to ports.
4. At the outset, it should be noted that the NPA supports the objects of the Bill and is generally satisfied with the provisions of the Bill. Nevertheless, it is submitted that the Bill can be improved in a number of respects and it is on these improvements that these comments focus. In this regard, the NPA’s comments are divided into:

1. issues of fundamental principle; and
2. the drafting and detail of various provisions of the Bill.

5. Please note that references to clause numbers in this document refer to clause numbers of the Bill.

2. issues of fundamental principle

1. The Ports Regulator (Chapter 5)

1. Chapter 5 of the Bill deals with the establishment and functions of the Ports Regulator ("the Regulator"). We submit, as a preliminary statement of position, that this chapter is not clear in content as to the powers and functions of the Regulator.

The temporary nature of the Regulator

2. An initial difficulty with Chapter 5 is that it does not stipulate that the Regulator should be a temporary institution. This is inconsistent with the White Paper, which contemplates that the Regulator will be disbanded after the establishment of the Authority outside Transnet (page 32 of the White Paper). The provisions of the Bill relating to the Regulator should, therefore, only be included as transitional provisions which will expire on the establishment of the Authority outside Transnet as envisaged in clause 27.
3. At the time when the Authority, falls outside Transnet, the NPA believes there will be no need for external regulation of this public entity by an external regulatory body. The Authority's functioning will rather be regulated by the NPA Act and other relevant arrangements such as:

• The National Ports Authority Act (port legislation) - This legislation, which will be based on the White Paper, confirms the role of the Authority and in the process determines the ambit of the functions and duties of the Authority including, for example, the infrastructure, commercial, safety and regulatory obligations thereof;
• Port regulations - Promulgated under the Bill, by the Minister of Transport or by the Authority with the Minister's approval;
• Shareholder's Compact - An agreement between the NPA and the Shareholding Minister which, for example, determines the financial objectives and performance targets of the Authority;
• Safety, labour and environmental legislation and regulations - Regulation of various activities by different ministries and agencies; and
• Port Consultative Committees - To advise the local branches of the Authority. For example, the Authority must consult the Port Consultative Committees regarding:

• any major scheme relating to the expansion or development of a particular port;
• any substantial or structural alteration in the port authority tariffs; and
• any other matter on which the Minister or Shareholding Minister may require the Authority to consult the Committee on (see clause 60).

1. The functions of the Regulator as contained in clause 32 are too broad and imprecise. In this regard, the White Paper contemplates that the Regulator's role will be limited to the following functions:

• monitoring the business relationship between Transnet and the Authority to ensure that Transnet does not derive an unfair advantage over other companies and that revenues generated by the Authority are used for the benefit of the Authority, its customers and the national economy;
• monitoring the business relationship between the Authority and South African Port Operations ("SAPO") to ensure that the latter is not advantaged and receives the same treatment as private port terminal operators; and
• oversight in relation to the provision of port facilities and services by the Authority.

1. The White Paper, therefore, contemplates that the Regulator's functions will be limited to ensuring that the Authority does not favour Transnet and that it operates in a fair and non-discriminatory manner in relation to the provision of its own services. There are good reasons for this limited role of the Regulator. The most important is that the White Paper envisages that the Authority (and not the Regulator) will be responsible for managing South Africa's ports and that the oversight of the Regulator adds another level of regulation, which increases the cost, and the efficiency, of ports regulation.
2. Chapter 5 of the Bill should therefore be amended so as to provide that the Regulator may only hear complaints and issue directives if the Authority abuses its position in:

• unfairly preferring Transnet, including SAPO, over other port users; and
• unfairly discriminating against port users in relation to the provision of services by the Authority itself.

1. In particular, it is unacceptable for clause 30(1)(e) to broadly empower the Regulator to "issue directives" to the Authority and to broadly provide in clause 30(2) that the Regulator may "consider any complaint or matter submitted to it" and "take such steps as may be necessary in the circumstances". In addition, the Regulator should not be empowered to issue directives relating to access by the Regulator to the Authority’s confidential information, as contemplated in clause 30(3)(d).
2. The provision of such broad, undefined powers to the Regulator not only leads to uncertainty, but is contrary to the constitutional principle of the rule of law, which has recently been emphasised by our Constitutional Court.

Additional comments relating to the Regulator

3. It is also important to clarify the following uncertainties relating to the Regulator:

0. the manner in which the independence and impartiality of the Regulator will be safeguarded. In this regard, it is fundamentally important that the Regulator should be perceived to be independent of the interests of port users, the Authority and government. For example, the independence of the Regulator would be enhanced by providing for a public nomination process prior to the appointment of members;
1. a clause providing for the removal and resignation of members of the Regulator, should be inserted. In this regard, the provisions of clause 18(4) could be employed;
2. the disqualifications from membership of the Regulator in clause 31(4) should be expanded along the lines of the disqualifications from membership of the Authority's board, contained in clause 17;
3. it should be made clear that the Regulator will follow fair and open procedures in accordance with the rules and principles of administrative law. For example, all parties having an interest in a matter should be given a proper opportunity to participate in the proceedings and to state their cases. The Regulator should be obliged to give reasons for its rulings;
4. it is not clear what regulatory process, tools and mechanisms will be used by the Regulator;
5. it is not clear how the Regulator will co-ordinate its activities with other regulatory institutions, for example, the relationship with the existing Competition Commission is not clarified;
6. Chapter 5 should include a provision relating to conflicts of interest of the members of the Regulator, along the lines of clause 19. Rules also need to be laid down concerning potential conflicts of interest among the regulator’s staff.

4. In conclusion on this issue, the NPA submits that, where the Authority is not part of Transnet, there will be no need for the external regulation of the Authority by a regulatory body (i.e. the Regulator) and that the existence of such body serves to increase the cost and inefficiency of port regulation. The White Paper contemplated an interim regulator whose role would cease were the Authority to be taken out of Transnet.

1. The phrase "on behalf of the State" (clauses 3(1) and 27(2))

0. Clause 3(1) provides that the Authority will own, manage, control and administer the ports "on behalf of the State". In addition, clause 27(2) provides that the Authority will hold all property "on behalf of the State".
1. It is submitted that the notion of the Authority owning property on behalf of the State is inconsistent with the concept of the Authority being a State-owned enterprise, which has separate legal personality. The concept of such enterprises recognises that the State may beneficially hold all the interest in an entity (through its shareholding) but that such entity has separate legal personality and holds property in its own name (see, for example, section 7(2) of the South African National Roads Agency Limited and National Roads Act 7 of 1998, section 6(1) of the Airports Company Act 44 of 1993 ("the Airports Company Act") and section 2(3) of the Legal Succession to the South African Transport Services Act 9 of 1989).
2. In addition, the concept of the Authority owing property on behalf of the State is contrary to the establishment of the Authority as a landlord port authority as contemplated in the Bill and the White Paper. For example, page 16 of the White Paper specifically provides that the "landowner functions" of the Authority shall include "owning, developing and managing the port property portfolio". If the Authority does not own property within ports, it may compromise its ability to raise funding for projects such as the development and construction of port infrastructure.
3. To the extent that the drafters are concerned that the Authority should not be able to alienate land within ports, this can be dealt with by including a provision which prohibits the Authority from selling land within the port limits. In this regard, we note that clause 16(4) of the Bill provides that land owned by the Authority may not be sold under any circumstances. This clause is too wide as it would include land owned by the Authority outside port limits, for example, situated in Johannesburg. Clause 16(4) should, therefore, be amended to only prohibit the sale of land owned within port limits.

2. Port services and facilities licences (clause 35)

0. It should be clearly stated that persons operating under concessions or public-private partnership agreements should not also require a licence under clause 35. This should extend not only to concessionaires themselves but also to other persons acting in accordance with a concession (for example, sub-contractors to the concessionaire).
1. For the sake of clarity, the phrase "unless an agreement contemplated in section 34 has been concluded" in clause 35(1) should thus be amended to read as follows:

"Unless a person provides a port service or operates a port terminal or port facility in accordance with an agreement contemplated in section 34 …".

2. In relation to existing operations in ports, we note that this position is clarified in clause 43 of the Bill.

1. The drafting and detail of various provisions

1. Concessioning of port facilities (clauses 1 and 36(1))

1. The definition of "port repair facilities" in clause 1 includes "dry docks, vessel repair facilities, warehouses and railways within a port". These are not confined to "repair" facilities but include all facilities within a port other than port terminals. The word "repair" should therefore be deleted from this definition, which should simply read "port facilities".
2. In addition, the word "railways" should be deleted from this definition as railway lines within ports are more appropriately dealt with as port infrastructure. In this regard, it is noted that "railways" are in fact included within the definition of "port infrastructure" in clause 1.
3. In addition, the Authority should be empowered to concession out the design, construction, rehabilitation, development, financing, maintenance and/or operation of port facilities. This power should be included in clause 34(1), through the insertion of the following paragraph:

"design, construct, rehabilitate, develop, finance, maintain and operate a port facility and provide services relating thereto".

2. Ports under the jurisdiction of NPA

1. For the sake of clarity, it is submitted that the definition of "port" be amended by listing the commercial ports that currently fall under the National Ports Authority as a Transnet Division. This definition should, therefore, read as follows:

"…means the commercial ports under the jurisdiction of the National Ports Authority of Transnet immediately prior to the commencement of this Act, namely, the ports of Richards Bay, Durban, East London, Nqura, Port Elizabeth, Mossel Bay, Cape Town, Saldanha Bay and Port Nolloth or a port which has been determined as such in terms of section 10(2)."

2. It is submitted that a "port" should also to be defined in detail and the area in which each port is situated should be spelt out with reference to the boundaries (i.e. the port limits) within which the port is situated. This area (both the sea and land area) should be described precisely in a schedule to the Bill or the port regulations. This is particularly important given the fact that the area of a port determines the very application of the Bill itself, including the powers and responsibilities of the Authority.

3. Functions of the Authority (clause 11)

1. In certain instances, the Authority may itself provide utility services to port users. Clause 11(1)(e) should, therefore, be amended to read "provide or arrange for services such as water, light, power, sewerage and telecommunications".
2. It is unclear what is meant by "ownership" in clause 11(1)(u). This term should rather be replaced by the term "participation".
3. Clause 11(1)(v) provides that one of the functions of the Authority is to "approve or license for the establishment and planning of off-shore cargo handling facilities and services relating thereto".
4. The functions of the Authority in relation to off-shore cargo handling facilities should be clarified. In this regard, the principle that the Authority is responsible for regulating the establishment and planning of such facilities, should be reflected. Accordingly, it is submitted that this paragraph be amended to read as follows:

"licence and regulate the erection and operation of off-shore cargo-handling facilities and services related thereto".

5. This wording is also consistent with the role of the Authority envisaged in clause 44, which specifically deals with off-shore cargo-handling facilities.

4. Aims of Authority (clause 12)

It is submitted that clause 12(I) be amended by deleting the words "of life" and by the addition of the words "and security" in between the words "safety" and "in ports". The clause should therefore read ‘promote measures for safety and security in ports".

5. Co-operative governance (clause 13)

Clause 13(2) provides that the Authority must conclude co-operative memoranda of understanding with all organs of state in order to serve the purpose of co-operative governance as envisaged in clause 13(1). While the principle of co-operative governance is a laudable one, it is submitted that this obligation is unduly burdensome and would increase the cost of regulation, particularly in light of the fact that it will necessitate the negotiation and conclusion of a large number of MOUs with the relevant entities. Accordingly, it is suggested that the word "must" in the first line of clause 13(2), should read "may".

6. Transfer of ports, land and other rights and obligations to Authority (clause 27)

In circumstances where corporate restructuring takes place in terms of legislation in the public sphere, it is normal for such transactions to be exempt from the payment of tax and other duties (see, for example, section 7(12) of the Airports Company Act). The Authority should, therefore, be exempt from such payment in relation to the once-off transfer of assets from Transnet to the Authority. Accordingly, the NPA suggests the inclusion of the following sub-clause in clause 27:

"Despite any provision in any other law, the Authority is exempt from any value-added tax or other tax, stamp duties, transfer duties or registration fees payable in terms of any law in relation to the transfer to the Authority of assets or rights in terms of this section."

7. Directives affecting licensed operators and other persons (clause 39)

It is submitted that clause 39(1)(b) be amended to read as follows:

"in the interest of safety, security or the environment"

8. Routine inspections (clause 41)

1. Clause 41 empowers the Authority to enter the premises of a licensed operator and conduct an inspection thereon "in order to determine whether licence conditions are being complied with". It is submitted that this power should be extended to circumstances where an inspection is required for the protection of safety of persons or property within ports. Accordingly, the following words should be inserted after "complied with" in the first line of clause 41(1):

"or where it is otherwise required for the protection of the safety of persons or property within a port".

2. Due to the nature of port operations, clause 41 should also empower the Authority to enter licensed operator's premises at reasonable times including after office hours.

9. Operations existing on commencement of Act (clause 43)

For the sake of completeness, the words "or to operate such facilities" should be included after the word "services" in the third lines of clauses 43(6) and (7).

10. Fees payable to Authority (clause 51)

1. The Authority may not itself provide port terminals and port facilities. The first line of clause 51(1)(b) should, therefore, read "the provision of port infrastructure and the use of port terminals and port facilities, including…"
2. The descriptions of cargo dues and berth dues in clauses 51(1)(b)(iii) and (iv) are inaccurate. These paragraphs should rather be amended to read as follows:

"(iii) cargo dues for the provision and maintenance of port infrastructure;

(iv) berth dues for vessels occupying quays or repair quays while not engaging in the loading or unloading of cargo."

11. Safety of navigation and shipping in ports (clause 52)

Clause 52(3)(b)(vi) should not be restricted to the detention of vessels suspected of causing oil pollution but should extend to other forms of pollution. Accordingly, the words "or other" should be inserted after the word "oil" in the first line of this paragraph.

12. Port regulations (clause 59)

1. Clause 59(1)(b) provides that the Minister may make regulations in respect of "port users appeals and grievance procedures". It is unclear as to which decisions may be appealed against and which entity will hear appeals. Unless this position is clarified, clause 59(1)(b) should be deleted.
2. The maintenance of security within ports is vitally important, particularly given the global risk currently posed by terrorism and the strategic importance to South Africa of its ports. At the same time, it is recognised that powers of search, seizure and arrest involve limitations on persons' constitutional rights to privacy. Accordingly, clause 59(1)(f) should specifically empower the Minister to make regulations which confer the powers of search, seizure and arrest on the Authority. This can be effected by the addition of the words "including the powers of search, seizure and arrest" at the end of this paragraph.
3. The reference to "loading of matters" in clause 59(1)(i) is not understood. This position should be clarified.
4. In order to fully regulate important activities within ports, the Authority's power to make regulations with the approval of the Minister under clause 59(2), should be clarified in the following respects:

1. the words "and the movement of vessels within, into and out of a port" should be included after the words "vessel traffic" in clause 59(2)(a);
2. the phrase "and on board vessels within the port" should be inserted at the end of clause 59(2)(c);
3. the phrase "regulation and" should be inserted prior to the phrase "licensing of activities" in clause 59(2)(d);
4. the following paragraph should be included in clause 59(2): "the regulation of loading and unloading of cargo and the embarkation and disembarkation of passengers within a port"; and
5. the following paragraph should be included in clause in 59(2); "the prohibition of certain activities within a port, including trading without the Authority's permission".

13. Repeal of law, and saving (clause 65)

The word "Bill", in the last line of clause 65(1), should read "Act".

2. Conclusion

1. Finally, given the recent media reports relating to the situation in Maydon Wharf, in the port of Durban, the NPA would appreciate the opportunity to make an oral submission on the need for restructuring and reform in this area, to the Portfolio Committee on Transport during the course of the Committee hearings on 4 or 5 March 2003. The purpose of this presentation will be to explain the history and unique circumstances pertaining to the Maydon Wharf area. For purposes of these comments, we submit that we are in full agreement with clause 45 of the Bill as contemplated to deal with Maydon Wharf matters which has its own unique set of circumstances.
2. Thank you for the opportunity to make these comments on the Bill. Please do not hesitate to contact us should the Committee have any queries on these comments or require assistance in formulating legislative wording to give effect to the comments set out above.

Kind regards