AUTHORITY BILL
The following is a summary of the SACOB comments on the National Ports Authority Bill. In the interests of brevity, SACOB only mentions those aspects of the Bill with which it has concerns.

• The definition of navigational aids should be expanded to accommodate future technological developments
• The motivation of management as an object of the Act should be deleted.

• It is inconsistent with the object of the Act to promote private sector involvement, for the state to be the only member shareholder of the Authority
• The memorandum/articles of association should give the Act precedence in the event of a dispute.
• The exemption of the Authority from the Companies Act gives the Minister unduly wide-ranging powers.

• There should be consultation with stakeholders before decisions are taken on viability studies.
• Instead of periodically updating the development framework, short, medium and long term rolling plans should be compiled. Furthermore, in addition to the Port Consultative Committee, a wider spectrum of stakeholders should be consulted in the compiling of the development framework.
• It is unclear if the Authority’s function to provide road and rail access to the ports, related to infrastructure or to egress and access control. The intent should be clarified, and should relate to egress and access only.
• Bearing in mind the damage that can be caused by poor service provided by contractors the Authority should determine the ability of a contractor to perform the job satisfactorily before the contract is awarded.
• The Authority should not concern itself with the black economic empowerment practices of private sector operators. Other laws and policies should be applicable.
• The Authority should promote and implement safety measures in the ports.
• Stakeholders should be consulted on any memorandum of agreement entered into between organs of state relating to port operations.

• The Act is silent on the appointment of founding board members to the board. Provision should also be made for private sector individuals to be appointed to the board.
• Stakeholders should be consulted on policy for the development, improvement and extension of ports.
• For good governance, board members should not have been found guilty of a criminal act, irrespective of whether the sentence included the option of a fine or not.
• The number of times an individual may be re-appointed to the board must be stipulated.
• Good corporate governance should require that a person on the board, not only declare a specific conflicting or compromising inters, but that he/she exit the board. Likewise he/she should resign should he/she, a family member, business partner or associate acquire an interest in the port. Furthermore, the National Ports Authority should not do business with an organisation in which a board member has an interest.

• The Regulator should be subject to the Competition Act.
• The minister should publish regulations, not the Regulator.
• Provision should be made for the manner in which the Minister will appoint the Regulator, whether its employees will be full or part time and how often meetings will take place.
• No members of the Regulator should be permitted to profit from information obtained as a result of his/her functions relating to the Regulator.

• Provision should be made for reviews of agreements and partnerships at periods of less than a year if circumstances so dictate.
• The Regulator should not be permitted to control and/or restrict share operations or interests of licensed operators.
• Any restrictions relating to the activities of a licensee must be restricted to operations in terms of the licence.
• The Regulator should not be able to fix prices. Its role should be to approve tariffs.
• Operators should be given an opportunity to rectify any contraventions of the licence prior to the Regulator taking punitive action, unless the activity is unlawful as determined in a court of law. This would also apply in the event that the Authority would issue a directive.
• When a licence is cancelled and the Authority provide the service, a user fee should be charged without the licensee having to pay the Authority.
• The Authority should not issue directives on operators' performance standards. These should be included in the contract.
• The Authority should not require detailed reporting on pilfering taking place at private operations.
• Dismantling of existing offshore infrastructure should only take place after careful investigation into all possible alternatives.
• An arbitration provision should be included in the negotiations relating to the restructuring of Maydon Wharf. Appeals should be made to an independent authority, not the National Ports Authority

• Before a port is closed, any contributing factors, especially mismanagement, must be investigated with a view to rectifying the situation.

• Reference should be made to the section establishing the Port Consultative Committees
• The Authority should not be able to charge a fee on land rentals. All costs should be included in the lease agreement
• Security in the ports should be in direct relation to the risk and at a reasonable cost.

• The Authority should refer to international norms and standards in determining the depths of channels.
• Persons/ organisations that have paid for the use of a vessel should not be expected to pay salvage costs in the event of the loss of that vessel.
• The Harbour Master cannot be expected to look after the safety of persons living and working on vessels in the port.
• Before a vessel owner is penalised for pollution, it must be established whether or not the pollution emanated from that particular vessel.
• International procedures should be followed for the closing of lighthouses.

• Not all activities in a port need to be regulated. In many instances codes of conduct and/or guidelines should suffice.

• The port consultative committee should be representative of port users, and should thus be drawn nation wide, not only form the communities where the port is situated.

SACOB is a Section 21 business association representing in excess of 30000 businesses, 20 national associations and their members and 150 corporate members. SACOB reaches into every corner of South Africa through its network of 53 Chambers of Commerce and has an infrastructure in place that enables it to communicate on a daily basis with its membership.

This submission to the Parliamentary Portfolio Committee deals with the National Ports Authority Bill. We thank the Parliamentary Portfolio Committee for the opportunity to comment and make ourselves available to clarify any issues contained herein.

In order to simplify the process, the points are dealt with on an individual basis and in numerical order.

"navigational aids" This definition is very precise, and should new technology be introduced, the definition would have to be amended. It is therefore suggested that the words "or any other device used in navigation" be added at the end of the definition.

One must question why one of the objects of the legislation is to motivate management. Surely it is the job of management to motivate employees. One can also ask if it is possible that legislation can motivate individuals? In addition, there is not reference in the legislation referring to how management is to be motivated.

The phrase: "in order to motivate management and workers" should be deleted.

One of the objectives of the Act, to wit, 2(b)(iii) is to facilitate transfer of technology, information systems and managerial expertise through private sector involvement and participation. The clause under discussion makes provision for the State to be the only member and shareholder of the Authority. This is inconsistent with the objectives of the Act.

It would surely be easier to include a statement in the memorandum/articles that in the case of a dispute, the provisions of the Act take precedence over the memorandum/articles. The question raised here is: does the memorandum/articles follow the Act or vice-versa? Usually the memorandum follows the Act, which should then logically have precedence

This clause gives the Minister of Trade and Industry extremely wide-ranging powers. There should be a set of prescribed circumstances under which the Minister can declare the Authority exempt from provisions of the Companies Act.

The clause states that an open and transparent process, including viability studies, environmental impact assessments and cabinet approval needs to be followed in determining which ports in additional to existing ones, should fall under the jurisdiction of the Authority. However, it excludes a statement to the effect that there should be consultation with stakeholders. It is recommended that such a statement be included.

The notion that the development framework should be periodically updated is vague. Short, medium and long term rolling plans should be compiled. This will ensure regular updating of the plan rather than the less desirable periodic updating.

The port development framework should be carried out in conjunction with the Port Consultative Committee (see Clause 60(1)) although a wider stakeholder contribution is preferred. Reference to the inclusion of stakeholders should be included in this clause.

While road and rail access to the ports comprise critical parts of the logistics chain, it is questioned if it should be the function of the Authority to provide such access. The words "provide or" should be deleted.

A further concern is that this clause could give the Authority the right to exclude private transport operators from accessing the port, as it does not clarify if access relates to the provision of infrastructure, or physical access and/egress control.

The intention of this clause needs to be clarified.

Typographical/language error – substitute "…vessels to ports" for "…vessels in ports".

It is necessary for the NPA to apply itself diligently to ensure that the contractor is able to carry out the terms of the contract as, should the terms of the contract not be adequately fulfilled, then the damage caused in Rands as well as in reputation may be immeasurable. The words "prior to the conclusion of any contracts" should be added after the word "efficiently".

All companies have an obligation to ensure that empowerment takes place. It surely is not the function of the Authority to become involved in these issues as they relate to licensed private sector operators in the ports. This clause should be deleted.

It is not enough to promote measures. The NPA should also be responsible for implementing the necessary procedures to promote safety. The words "and implement measures" should be added.

Whilst it is recognised that inter-governmental relations will be of critical importance to the successful operation of ports, it is queried whether stakeholders will be consulted in the process leading up to the conclusion of a memorandum of understanding that will be entered into between the relevant organs of state?

Clause 15 gives details on how a vacancy on the board is to be filled, and provides for nominations to called for through the national media. However, no such provision is made for the appointment of members at the commencement of the Act. Thus the question must be asked – from whom will the founding members be drawn?

A further query is the role of the private sector on the Board. No specific provision is made for stakeholder representation. The outcome could be a board composed entirely of public sector representatives, as there are individuals within that sector with the expertise required.

It is therefore imperative that specific provision be made for the inclusion of private sector individuals on the board.

The overall policy for the development, improvement and extension of the ports should be set in conjunction with stakeholders. Add the words "…in conjunction with stakeholders." .

If a person has been convicted of an offence then that is sufficient to exclude him from a prominent position on the Board. The fact that he was not imprisoned but paid the fine confirming his guilt does not exonerate him from having committed a crime. Good Governance requires a zero tolerance attitude. Delete the words "without the option of the fine".

Members of the Board may be reappointed to ensure continuity but it is preferable that members should not be appointed in perpetuity. Good governance requires that Board Members be changed at least every 5 years. Add the words "for one term of office, to serve a maximum of two terms of office."

It is not acceptable that a member of the Board merely declares his interest in any direct or indirect financial transaction of the NPA. Good governance must not just take place but must be seen to take place. Good governance requires that immediately a member of the Board acquires an interest in the Authority then he or she should exit the Board.

A member of the Board should not have the option of recusing himself from discussions relating to an interest in which his family, partner or associate is involved. The presence of a family, partner or associate’s interest will forever colour the decisions made and cause suspicion amongst other stakeholders.

The clause should read that a member of the Board must resign if a family member, business partner, or associate acquires a direct or indirect financial interest.

It is unacceptable that a Board member should benefit from his duties as a member of the Board and should he acquire an interest in the NPA then it wholly insufficient sufficient that he declares the interest to the shareholding Minister. The Board member should exit the Board in this case.

The NPA should not do business with an organization or enterprise in which a member of the Board has an interest. This is wholly unacceptable and is in conflict with the principles of good governance. An alternative organization or enterprise should be sought.

It is unclear whether the Regulator and other members appointed by the Minister will be full-time employees or how often members must meet. This provision should be catered for.

Remove the comma between "monitor" and "the".

It is imperative that the provisions of the Competition Act be complied with.

The Regulator should not publish regulations in the Government Gazette. This should be the prerogative of the Minister. The Minister should publish the Regulations, after consultation with, and with the concurrence of the Regulator.

It is not clear how the delegates of the regulator will be selected and it is preferable that they are selected in a similar manner provided by the Bill in terms of filling vacancies to the Board, i.e. from nominations called for in the national media. This will improve the credibility of the regulator and is in the interests of democracy. Clarity is required on the selection procedure.

See comments made in respect of Paragraph 17.

A member of the secretariat of the Regulator is not able to, inter alia, profit from confidential information obtained as a result of performing that person’s official functions. This clause should be extended to all of the members of the Regulatory Body and the Regulator.

Perhaps provision should be made for possible reviews at shorter notice, should circumstances so dictate. A year could be too long to wait in the event that necessary services are not being appropriately provided.

It seems very unfair that the terms of a licence could make it possible for the Regulator to control and restrict the share operations or interests in a licensed operator. What if the operator is listed on the JSE? How will the Regulator control the movement of shares? What if circumstances are such that a change in shareholding or in the interests is beneficial to the licensed operations? What if the changes are in a division or department not linked to the licensed operations?

Ideally, the Regulator should not have this power. However, should such power be deemed necessary then it should only relate to operations directly connected with those provided for in the licence.

This provision is very limiting. It is understandable that such a restriction be placed on activities taking place with specific reference to those for which the licence has been issued. It must not be extended to operations in other divisions of the operator. This should be clearly stated.

SACOB is opposed to any form of price fixing. The role of the Regulator in this regard should be aligned with those in other industries, such as electricity and telecommunications, namely to approve tariffs only.

Clause 38(2) states that an operator may be required to take specific actions to rectify a contravention or breach of operating conditions.

SACOB believes that when a breach or contravention occurs, the operator must be given the opportunity to rectify the situation, unless the breach constitutes an unlawful act, and it has been found to be so in a court of law.

Clause 38(3) merely provides for representations to made why the licence should not be suspended or cancelled. It should provide an opportunity to rectify the situation.

SACOB understands the need to recover charges for services rendered, but in a case envisaged in terms of this clause, user fees should apply as a matter of course. It would be from this source that the Authority would automatically charge fees for the services rendered, and thus should not recover expenses from the operator concerned.

Surely there should not be a need for the Authority to give directives on performance standards and procedures to be observed by licensed operators. As a performance contract has to be entered into, such issues should be included in such a contract.

As in the case of clause 38(3), operators should be given an opportunity to rectify a situation, not merely be provided with one to make representations as to why a directive, if considered necessary, should not be issued. Should a directive be deemed necessary, it should merely be to ensure compliance with standards set out in the performance contract.

The ability of the Authority to issue directives adds to uncertainty in business operations and discourages investment.

It is questioned why this detailed reporting is necessary. In any business there is a level of pilferage. It is understandable that theft of cargo needs to be minimised, and in this regard reporting of such losses is acceptable. However, the reporting of pilferage is likely to cause an unnecessary administrative burden, and unless a convincing argument can be made why the Authority would need such information, there should be no need to provide it.

The dismantling of an offshore facility could be a costly exercise, and should only be done if the facility is to be disbanded. In the event that a new operator is to take over the function, the parties concerned should be given and opportunity to negotiate the most appropriate outcome. For instance, the existing operator may be prepared to sell the infrastructure to the new operator.

It is thus recommended that dismantling only take place after careful investigation into all possible alternatives.

This provision clearly indicates that a lessee negotiating with the Authority is playing on an uneven playing field. It makes it possible for the Authority to terminate a lease if the lessee does not agree with it. It is imperative that an arbitration clause be included so as to ensure that fairness prevails.

This clause reinforces the uneven playing field syndrome. If the lessee does not agree with the declaration that his lease should be declared invalid, he can make representations on the proposed declaration. It does not mention to whom the representations should be addressed thus it is assumed that it would be to the Authority. Thus, the Authority becomes a player, the referee and the judge. This situation will discourage private sector operators from participating in the port.

If mismanagement has made the port unviable, then it should not be closed before an effort is made to remedy the situation. Chapter 2 paragraph 9 makes a tentative provision for judicial management or liquidation. It is preferable that provision is made for this remedy prior to the final decision being made to close the port.

Reference should be made to the section in the Act whereby the Port Consultative Committees are established, namely section 60.

SACOB questions why the Authority should be able to charge a fee on land rentals. Surely lease agreements should include fair prices for rentals. Additional fees on land rentals are not desirable.

SACOB questions if the security referred to in this clause is addition to the normal security that would be required in terms of which an operator’s licence is issued. If so, the costs of operating in a port could escalate to the detriment of South Africa’s international trade. They would also act as a deterrent to potential operators in the port.

In any event, security should always be in direct relation to the risk, and an amount that the Authority may deem fit.

Reference should be made to internationally accepted norms rather than referring to depths published by the Authority, since South Africa is competing on a global scale.

SACOB is gravely concerned at this provision. Persons who have had beneficial use of the vessel could include a cargo owner or passenger. These persons would have paid to use the vessel, and themselves could have suffered severe losses. It would be gravely unfair to try to recoup costs from such persons. Thus costs should not be recoverable from them.

It is questioned if it is feasible for the Harbour Master to carry responsibility for the welfare of persons working or living on a vessel in the port. As long as usual precautions are taken to prevent accidents and other incidents, the Harbour Master should not have such responsibilities. It is suggested that international practice be investigated and introduced.

This provision does not provide for instances where the vessel has not, in spite of the suspicion, caused oil pollution. As the Authority does not have an obligation to compensate the vessel owners/operators in the event the vessel did not cause the pollution, the possibility of exploitation of vessel owners/operators cannot be ruled out.

The inclusion of this clause in the legislation would send a negative message to operators, and could result in a reluctance to call on South Africa ports.

It is suggested that international practice be followed in the closure of a lighthouse, or where the services provided by the lighthouse are amended.

SACOB refers to its comments on Clause 30(3) where it states that the Regulator should not publish regulations in the Government Gazette. The same principle should be applied to the provision that the Authority publishes regulations in the gazette. This should be the prerogative of the Minister. The Minister should publish the, after consultation with, and with the concurrence of the Authority.

In addition, not all the activities need to be regulated. In some instances codes of good practice and guidelines may be sufficient, as is the case in clause 59(2)(k). This clause, if interpreted as it stands in the Bill would mean that regulations would be promulgated covering the guidelines for entering into a concession or public-private partnership agreement. This is a contradiction in terms

SACOB questions who would be regarded as local port users. Would it be those who use the local port no matter where they are located, or would it be users in located in proximity to the port? SACOB believes that port users in the broader context should be represented on the committees, and they should be drawn from the port’s client base, irrespective of their locality. For example, individuals drawn from the local area could have a very different view of the role the port should play to that of a client located at a distance i.e., Durban users should not be able to make representations on behalf of those who are located in Johannesburg.