18 June 2003

Mr Jeremy Cronin, MP
Chairperson of the Portfolio Committee on Transport
Parliament of the Republic of South Africa
P0 Box 15
CAPE TOWN
8000


Dear Mr Cronin

TRANSNET LIMITED: AMENDED SUBMISSION TO THE PORTFOLIO
COMMITTEE ON TRANSPORT ON 18 JUNE 2003- NATIONAL PORTS
AUTHORITY BILL, 2003


The Portfolio Committee on Transport invited written submissions from interested parties regarding the above. Transnet would like to express its appreciation for the opportunity to comment on the Bill.

The purpose of this letter is to emphasise Transnet's view on the National Ports Authority Bill, 2003 ("the Bill") and to deal primarily with technical legal drafting issues pertaining to the Bill as highlighted by the National Ports Authority a Division of Transnet (see Annexure A).

General speaking1 however, Transnet is satisfied with most of the amendments save for the matter highlighted in this submission. It is not our intention to repeat the proposals contained in the previous submissions made
by Transnet (namely, the letter dated 19 March 2003 addressed by Transnet to the Chairperson of the Portfolio Committee on Transport and the annexures thereto) ("Transnet's previous comments") nor is it our intention to repeat the comments on the amended Bill made by the National Ports Authority of South
Africa ("NPA") and the South African Forts Operations ("SAPO").

In our submission, Transnet supported the National Ports Authority Bill, especially its key objectives and underlying principles.

Subsequent to the oral presentation to the parliamentary Portfolio Committee on 5 March 2003, Transnet (NPA, SAPO) NDOT, DPE had further discussions to support the NDOT in their finalisation of this process. All parties have in principle agreed that the NPA Division be incorporated within Transnet and at some stage in the future be transferred or disposed of to the State. The amended Bill envisages the establishment of the Authority in three phases, namely the NPA Division", the "subsidiary NPA" within Transnet and the "separate NPA" outside Transnet. It is important to note that the intent of the Bill should make provision that the NPA has all the powers and the responsibility of the Authority during each of these phases. There was also agreement on the establishment of an interim regulator whilst the NPA is part of Transnet.

We wish to draw your attention to the fact that the Bill is still silent on the issue of tax exemptions available to Transnet and/or any other entity pursuant to the incorporation of the subsidiary NPA or the separate NPA and the transfer of assets, liabilities and the like from Transnet to the subsidiary NPA, and the subsequent transfer from the subsidiary NPA to the separate NPA. As mentioned in paragraphs 4.2.7 and 13.3.2 of Annexure "A" attached to Transnet's previous comments dated 19 March 2003, the amended Bill should provide for certain tax exemptions to be available to Transnet, the subsidiary NPA and the separate NPA for the transfer of assets, rights and the like. We refer you in this regard to the suggested wording in paragraphs 4.2.7 and 13.3.2 of Annexure 'A" attached to Transne{s previous comments and in paragraph 45.5 of the NPAs submission attached hereto.

These proposed exemptions relate to the payment of fees for the formation and incorporation of the subsidiary NPA, the creation and issue of shares upon the formation of the company, value-added tax, capital gains tax, and the like. In the absence of such a provision, Transnet and/or the Authority (and, ultimately, the State) will be liable to pay such duties and taxes.

In conclusion NPA (see Annexure A) will submit comments on the technical aspects of the amended Bill. The feedback from the Transnet Business Units should therefore be read against the background of the Transnet view. Transnet acknowledges the vital strategic importance of this Bill not only for Transnet, but also the economy, and therefore support the urgent enactment of this Bill, notwithstanding the concerns articulated in the submissions.


Kind Regards

'MS RIAH PHIYEGA
GROUP EXECUTIVE
CORPORATE AFFAIRS
TRANSNET LIMITED