PETROLEUM PRODUCTS AMENDMENT BILL
(as introduced as a section 75 Bill)
Document B 25 -2003

COMMENTS SUBMITTED BY CHEMICAL AND ALLIED INDUSTRIES
ASSOCIATION (CAIA)

JULY 2003

INTRODUCTION

CAIA welcomes the opportunity to comment on this headline Bill. CAIA supports the objective of the Energy White Paper 1998 of reducing regulation of the petroleum sector whilst at the same time ensuring that the best needs of all South Africans are properly considered. CAIA believes that success will only be achieved if the Bill provides clarity to ensure proper stakeholder inputs and resulting fairness of any executive regulation, that are also properly linked to legislative and judicial powers, as provided for by the South African Constitution.

CAIA interest in the Bill stems from its support for an integrated approach to chemicals management. The need for an integrated approach is recognized by the global initiative to develop a strategic approach to the International Management of Chemicals led by the United Nations agencies. The commitment by nations to the Johannesburg Plan of Implementation adopted at the World Summit on Sustainable Development, that included the commitment to implement globally harmonized systems of chemical classification and labelling by 2008, is further evidence of the growing trend towards an integrated approach. Harmonisation of chemical classification in terms of hazard is one of the fundamentals of an integrated approach to chemicals management.

CAIA comments are confined to those areas of the Bill, which are seen as potentially undermining this global and national goal.

The Bill involves a substantial number of changes to the current Act, and it appears that some of these changes, the secondary ones, described in limited terms (referred to in the Bill as "matters incidental"), have been tacked on to the primary one (for setting up a licensing regime for the oil industry) without full and due consideration, nor providing clarity as to what they may mean and how they will be implemented. If such secondary aspects are included, the Bill should provide for proper processes and/or guidelines, so that implementation is not selective nor may accommodate some special interest groups' views outside a clearly understood process, and that the executive is properly mandated and responsible to parliament. In this regard, and in particular for the control of product qualities and standards, CAIA believes that sound and accepted principles of science and public policy must be provided for and ensured by the legislature. This would include provisions for criteria which should be adhered to including, but not limited to, the following:

the regulations (or product standards) should be designed to address clear objectives that take proper consideration of the input of all stakeholders;
~ such stakeholders should have equal and fair opportunity to participate in the process of producing the regulations or standards;
objectives should be properly motivated and prioritised, with due recognition of the environmental and pressing socio-economic and developmental needs of the country;
~ alternative approaches and methods of achieving the objectives should be given a full and fair hearing, and consideration in order to evaluate their relative merits; and
~ the entire evaluation process should be based on sound science and data, with the opportunity for all stakeholders and relevant experts to have sight of, and comment on, the stakeholder submissions (and any supporting scientific evidence or data) that will shape the contents and tone of the regulations and standards.

CAIA has consistently advocated a holistic and coherent approach to policy making, as one of the essential components of investor certainty and presents these comments in the hope that they will stimulate further debate so that the final version of the PPA Bill enjoys the support of the broad spectrum South African stakeholders and meets it important objectives, such as low costs (efficient supply) of a basic building block in the economy - transport.


SPECIFIC COMMENTS

Section 2(a)
The inclusion of "safe use" appears to extend the scope of the Act to areas currently covered by the Occupational Health and Safety Act and the (Regulatory) Standards Act. It is not clear whether the term use includes transportation, which would extend the scope into the area covered by the National Road Traffic Act. It is further noted that "safety and health" are not included in the objectives of the Bill that provide guidance and context to decisions, indicating that this is not a primary consideration for this Bill.

While CAIA strongly supports the use of legislation to ensure the management of risk associated with the use of hazardous materials, implementation of the globally harmonised system of chemical classification and labelling requires a harmonized approach across different jurisdictions. The inclusion of this element in this legislation will further fragment an already fragmented legislative approach to chemical management.

It is recommended that in order to ensure streamlining of the legislative approach "safe use" be deleted.

Clause 12C(e): Ministerial power to regulate standards and specifications
The need to regulate the specification and standards of petroleum products is recognised and welcomed. CAIA members supply a number of components and additives that are used in petroleum products. To obtain approval for these products for use involves extensive performance, health and environmental testing to international standards. These standards are developed by proper process by expert groups and apply fairly to all potential suppliers. As an example, the specifications for Jet Fuel, that are supplied to international customers and clearly extend beyond national control, include a number of approved chemical additives.



2
U_South Africa already has a properly defined process to regulate standards and control compliance, enabled by another legislative mechanism, The Standards Act. This provides for the promulgation of compulsory specifications (of products and appliances), particularly to protect public health. Use of this existing process improves likelihood of proper implementation.

The proliferation of technical regulations in different legislative instruments complicates the conclusion of Mutual Recognition Agreements with trading partners on conformity assessment.

The need to formulate technical regulations within a national framework is recognised by the dti, which is developing a new framework, which will better define the functions, and values of regulators as well as a sanctions mechanism to be used when regulated products fail to comply. This work will be complemented by the development of a Mutual Recognition Agreement Strategy, which will be developed for key sectors of the economy in order to reduce technical barriers to trade and to improve market access. The inclusion of this enabling power in the Amendment Bill will compromise the achievement of this national goal.

12c(e) should therefore be deleted.


CONCLUSION AND RECOMMENDATIONS

CAIA looks forward to participating further as required by the Parliamentary F'ortfolio Committee.