Barry Streek
In a new privatisation move, the government has released draft legislation enabling private companies and equity partners to become involved in South Africa’s strategic petroleum pipelines.
The draft Petroleum Pipelines Bill, published in the Government Gazette, provides for the appointment of a Petroleum Pipeline Regulator to regulate the operation of the petrol pipeline and storage infrastructure.
“It has now become a possibility that parties other than national government may become active in the ownership and operation of petroleum pipelines,” notes attached to the Bill state. “It is therefore incumbent on government to introduce regulatory measures to ensure the efficient operation of the pipelines network and orderly development in future.”
This week the Congress of South African Trade Unions (Cosatu) objected strongly to the legislation, saying the pipelines should remain in public hands. Said Fiona Tregenna, of Cosatu’s parliamentary office: “The draft Bill appears to open up competition in petroleum pipelines, under a regulator. Cosatu believes the petroleum pipelines sector is a strategic sector for South Africa, given its centrality in meeting our energy needs.
“As such we consider it most appropriate for petroleum pipelines to remain in public hands, with the state developing the sector in the national interest. A strong regulatory framework is important to this.”
Cosatu would seek clarity from the Department of Minerals and Energy Affairs about its intentions and “interact with it to advance these objectives”.
Theuns Burger, the department’s petroleum director, said the Bill did not in itself promote privatisation, but provided for the regulation of pipelines and storage facilities.
This would enable companies to develop new pipelines once these had been approved by the regulator. Whether the private sector or strategic equity partners became involved in existing pipelines or invest in them would depend on the government’s decisions about the restructuring of Petronet, which owns the infrastructure.
The Bill did not make financial provisions apart from the payment of licence fees, Burger said.
The memorandum attached to the Bill says a network of pipelines is currently used to transport crude oil and petroleum products between the port of Durban, the Durban refineries, the crude and synthetic fuels depots in Gauteng and Mpumalanga, and between depots.
“The petroleum industry and markets is highly dependent on this network. The pipeline network is thus of strategic importance to the economy [which] depends on the stable supply of liquid fuels and hence the ongoing effective operation of the petroleum pipeline and storage infrastructure. To date, the state has managed the operation of much of the pipeline network.”
Among the objects of the new law are to “promote competition in the provision of commercial services and limit anti-competitive practices in the construction and operation of pipelines” and to “promote fair and equitable access to pipelines, offloading facilities and storage facilities, and to commercial services connected therewith”.
The regulator will issue licences for the construction of pipelines and offloading facilities and their operation, and will maintain a register of storage facilities.
The legislation also enables the regulator to expropriate property to facilitate the construction of pipelines, offloading facilities and storage facilities, provided a licensee or registered person is unable to acquire land by agreement with the owner and the land or a right in the land is “reasonably required” by a licensee or a registered person to develop these facilities.