1 TRANSNET PAGE National Environmental Management: Integrated Coastal Management Amendment Bill, B Transnet SOC Ltd submissions to the Parliamentary Portfolio Committee on Water and Environmental Affairs, 24 July 2013

2 TRANSNET PAGE Outline Transnet’s general approach to the Bill Illustrations of port infrastructure The ambit of coastal public property and its impact on Transnet’s property interests in ports Transnet’s recommendations on the ownership issue Other issues arising from the ICM Bill

3 TRANSNET PAGE Transnet’s general approach to the Bill Transnet supports the purpose of the ICM Act: the protection of South Africa’s coastal environment Transnet manages significant environmental responsibilities under the National Ports Act and general environmental law Transnet’s ownership interests in commercial ports is required for effective port infrastructure investment and is consistent with the National Ports Act

4 TRANSNET PAGE Illustration of port infrastructure: the Port of Ngqura Jetty Turning Basin Breakwater Entrance Channel Breakwater Quay wall

5 TRANSNET PAGE Examples of breakwater structures Core Rock Armour Rock Concrete Armour Units Seabed Sea level Rubble Mound Breakwater Concrete Block Breakwater Breakwater protected by a rubble mound Sea level Concrete Caisson Breakwater

6 TRANSNET PAGE Example of quay wall structure Gravity quay wall (concrete blocks) Foundation stone Anti scour layer

7 TRANSNET PAGE Example of quay wall structure (2) Caisson quay wall (concrete blocks) Foundation stone Anti scour layer

8 TRANSNET PAGE The impact of loss of ownership on Transnet Remove port assets worth R45.8 billion from Transnet’s balance sheet Compromise Transnet’s loan covenants Imperil Transnet’s R307 billion capital investment programme and Government’s economic infrastructure developmental agenda Adverse impact on Transnet’s gearing, affecting the company’s credit rating and increasing the cost of debt

9 TRANSNET PAGE The Explanatory Memorandum to the Bill Transnet submits that it is possible for the Bill to accommodate Transnet’s ownership interests in ports without compromising the purpose of the ICM Act The Explanatory Memorandum indicates that the drafters of the Bill acknowledge Transnet’s concerns A purpose of the Bill is to “ensure that [coastal public property] does not impact on ownership of assets and operations of other organs of state” (paragraph 2.1 of the Explanatory Memorandum) Unfortunately, the Bill does not achieve this objective

10 TRANSNET PAGE The ambit of CPP and its impact on Transnet’s property Transnet currently owns the seashore and seabed within ports and discharges its duties in respect of ports in terms of the National Ports Act Section 11(1) of the ICM Act: ownership of coastal public property (CPP) “vests in the citizens of the Republic” and is held in trust by the State

11 TRANSNET PAGE The ambit of CPP and its impact on Transnet’s property (cont.) ICM Bill seeks to address Transnet’s concerns. Section 7(2)(a) excludes from CPP: “any immovable structure, or part of an immovable structure, including harbour installations and infrastructure, whether located on land or on the seabed, lawfully constructed by an organ of state” Transnet submits that this section does not achieve its intended purpose of safeguarding Transnet’s ownership

12 TRANSNET PAGE Two reasons why s 7(2)(a) does not protect Transnet’s ownership The property law principle of accession immovable structures, such as breakwaters and quay walls, will accede to the seashore or seabed beneath the structures the owner of the seashore or seabed (SA’s citizens) will therefore own those immovable structures Areas within ports that do not consist of immovable structures, but which are Transnet assets, are not excluded from CPP, e.g. basins and channels

13 TRANSNET PAGE Ownership issue: Transnet’s recommendation Specify that the ownership regime in s 11(1) does not apply in ports This is consistent with Transnet National Port Authority’s (TNPA) statutory function of owning ports (s 11 of National Ports Act) Would not undermine the public interest as Transnet is a state-owned entity that, through TNPA, administers ports in the public interest Provide for transfer of ownership of new ports to TNPA if such ports are proclaimed

14 TRANSNET PAGE Ownership issue: alternative recommendation Exclude port installations and port infrastructure (as defined in the National Ports Act) that is lawfully constructed by an organ of state from the ambit of CPP Exclude the land and seabed beneath these structures, installations and infrastructure from CPP Provide for ownership in new port installations and port infrastructure to vest in TNPA (as the Authority under the National Ports Act)

15 TRANSNET PAGE Other issues arising from the Bill Definition of harbour (section 1) not clear that existing ports have been “proclaimed in terms of any law” commercial ports should be distinguished from harbours recommend: insertion of definition of “port” (as defined in National Ports Act) Land reclaimed from coastal waters in a port should vest in TNPA (section 7A)

16 TRANSNET PAGE Other issues arising from the Bill (cont.) Owner of land unit loses ownership if high-water mark moves inland (section 14(5)) problem for proposed Durban dig-out port should not apply in ports Maximum period for dumping permits should be extended to five years (section 71(5)) capital works dredging requires regulatory certainty to secure funding for infrastructure projects ease of administration for maintenance dredging

17 TRANSNET PAGE Thank you