SAPIA PRESENTATION BEE CONFERENCE APRIL 2004

PETROLEUM INDUSTRY LEADS Even before 1994 the industry was a leader, driven by the Sullivan and EEC principles. In those days it meant breaking the rules in order to have a more representative workforce at all levels. Non-racial toilets, whites working under blacks – these were becoming the norm in the industry in the 1970’s – long before they were for business in general.

WORKING WITH GOVERNMENT The petroleum industry was one of the first industries to declare publicly that it wished to work with the democratic government and other stakeholders to help build a better life for all South Africans. It was also involved in direct BEE efforts before the 1998 White Paper and the 2000 Charter.

PRE-WHITE PAPER EFFORTS In his chairperson’s review in 1998 then Sapia Chair Mr Fred Phaswana said: “The most important issue Sapia members are addressing is Black Economic Empowerment in our industry.” He then listed what the industry had done.

MR PHASWANA’S LIST OF THINGS DONE BY 1998 Encouraging equity deals Employee ownership schemes Assisting BEE companies Making available to BEE companies all new Ratplan quotas Providing supply and distribution services Providing refinery processing agreements Making service stations available

LIQUID FUELS CHARTER First Industry Charter – November 2000 Before that: Discussions with BEE companies in 1997 Much assistance as listed above Formation of AMEF White Paper, 1998, 25% BEE participation Adaptation of RATPLAN Ministerial Challenge – April 2000

THE THREE PILLARS Equity ownership Human resource development Procurement Progress must be made on each pillar.

EQUITY OWNERSHIP Rapid progress made in first three years All members have done deals. Key need to ensure sustainability

COMPLIANCE WITH CHARTER Evaluation of compliance is key What are the rewards/sanctions? Ministerial Evaluation Committee Making the Charter a “Contract with the Nation”

SECTORAL CHARTERS Where a sector has a Charter, as the Petroleum Industry does, compliance with the Sectoral Charter targets should be recognised by other parties as evidence of empowerment credentials. Therefore petroleum companies with 25% BEE shareholders should be fully recognised.

PROCUREMENT Sourcing goods and services from empowerment suppliers are a very real way of ensuring that empowerment reaches deep into the economy. It is challenging and involves finding and developing such suppliers.

HUMAN RESOURCE DEVELOPMENT Again a way of ensuring that empowerment reaches down into society. Development should be of own staff and of the broader community.

THE SUPPORTIVE CULTURE This is the real key – the process must be controlled by individuals who support transformation Our society is littered with examples where those who are in positions of authority and should be promoting transformation are the very ones hampering it.

CONCLUSION Empowerment is vital to the well-being of South Africa. The Petroleum Industry is proud to have been a leader. It wants to stay a leader.