1. THE PETROLEUM PIPELINES BILL Presentation to Parliamentary Portfolio Committee on Minerals and Energy
Dr Rod Crompton
Chief Director Hydrocarbons
Department of Minerals and Energy
7th November 2001

2. Background: Government’s Objectives
Lower intermediate input costs (energy) to create a low-cost platform for economic development – industrial heartland.
Reduce monopoly rents in the natural monopolies.
(Energy Policy White Paper Dec 1998)

3. Background: Government’s Approach
Competition between and within energy carriers.
Appropriate “rules of the game” for investors
Facilitate investment projects
Regulation where necessary
Protect country’s strategic interests

4. Government considerations
Most but not all pipelines state owned
Additional pipeline capacity & investment required
Pipeline network strategic importance e.g. Natref fire
Not clear if all tariffs market related.
Transparency in tariff composition.

5. PROCESS THUS FAR Consultations:
International Energy Agency survey, April 1996
White Paper on Energy Policy, December 1998
Consultants appointed July 2000.
Three stakeholder workshops
Published for comment, 14 September 2000.
Submissions from 8 parties
Currently processing submissions
Next steps
Cabinet
State Law Advisor
Parliament
Translation (Zulu)

6. Submissions received from
Engen(Coastal Refineries)
Sasol
TotalFinaElf
Petronet
South African Institute of Civil Engineers
COSATU
Groundwork
Umbhaba Estates

7. Purpose of Bill To establish a national regulatory framework.
To establish a Petroleum Pipeline Regulator as custodian and enforcer of the national regulatory framework.
To provide for issuing of licenses
To provide for registration of certain activities

8. Scope Crude oil Petroleum products
Pipelines, Storage facilities, off-loading facilities
Excludes production of petroleum (i.e. mining or farming)

9. Objects Promote competition, limit anti-competitive practices
Promote the efficient, effective, sustainable orderly development from a national and industry perspective.
Promote fair and equitable access

10. Petroleum Pipeline Regulator
Established as a legal person.
Functions of the Regulator:-
Issue licenses for construction, operation, of pipelines and related services
Register storage facilities
Gather information
Set tariffs and charges
Promote competition
Right to expropriate land

11. Petroleum Pipeline Regulator
Composition:
5 part-time members;
appointed by Miniser for 4 years renewable;
limitations
RSA citizen, solvency, no convictions
Conflict of interest (disclosure)

12. Qualifications of Regulator Board
Relevant experience.
Impartial and objective.
Balance between continuity and capacity building

13. Regulator Meetings Procedures prescribed by regulation.
Open to public unless confidential, propriety or commercially sensitive information discussed.
Decisions reduced to writing.
Record of proceedings.

14. Duties of Regulator Act in a justifiable and transparent manner.
Not act in own interests.
Act independently of undue influence or instruction.
Act in a manner required and expected from the holder of a public office.

15. Decisions of the Regulator
Procedurally fair – hear both sides.
Based on facts and evidence.
Legally consistent.
In public interest
Written.
Explained.
Appeals to court having jurisdiction.

16. Regulator support CEO + staff
CEO may be to person employed by another energy regulatory authority

17. Regulator Funding By appropriations from National Revenue or ;
Monies in terms of section 3 of CEF Act
Levies by separate legislation
Fees earned, e.g. dispute resolution;
Accounts audited by Auditor General.

18. Issuing of Licenses Application advertised
Objections within 30 days considered.
Decision period 60 days after replies to objections
Separate licenses for each activity.
Existing activities must apply and get licenses.

19. License Conditions (1) Regulator may impose conditions, e.g.
Setting and approval of tariffs
Period of validity
Construction and operations standards
HSE concerns
Competition issues
Non-discriminatory practices
Separate management and accounts for vertically integrated companies - no cross-subsidization.

20. License Conditions (2)
Access on commercially reasonable terms in transmission and storage for all.
Negotiated changes in routing, diameters capacity, compression at own cost.

21. Licenses - Sundry
Non-discrimination,term, amendment, revocation of license.
Regulator can amend license
Regulator arbitration on request
Standards of construction
Contravention: penalise, suspend or revoke, fines up to R2 mill. per day. Appeals to High Court
Registration can be converted to licensing

22. Other Provisions Storage facilities must be registered.
Following arbitration of a dispute Minister and Regulator may make it a licensed activity
Entry, inspection and information gathering by Regulator.
Voluntary resolution of disputes.
Compulsory resolution of disputes
Expropriation - rights of way.

23. Regulations
Made by Minister after consulting Regulator and inviting public comment:
Procedures
Record keeping
Forms
Publishing information
Methodology to be used by Regulator
Land rehabilitation

24. General Prohibition on agreements contrary to Act
Short Title, Petroleum Pipelines Act

25. Historical

26. Current usage