1. PETROLEUM PIPELINES BILL PARLIAMENTARY PORTFOLIO COMMITTEE WORKSHOP 20 MAY DEPARTMENT OF MINERALS AND ENERGY
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

2. Background – Government’s Objectives
Lower intermediate input costs (energy) to create low-cost platform for economic development – esp. in industrial heartland
Reduce monopoly rents in natural monopolies
(Energy Policy White Paper – Dec 1998)
Gauteng are ~ 50% of all consumption
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

3. Background 2 – Government’s Approach
Competition between and within energy carriers
Protect country’s strategic interests
Appropriate ‘rules of the game’ for investors
Facilitate investment projects
Regulation only where and to extent necessary
Road, rail & pipeline
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

4. Government considerations
Pipeline network strategic importance – eg Natref fire
Most pipelines currently state-owned
Additional capacity & investment needed - +/- 2007
Not clear if all tariffs market related
Transparency in tariff composition
eg Dbn-Secunda line 40 yrs old
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

5. Process to date International Energy Agency survey - April 1996
Energy White Paper – December 1998
Consultants appointed July 2000
3 stakeholder workshops
Published for comment, 14 September 2000
Submissions from 8 parties
Cosatu
Engen (Coastal refiners)
Groundwork (Environmental NGO network)
Petronet
Sasol
SA Institute of Civil Engineers
TotalFinaElf
Umhaba Estates
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

6. Purpose of Bill Scope of Bill
- Establish a national regulatory framework
- Establish a Regulator as custodian & enforcer of regulatory framework
- Provide for issuing of licenses
Scope of Bill
Crude oil
Petroleum products
Pipelines, storage facilities, off-loading facilities
Excludes production facilities
Others – Safety; investment climate; Security
Storage – ie no sales to final end-users
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

7. Objects of the Bill
Promote competition; limit anti-competitive practices
Promote efficiency; effective, sustainable & orderly development from national & industry perspective
Promote fair & equitable access
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

8. The Regulator - 1 Independent ( legal person) Functions
Issue licenses for construction & operation of pipelines related facilities
Gather information
Set tariffs & charges
Promote competition
Right to expropriate land
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

9. The Regulator - 2 Composition To be phased into single regulator
5 members – full time
Appointed by Minister for 4 year term, renewable
Limitations
RSA citizens; solvent; no convictions
Conflict of interest – disclosure
To be phased into single regulator
Qualifications
Relevant experience
Impartial & objective
Balance between continuity & capacity building
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

10. The Regulator - Meetings
Procedures prescribed by regulator
Open to public unless confidential, proprietary or commercially sensitive information discussed
Decisions to be reduced to writing
Record of proceedings
The Regulator - Duties
Act in justifiable & transparent manner
Not act in own interests
Act independently of undue influence or instruction
Act in a manner required & expected from holder of public office
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

11. The Regulator - Decisions
Procedurally fair
Based on facts & evidence
Legally consistent
In public interest
Written
Explained
Appeals to to court having jurisdiction
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

12. The Regulator - Support
CEO & professional/administrative support staff
CEO may be person employed by another energy sector regulatory authority
Support to be common to eventual single regulatory authority
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

13. Funding Appropriation from national revenue
Levies by separate legislation (has been drafted)
Fees earned – eg dispute resolution
Accounts to be audited by Auditor General
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

14. Issue of Licenses Applications advertised Objections within 30 days
Decision period 60 days after replies to objections
Separate licenses for each activity
Existing activities must apply and get licenses
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

15. Licensing Conditions - 1
Regulator may impose conditions, eg
Setting & approval of tariffs
Period of validity – 25 years – may be relinquished
Construction & operations standards
HSE concerns
Competition issues
Non-discriminatory practices
Separate management & accounts for vertically integrated companies – no cross-subsidisation
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

16. License conditions - 2
Access on commercially reasonable terms in transmission & storage for all
Negotiated changes in routing, diameter, capacity.
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

17. Licenses - Miscellaneous
Non-discrimination; term; amendment, revocation
Regulator can amend licenses
Regulator arbitration on request
Standards of construction
Contraventions
Suspend or revoke
Fines up to R2 mill / day
Appeals to high Court
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

18. Other provisions
Entry, inspection & information gathering by Regulator
Voluntary resolution of disputes
Compulsory of disputes
Compulsory resolution of disputes
Expropriation – rights of way
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

19. Regulations
Made by Minister after consulting Regulator & inviting public comment
Procedures
Record keeping
Forms
Publishing of information
Methodology to be used by Regulator
Land rehabilitation
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill

20. General Prohibition on agreements contrary to Act
Short Title – Petroleum Pipelines Act
Portfolio Committee Workshop – 20 May 2003
Petroleum Pipelines Bill