1. REPUBLIC OF SOUTH AFRICA GAS REGULATOR LEVIES BILL (As introduced in the National Assembly as a money Bill) (The English text is the official text of the Bill)

2. BACKGROUND Gas Act passed 2001  Establishes a National Gas Regulator   Funds required to operationalise National Gas Regulator

3. KEY FEATURES IMPOSITION OF LEVIES:- Gas Regulator imposes levies (could be different amounts for different years) based on amount of gas at inlet flange after publication for comment after notifying Minister in writing after providing evidence of consultation

4. Why the inlet flanges? a) International practice b) In line with SA tax policy (taxation at source) c) Effective non-intrusive measurement technologies exist d) Administrative efficiencies – far fewer points for Regulator to monitor than customers

5. Approval a. Minister of Minerals & Energy in concurrence with Minister of Finance b. 30 days notice c. reviewed annually

6. DISPOSAL AND MANAGEMENT OF LEVIES 1. Separate Gas Regulator account 2. Annual budget and business plan to Minister of Minerals and Energy 3. Concurrence of Minister of Finance

7. NON PAYMENT OF LEVIES 1Interest on unpaid levies 2 PFMA interest rate

8. LEVY LAPSES AFTER 5 YEARS 1. Concurrence of Minister of Minerals and Energy and of Finance to extend beyond 5 years 2. After Minister of Minerals and Energy commissions review of Regualtor’s performance.

9. ASSESSMENT AND PERFORMANCE OF REGULATOR 1. Minister of Minerals and Energy commissions “any person” if there is concern in gas industry or inadequate performance 2. Must assess at least once in 5 years

10. PART TWO SINGLE ENERGY REGULATOR

11. Cabinet decision – single energy regulator Requires coordination of legislation:-  National Electricity Regulator (Electricity Supply industry bill)  National Gas Regulator  National Petroleum Pipelines Regulator (Bill pending)

12. CABINET DECISIONS Appoint new persons to NER, gas and petroleum pipelines boards. Fill technical posts for gas and later petroleum pipelines. Amend Electricity Act, Gas Act and Petroleum Pipelines Bill to provide for same persons on all three boards.

13. CABINET DECISION (continued) Investigate replacing Electricity Act, Gas Act and Petroleum Pipelines Bill with a single Energy Regulator Act. Integrate remaining liquid fuels regulatory functions once process complete. Retain Nuclear Regulator in current form (health and safety regulator).

14. COMPARISONS Electricity Act Gas ActElectricity & PPL Bills Members7 to 9 full- or part-time 5 part-time5 full-time Gov. Officials No more than 3 None CEOBoard member Not Board member FundsLicense fees Donations Fiscus, Levies Mainly fees & levies

15. DECISION MAKING Electricity Act No requirements except for appeal to Minister Gas Act, Electricity & PPL Bills Meetings public. Decisions must be: – Procedurally fair; – Based on facts and evidence; – In writing; – Explained. Review by High Court.

16. Structure: Existing Legislation Electricity Act (Act 41 of 1987) Gas Act Members (discretionary) 5 full-time plus 2 part-time 5 “part-time” FundingLevies Donations Initial loan then levies Decision making Adopt Gas Act decision making See previous slide

17. WAY FORWARD STEP ONE 2002 Advertise for 5 full-time board members for electricity, gas and, ultimately, petroleum pipelines. NER board resigns (on request). Minister appoints same five regulators appointed for separate electricity and gas boards and later Petroleum Pipelines. Two additional members for NER to make 7. CEO board member for NER but not for gas Pass gas levy bill plus obtain loan.

18. Step Two: Structure of New Electricity Act & Petroleum Pipelines Act Electricity Regulation Act Gas ActPetroleum Pipelines Act Members (mandator y) 5 full-timeSame 5 Primary Funding Levy Decision making As per Gas Act Gas ActAs per Gas Act

19. Procedures Pass Electricity and Petroleum Pipeline Bills plus Petroleum Pipeline Levy Bill plus minor amendments to Gas Act. CEO no longer member of any board. The same 5 full-time members appointed for separate electricity, gas and petroleum pipelines boards in accordance with the legislation.

20. Step Three: Structure of Energy Regulator Act ElectricityGasPetroleum pipelines Liquid fuels Members5 full-time common Board 5 full-time common Board 5 full-time common Board 5 full-time common Board Primary funding Levy ? Decision making As per Gas Act Same Same?

21. Procedures Pass Energy Regulator Act. Appoint combined board for electricity, gas and petroleum pipelines. CEO not a member of the board. Incorporate liquid fuel functions.