- Transport Minister Barbara Creecy has defended her decision to implement a long-term lease for oil companies at Durban’s petrochemical hub.
- However, MPs have said that there needs to be a review of Creecy’s decision, claiming that Creecy had not adequately considered the interests of black-owned companies.
- Meanwhile, fuel companies have stated that the long-term leases would enable billions of rands of investment in the port’s precinct, and the security of fuel supply in SA.
- For more financial news, go to the News24 Business process.
Transport Minister Barbara Creecy says her decision to implement 25-year leases for oil majors at Durban’s petrochemical hub followed the correct legal procedure, despite questions from lawmakers around the exclusion of smaller traders and black-owned companies from the process.
Creecy appeared at Parliament on Friday, along with Minister of Minerals and Petroleum Resources Gwede Mantashe.
The meeting followed a decision by Creecy in September this year to implement a directive as part of Section 79 of the National Ports Act, allowing tenants to operate a long-term lease for liquid bulk terminals and manufacturing sites in the Island View precinct at the Durban Port.
READ | Creecy opens Island View fuel hub to CEF, paving the way for Sapref’s revival
The directive also allowed for the state-owned Central Energy Fund (CEF) to access the precinct and revive its refinery capacity, with a 15% capacity allocation to all the terminal’s infrastructure, which would increase to 30% allocation over time.
Creecy and Mantashe appeared in a joint meeting with several of Parliament’s committees, along with several tenants of the Island View Precinct, including Bidvest Tank Terminal, H&R South Africa, Chemoleo, Unico Tec, Astron Energy, Vopak Terminal Durban, Engen, TotalEnergies, Sapref, and Sasol.
The meeting was held with the Portfolio Committee on Defence, the Portfolio Committee on Trade, Industry and Competition, the Portfolio Committee on Transport, the Portfolio Committee on Energy and Electricity, and the Portfolio Committee on Petroleum and Mineral Resources.
The transport minister defended her decision to implement the directive and not an open tender process, telling MPs from the committees:
I remain convinced that the decision made is within the confines of the law. I followed the law, and I consulted everyone whom I needed to consult.
Barbara Creecy
Creecy also said that smaller traders and black-owned companies would be able to access the precinct and its storage through the allocation given to CEF, which would also assist in the revival of the refinery capacity of the country and its reindustrialisation.
Speaking to MPs, Creecy also said that the requirements of black economic empowerment and transformation would be built into the leases for all tenants and those who are allocated capacity at the precinct. The leases, including CEF’s allocation, are expected to be finalised by March next year.
“It is necessary to proceed with ownership empowerment. Most of these companies are at a level four BBBEE compliance, and they need to move up towards level one or two. Issues of skills development and other forms of social development would also be built into the leases and monitored by the National Energy Regulator of South Africa and the Transnet National Ports Authority.”
She told MPs that the TNPA would also monitor third-party access to excess storage for new market entrants, with oil majors also encouraged to provide access to these companies. According to the minister, regulations which have allowed for third-party access were not implemented effectively in the past.
“The law requires for companies to publish their information to Nersa and we want to add TNPA to this, as the overall third-party aggregator […] We want also to make sure there is no hoarding, so we want to establish a ‘Use It or Lose It Rule’ where TNPA can claim underutilised capacity and allocate it to others, including new market entrants.”
She added, “TNPA is developing a document for an expression of interest for a third-party access application and a queueing system. It will also make excess capacity available for these operators.”
‘A Minister of Big Business’
In recent months, Creecy’s directive has drawn heavy criticism from black-owned companies, who have said they have been excluded from the process by the department.
Organisations such as the Association of Economic Intervention Forum have advocated for their own allocation in port infrastructure and capacity, saying that the directive favours foreign-owned companies who are tenants at the port.
MPs expressed similar views in the meeting, with some even calling for a review of the directive.
MK Party MP Mzwanele Manyi labelled Creecy as the Minister of Big Business, stating that the control of port infrastructure needs to be controlled by the state and the TNPA. Manyi also claimed that Creecy had prioritised the interests of major oil companies over those of smaller enterprises.
While the Port Authority is the landlord of most of SA’s ports, it has not taken control of the precinct and its infrastructure since 1960.
Fellow MK Party MP, Siyabonga Innocent Gama, said that black companies did not have access to the precinct. “This section 79 process has defects which need to be dealt with. She [Creecy] must withdraw to deal with these defects and help the country move forward.”
Chairperson of the Portfolio Committee on Trade, Industry, and Competition and ANC MP, Mzwandile Masina, said that all the committees would compile a report on the directive, which would be submitted to the National Assembly for approval.
“We need to make recommendations which do not disempower businesses that might want to take this directive to court […] We want space for others at the precinct. But we do not mind working with oil majors. We need a balanced solution.”
Meanwhile, Mantashe said Parliament should not dismiss foreign-direct investment, stating that the security of fuel supply was a national interest.
“White people controlling the sector; what is wrong with that? You are saying foreign direct investment must be scrapped and multinationals must not come here. They have been supplying us for years,” he told MPs.
He added, “We must grow capacity [by black companies in the sector] brick by brick. Black companies must put their skin in the fire. That is what is happening with coal mining and other sectors. Black people need to do the same [as other companies] and compete.”
Companies commit to transformation
In presentations to the committee, several tenants of the precinct, including Engen and TotalEnergies, said that the long-term leases enabled billions of rands worth of investment in upgrading port infrastructure, compared to short-term leases.
They also stated that they would continue to invest in transformation within the sector, with several companies achieving level one BBBEE compliance.
The Fuel Industry Association of South Africa also stated that the long-term lease would help SA ensure the security of its fuel supply, with an estimated R60 billion in investment planned by its members to invest in the precinct. News24 previously reported that the country has become reliant on imports for most of its fuel demand, amid declining refining capacity.
SA imports about 72% of its fuel through the Island View Precinct.
Avhapfani Tshifularo, CEO of the association, told News24 that the association and its members were compliant with the legal BBBEE requirements, which would ensure transformation within the industry. The association had sent an application to Creecy to issue the directive.
However, in response to concerns of MPs, Tshifularo warned that excess was not available for new market entrants. “This excess capacity does not exist. An open bidding process would allow us to build new capacity for new market entrants [in the sector].”
He also said that the association would welcome the revival of the country’s refinery capacity through the CEF’s allocation at the precinct, with the finalisation of the long-term agreements already under way.
