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Empowerment

Introduction

The 1998 White Paper on Energy Policy set "the sustainable presence, ownership or control by historically disadvantaged South Africans of a quarter of all facets of the liquid fuels industry or plans to achieve this" as a milestone to trigger the substantive re-regulation of the petroleum and liquid fuels industry in South Africa:

The government has linked the re-regulation of the industry to the meaningful participation in the industry by South Africans who were excluded in the past through the general racial political dispensation, social inequalities and provisions governing the industry specifically.

In pursuit of this objective, the government has taken various steps together with industry leaders and associations, such as the South African Petroleum Industry Association (SAPIA) and the African Minerals and Energy Forum (AMEF).

At several meetings between Pumzile Mlambo Ngcuka, the then Minister, and industry associations in 1999 and 2000, the idea of a task team as well as an industry summit were mooted as mechanisms to take forward the imperative posed in the White Paper. In her Parliamentary budget vote address on 11 May 2000, Ms Mlambo Ngcuka announced that the appointment of a ministerial task team.

While transformation and de-regulation need to take place with a minimum of disruption and unintended negative consequences, the meaningful participation by historically disadvantaged South Africans in the economy is an urgent and overriding national economic and political imperative.

Scope of the task team

After initial consultations, the task team embarked on a series of workshops examining the entire liquid fuels petroleum industry in South Africa:

  • Oil and gas exploration and production;
  • Crude oil refining;
  • Synfuels manufacturing;
  • Marketing of petroleum products; and
  • Transportation of petroleum products.

Industry associations were tasked to ensure that any unorganised industry players are brought into the process. Efforts were made to this end, and some of these companies did participate in part of the deliberations.

The task team met on several occasions, and finally agreed on six strategic issue areas to focus on (see below). These strategic focus areas were discussed at a series of three full-day workshops. While the workshops were a process of engagement often fraught with tension, they brought the participants closer to a common understanding of the issues that faced the transformation agenda.

The Liquid Fuels Empowerment Charter emerged as an attempt to capture the frustrations of the new participants in the industry and the ways in which transformation could best be facilitated.

"In some ways, the process leading to the signing of the charter was as important as the document itself. The final document, signed by key industry players in November 2000, is a statement of the commitment of the signatories to transformation of the industry as a principle, as well as details of the key measures and expectations. Since then, it has become the organising force in the transformation of the liquid fuels sector."*

Strategic focus areas

The areas focused on by the task team were:

Employment equity: The key concern here was the participation of historically disadvantaged South Africans in the mainstream of the industry, especially at managerial and operational levels.

Capacity building: The industry requires certain high level skills that are in general inadequately provided for in the South African labour market. Emerging companies are especially under-skilled. A key driver in their success will thus be the extent to which their capacity can be accelerated.

Ownership and control: The industry is highly capital intensive, with major infrastructure. This has historically been in the hands of the multinational companies. The focus here was on the acquisition of such ownership by historically disadvantaged South Africans, and what such ownership would entail.

Financing: The key obstacle for new and small entrants into the industry is its high capital intensity and relatively low or slow return rate. Financing mechanisms will need to be devised if this objective is to be achieved.

Procurement: In the past, positive or affirmative procurement policies have been used to accelerate the growth of new entrants. This avenue was examined as a key driver in the nurturing of emerging companies from all sectors. The focus here was on both private sector and public sector procurement.

The legislative and regulatory environment: Within which the White Paper milestone is to be achieved was examined to determine the extent to which it may assist or hamper progress, and to arrive at interventions at this level. Industry agreements were also examined as part of this focus. Additional information: The lie of the land, Mail and Guardian, November 2002.



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