Charter for the South African Petroleum and Liquid Fuels Industry
on Empowering Historically Disadvantaged South Africans in the Petroleum and
Liquid Fuels Industry
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Mindful of:
- the imperatives of redressing historical social and economic
inequalities as stated by the Constitution of the Republic of South Africa,
inter alia Section 9 on Equality (and unfair discrimination) in the Bill of
Rights, and section 217.2 on procurement where the "organs of state" may
implement a "procurement policy providing for categories of preference in the
allocation of contracts and the protection or advancement of persons, or
categories of persons, disadvantaged by unfair discrimination",
- the policy objective stated in the Energy Policy White Paper to
achieve "Sustainable presence, ownership or control by historically
disadvantaged South Africans a quarter of all facets of the liquid fuels
industry or plans to achieve this"
- the Black Economic Empowerment Commission's definition of
Empowerment as "an integrated strategy aimed at the substantially increasing
black participation at all levels of the population and:
- Noting the enactment of the Preferential Procurement
Framework Act (No 5 of 2000).
- The Employment Equity Act (No 55 of 1998)
- The Competition Act (No 89 of 1998) (Also ref. to the
Amendment Act No 35 of 1999 and subsequent amendments)
- The Skills development Act (No 97 of 1998)
The signatories have developed this Charter to provide a
framework for progressing the empowerment of historically disadvantaged South
Africans in the Liquid Fuels Industry.
Scope of Application
This Charter applies to the privately owned parts of the
industry, and to all parts of the value chain, inter alia:
- Exploration and production of Oil
- Liquid fuels pipelines; Single Buoy Mooring's; depots and
storage tanks
- Oil refining and synthetic fuel manufacturing plants, including
lubricants
- Transport, including road haulage and coastal shipping
- Trading, including import and export
- Wholesale and retail assets/infrastructure.
Interpretation
For the purposes of interpreting the White Paper on Energy
Policy, the following terms apply:
- The term Historically Disadvantaged South Africans (HDSA)
refers to all persons and groups who have been discriminated against on the
basis of race, gender and disability.
- HDSA companies are those companies that are owned or
controlled by historically disadvantaged South Africans which operate on a
basis to meet all aspects of this Charter. These companies, which operate
within and supply the industry, submit affidavits to Government reconfirming
their ownership status in December of each year. Government publishes this list
annually.
- Ownership refers to equity participation and the ability
to exercise rights and obligations that accrue under such ownership.
- Control of a business entity can be achieved in a number
of ways; (a) a majority shareholding position, i.e. 50% + 1 share; (b) an
effective controlling shareholding; (c) a majority of a board of directors;
and/or (d) a shareholders agreement.
- Sustainability refers to:
- medium to long-term viability and adaptability through a
presence across all facets of the liquid fuels value chain;
- ventures with prospects of long term profitability,
and
- requisite levels of skills and access to technology.
- A quarter of all facets of the liquid fuels industry or
plans to achieve this
The 25% ownership and control of all facets of
the industry that the parties to this Charter are seeking to bring about over a
ten year period means HDSAs owing in total, by the end of that period, not less
than 25% of the aggregate value of the equity of the various entities that hold
the operating assets of the South African oil industry. The parties to the
Charter agree that the measurement of the extent of the achievement of this
target of 25% of the aggregate value of the equity will be based on the asset
values per the audited accounts of the entities concerned
Supportive Culture
The success of this program depends on the disposition of those
who have responsibility for managing the process.
Member companies and government therefore undertake to appoint to
such positions, managers who will understand the spirit and background under
which these policies were conceived in order to create a supportive and
enabling environment for business success.
It is noted that the process that gave rise to this Charter has
increased the understanding and cooperation between established industry
players and HDSA companies.
Companies undertake to foster a supportive culture with regard to
all aspects of this Charter when dealing with HDSAs. Companies subscribe to
incorporating and driving a process of transformation and a change of culture
in their statements of business principles.
Capacity Building
The South African labour market does not produce enough of the
skills required by the petroleum industry, especially the HDSA oil companies.
Organized industry and government work together in addressing this skills gap.
- In its bi-lateral relations with relevant countries, government
endeavors to secure training opportunities for HDSA companies' staff, as well
as exchange opportunities with oil companies operating outside of South Africa.
- Industry undertakes to build skills of its employees and report
on progress annually in an agreed format.
- The industry, through the standing consultative arrangements,
interfaces with statutory bodies such as SETA (Sectoral Education and Training
Authority), in the development of skills development strategies
Employment Equity
Companies publish their employment equity targets and
achievements and subscribe to the following:
- South African subsidiaries of multinational companies and South
African companies focus their overseas placement and / or training programmes
on historically disadvantaged South Africans;
- identifying a talent pool and fast tracking it;
- ensuring inclusiveness of gender;
- implementing mentorship programmes; and
- setting and publishing "stretch" (i.e. demanding) targets and
their achievement.
- It is noted that the Capacity Building efforts referred to
above will assist in this process.
Private Sector Procurement
Participants in the industry subscribe to and adopt supportive
procurement policies to facilitate and leverage the growth of HDSA companies.
Such policies include criteria that favor HDSA companies, all else being
equal.
- Scope: The scope of procurement shall include supplies (e.g.
Crude), products and all other goods and services.
- HDSA companies are accorded preferred supplier status as far as
possible.
- List of suppliers: It is envisaged that information on all HDSA
companies wishing to participate in the industry will be collected and
published. All participants in the industry will assist in compiling such a
list that will inter alia be published by government on the Internet and
updated regularly.
- All participants shall continue to deploy every effort to
ensure that vessels used in the transportation of supplies or products shall
meet all prescribed health, safety and environmental standards.
Public Sector Procurement
Government will engage with State Tender authorities to draw
their attention to the White Paper milestones with respect to economic
empowerment of historically disadvantaged South Africans, with the aim of
giving effect to supportive procurement policies within this sector.
Access and Ownership of Joint Facilities
Access to large infrastructure for the movement and storage of
crude oil and petroleum products, such as SBMs, pipelines and depots and
storage tanks, is acknowledged as a critical weakness in the supply chain of
emerging companies. In this regard owners of such facilities provide third
parties with non-discriminatory access to uncommitted capacity. HDSA companies
are to be given fair opportunity to acquire ownership in such facilities.
Refining Capacity
Access to refining capacity also represents a key weakness in
HDSA companies' supply chain. Oil refiners and synthetic fuel manufacturers
seriously consider:
- selling shares in their facilities to HDSA companies;
- making capacity available to HDSA companies eg through toll
refining agreements, and
- including HDSA companies as joint venture partners in any
expansions or upgrades.
Retailing/Wholesaling
The parties agree to create fair opportunity for entry to the
retail network and commercial sectors by HDSA companies
State Assets
Government undertakes to deal with state assets in a manner that
promotes the objectives of the White Paper on Energy Policy and this
Charter.
Upstream
The activity of oil and gas exploration and production is
acknowledged as a high-risk activity that provides limited opportunities for
new entrants. Government continues to make licenses subject to the following
conditions:
- All licenses for exploration and production in the country's
offshore area reserve not less than 9% for HDSA buy-in.
- All licensees contribute funds toward the "Upstream Training
Trust" to fund skills development at various levels. As discoveries are made,
further skills development strategies are devised to empower historically
disadvantaged South Africans in this sector.
Financing
Finance is a serious constraint for HDSA companies.
- Government assists industry in explaining the milestones in the
White Paper on Energy Policy, as well as explaining the needs and
characteristics of the industry to financing institutions, both private and
public.
- Companies investigate and implement internal and external
financing mechanisms for giving HDSA companies access to equity ownership
within the South African context.
- Companies to consider engaging HDSA companies in viable
strategic partnerships.
Terms of Credit to HDSA Companies
Industry participants acknowledge that terms of credit are
important to HDSA companies and agree to take this into account in bilateral
activities.
Regulatory Framework and Industry Agreements
Government's regulatory framework and industry agreements strive
to facilitate the objectives of this Charter.
Synfuels Supply
Parties to the Synfuels Supply agreements will strive to
accommodate HDSA companies, which lack the facilities to comply fully with such
agreements in the fairest way possible.
Consultation, Monitoring, Evaluation and Reporting
It is recognized that the achievement of the objectives set out
herein entails an ongoing process.
The DME conducts an annual survey of the industry to evaluate
progress in achieving the objectives of the White Paper. Companies submit such
data as is required at the end of each year, including employment equity data,
procurement targets, etc. The aggregated information is published and forms the
basis of the annual forum.
Oil companies have taken major initiatives in this regard and
have participated in a first survey earlier this year. Parties hereto
participate in an annual forums for the following purposes:
- monitoring progress in the implementation of plans;
- developing new strategies as needs are identified;
- ongoing government/industry interaction in respect of these
objectives;
- developing strategies for intervention where hurdles are
encountered;
- exchanging experiences, problems and creative solutions;
- arriving at joint decisions;
- reviewing this Charter if required; and
- giving notice of withdrawal
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