EMPOWERMENT OF THE HDSA in THE LIQUID FUELS INDUSTRY

1
EMPOWERMENT OF THE HDSA in THE LIQUID FUELS
INDUSTRY

• Panel Discussion
• 26 September 2007

Sizwe Mncwango Masana Petroleum Solutions (Pty)
Ltd
2
White Paper on the Energy Policy

• Energy as a strategic resource
• South Africa as a country is endowed with
  abundant energy resources
• Successful taping of all possible energy carriers
  is vital for sustainable economic growth
• In fact, industry (especially manufacturing and
  mining) as a whole consumes approximately 40 of
  electricity
• White Paper, December 1998, as a vehicle
• Government committed to the promotion of access
  to affordable and sustainable energy services for
  small and HDSA
• White Paper therefore written so as to clarify
  government Policy regarding supply and
  consumption of energy
• It is within this context that the policy
  objective as stated in the Energy Policy White
  Paper was to achieve 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.

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Liquid Fuels Charter for the SA Petroleum Industry

• Key objective of the Liquid Fuels Charter 02
  December 2000
• To provide a framework for progressing the
  empowerment of HDSA in the Liquid Fuels Industry
  (as per the Energy Policy White Paper)
• Unpacking and interpreting the White Paper of
  December 1998
• Ownership equity participation and ability to
  exercise rights and obligations
• Control through shareholding, Board of
  Directors, agreements, etc
• Presence medium to long term viability,
  adaptability, sustainability across the value
  chain
• Implementing the Charter would impact various
  facets of the sector ranging from
• Capacity building, Employment Equity, Private /
  Public Sector Procurement
• Access and ownership of Joint Facilities,
  Refining, Retail / Wholesale, State Assets,
  Upstream
• As well as access to affordable financing, terms
  of credit to HDSA and Synfuels

4
Progress to date on Charter commitments

• Progress on most of the Charter fronts has been
  quite varied, if not very slow
• Ownership, as the most visible side of
  transformation, has been achieved to a large
  extent (the industry needs to be congratulated
  for that)
• Achievement of Presence milestones remains
  critical
• There has been good and commendable progress on
  Capacity Building, EE and Procurement
• Access to and ownership of facilities has been
  poor, with no visibility of HDSA having
  meaningful influence in refining, retail, state
  assets and upstream
• At 25 ownership, it has been rather difficult to
  effect meaningful Control
• The major key towards meaningful control, is
  capacity building in the creation of the
  requisite skills
• Without significant ownership rights vesting in
  the hands of HDSA, it is still a long way before
  meaningful player is run, operated and managed by
  HDSA

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Recommendations and way forward

• Consultation, monitoring, evaluation and
  reporting
• The DME conducts an annual survey of the industry
  to evaluate progress
• The aggregated information is published and forms
  the basis of the annual forum
• Judging from progress thus far, the survey has
  degenerated into a compliance exercise
• There has been endless debates regarding the
  interpretation of the information by various
  stakeholders
• It is clear that most milestones as promised more
  than ten years ago will not be achieved by 2010,
  unless ..
• RECOMMENDATIONS
• The initial commitments are re-visited, there is
  alignment on a revised monitoring framework
• To this end, as BEE players we call for a
  structured system that duly recognizes those
  participants who have gone beyond the Charter
  call to deliver on transformation
• An Industry based structured system that rates
  the degree and extent of contribution (using the
  original Charter elements) e.g. Level 1, 2, 3,
  etc and rewards participants
• A deliberate emphasis on Skills and recognition
  for participants that have created entities that
  are run, operated and controlled by HDSA,
  highlighting their role in the hard issues
  (assets and facilities, refining, retailing and
  financing)

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EMPOWERMENT OF THE HDSA in THE LIQUID FUELS
INDUSTRY

• Panel Discussion
• 26 September 2007

Sizwe Mncwango Masana Petroleum Solutions (Pty)
Ltd