MINERALS AND ENERGY BUDGET 20045 COMMENTS BY SAPIA

MINERALS AND ENERGY BUDGET 2004/5 COMMENTS BY SAPIA JUNE 2004

SAPIA SUPPORTS KEY OBJECTIVES • The government’s key objectives: - poverty alleviation, job creation, economic growth, empowerment, HRD, promotion of investment and SMME development are fully supported and endorsed by Sapia. • Sapia also subscribes to supporting DME in the achievement of its mandate.

STRATEGIC OBJECTIVES • Sapia also subscribes to the objectives – namely transformation, optimum energy utilisation and sound HSE. • Sapia support for DME’s programme of managed liberalization of the oil industry.

THE FINANCIAL FIGURES • Sapia does not feel that it is competent to comment on the actual financial figures making up the R 1. 934 bn budget appropriation, other than to note that more than half of the total is devoted to the National Electrification Programme.

THE NEED FOR CAPACITY • Sapia does note that one of the key challenges DME faces is the recruitment and retention of key personnel. • Because of the importance of DME to the future well-being of RSA as a whole – and to the petroleum industry – Sapia supports DME in its endeavours in this regard.

PETROLEUM INDUSTRY ISSUES DME IS DEALING WITH • Sapia would like to indicate some of the issues that DME has to deal with, and which are of critical importance to the industry. • The list indicates the extent of the challenge facing that part of DME which deals with the Petroleum industry.

ISSUES - 1 • The processing of the Second Amendment Bill in respect of the Petroleum Products Act. • The promulgation of the Regulations in terms of the PPAA, especially the proposed new licensing system. • Establishing the Pipeline Regulator and promulgating the regulations in terms of the Pipelines Act.

ISSUES - 2 • Finalising the Vehicle Emissions Strategy and the related future transport fuels specifications. • Co-ordination of the process leading to the 2006 specification changes – no more lead in petrol and 0. 05% max sulphur in diesel. • Promoting a Clean Fuels Levy to support refining investment to make these cleaner fuels. • Conducting a viability study of the petroleum industry – and taking any actions that may result.

ISSUES – 3 • Monitoring the industry’s performance in meeting the targets in the Industry BEE Charter. • Ensuring alignment between the Industry’s Charter and DTI’s broad based BEE Act of 2003 gazetted in January 2004. • Encouraging the advancement of women in the industry.

ISSUES - 4 • Renewable energy – including the determination of bio-fuel viability in South Africa – encouraging efficiency in the use of fuels. • Maintaining and managing the price regulatory mechanisms in respect of the controlled products, including the MPAR system. • Creating business plans for the Ie. C’s and the Supplier Development Agency

SUMMARY - 1 • The DME Budget, as it relates to the petroleum industry, represents a comprehensive work plan which should result in South Africa having a secure supply of competitively priced environmentally sensitive transport fuels and a healthy petroleum industry.

SUMMARY - 2 • It should also result in the government’s key objectives being met. • Sapia undertakes to work with DME and the Portfolio Committee in helping to make this happen, as we did in 2003/4 when the new BFP formula replaced the old “IBLC” and when progress was made towards achieving the Charter targets.

SUMMARY - 3 • 2003/4 progress also included the signing of the Supplier Data Base and Development Agency MOU and the passing of the PPAA and Pipelines Act, and the setting and publication of a single national maximum price for “naked” paraffin each month.

QUESTIONS