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National Environmental Management: Integrated Coastal Management Amendment Bill, B8-2013

Transnet SOC Ltd submissions to the Parliamentary Portfolio Committee on Water and Environmental Affairs, 24 July 2013

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Outline

Transnet’s general approach to the Bill

Illustrations of port infrastructure

The ambit of coastal public property and its

impact on Transnet’s property interests in ports

Transnet’s recommendations on the ownership issue

Other issues arising from the ICM Bill

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Transnet’s general approach to the Bill

• Transnet supports the purpose of the ICM Act: the protection of South Africa’s coastal environment

• Transnet manages significant environmental responsibilities under the National Ports Act and general environmental law

• Transnet’s ownership interests in commercial ports is required for effective port infrastructure investment and is consistent with the National Ports Act

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Illustration of port infrastructure: the Port of Ngqura

Jetty Turning Basin

Breakwater Entrance Channel

Breakwater

Quay wall

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Examples of breakwater structures

Core Rock Armour Rock

Armour RockConcrete Armour Units

Seabed

Sea level

Rubble Mound Breakwater

Concrete Block Breakwater

Breakwater protected by a rubble mound

Sea level

Concrete Caisson Breakwater

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Example of quay wall structure

Gravity quay wall(concrete blocks)

Foundation stone

Anti scour layer

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Example of quay wall structure (2)

Caisson quay wall(concrete blocks)

Foundation stone

Anti scour layer

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The impact of loss of ownership on Transnet

• Remove port assets worth R45.8 billion from Transnet’s balance sheet

• Compromise Transnet’s loan covenants

• Imperil Transnet’s R307 billion capital investment programme and Government’s economic infrastructure developmental agenda

• Adverse impact on Transnet’s gearing, affecting the company’s credit rating and increasing the cost of debt

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The Explanatory Memorandum to the Bill

• Transnet submits that it is possible for the Bill to accommodate Transnet’s ownership interests in ports without compromising the purpose of the ICM Act

• The Explanatory Memorandum indicates that the drafters of the Bill acknowledge Transnet’s concerns

• A purpose of the Bill is to “ensure that [coastal public property] does not impact on ownership of assets and operations of other organs of state” (paragraph 2.1 of the Explanatory Memorandum)

• Unfortunately, the Bill does not achieve this objective

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The ambit of CPP and its impact on Transnet’s property

• Transnet currently owns the seashore and seabed within ports and discharges its duties in respect of ports in terms of the National Ports Act

• Section 11(1) of the ICM Act: ownership of coastal public property (CPP) “vests in the citizens of the Republic” and is held in trust by the State

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The ambit of CPP and its impact on Transnet’s property (cont.)

• ICM Bill seeks to address Transnet’s concerns.

• Section 7(2)(a) excludes from CPP: “any immovable structure, or part of an immovable structure, including harbour installations and infrastructure, whether located on land or on the seabed, lawfully constructed by an organ of state”

• Transnet submits that this section does not achieve its intended purpose of safeguarding Transnet’s ownership

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Two reasons why s 7(2)(a) does not protect Transnet’s ownership

• The property law principle of accession

• immovable structures, such as breakwaters and quay walls, will accede to the seashore or seabed beneath the structures

• the owner of the seashore or seabed (SA’s citizens) will therefore own those immovable structures

• Areas within ports that do not consist of immovable structures, but which are Transnet assets, are not excluded from CPP, e.g. basins and channels

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Ownership issue: Transnet’s recommendation

• Specify that the ownership regime in s 11(1) does not apply in ports

• This is consistent with Transnet National Port Authority’s (TNPA) statutory function of owning ports (s 11 of National Ports Act)

• Would not undermine the public interest as Transnet is a state-owned entity that, through TNPA, administers ports in the public interest

• Provide for transfer of ownership of new ports to TNPA if such ports are proclaimed

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Ownership issue: alternative recommendation

• Exclude port installations and port infrastructure (as defined in the National Ports Act) that is lawfully constructed by an organ of state from the ambit of CPP

• Exclude the land and seabed beneath these structures, installations and infrastructure from CPP

• Provide for ownership in new port installations and port infrastructure to vest in TNPA (as the Authority under the National Ports Act)

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Other issues arising from the Bill

• Definition of harbour (section 1)

• not clear that existing ports have been “proclaimed in terms of any law”

• commercial ports should be distinguished from harbours

• recommend: insertion of definition of “port” (as defined in National Ports Act)

• Land reclaimed from coastal waters in a port should vest in TNPA (section 7A)

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Other issues arising from the Bill (cont.)

• Owner of land unit loses ownership if high-water mark moves inland (section 14(5))

• problem for proposed Durban dig-out port

• should not apply in ports

• Maximum period for dumping permits should be extended to five years (section 71(5))

• capital works dredging requires regulatory certainty to secure funding for infrastructure projects

• ease of administration for maintenance dredging

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Thank you