PETROLEUM PIPELINES BILL

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PETROLEUM PIPELINES BILL

• Arthur Dykes
• Consultant

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WHITE PAPER ON ENERGY POLICY (December 1998)

• Government will promote competition in the
  transport of liquid fuels.
• The petroleum regulatory regime will inhibit
  monopolistic abuse of pipelines and storage
  facilities. Pipelines will be required to
  provide non-discriminatory open access to
  uncommitted capacity, transparency of tariffs,
  and disclosure of cost and pricing information to
  a suitable authority.

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GENERIC PROVISIONS (1)

• 67 of the Gas Act is directly applicable to the
  Petroleum Pipelines Bill
• 78 of the Petroleum Pipelines Bill could be
  taken from the Gas Act with very minor changes
  for context
• Non-generic provisions are found mainly in
  definitions, license conditions and regulations

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GENERIC PROVISIONS (2)

• Private companies could deal with gas,
  electricity and petroleum pipelines Acts
• Substantive, style word differences on the same
  issues in the 3 Acts will lead to confusion e.g.
  review/appeal, transparency
• Cabinet decision on single regulator could mean
  an interim common regulator administering the 3
  Acts

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GENERIC PROVISIONS (3)

• Recommendations
• Distinguish between changes in the 2 Bills from
  generic issues in the Gas Act that
• Merely reflect personal preferences of style and
  wording reject
• Lower standards - reject
• Are well-motivated and positive - accept

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NON-GENRIC DEFINITIONSLoading, Pipelines, Storage

• Will a third party be able to use uncommitted
  capacity to import petroleum and petroleum
  products at non-discriminatory tariffs and
  conditions?
• The key is that the loading facilities and
  pipelines, with associated storage facilities,
  are a continuous system, notwithstanding ownership

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OBJECTS OF ACT

• The regulatory philosophy is the same as in the
  Gas Act, so most of the objectives are generic
  but
• The order has been changed
• Some objectives omitted e.g. equitable basis
• Security has been added

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PROVISIONS RELATING TO THE AUTHORITY

• Section 4 Powers and Duties
• Format changed (two sub-sections)
• This section lists the main functions, not an
  exhaustive list of all functions
• Compared with the Gas Act
• Some functions have been deleted e.g. remedial
  action
• Others have been added e.g mediators

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PROVISIONS RELATING TO THE AUTHORITY

• Section 4 (continued)
• Competition Commission
• Negotiate agreement
• Right to participate in Authoritys meetings
• Give and receive advice
• Review legislation and regulations

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PROVISIONS RELATING TO THE AUTHORITY

• Section 4 (continued)
• Health, Safety and Environment
• Incorporation by referral
• ASME plans and procedures
• Security
• Plan based on the National Key Points Act, 1980
  (Act No 102 of 1980)

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PROVISIONS RELATED TO THE AUTHORITY

• Section 6 - Appointment
• Word and style changes
• Provisions omitted
• State employers (referee and player)
• Requirements relating to spouse, life partner,
  child, business partner or associate or employer

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PROVISIONS RELATED TO THE AUTHORITY

• Sections 7, 8 and 9
• Minor word and style changes
• Perhaps meeting should be defined?
• Section 10
• Provision for decisions to be taken under review
  by High Court omitted

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PROVISIONS RELATED TO THE AUTHORITY

• Section 12 (Funds) 13 (Accounting)
• Provision made for donations
• Section 14
• Changes mean that two reports must be submitted
  and that the Authority loses discretion on
  additional content

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LICENSING

• Sections 15,16, 17, 18 and 19
• Basically the same as the Gas Act except that
• Ministers power to direct criteria for licenses
  deleted, including the disposal of state assets
  obtained in this way

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CONDITIONS OF LICENCESection 20

• Separate accounting and management may be
  required
• Existing State controlled entities operated as
  common carriers with phase-in period of
• 5 years for existing contracts
• 180 days if capacity not used

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CONDITIONS OF LICENCESection 20

• Private entities and state entities new
  pipelines have choice of
• Common carrier
• TPA for uncommitted capacity
• TPA for loading and storage facilities
• Negotiated changes for pipelines and loading and
  storage facilities at own cost

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CONDITIONS OF LICENCESection 20

• Tariffs set by Authority for pipelines
• Tariffs approved by Authority for loading
  facilities and storage facilities
• Authority may set standards or incorporate other
  legislation by reference for
• Construction, operation, health, safety,
  environment and security

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LICENCE PROVISIONS

• Section 22 (term of licence)
• New provisions
• Automatic renewal only if licence conditions have
  been complied with
• Specifying new owner must apply for new licence -
  see section 24 (1) (c)
• Section 23 (amendment of licence)
• New provision in case of an emergency

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LICENCE PROVISIONS

• Section 25 (contraventions)
• New provision appeal to High Court
• Section 35 (3) (o) of the Constitution ensures
  the right of every accused person the right of
  appeal or review by a higher court
• Section 10 (3) of the Gas Act (omitted in this
  Bill) gave the right of review to decisions of
  the Regulator

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LICENCE PROVISIONS

• Section 28 (setting and approval of tariffs)
• As for section 33 (1) (f) (regulations)
• Tariffs to be determined by methodology
  prescribed by regulation
• Review by Authority on own initiative or on
  request by the licensee

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GENERAL COMMENTS

• National Gas Regulator (the Regulator), Petroleum
  Pipelines Regulatory Authority (the Authority)
  and National Electricity Regulatory Authority
  (regulatory authority)
• Prescribed by regulation or prescribed by
  rule seems unnecessary as there is no discretion
  as to content of rules