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PETROLEUM PIPELINES BILL

PETROLEUM PIPELINES BILL. Arthur Dykes Consultant. WHITE PAPER ON ENERGY POLICY (December 1998). “Government will promote competition in the transport of liquid fuels.”

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PETROLEUM PIPELINES BILL

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  1. PETROLEUM PIPELINES BILL Arthur Dykes Consultant

  2. 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.”

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. PROVISIONS RELATING TO THE AUTHORITY Section 4 (continued) • Competition Commission: • Negotiate agreement • Right to participate in Authority’s meetings • Give and receive advice • Review legislation and regulations

  10. 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);

  11. 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

  12. 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

  13. 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

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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

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