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Charter for the South African Petroleum and Liquid Fuels Industry

Category: Policy/Strategy
Binomial Name: Government of the Republic of South Africa
Sub Category:Policy/Strategy (South Africa)
Location:Republic of South Africa
Alternative Names:
  • Charter for the South African Petroleum and Liquid Fuels Industry: Empowering Historically Disadvantaged South Africans
  • Subject Matter:Collaboration / Partnership | Oil and Gas | Petroleum
    URL: http://www.dme.gov.za/pdfs/energy/liquidfuels/energy_liquid_charter.pdf
    Summary Information:
    The Charter for the South African Petroleum and Liquid Fuels Industry: Empowering Historically Disadvantaged South Africans ('the Charter') was prepared by a task team of the Hydrocarbons and Energy Planning Branch of the Department of Minerals and Energy (DoME) in consultation with key stakeholders such as the African Minerals and Energy Forum (AMEF) and the South African Petroleum Industry Association (SAPIA) (DoME Website: Empowerment). The Charter was signed on 2 November 2000.

    The Charter provides a basis for transforming the South African petroleum and liquid fuels industry to one which incorporates the principles of Black Economic Empowerment ('BEE'). BEE is one of the range of measures being used to counteract the economic effects of apartheid in South Africa.
    Detailed Information:
    Application

    The Charter applies to the entire value chain of both publicly and privately owned enterprises in the South African petroleum and liquid fuels industry, including, inter alia, exploration, production, oil refining, transportation and trading. The Charter's adoption under section 12 of the Broad Based Black Economic Empowerment Act 2003 ('the Act') renders the Charter a statement of intent, which does not create legally binding obligations.


    Purpose

    The aim of the Charter is to 'provide a framework for progressing the empowerment of historically disadvantaged South Africans in the [petroleum and] Liquid Fuels Industry.' The Charter incorporates the aim of the White Paper on the Energy Policy of the Republic of South Africa ('the White Paper') to achieve 25% ownership and control of the industry by historically disadvantaged South Africans ('HDSAs') within a ten year period.

    The Charter's objectives are to be achieved through through:
  • fostering a supportive culture towards HDSAs;
  • capacity building, including overseas training opportunities;
  • employment equity;
  • private and public sector procurement, including according HDSA companies preferred supplier status wherever possible;
  • improved access and ownership of joint facilities for the movement and storage of oil and petroleum products;
  • improving access to refining capacity;
  • creation of fair opportunities for entry into retailing and wholesaling;
  • dealing with state assets in a manner which promotes the objectives of the Charter and the White Paper;
  • upstreaming through the reservation of a minimum 9% of all licences for exploration and production in offshore areas for HDSA buy-in, as well as dedicating moneys from licence fees to an 'Upstream Training Trust';
  • improving access to financing for HDSA companies, including through the creation of strategic partnerships;
  • improved terms of credit to HDSA companies;
  • regulatory framework and industry agreements which endeavour to facilitate the objectives of the Charter;
  • parties to synfuels supply agreements which strive to accommodate HDSA companies.


    Monitoring

    Monitoring of the Charter involves an annual survey which evaluates progress in achieving the aims of the Charter and the White Paper. Companies are required to submit data including procurement targets and employment equity data, which is then compiled in aggregate form and discussed in an annual forum.


    Support for the Charter

    Many major companies signatory to the Charter have professed their support and adherence to the principles of Black Economic Empowerment through the Charter. SAPIA, whose member companies include BP, Caltex, Engen, PetroSA, Sasol, Shell and Total, is a major supporter of the Charter (SAPIA Annual Report, 2004).
  • Outcomes:
    A Mail & Guardian article reported that in 2002, black-owned companies owned around 14% of the oil industry, benefitting from about 11% of the total operating profit. Three major oil companies, Engen Petroleum, Shell and BP, had signed equity deals with black-owned companies. The article also reported that one concern in relation to the Charter was that ‘companies should not use drive to transform as a pretext to sell off the loss-making parts of their business to black partners under the guise of economic empowerment’ (Mail & Guardian, ‘Equity in the Oil Industry – a Pipe Dream?’, 1 November 2002).

    In March 2004, Engineering News Online reported that according to the Director-General of the Department of Minerals and Energy, the oil industry had made ‘steady progress’ in empowering HDSAs, with control by black companies of the petroleum industry increasing by 4% to 17%. However, the Director-General of the Department of Minerals and Energy also asserted that the Department would be establishing a ‘Supplier Development Programme… because not much effort has been made by industry to come up with creative solutions to surmount the problems’ (Engineering News Online, ‘Oil Sector Not Rising to BEE Procurement Challenge’, 11 Marcy 2004).

    In 2002, the company Women in Oil and Energy South Africa (WOESA) was launched with a vision to ‘be the leading organisation in facilitating the participation of women in business ventures in the oil, gas and other energy sectors.’ Their objectives involve engaging major role players in the industry and lobbying government to promote women’s empowerment in the sector (WOESA Website).

    Related Entries

    Agreement
  • Memorandum of Understanding Between the Department of Minerals and Energy (South Africa) and the South African Petroleum Industry Association
  • Sasol Inzalo Black Economic Empowerment ('BEE') Transaction
  • Organisation
  • Department of Minerals and Energy (South Africa)
  • South African Petroleum Industry Association
  • South African Supplier Development Agency
  • Sasol Ltd
  • Legislation
  • Broad-Based Black Economic Empowerment Act, 2003 (South Africa)
  • Policy/Strategy
  • Black Economic Empowerment
  • Apartheid

  • References

    Newspaper Article
    Glenda Daniels, Mail & Guardian (1 November 2002) Equity in the oil industry – A pipe dream?
    Fiona Thompson, Mail & Guardian (1 November 2002) Making the oil industry charter work
    Mail & Guardian (1 November 2002) The Lie of the Land
    Mail & Guardian (1 November 2002) Women Gain Entry Into Male-Dominated Industry
    Report
    SAPIA (2004) 2004 Annual Report
    Resource
    Hydrocarbons and Energy Planning Branch - Liquid Fuels (2 November 2000) Charter for the South African Petroleum and Liquid Fuels Industry: Empowering Historically Disadvantaged South Africans
    Women in Oil and Energy South Africa (WOESA) (2007) Website
    Department of Minerals and Energy (South Africa) (December 1998) White Paper on the Energy Policy of the Republic of South Africa
    Engineering News (18 October 2002) SA to Monitor Progress of BEE in Oil Industry
    Engineering News (11 March 2004) '17% of SA's Oil Industry Now Black-Owned'
    Jill Stanford, Engineering News (11 March 2004) 'Oil Sector Not Rising to BEE Procurement Challenge'
    Jenny Furness (4 March 2004) Petro SA Invites Tenders for 100%-BEE Firms
    Department of Minerals and Energy Empowerment
    South African Petroleum Industry Association (2008) Website
    Shell (2008) About Shell: Embracing The Process of Black Economic Empowerment In Shell

    Glossary

    Policy/Strategy (South Africa)

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