Petroleum Products Amendment Act

1. Section 1 of the Petroleum Products Act, 1977, hereinafter referred to as the 5 principal Act, is hereby amended- (a) by the insertion before the definitions: definition of “inspector” of the following “ ‘bulk’ means a prescribed quantity of petroleum product; ‘Charter’ means the Charter in Schedule 1; ‘hold’, when used in relation to land, means the owning of land for the purpose of establishing a site;”; ( b ) by the insertion after the definition of “inspector” of the following definitions: “ ‘licence’ means a manufacturing, wholesale, site or retail licence; ‘liquefied petroleum gas’ means a petroleum product which consists mainly of propane or butane or both and which can be stored as a liquid under relatively low pressure for use as a fuel; for ‘manufacture’ means the manufacture commercial purposes, and includes the blending and re-refining of petroleum products, and ‘manufacturer’ shall be interpreted accord- &”; of petroleum products (c) by the substitution for the definition of “Minister” of the following definition: “ ‘Minister’ means the Minister of Minerals and Energy;”; (d) by the insertion after the definition of “outlet” of the following definition: 10 15 20 “ ‘paraffin’ means a liquid petroleum product that is a complex mixture of predominantly aliphatic hydrocarbons ranging from C9 to C 16, used also known as mainly for lighting, cooking kerosene;”; and heating purposes, 25 4 No. 26293 GOVERNMENT GAZE’ITE, 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 ( e ) by the insertion after the definition of “petroleum product” of the following definitions: ‘‘ ‘prescribed’ means prescribed by regulation made by the Minister; ‘retail’ means the sale of petroleum products to an end-consumer at a site and ‘retailer’ shall be ‘retail licence’ means a licence to conduct the business of a retailer;”; accordingly; interpreted 5 ( f ) by the deletion of the definition of “service”; (g) by the insertion before the definition of “this Act” of the following definitions: “ ‘site’ means premises on land zoned and approved authority for the retailing of prescribed petroleum products;” ( h ) by the substitution for the definition of “this Act” of the following definition: by a competent 10 “ ‘this Act’ includes any regulation, notice and licence issued or given in terms of this Act;”; and deletion (i) by the ( j ) by the addition of the following definitions: of the definition of “Treasury”; and 15 “ ‘wholesale’ means the purchase and sale in bulk of petroleum products by a licensed wholesaler to or from another licensed wholesaler, or from a licensed manufacturer, or sale end-consumer for own consumption and preted accordingly; ‘wholesale licence’ means a licence wholesaler.”. to a licensed retailer or to an ‘wholesaler’ shall be inter- to conduct the business of a Amendment of section 2 of Act 120 of 1977, as amended by section 1 of Act 72 of 1979, section 2 of Act 61 of 1985, section 2 of Act 68 of 1991 and section 1 of Act 46 of 1993 25

2. Section 2 of the principal Act is hereby amended- ( a ) by the substitution in subsection (l)(a) for the words preceding subparagraph (i) of the following words: “(a) for the purposes of ensuring a saving in, and the efficient use of, petroleum products, regulate in such manner as he or she may deem fit, including the imposition upon any person connection therewith, or prohibit-”; of any duty in ( 6 ) by the substitution for paragraph ( c ) of subsection (1) of the following paragraph: “(c) prescribe the price, or a maximum or minimum price, or a 30 35 maximum and minimum price, at which any petroleum product may be sold or bought by any person, and conditions under which selling or buying of petroleum products other than in accordance with the prescribed, maximum or minimum price may take and place;”; the 40 ( c ) by the addition to subsection (1) of the following paragraphs: “(0 oblige any person to publish the prices at which petroleum products are available for sale including conditions relating to the frequency of such publications, manner of its publication and the displaying thereof; ( g ) prescribe the quantities of crude oil or petroleum products structure, the method and its content and to be 45 maintained by any person.”. Insertion of sections 2A, 2B, 2C, 2D, 2E and 2F in Act 120 of 1977

3. The following sections are hereby inserted in the principal Act after section 2: 50 26293 6 No. GOVERNMENT GAZETTE, 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 “Prohibition of certain activities 2A. ( I ) A person may not- ( a ) manufacture petroleum products without a manufacturing licence; (b) wholesale prescribed petroleum products without an applicable wholesale licence; ( c ) hold or develop a site without there being a site licence for that site; an applicable retail (d) retail prescribed petroleum products without licence, issued by the Controller of Petroleum Products. (2) ( a ) If a person engages in an activity in contravention of subsection (1) the Controller of Petroleum Products must by written notice direct that person to cease such activity forthwith. (b) The Controller of Petroleum Products may allow a person to continue with an activity contemplated in paragraph (a) pending an application and the issuing of a licence if the cessation of such an activity is likely to lead to a material interruption in the supply of petroleum products. ( c ) If an application contemplated in paragraph (b) is unsuccessful, the Controller of Petroleum Products must by written notice direct that person to cease such activity and, if applicable, to rectify any state of affairs resulting from that person’s activities within the period stipulated in the notice. 5 10 15 20 (3) If a person engages in an activity in contravention of a licence issued to that person, the Controller of Petroleum Products must by written notice direct that person to comply with the licence and, if applicable, to rectify any state of affairs resulting from such contravention within the period stipulated in the notice. 25 (4) Any person who has to apply for a licence in terms of subsection (1) must- ( a ) in the case of a manufacturing licence be the owner of the property concerned and if not the owner must have the written permission of the owner; 30 ( b ) in the case of a site licence be the owner of the property concerned or in the case of publicly owned land have the written permission of the owner; ( c ) in the case of retail and wholesale licences be the owner of the 35 business entity concerned; (d) do so in the form and manner prescribed. ( 5 ) No person may make use of a business practice, method of trading, at or agreement, arrangement, scheme or understanding which is aimed would result in- ( a ) a licensed wholesaler holding a purposes as prescribed, but excludes wholesalers and liquefied petroleum gas and paraffin; retail licence except for training retailers of ( b ) self-service by consumers of prescribed petroleum products on the premises of a licensed retailer. (6) A licensed manufacturer shall only sell petroleum products to a licensed wholesaler or a licensed purposes. retailer, or both, except for export (7) A licensed retailer shall only purchase petroleum products from a licensed wholesaler or a licensed manufacturer. or both. Licensing 40 45 50 2B. (1) The Controller of Petroleum Products must issue licences in accordance with the provisions of this Act. (2) In considering the issuing of any licences in terms of this Act, the Controller of Petroleum Products shall give effect to the provisions of section 2C and the followiiig objecLives: 55 8 No. 26293 GOVERNMENT GAZETTE, 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 (a) Promoting an efficient manufacturing, wholesaling and retailing petroleum industry; (b) facilitating an environment conducive to efficient and commercially justifiable investment; ( c ) the creation of employment opportunities and small businesses in the petroleum sector; the development of 5 (d) ensuring countrywide availability of petroleum products at com- petitive prices; and (e) promoting access to affordable petroleum products by low-income consumers for household use. (3) Any licence issued by the Controller of Petroleum Products remains valid for as long as- (a) the licensee complies with the conditions of the licence; ( b ) the licensed activity remains a going concern, excluding a site; and (c) in the case of a site, there is a corresponding valid retail licence. (4) The Controller of Petroleum Products must issue only one retail licence per site. (5) To ensure the continued operation the prevention of hardship the Controller of Petroleum Products may, upon application, issue a temporary licence which shall be valid for a period not longer than six months. of a licensed activity and (6) It shall be a condition a wholesale licence, as the case may be, that the licensee must purchase 01 sell, or purchase and sell, petroleum products- (a) manufactured from coal, natural gas or vegetable matter; (b) that meet prescribed specifications and standards where applicable; of a manufacturing licence or 10 15 20 25 and ( c ) when such petroleum products are available in the Republic, before purchasing or selling, or purchasing and selling, petroleum products manufactured from other raw materials. 30 Transformation of South African petroleum and liquid fuels industry 2C. (1) In considering licence applications in terms of this Act, the Controller of Petroleum Products shall- (a) promote the advancement of historically disadvantaged South Africans; and (b) give effect to the Charter. (2) The Controller of Petroleum Products may require any category of in respect of the licence holder to furnish information, as prescribed, implementation of the Charter. Transitional licensing provisions 2D. (1) For the purposes of this section- ‘hold’ means to own or lease land, or to possess an option to purchase or lease land, that has been zoned and approved by appropriate authorities for use as a site; and ‘process of developing’ means the construction of, or the completion of the such land as a site within a period of 12 infrastructure necessary to use months from the date Amendment Act, 2003. of commencement of the Petroleum Products (2) Any person who, at the time of commencement of the Petroleum Products Amendment Act, 2003- (a) holds and is in the process of developing a site; or (b) manufactures or wholesales petroleum products, or retails pre- scribed petroleum products; 35 40 15 50 shall, subject to subsection ( 3 ) , be deemed to be the holder of a licence for that activity. 55 GAZETTE, GOVERNMENT 26293 10 No. 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 (3) (a) Any person referred to in subsection (2) shall, within a period of six months from the date of commencement of this section, apply for a manufacturing, wholesale, site or retail licence, as the case may be. (b) Subsection (2) shall cease to apply if the person fails to apply for a licence within the period contemplated in paragraph (a). (4) ( a ) An applicant contemplated in subsection (3) shall, on application, be entitled to be issued with a licence for the operation of the activity concerned if the applicant is in compliance with all national, provincial and local government legal requirements, that are in force immediately prior to the commencement of this Act for the operation of the activity concerned. (b) Such applicant shall be subject to the general conditions of a licence set out in this Act, but not to any financial security requirement prescribed by regulation. 5 10 System for allocation of licences 2E. (1) The Minister must prescribe a system for the allocation of site and their corresponding retail licences and the supply of prescribed petroleum products to such licensees, by which the Controller of Petroleum Products 15 shall be bound: Provided that the Controller of Petroleum Products shall only be bound by the provisions of such a system for the period set out in that regulation or any amendment thereto or any substitution thereof which period may not exceed 10 years from the date of commencement of that regulation. (2) The Minister shall prior to promulgating a system contemplated in subsection (1) invite public comment thereon by publishing it in the Gazette and duly considering such comments. (3) A system contemplated in subsection (1)- ( a ) must intend to transform the retail sector into one that has the optimum number of efficient sites; ( b ) must intend to achieve an equilibrium amongst all participants in the petroleum products industry within the constraints of this Act; (c) must be based on the objectives referred to in section 2B(2) and 2C; (d) must promote efficient investment in the retail sector and the productive use of retail facilities- 20 25 30 (i) by limiting the total number of site and corresponding retail 35 licences in any period; (ii) by linking the total number of site and corresponding retail licences in any period, to the total mass or volume of prescribed petroleum products sold by licensed retailers; and (iii) by other appropriate means; (e) must allow licensed wholesalers to trade with each other any contractual rights and obligations they may have, to supply licensed retailers with prescribed petroleum products; (f) may specify that petroleum products which- (i) are manufactured from coal, natural gas or vegetable matter, when available in the Republic; (ii) meet prescribed specifications and standards, where appli- 1.0 1.5 cable, must be supplied to a licensed retailer before the supply of prescribed petroleum products manufactured from other raw materials may be supplied. 50 12 No. 26293 GOVERNMENT GAZETTE, 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 (g) may link the issuing of a new site licence and the corresponding retail licence to the termination or transfer of ownership of one or more existing site licences and the corresponding retail licences; ( h ) may link the issuing of a new retail licence to the transfer from a licensed wholesaler of contractual rights enjoyed by that wholesaler retailers, to another licensed in respect of one or more licensed wholesaler. (4) The Minister shall from time to time review the efficacy of the system Contemplated in subsection ( I ) against the objectives of this Act and may of amend the system in an appropriate manner and the provisions subsection (2) shall mutatis mutandis apply. (5) Nothing contained in subsections (l), (2) or (3) absolves any person from the obligation to apply for and hold a licence in terms of this Act. System for allocation of licences for liquefied petroleum gas and paraffin 2F. (1) For the purposes of this section ‘retail’ means the sale of liquefied ‘retailer’ shall be paraffin to an end-consumer and petroleum gas or interpreted accordingly. 5 10 15 (2) The Minister may by regulation, prescribe licensing systems for the wholesaling and retailing of liquefied petroleum gas or paraffin, or both, by which the Controller of Petroleum Products shall be bound. 20 (3) A system contemplated in subsection (2) must- ( a ) be based on the objectives referred to in sections 2B(2) and 2C; (b) be targeted at poverty alleviation for low income households; (4) The Minister shall prior to promulgating a system contemplated in it in the subsection (2) invite public comment thereon by publishing Gazette and duly consider such comments. ( 5 ) A system contemplated in subsection (2) may in designated areas, paraffin to one or more restrict the retail of liquefied petroleum gas or retailers. (6) The Minister shall from time to time review the efficacy of a system contemplated in subsection (2) against the objectives of this Act and may amend the system of subsection (4) shall mutatis mutandis apply.”. in an appropriate manner and the provisions 25 30 Amendment of section 3 of Act 120 of 1977

4. Section 3 of the principal Act is hereby amended by the substitution for subsection 35 (1) of the following subsection: “( 1) The Minister- (a) shall, subject to the laws governing the public service, appoint any person in the public service as Controller of Petroleum Products and may appoint persons in the public service as regional controllers of petroleum products or as inspectors for the Republic or any part thereof; 40 (b) may on such conditions and at such remuneration as he or she may in consultation with the Minister of Finance determine, appoint or authorise any other person or person belonging to any other category of persons to act as regional controller of petroleum products or as inspector for the Republic or any part thereof.”. 45 Repeal.of section 4A of Act 120 of 1977

5. Section 4A of the principal Act is hereby repealed. Repeal of section 4B of Act 120 of 1977

6. Section 4B of the principal Act is hereby repealed. 50 14 No. 26293 GOVERNMENT GAZETTE, APRIL 2004 26 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 Repeal of section 5 of Act 120 of 1977

7. Section 5 of the principal Act is hereby repealed. Repeal of section 7 of Act 120 of 1977

8. Section 7 of the principal Act is hereby repealed. Repeal of section 8 of Act 120 of 1977

9. Section 8 of the principal Act is hereby repealed. Repeal of section 10 of Act 120 of 1977

10. Section 10 of the principal Act is hereby repealed. Repeal of section 11 of Act 120 of 1977

11. Section 11 of the principal Act is hereby repealed. 5 10 Substitution of section 12 of Act 120 of 1977, as amended by section 5 of Act 72 of 1979 and section 8 of Act 61 of 1985

12. The following section is hereby substituted for section 12 of the principal Act: “Offences and Penalties 12. (1) Any person who contravenes a provision guilty of an offence and be liable on conviction to a fine not exceeding R1 000 000,00, or to imprisonment for a period not exceeding 10 years, or to both such fine and such imprisonment: Provided that if a directive issued (3) is complied with within the period in terms of section 2A(2)(c) or specified therein, the person concerned shall be absolved from criminal liability. of this Act, shall be 15 20 (2) The Minister may by notice in the Gazette amend the amount referred to in subsection (1) in order to counter the effect of inflation.”. Substitution of section 12A of Act 120 of 1977, as inserted by section 9 of Act 61 of 1991 25

13. The following sections are hereby substituted for section 12A of the principal Act: “Appeal 12A. (1) Any person directly affected by a decision of the Controller of Petroleum Products may, notwithstanding any other rights that such a person may have, appeal to the Minister against such decision. (2) An appeal in terms of paragraph ( a ) shall be lodged within 60 days after such decision has been made known to the affected person and shall be accompanied by- (a) a written explanation setting out the nature of the appeal; (b) any documentary evidence upon which the appeal is based. (3) The Minister shall consider the appeal, and shall give his or her decision thereon, together with written reasons therefor, within the period specified in the regulations. Arbitration 12B. (1) The Controller of Petroleum Products may on request by a 40 licensed retailer alleging an unfair or unreasonable contractual practice by 16 No. 26293 GAZETTE, GOVERNMENT 26 APRU. 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 vice versa, require, by notice in writing to the a licensed wholesaler, or parties concerned, that the parties submit the matter to arbitration. (2) An arbitration contemplated in subsection (1) shall be heard- ( a ) by an arbitrator chosen by the parties concerned; and ( b ) in accordance with the rules agreed between the parties. (3) If the parties fail to reach an agreement regarding the arbitrator, or the applicable rules, within 14 days of receipt of the notice contemplated in subsection (1)- ( a ) the Controller of Petroleum Products must upon notification of such 5 failure, appoint a suitable person to act as arbitrator; and 10 (b) the arbitrator must determine the applicable rules. (4) An arbitrator contemplated in subsection (2) or (3)- ( a ) shall determine whether the alleged contractual practices concerned are unfair or unreasonable and, if so, shall make such award as he or she deems necessary to correct such practice; and 15 (b) shall determine whether the allegations giving rise to the arbitration were frivolous or capricious and, if so, shall make such award as he or she deems necessary to compensate any party affected by such allegations; ( 5 ) Any award made by an arbitrator contemplated in this section shall be final and binding upon the parties concerned and may, at the arbitrator’s discretion, include any order as to costs to be borne by one or more of the parties concerned. 20 Regulations 12C. (1) The Minister may, without derogating from his or her general 25 regulatory powers, make regulations- ( a ) regarding manufacturing, wholesale, site or retail licences, includ- ing- (i) the form and manner in which an application for a licence or an amendment to an already issued licence shall be made; (ii) procedures to be applied in the evaluation of an application for a licence, and the period within which it shall be considered; (iii) the monies payable for licences; (iv) the form of a licence; (v) conditions of licence which may be imposed by the Controller of Petroleum Products in respect of a particular licence or a category of licences, including- (aa) the rights, duties and obligations of licensees in the manufacture, handling, storage, packaging, dispensing and sale of petroleum products; (bb) conditions relating to the advancement of historically disadvantaged South Africans; (cc) the number of retail licences that may be held by a licensed wholesaler for retail training purposes; 30 35 40 (vi) the obligation of a licence holder to keep records and to furnish particular information to the Controller of Petroleum Products, and the frequency of furnishing such information; 45 (vii) the transfer of ownership of licences, excluding the price of the licensed property; (viii) the termination of a licence and the procedures relating to such 50 termination; (b) prohibiting a business practice which conflicts with the objectives referred to in sections 2B(2) and 2C; 18 GAZETTE, GOVERNMENT 26293 No. 26 APRn 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 (c) regarding the records and information to be kept by the Controller of Petroleum Products, and the furnishing thereof to third parties in accordance with the provisions of the Promotion of Access to Information Act, 2000 (Act No. 2 of 2000); continuity of supply of petroleum products by regarding the noma1 operating conditions, and in cases of licensees under potential or actual emergency, including an amendment to a licence; regarding the specifications and standards of petroleum products; of the blending or mixing of different regarding the prohibition petroleum products or the blending or mixing of petroleum products with other substances which will lead to deviation from prescribed petroleum product specifications or standards or for the purpose of avoiding the payment of any tax, duty or levy; of land used in connection with a regarding the rehabilitation licensed activity by the licensee concerned, including the lodging of financial security for rehabilitation purposes and the composition and amount of such security; and the period within which a decision on an appeal should be given. f h i (2) The Minister shall, except in an emergency, prior to promulgating any regulation contemplated in subsection (l)(e)- (a) invite public comment thereon by publishing in the Gazette the full particulars of the specification or standard; (b) allow a period of not less than two months after the date of publication of such Gazette for the submission of public comment; and (c) duly consider such comments.”. 5 10 15 20 25 Substitution of long title of Act 120 of 1977

14. The following long title is hereby substituted for the long title of the principal Act: “To provide for measures in the saving of petroleum products and an economy in the cost of distribution thereof, and for the maintenance and control of a price therefor, for the furnishing of certain information regarding petroleum products, and for the rendering of services of a particular kind, or services of a particular standard, in connection with petroleum products; to provide for the licensing of persons involved in the manufacturing and sale of certain petroleum products; to promote the transformation of the South African petroleum and liquid fuels industry; to provide for the promulgation of regulations relating to such licences; and to provide for matters incidental thereto.”. 30 35 Short title

15. This Act is called the Petroleum Products Amendment Act, 2003, and comes into operation on a date to be fixed by the President by Proclamation in the Gazette. 40 20 No. 26293 GAZETTE, GOVERNMENT 26 APRIL 2004 Act No. 58,2003 PETROL.EUM PRODUCTS AMENDMENT ACT, 2003 Schedule 1 the South African Petroleum and Liquid Fuels -For Industry on Empowering Historically Disadvantaged South Africans in the Petroleum and Liquid Fuels " , Industry ~~~~~ ~ 22 No. 26293 GOVERNMENT GAZETTE, 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 Sustainabilifyrefers to: - medium to long-term viability and adaptability through a presence across all facets of the liquid fuels value chain; - ventures with pros ects of long-term profitability; and - requisite levels of sklls and access to technology. A quarter of all facets of the liquid fuels industT, or plans to achieve this The 25% ownership and control of all facets of the industry that the parties to t h i s Charter are seekin to bring about over a ten-year period means HDSAs owning in total, b the end of that period, not less $an 25% of the ag regate value of the e uity of the various entities that gold the o erating assets of the south African oil infustry The parties to %e Charter agree that the measurement of i e extent of the achievement of this target of 25% of the aggregate value of the equity will be based on the asset values per the audited accounts of the entities concerned. Supportive Culture The success of this programme depends on the disposition of those who have responsibility for managing the process. Member companies and Government therefore undertake to appoint to such positions managers who will understand the spirit and hackaround under which and enabling environment f o r h i n e s s success. It is noted that the process that gave rise to this Charter has increased the understanding and cooperation between established industry players and HDSA companies. these policies were conceived in order to create a supportive FiftPen -- 24 No. 26293 GAZETTE, GOVERNMENT 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 26 No. 26293 GOVERNMENT GAZElTE, 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 28 No. 26293 GAZETTE, GOVERNMENT 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 the South African Petroleum and Liquid Fuels -For Industry on Empowering Historically Disadvantaged South Africans in the Petroleum and Liquid Fuels Industry GAZETTE. 26293 GOVERNMENT No. 30 26 APRIL 2004 Act No. 58,2003 PETROLEUM PRODUCTS AMENDMENT ACT, 2003 LIST OF COMPANIES THAT HAVE PARTICIPATED IN THE BEE PROCESS Designed 2 The Shell Design Studio Printe by Hansa Reproprint ~ I'jinrlmn --