Industry transformation

The transformation roadmap is defined through the 1998 Energy White Paper , Liquid Fuels CharterCodes of Good Practice for BEE and the B-BBEE Act of 2003. The Liquid Fuels Charter was created in order to transform the liquid fuels industry to achieve the policy objectives of the 1998 Energy White Paper.

Liquid Fuels Charter

The Charter for the South African Petroleum and Liquid Fuels Industry on Empowering Historically Disadvantaged South Africans in the Petroleum and Liquid Fuels Industry, known as the Liquid Fuels Charter (LFC), was signed by the industry in 2000. It aimed to ensure the sustainable presence, ownership and control by approximately 25% of historically disadvantaged South Africans across the industry value chain by 2010. As the first industry to sign such a charter, SAPIA members prioritised the critical need to correct the imbalances of the past, long before the Broad-Based Black Economic Empowerment Amendment Act of 2013.

The goal of 25% ownership of the South African petroleum industry by historically disadvantaged South Africans (HDSA) is being met by SAPIA members. All privately owned, integrated members of SAPIA have concluded transactions, in differing arrangements, to facilitate HDSA ownership of their companies or to assist in the development of qualifying small enterprises. The implementation of the LFC includes much more than ownership. Procurement, employment equity, capacity building and the creation of a supportive culture are also vitally important.

Being the first charter in the country there are some disadvantages for the industry. One of these is that the LFC does not have a balanced scorecard. The concept of balanced scorecards was only developed later and was fine tuned in subsequent charters in line with the 2007 Broad-Based Black Economic Empowerment

(B-BBEE) Codes of Good Practice

The absence of a balanced scorecard has been a distinct problem for the industry. It has meant that all the good results achieved by the industry have been overlooked by critics of the industry and attention only focused on areas where performance has been perceived to be relatively weaker. The industry has never hidden the weaker areas in its performance. Some of these weaknesses are the advancement of women in the industry and the procurement of crude and products from empowered suppliers. To reduce regulatory compliance burden, the industry is working on the alignment proposal of the LFC to the 2013 B-BBEE Codes of Good Practice.

BEE transactions by SAPIA members

All integrated, privately owned members have concluded equity ownership deals.

Most of these are in respect of 25% of the full value chain, including both refining and marketing. Most are also broad-based and include women’s groups and the community. Good progress has been made with equity participation. Most of SAPIA’s members have already engaged black partners in either the full value chain or in important parts of it. Most importantly, the international oil companies have equity deals. Multinationals in other sectors of the economy are not entering into broad-based black economic empowerment transactions but rather opting for the Equity Equivalent Investment Programme in terms of the B-BBEE Codes of Good Practice.

Co-operation between SAPIA and Women in Oil and Energy
In 2005, SAPIA and Women in Oil and Energy (WOESA) signed a MoU for empowerment of women in the oil and energy sector. The MoU was valid for three years. SAPIA members individually continued to financially support WOESA. SAPIA and WOESA worked together to facilitate the sustainable empowerment of women in the oil, gas and other energy sectors. The MoU allowed for two types of relationships between the organisations – one direct relationship between WOESA and SAPIA and another bilateral relationship between WOESA and individual SAPIA members.

Compliance to the Broad-Based Black Economic Empowerment Amendment Act, 2013

SAPIA’s assessment of the industry’s achievements to date show that industry is making significant strides in respect of the pillars of the 2007 B-BBEE Codes of Good Practice. However, there are some challenges in the transformation journey which ultimately aims to achieve B-BBEE. These include procurement of crude oil, the need to increase credible B-BBEE suppliers, availability of accredited petroleum industry learning programmes and increasing the representation of people with disabilities.