Infrastructure Committee Minutes - Durban Chamber of Commerce

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Infrastructure Committee Minutes - Durban Chamber of Commerce



    PO Box 1506 Durban 4000 South Africa; Tel: (031) 335 1000 Fax: (031) 332 1288

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    M I N U T E S

    of a meeting of the Infrastructure Committee

    held in Chamber House, 190 Stanger Street, Durban,

     on Wednesday, 16 May 2007 at 08h30.

PRESENT: Mr Allister Donald (Chairman) DCCI

     Mr Robin Boustred DCCI

     Mr Peter Grobler DCCI

     Mr Jay Kalichuran eThekwini Electricity

     Mr Rob McInerney Sharelist Properties

     Professor G G Maasdorp Imani Development

     Mr Seniel Pillay eThekwini Transport Authority

     Ms Simangele Radebe EDI Holdings

     Mr Ashwin Ramballee eThekwini Electricity

     Mr Frank Stevens eThekwini Water and Sanitation

     Dr Pravin Thakur DCCI SMME Desk


     Mr Dan Naidoo Umgeni Water

     Mr Sikhumbuzo Mkhize Gigaohm Electrical Supplies

     Mr L Sisa Mtwa Metrorail

     Mr Eric Smith Telkom SA Ltd



    Actioned By: 1. WELCOME The Chairman welcomed all members to the meeting, thanking everybody for their attendance. He also extended a special welcome to Ms Simangele Radebe, EDI Holdings and Mr Seniel Pillay, eThekwini Transport Authority. Noted. 2. APOLOGIES FOR NON-ATTENDANCE The apologies as recorded above, were NOTED.


     The minutes of the meeting held on 21 February 2007, which had been circulated, were CONFIRMED as a true record of the proceedings. 4. MATTERS ARISING FROM MINUTES Noted that there were no matters arising from the last Minutes which would not be covered elsewhere in the Agenda. 4.1 Regional Electricity Distributors (REDS) Ms Radebe, Project Manager for RED 5, reported under this Item, as follows.

     The flow of electrical energy was from generation, through transmission and then got

     distributed accordingly. Electricity generation was monopolized by Eskom. Several challenges faced EDI Holdings, the company responsible for facilitating the restructure of the National Electricity Distribution Industry in accordance with the requirement of the Energy White Paper and subsequent Cabinet endorsements in this regard, as follows: fragmented industry structure, inadequate maintenance of networks, inequitable treatment of consumers countrywide and inconsistent electrification performance. Noted. A Cabinet decision was taken in October 2006 to establish 6 wall-to-wall REDs. The REDs were to be governed as a public entity, regulated by the Electricity Regulation

     Act and the Public Finance Management Act (PFMA). The Department of Minerals and

     Energy would oversee and control the REDs. Cabinet further approved that a national electricity pricing system would be developed by NERSA. Noted. A number of key implementation enablers for the establishment of the REDs were: governance of the REDs; Electricity Restructuring Legislation; the promulgation of Asset Transfer Framework to enable effective and orderly transfer of assets from local government and Eskom to the REDs; a National Tariff Harmonisation Framework to ensure rationalisation of tariffs nationally and a Salary Harmonisation Framework. Noted.

     Shareholding of the REDs would be between Eskom, National and Local Government. The Municipality in each RED would remain as the service authority and the RED would become the Service provider. REDs would collect surcharges in accordance with the Municipal Fiscal Powers & Functions Bill on behalf of the municipalities and pay it over to them. REDs would also pay dividends to shareholders, subject to financial

     performance. The relationship between REDs and municipalities was to be governed

     through the Service Delivery Agreement, as contemplated in Section 81 of the Municipal Systems Act. The REDs would be buying electricity directly from transmission. RED 5 encompassed the whole of Kwa-Zulu Natal, 3 municipalities of the Eastern Cape and portion of the Free State. Noted. REDs would have a vital part to play in implementing electrification in South Africa as well as provision of free basic electricity. There would be a focus on customer service and realistic tariff structures through measures such as reduction of bad debts and lower interest charges. Noted.

     Municipalities would continue to derive income from electricity sales within their area of


     jurisdiction. The income would be based on the current audited revenue generated from electricity sales and transferred to the municipality to support other services. The method through which municipalities will receive a continued revenue stream from electricity sales would be through: a surcharge to customers on electricity sales, dividends from the relevant RED, subject to financial performance and within the approved policy of the relevant RED. Surcharges collected by the RED would be paid over to the relevant municipality on a basis agreed to between the relevant municipality and the RED. Noted.

    A number of legal instruments would govern the operations of the REDs, including:

     PFMA, Companies Act and the NERSA Distribution License. Noted.

     In terms of the way forward for the establishment of the REDs, Eskom had achieved a state of readiness, with the necessary preparation having been done. There were, however, a number of municipalities which still needed to reach a similar stage of preparation, however. Ringfencing was the initial step to the process of RED creation, during which the electricity distribution business is separated from the parent municipality for incorporation into the RED. There was a need for due diligence to be done on the issue of ringfencing. eThekwini Municipality was fairly well prepared thus far, requiring validation of ringfencing. Noted.

     There were a number of committees which would be formed to progress the

     establishment of the REDs, including: a sponsors committee, a regional engagement forum, a technical steering committee and various workgroups. Mr Boustred enquired as to whether business would still interact with eThekwini Municipality in terms of quality and service? Ms Radebe replied that this would still be the case but the name of eThekwini Electricity would be changed. Mr Boustred questioned as to whether the same tariffs would be charged countrywide and who would be the regulator thereof? Ms Radebe replied that the Regulator would be NERSA. Tariffs may differ countrywide due to a number of geographical variables. There was a need for a study to be conducted on the cost reflectivity of tariffs. Different

     business concerns may get affected to different extents in relation to the volumes of

     electricity used. NERSA would regulate this issue. Mr Ramballee stated that he was aware that tariff cross-subsidization occurred but was not sure of the extent. A study would need to be conducted to determine the extent thereof. Contrary to opinion, it may turn out that residents were subsidizing business and not vice versa. Noted. Ms Radebe informed that a surcharge of electricity sales would be paid to the Municipalities, hence income would still be derived thus. It was also informed that the City would no longer have to refurbish and maintain electrical infrastructure. Noted.

     The Chairman thanked Ms Radebe for this presentation and requested another

     presentation in six months time as a follow-up to this one, as a means of seeing A. Botha/S. progress attained. Agreed. In the meantime, Ms Radebe informed that any queries on Radebe REDs could be directed to her. Noted. 4.2 eThekwini Electricity Mr Kalichuran informed that this Municipal department was looking over-border for recruitments for skilled artisans. Noted. Mr Boustred enquired as to whether retirees were being considered for posts in eThekwini Electricity, considering that they certainly possessed the necessary experience? Mr Kalichuran informed that a number of retirees had been approached and this issue was being progressed. Noted.

     In terms of outages recently experienced, there had been a number due to recent storm activity. Noted. Mr Boustred enquired as to whether there were any priority areas which needed to be carefully watched in terms of high numbers of outages? Mr Kalichuran stated that there were none at present. He also informed that there were programmes in place which would cater for outages in the next five-year period. Noted. Tariff increases had been proposed at 7,5%, as well as an additional business levy


     surcharge of 5%. Mr Ramballee added that it remained to be seen whether this surcharge was based on an energy component or another component. For bulk electricity customers, there were a number of components which comprised the tariff levied, thus this was more complex to determine. Noted. Mr Boustred stated that the DCCI needed to take the issue of this tariff increase up in the strongest terms. Noted. The Chairman informed that this issue had been seen in the press and that it was misquoted that the DCCI had accepted the proposal of a business levy. This had not been the case and a task group had been formed by the DCCI to address the issue of the abovementioned business levy with the City Manager. Noted. Mr Ramballee stated that there had been difficulties getting their tariffs approved by NERSA. Eskom was

     utilizing the multi-year pricing determination which set tariffs for the next 3 years. Any

     tariffs submitted by Municipalities which were not below 5,2%-5,8% increase were being scrutinized by NERSA prior to approval. Tariff increase announcements were only expected by end May 2007. It was agreed that Mr Ramballee send through detail A. Ramballee as to where this issue currently was, including final tariff increases. The chairman enquired as to the delays incurred by EIA’s in terms of electrical infrastructure upgrades. Was there any means to circumvent these lengthy delays experienced? Mr Kalichuran responded that all projects going forward had been identified and the EIA’s for these projects were being undertaken upfront and were requesting extended periods of decisions. Noted.

     4.3 Energy - Supply Industry In the absence of an Eskom representative, there was no report under this Item. Noted. 5. MARITIME 5.1 Durban Port Liaison Committee The Chairman stated that it was understood that the development of Salisbury Island, which was earmarked as a possible future car terminal, had been dropped due to the high capital costs involved. In the meantime, the new berths were being used as an interim measure. Noted.

     Pier 1 container Terminal had been re-opened last week. Those involved with the expedited completion of Pier 1 Container Terminal deserved a real congratulation for the level of commitment to the process. It was anticipated that, with Pier 1 slowly coming on-stream, berthing delays would be reduced. Noted. The communications being issued from DCT were not at the levels that were previously experienced. There had been a decision to withdraw the monthly DCT Volumes and Productivity statistics which were tabled at monthly DCT meetings. This issue was to be taken up by the DCCI management with the relevant SAPO managers. Numerous

     questions had been fielded by the Associations which comprised the DPLC, with

     specific regard to the development of DCT and Pier1, as well as surrounding infrastructure into and out of the Port. Unsatisfactory answers had been received from the DCT manager. The DPLC was responsible for providing valuable input into a number of Government initiatives, including that of the DPSA and DoT’s various initiatives aimed at developing the DurbanGauteng freight route. DoT had acknowledged the DPLC’s input in a public forum with regards to several initiatives being undertaken by that department. Between 60%-75% of imports and exports into South Africa came via DCT and business was expected to pay for any delays that may be caused as a result of Port inefficiencies. Noted.

     Prof Maasdorp stated that he had been concerned that, at the recently held public

     meeting detailing the container terminal expansion, the airport digout option had received no more than a passing mention. It was mentioned that the proposed development would cut through the existing Maydon channel, rather than through the southern channel with its fewer environmental aspects which needed consideration. He stated that it had been considered possible to go through the Island View channel. Furthermore, the EIA process for the Bayhead expansion was estimated to take approximately two years longer than that of using DIA as a digout Port. He enquired as


     to the DPLC stance on the issue? The Chairman stated that the DPLC had been involved in the Port master plan since inception of the original plan in 2004. The DPLC had stated that there was only one chance to get the rightful EIA decision. Should this not occur, very significant delays would be incurred at the expense of development of the Port. It was crucial that all Port users be involved in the process from the very start to get a balanced viewpoint on the matter. Noted. Commenting on the above matter, Mr Boustred stated that it was important to get the development planners back to the DPLC to provide some form of finality on the issue. This was agreed to by the Chairman. Noted.

     6. TRANSPORT 6.1 Road Traffic Development Plan The Secretariat informed that Pitseng Resources were still finalizing the initial inception report of the Durban Freight Plan, which was due on 30 March 2007. The reasons for delay included the number of studies being undertaken by Transnet, which would feed into this Plan, namely the Port Master Plan and the various traffic studies that were also being undertaken for the City. A meeting of the DFP Steering Committee was being held on 14 June 2007 and the report was expected to go out thereafter. Noted.

     Mr Pillay added to this, informing that a lot of work was being done which may change

     the scope of the project. The initial scope of the project was to look at a freight plan for

     Durban to Gauteng. This had since changed and the scope of the work may need to be revised accordingly. Noted. Mr Pillay further informed that a number of freight transport studies were taking place in and around the Port by both the City and Transnet. These studies integrated with the Port Master Plan. Noted. A traffic forum had been set up as a sub-component of the TEMPI workgroup. Scenario testing was being undertaken, specifically for the southern Port area, in order to determine what the various infrastructural needs may be. The results of these studies were expected to be available by June 2007 and took into

     account the Khangela Bridge and the proposed Bayhead digout project. The National

     Freight Logistics Strategy would pick up on the external issues such as the

     truckstop/staging areas. A feasibility study was being undertaken to determine whether the interim car terminal ought to remain at Point on a permanent basis. The initial report of this study was expected by the end of June 2007. Freight movement throughout the city was also being looked at and the possibility of moving freight through the city only during certain times. Noted. The Chairman stated that, at a recent meeting with DoT, it was reaffirmed by members of the DCCI that central Government would have to contribute to the development of the City’s infrastructure, in light of the fact that up to 75% of the country’s economy

     moved through Durban. Noted.

     Mr Pillay stated that the National Transport Masterplan was currently at the data collection stage and would cover the whole of South Africa. Technical and management committees were to be formed at a national level to further this process. Prof Maasdorp added that 3 contracts had been awarded to 3 different consortia for this Masterplan in the Free State, Gauteng, Western Cape and Kwa-Zulu Natal. Work was further advanced in Kwa-Zulu Natal and Western Cape on this issue than in the other areas mentioned. The Chairman stated that it was good to see a higher level of interaction and that there was progress being attained at a national level. Noted.

     The Chairman stated that it was most reassuring to have had Mr Pillay at the meeting,

     thanking him for his very valuable input. Noted.

     6.2 Air

     The Draft EIA was available for Dube Tradeport and could be obtained through the

     Secretariat or the website: The closing date for comments on this was 25 May 2007. Noted. Further to this, there was a very interesting study which was undertaken to assess 5

     the high-level expansion and capacity review of DIA. It essentially stated that, even in a fully developed state, DIA had notable constraints, particularly airside. Even if all other facilities, such as landside access or utilities could be built to support more than 14 mppa, DIA would never have the potential to grow to levels Dube Tradeport could provide. Noise and safety risks were higher at DIA than Dube Tradeport in terms of the surrounding population. The Secretariat offered to forward this study onwards, should anyone be interested. Noted. 6.3 Metrorail In the absence of Mr Mtwa, who had tendered his apologies, there was no report under

     this Item.

     6.4 N2 Wild Coast Toll Road The Final Scoping Report had been submitted to the authorities for the N2 Toll Road. This included the comparative analysis of the various alternative alignments suggested and the Comments and Responses table, key issues and concerns and layout details of proposed road construction/upgrades. Noted. Mr. Boustred stated that the City might have the right to ban the Toll Road. Mr. Pillay stated that it would ultimately be a SANRAL decision in the end, in light of the fact that this was a national road. Noted. 6.5 eThekwini Transport Authority Noted that this Item had been covered under the previous Agenda Items, namely Item 6.1. 6.6 KZN Freight Transport Task Group Mr Grobler informed that the Vice-Chairman of the KZN Freight Transport Task Group, Mr Chris Stretch had been instrumental in getting a number of Items progressed on this

     Group’s agenda. Mr Grobler requested of this Committee that he be granted

     authorization to urge the Task Group to broaden their scope when looking at driver safety. The Task Group had a tendency to focus only on what was being done in Australia, as reference, and there were also companies undertaking some valuable work in this field in USA and Europe which the Task Group could draw on. The P. Grobler Committee agreed to this and Mr Grobler undertook to raise the issue with Mr Ray Sowman of the Task Group. There had been further discussion on moving freight to rail in the last Task Group meeting. Noted. Mr Grobler informed that the DCCI had made it clear that the

     irregularity of the Task Group meetings was not satisfactory. As a result, the meetings

     for the rest of the year had been fixed. Noted.

     7. WATER AND EFFLUENT 7.1 Umgeni Water Mr Naidoo provided written report to the Committee as follows. The storage levels of all the major dams were in a healthy state and Umgeni Water did not anticipate any supply or drought problems over the next year. The project commissioning of the South Coast Pipeline had shifted to the end of August 2007 from April 2007. The programme had shifted largely due to the many

     environmental challenges and social challenges associated with grave sites and land

     claims, that had resulted in the pipeline route being adjusted a few times. The project was currently 80% complete. The current healthy status of the South Coast dams was mitigating against any drought situation or water restrictions that could arise due to the delay in the commissioning of this pipeline. The following information about Springrove Dam was imparted: The project was still awaiting Ministerial approval. The department was currently proceeding with the relevant EIA processes and were expecting a Record of Decision by June 2007. Umgeni Water still awaited final approval from the department. Noted.


     Umgeni Water had consulted all bulk water customers with regard to the annual tariff increase for 2007-08 viz. eThekwini Municipality, Ilembe District Municipality (DM), Ugu DM, Sisonke DM, Msundusi Municipality, Umgungundlovu DM. Umgeni Water had consulted with the above customers for an increase of 5%. Comments had been received and responded to. The Department of Water Affairs and National Treasury had approved a tariff increase of 5% for the financial year 2007/2008, and had also commended the organisation on setting a tariff below CPIX. Noted.

    7.2 eThekwini Water Services

     Mr Stevens informed that there were several projects underway within EWS. The

     harbour tunnel tour had been completed. The various utility pipes had been laid and lighting was in the process of being installed throughout the tunnel. The harbour mouth widening project had been awarded and work was to begin within the next few months. Noted. The Western aqueduct was to be constructed. This comprised a 75km long pipeline, F. Stevens stretching from eThekwini’s western boundary to Cato Ridge. Mr Steven’s agreed to table this plan at the next meeting. He also mentioned a side project that was being undertaken. This hydropower project would generate 8MW of electricity which could be utilized in carbon trading for eThekwini, much like the current landfill gas-to-

     electricity project underway. Noted.

     All AC pipes were being replaced due to these having been destroyed over time. Over 3 000km of these AC pipes were being replaced with PVC piping. This problem was especially prevalent in the Outer West and Westville. This would reduce water loss in these areas due to reduced amounts of pipe bursts. Mr Stevens explained that eThekwini had a water loss figure of approximately 16%, with 12% being the international benchmark figure. A further 15% of water was stolen. Teams were being used to address these issues and to determine the water balance in eThekwini and to check where losses were occurring. It had happened in the past that some consumers were not metered eg. Westville Prison, certain schools etc. The finance

     department of eThekwini Water and Sanitation was working on recouping the high

     amounts of revenue lost as a result of certain facilities not being metered in the past. Noted.

     7.3 Catchment Management Agencies Mr McInerney had been nominated to serve on the CMA Governing Board for the Mvoti-Mzimkhulu catchment, representing industry in the greater Durban area. This nomination was being sent to DCCI Board of Management for final approval. Noted. He had also been nominated to serve on the Water Research Commission’s Reference

     Group for Quantitative Assessment of Industrial Effluents for Discharge Permitting,

     which would guide and assist the research team during the project. During the last decade, the eThekwini Water and Sanitation Unit had found that illegal waste management practices by industry and the associated waste service providers had led to large volumes of oils, sludges, ship slops etc. being discharged illegally to sewer, stormwater or elsewhere in the environment. This has placed a burden on the Unit in terms of clean-up and remediation costs. Noted. 8. TELECOMMUNICATIONS 8.1 National Emergency Telephone Number In the absence of Mr Smith, there was no report under this Item. Noted. 8.2 Second Network Operator

     In the absence of Mr Smith, there was no report under this Item. Noted.

     9. GENERAL Noted that there were no matters discussed under this Item. 10. DATE OF NEXT MEETING 7

It was AGREED that the next meeting be held on Wednesday, 15 August 2007 at 08H30. THIS CONCLUDED THE BUSINESS AND THE CHAIRMAN DECLARED THE MEETING CLOSED. CONFIRMED:

CHAIRMAN:_______________________ DATE:_____________________




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