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South Africa’s economy was roaring along in 2007 on the back of the global commodities boom when power shortages struck, bringing mines and smelters to a halt.

Then-President Thabo Mbeki publicly apologised for prevaricating about adding generation capacity despite repeated warnings that supply was constrained, and state power utility Eskom swiftly opened the spending taps.

The botched implementation of the expansion plan has haunted the country ever since.

Eskom in 2007 alone approved 13 projects worth more than R200 billion that it said would boost electricity output 56% by 2017. The flagships were two mammoth coal-fired power stations, Medupi and Project Bravo, that were both expected to be finished by 2015 at a total cost of R163.2 billion.

Instead of resolving the energy shortfall in Africa’s most industrialized nation, the plants have been textbook studies on how not to execute large infrastructure projects. Medupi’s completion date has been pushed out until next year or 2021 and Kusile, as Bravo is now called, is scheduled for 2023. The delays have given South Africa months of rolling blackouts, an economy in deep trouble and a huge headache for its president, Cyril Ramaphosa.

While Eskom’s current management and Ramaphosa’s government have sought to come to grips with the problems at Medupi and Kusile, there’s no guarantee the plants will ever perform optimally.

Ballooning price tag

“They needed to basically call a halt to the whole project and do a reset—to go back into the contracts and the design and engineering,” said Mike Rossouw, who was appointed as an independent consultant to Eskom in 2014 and advised it on how to address its construction challenges. “They never did that and haven’t at any stage and the consequences are there for all to see.”

Meanwhile, the anticipated price tag has ballooned to R451 billion, including the costs of interest during construction and fitting the plants with equipment needed to meet environmental standards. That equates to Eskom’s entire current debt, a burden that’s left it unsustainable and reliant on a three-year, R128-billion government bailout to remain solvent.

The utility now concedes multiple failings that led to cost overruns and delays, including inadequate planning and front-end engineering development, plus ineffective contracting strategy, execution and oversight. Contractors also performed poorly and incurred limited penalties, while strikes and demonstrations compounded the implementation woes. Turnover at the top—the company has had 11 permanent and acting chief executives since construction began—didn’t help.

Steve Lennon, Eskom’s former group executive for sustainability, recalled how Medupi’s construction went awry when the utility was ordered to fast-track the process.

“The project was under development and implementation at the same time, which is clearly a recipe for disaster in terms of any good practice for major project execution,” he said by email. “There was a shortage of contractor capacity given the worldwide demand for large-scale generation plant at the time. That meant that the main contractors could virtually name their price and conditions.”

Eskom also assumed much of the risk of developing Medupi and Kusile when it decided to coordinate the projects, rather than appointing an outsider to oversee engineering, procurement and construction—a common practice in plant development.

“The South African market at the time was not ready for a single contractor to handle the onerous risk of executing a project of this complexity and magnitude,” Eskom said in an emailed reply to questions. The company also wanted to develop skills and create jobs by bringing in small and medium-sized contractors, it said.

Medupi and Kusile, expected to be among the world’s biggest coal-fired stations, share the same configuration. The latter’s two towering smokestacks and six enormous boilers are visible from the main highway that runs between Johannesburg and the east coast.

Claims against Eskom

Speculation that the plants could be delayed first surfaced in 2008. While Eskom initially denied that the projects had gone off track, it was forced two years later to adjust the time lines and anticipated price.

Eskom Rotek Industries, a wholly owned Eskom subsidiary, was appointed to establish the Kusile site—a process that entailed digging drains, laying pipes and doing the earthworks and terracing. Its contract was terminated early on because it was unable to deliver. That created a bottleneck for other contractors, which filed for damages.

Eskom said it has paid out R14.8 billion to settle the claims, which totaled R252.9 billion, and it filed claims of its own worth R2.6 billion against companies that failed to meet their contracts.

The delays and design changes reverberated throughout the programme. While the manufacture of equipment continued as planned, it was left sitting in warehouses or on site with the clock ticking on warranties, according to Makgopa Tshehla, a professor at the University of South Africa and an expert on large construction project management.

Broken boilers

The biggest construction headaches were caused by the installation of deficient boilers supplied by Mitsubishi Hitachi Power Systems Africa, according to Eskom. Talks on how to resolve the problems are ongoing, according to Jan Oberholzer, the utility’s chief operating officer.

Mitsubishi Hitachi didn’t respond to questions about the defaults or the discussion of plans. In 2014, Hitachi Power Africa, an earlier iteration of the company, blamed local subcontractors for faulty welds on the Medupi boilers, but Eskom’s former finance director, Paul O’Flaherty, said the main contractors were at fault.

Tshehla says Eskom’s board should ultimately bear most of the blame for failing to properly assess the projects and the related risks, and for not holding management accountable for poor performance.

Oversight deficiencies were compounded by the repeated changes to Eskom’s top management and demands by politicians for them to get a move-on with the projects.

“Eskom was already under the whip for lack of capacity so they were chasing like mad dogs to get those power plants done,” Rossouw said. The management “took on responsibility and risk which I don’t think the board ever understood properly. They were hardly capable of conveying a concise, understandable picture to the board.”

In 2012 Eskom invited then-President Jacob Zuma to attend a pressure test on Medupi’s first boiler to show that the project was running according to plan. Rossouw recounted that management ignored engineers’ advice that the plant wasn’t ready and, when steam was pumped into pipes connected to the boilers, tools and other debris were blown out.

Zuma gave no indication that he was aware anything was wrong. He said in a prepared speech that he was “delighted” with the progress being made on the project and congratulated his minister, Eskom and its workers “for a job well done.” Zuma returned to the plant in 2015 when it delivered its first power to the grid—two years later than anticipated at the time of his previous visit.

Article by Fin 24

While financial emigration may be a viable option for a small minority of individuals who will be hit by South Africa’s coming ‘expat tax’, for the majority, it’s likely to be a costly exercise which won’t provide significant tax relief in the long-term.

This is according to Ettiene Retief of the South African Institute of Professional Accountants (SAIPA) who said that recent news reports have provided conflicting – and even wholly inaccurate – information around the implications for expats to the scheduled March 2020 change to the Income Tax Act.

“Financial emigration is the process whereby taxpayers change their status with the South African Reserve Bank (SARB) from resident to non-resident,” he said.

“It’s a process conducted purely for exchange control purposes, but which does not affect your citizenship status in any way.”

Emigration, on the other hand, is a very different process as it involves physically relocating from one country to another country either in the short or long term, said Retief.

Once emigration has become a permanent status, the process of financially emigrating – during which time the individual’s assets move from their old country of residence to their new country of residence – takes place, he said.

“The mistake many people are currently making is that they are expecting financial emigration to resolve their issues around paying tax in South Africa on income earned abroad, a so-called ‘expat tax’.

“The reality, however, is that financial emigration, for most individuals, won’t provide material tax savings,” he said.

Expat tax

Once the amendments to the Income Tax Act come into effect in March 2020, South African tax residents working abroad will only be exempt from paying tax on the first R1 million they earn abroad. Thereafter they will be required to pay tax on any foreign earnings.

The revised act does, however, make provision for expats working abroad who are registered for tax in those countries, said Retief.

In these instances, the act allows those individuals to apply for credits in South Africa which are offset against the tax they owe locally, with the tax rate starting at the lowest rate, he said.

“The reality, therefore, is that South Africans working abroad will in most instances not be significantly negatively impacted by the changed regulations and will still not be double taxed.

“The only individuals that will be detrimentally impacted are those earning very large amounts offshore and even in these instances, they will still only be paying the same amount of tax they would have been paying in South Africa in any event.”

What’s important to understand is that to all intents and purposes the law has not changed but has instead just corrected a loophole, said Retief.

“South African residents who work abroad permanently and spend the majority of their time living abroad would already be considered non-residents from a tax perspective. Remember that it is possible to change your tax residency without having to financially emigrate.”

Downsides

What recent news reports – those encouraging individuals to emigrate financially in order to avoid the expat tax – have failed to reveal is that financial emigration is an expensive exercise, said Retief.

He added that there is a huge tax implication involved in changing an individual’s tax residency.

“By financially emigrating an individual is deemed to have disposed of all their assets in South Africa, which means that capital gains tax starts applying. Should the individual decide at some future point to financially emigrate back to South Africa, the individual would not get that money back.

“To avoid South African taxation rules, an individual would need to first change their tax residency. Financial emigration is the very last step – and even then, it’s not an essential part of an amended tax residency given that it is only an exchange control provision.

“Emigration and financial emigration only comfortably overlap when a taxpayer is legitimately emigrating. The latter doesn’t work if the individual intends to continue residing in South Africa,” he said.

Article by Business Tech

President Cyril Ramaphosa has signed off a number of major new laws – including the controversial ‘internet censorship bill’.

In a statement on Wednesday (2 October), the presidency said that the new laws include:

• Overvaal Resorts Limited Repeal Bill;
• The Property Practitioners Bill;
• Electronic Deeds Registration Systems Bill;
• Film and Publications Amendment Bill.

It was not clear at the time of writing whether the laws had been promulgated and had officially come into effect. In addition, some parts of the legislation may only come into effect at a later date.

Controversy

While most of the new laws will likely be welcomed, one of the new bills has courted controversy as it made its way through the law-making process.

The Film and Publications Amendment Bill – known as the ‘internet censorship bill’ by some of its opponents – aims to introduce a number of changes including harsher rules to protect children from disturbing and harmful content, and to regulate the online distribution of content such as films and games.

Some of the other notable changes include:

• Revenge porn: Under the bill, any person who knowingly distributes private sexual photographs and films without prior consent and with intention to cause the said individual harm shall be guilty of an offence and liable upon conviction. This includes a possible fine not exceeding R150,000 or to imprisonment for a period not exceeding two years and/or to both a fine and imprisonment not exceeding two years. Where the individual is identified or identifiable in said photographs and films, this punishment rises to a R300,000 fine and/or imprisonment not exceeding four years;

• Hate speech: The bill states that any person who knowingly distributes in any medium, including the internet and social media any film, game or publication which amounts to propaganda for war, incites imminent violence, or advocates hate speech, shall be guilty of an offence. This includes a possible fine not exceeding R150,000 and/or imprisonment for a period not exceeding two years;

• ISP requirements: If an internet access provider has knowledge that its services are being used for the hosting or distribution of child pornography, propaganda for war, incitement of imminent violence or advocating hatred based on an identifiable group characteristic it shall immediately remove this content, or be subject to a fine.

Some of the above changes have previously come under scrutiny from members of industry and the public, over concerns that it would be used as a means of censorship for online content.

Speaking to BusinessTech in May 2019, Dominic Cull of specialised legal advice firm, Ellipsis, said that the bill is ‘extremely badly written’.

He added that the introduction of the bill means that there is definite potential for abuse in terms of infringement of free speech.

“One of my big objections here is that if I upload something which someone else finds objectionable, and they think it hate speech, they will be able to complain to the FPB,” he said.

“If the FPB thinks the complaint is valid, they can then lodge a takedown notice to have this material removed. ”

Cull said this was problematic as the FPB, which is appointed by government, should not be making decisions as to what is and isn’t allowed speech under the South African Constitution.

“When we can see that the courts struggle with these issues, there’s no place for politicians directly appointed by a minister to deal with them,” he said.

Article by Business Tech

The Competition Commission has laid the blame for the rising cost of private healthcare at the feet of the national health department.

This was disclosed on Monday at the release of the commission’s health market inquiry report which found that the health department’s failure to hold regulators sufficiently accountable has led to uncompetitiveness and inefficiencies in the private healthcare sector.

The inquiry was initiated by the commission to investigate increasing prices of private health care, which only a minority of South Africans could afford. The release of the report comes ahead of an intended rollout of the National Health Insurance, expected to be fully operational in seven years.

In the health facilities market (everything from hospitals to the beds in them), the five-year long investigation found that the dominant service providers in private health care are anti-competitive, leading consumers to pay above-inflation prices for health.
The report found that the three large hospital groups — Netcare (33%) Mediclinic (28.6%) and Life (28.5%) — are able to secure “steady and significant profits year on year”, making it difficult for new entrants and smaller service providers to grow and compete on merit.

The dominance of these groups also lures the best medical specialists to their hospitals by enticing them with lucrative benefits which smaller entrants cannot afford.

The other private service providers are only able to access to 10% of the market due to the dominance of the three large hospital groups. This has led to little to no improvements in health services.

“Facilities operate without any scrutiny of the quality of their services and the clinical outcomes that they deliver because there are no standardised publicly shared measures of quality and healthcare outcomes to compare one against the other,” the report finds.

Health practitioners have also been found guilty of over-servicing or using higher levels of care than required. This practice, the report found, may lead to a waste of resources and may also negatively impact of the patient’s health. The costs of this practice is carried wholly by the consumer who is often uninformed and may not be aware of the anti-competitive behaviour of the practitioner.

“It pushes up the cost of care and, if it is high enough, it will make it unaffordable and threaten the sustainability of the healthcare market.”

With regards to funders, the commission found that Discovery Health had sustained high profits, way above those of its main competitors. These profits, earned by the company because it assumes limited risk compares to consumers or providers of private healthcare, result from the high barriers to entry to the medical aid scheme market.

“The existing administrators do not seem to impose a significant competitive constraint on Discovery Health. Additionally, the lack of transparency on prices has meant that patients live in a world of price uncertainty. And, absent from an ability for funders to negotiate meaningfully with numerous practitioners, the default payment mechanism of fee-for-service continues to dominate the market.”

The commission has recommended various sweeping systemic changes that should be implemented to move it towards a more pro-competitive market. The commission recommends that a supply side regulator for healthcare be established in order to effectively regulate the suppliers of healthcare.

To promote a more competitive market in the sector, the commission recommends that a new standardised payment option must be made available by all medical aid schemes. The new base fee will enable consumers to effectively compare prices and would reward schemes that are able to innovate and create better health packages for consumers.

To reduce the dominance of one or more companies in the sector, the commission recommends that it reviews possible mergers that may contribute to an anti-competitive market. This would also ensure that practitioners are also guided on about what constitutes pro-competitive conduct.

Article by Thando Maeko and Mail & Guardien

Districts will be empowered and even emboldened to initiate and enter into partnerships – to advance effective service delivery – with civil society, the private sector, and engineering association or accounting councils, writes Parks Tau.

For the first time in democratic South Africa, local government becomes the nucleus of, and for, societal development. A strategic mechanism mobilised for this purpose is the district-based model. All the three spheres of government, working in cooperative unison, will now effectively coalesce, in their operations and functions at the country’s 44 districts and eight metropolitan areas.

What does this district-based model to development actually entail and mean in practice? How is it indicative, in the 6^th administration led by President Matamela Ramaphosa, of a zeitgeist moment and process towards rebuilding and renewal of the country?

The district model is a response to two structural challenges. First, the inefficient silo and disjointed functions between national, provincial and local government. This has resulted, among other factors, in inadequate responses to service delivery challenges, slow reactions to environmental emergencies (like drought, floods) and collapse, in some areas, of basic municipal infrastructure services.

Second, it is a consciously calculated intervention to close the growing social distance between citizens and communities and their public institutions and civil service. The outcomes of this distance, between public representatives and communities, is evident in increasing service delivery protests that sometimes result, or mushroom, in wanton infrastructure destruction.

As various evidence-based studies attest, like those from Municipal IQ, these community protests or civil actions incidents, emerge largely from three interrelated issues: contentious municipal demarcation, selection of compromised municipal accounting officers, plus evictions and land invasions in areas unsuitable for human habitation.

These two structural challenges take place in a context of increasing service delivery demands, from citizens and residents, and diminishing government revenue streams. Hence the inclusion, in the district model, of alternative revenue-raising options in local government such as, municipal pooled financing, municipal bonds and partnerships with local industry.

The principles of the district model, or the eponymous “Khawuleza” service delivery model, endorsed by the President’s Coordinating Council (PCC), will customise service delivery according to local specificity of, for example, Metsimaholo, iLembe, Mbizana, Maluti-a-Phofong municipalities.

Service delivery will be guided by community needs instead of adopting a blanket national and provincial mandates.

Of course, these mandates will be guided overall by the National Development Plan (NDP) blueprint, in its emphasis for instance, that all citizens and communities shall have access to basic services and amenities. This fits together with the constitutional injunction, in Chapter 2 of the Bill of Rights, for government to deliver socioeconomic services that enhances, “the right to dignity and the right to equality” of all citizens, residents, economic migrants and political refugees.

Additionally, the district model will be distinguished by regularised monitoring and evaluation (M&E) mechanisms to gauge service delivery made. Such monitoring is targetted at identifying, and fixing, bottlenecks. Deliberate project management, of turning policies into action plans, is to be tracked through professionalised personnel who will assess delivery impact, capacity building, and opportunities for shared resourcing.

The Department of Cooperative Governance (Cogta) will be the implementing national institution, working in concert with the provinces and the PCC. An objective of working primarily from the combined 52 impact districts, is to ensure localised complementarity in delivery of national commitments to the NDP, continental obligations to the Agenda 2063 and pledges to implement the Sustainable Development Goals or the Paris Climate Accord.

To effect the district model and realise the aspirations of participatory government, sector-specific social compacts will be important. Districts will be empowered and even emboldened to initiate and enter into partnerships – to advance effective service delivery – with civil society, the private sector, and engineering association or accounting councils.

Social compacts, which are implicit agreements between various stakeholders, are singled out to encourage citizens and communities to honour their municipal services. As the Cogta minister, Dr Nkosazana Dlamini-Zuma, indicated at the 2019 Budget Vote, it is unsustainable that municipalities are owed R139bn in rendered public services (water, sanitation and electricity), coupled with, in turn, the R21.1bn owed by municipalities to Eskom.

Therefore, social compacts, based on making concessions to reach shared consensus, are a central instrument for all partners to work in unison to realise meritocratic democracy, advance Batho Pele principles, consequence management, and entrench a responsive citizen-centric government and governance framework.

The district model is an opportunity for all South Africans across geographic, racial, economic and ideological boundaries to build bridges towards practical, measurable and non-partisan service delivery. A district model offers a ready platform to address the systemic challenges flagged annually, for one, by the auditor general on municipal underperformance and to recapacitate the 40 municipalities under administration.

The Khawuleza district model deserves the support from all stakeholders, to address the triumvirate developmental challenges (of poverty, unemployment and inequality) so that local government can stabilise its systems, reinforce its governance structures and be sustainable in M&E in the short- to long-term.

In short, the district-based model of development provides a strategic instrument to bring back to life the civil service, realign it to its normative proximity to people, reinstill trust and confidence in state institutions and an esprit de corps where citizens and communities value public institutions.

– Parks Tau is Deputy Minister of the Department of Cooperative Governance (CoGTA).

President Cyril Ramaphosa upped the game when he put worker ownership of companies on the table at the congress of the SA Clothing and Textile Workers Union last week.

Ramaphosa told members of Sactwu that securing co-ownership was important to give workers a say in industries, and to prevent the increasing conflict that has sparked a wave of strikes.

Banking union Sasbo was on Thursday interdicted from proceeding with what would have been the biggest banking strike in 99 years, and which would have taken labour action decisively into the services industry. The idea of workers as owners is gaining currency as the model of twenty-first-century capitalism comes under increasing scrutiny.

Piketty recently said worker ownership would allow “new social groups to become owners and shareholders”.

While employee share ownership schemes are touted in black empowerment laws as a more legitimate form of black economic empowerment than the crony deals that characterised the first era of BEE, they have not been successful. Journalist Carol Paton, writing in Business Day about mining sector deals, noted that workers had not made significant gains.

It is a method favoured by both the ruling African National Congress and the official opposition the Democratic Alliance.

In its election manifesto ahead of the May 2019 national election, the ANC promised to “introduce legislation for the extension of company ownership to a broad base of workers through an employee ownership scheme and similar arrange arrangements to supplement workers’ incomes and build greater partnerships between workers and owners to build these businesses,” according to its manifesto.

“Social partners (government, labour and business) will put together the minimum thresholds and conditionalities to govern the establishment of worker-ownership funds, paving the way to empower millions of workers across the economy.”

The ANC said in its manifesto that the government would provide public assistance (which means state funding) to help workers buy shares.

With a depleted fiscus, the assistance is unlikely in the short term, but the idea is now on the table.

Here’s what is happening in and affecting South Africa today:

• Government is working on new laws that will bar foreign nationals from operating in certain sectors of the economy. Justice and Correctional Services Minister Ronald Lamola said that the legislation will strike a clear balance in helping the economy grow while clearly indicating which types of businesses foreign nationals are and are not allowed to operate in. [IOL]

• South African taxpayers are some of the most heavily taxed in the world, but things may still get worse. Economist Mike Schussler believes that the government will likely increase personal income tax rates and the fuel levy as it is running out of options to raise money. [eNCA]

• State arms company Denel has failed to supply R250 million worth of army vehicles to the government of Chad, despite having been paid a R100 million deposit almost two years ago. Chad has since cancelled the contract and demanded its deposit back from the cash-strapped arms company. [City Press]

• Parliament has begun revising the rules to deal with the removal of the Public Protector. While the constitution and the national assembly’s rules do set out a broad framework for parliament to remove the head of a Chapter 9 institution such as the public protector, these new changes aim to ensure clarity and uniformity. [Parliament]
  

• The rand starts the week on the back foot following the US Federal Reserve’s decision to cut rates and further uncertainty regarding the US-China trade agreement. On Friday the rand was at R14.91 to the dollar, R18.62 to the pound and R16.43 to the euro.

South Africa’s R2.4 trillion savings industry has a request for the ruling party: stop with threats of dictating where funds must invest and get going on projects that pensions can help finance.

“You can prescribe, but nothing will happen unless you have proper projects,” Leon Campher, the chief executive officer of the Association for Savings and Investment South Africa, an industry body of fund managers and insurers, said in an interview in Johannesburg. “The savings industry would gladly invest in infrastructure or developmental projects provided they are properly done.”

President Cyril Ramaphosa last month echoed the election manifesto of the African National Congress saying a discussion was required to investigate the use of prescribed assets as a tool for fostering economic growth. A lack of detail on how retirement funds could be forced into investing in state-owned companies or government projects has stoked concerns it could leave pensioners poorer if these don’t make inflation-beating returns.

There has been very little visible progress since Ramaphosa last year announced that the government would create a multi-billion rand infrastructure fund. Banks and even Ramaphosa’s envoys appointed to lure investment into the country have complained over a dearth of projects that has led to the near demise of South Africa’s construction industry.

“If it’s funding for developmental projects South Africa is after, government would be better off ensuring that the infrastructure initiative proposed by the president in his fiscal stimulus plan a year ago gets going,” Campher said.

Joint Effort

The association and banking industry are working with the Development Bank of Southern Africa to flesh out details of an infrastructure initiative, Campher said, adding that DBSA has indicated it could be up and running by the end of this year. The lender didn’t immediately respond to requests for comment.

“The concept is that you have the government pot, the DBSA pot and you have got the savings pot so you can create what is called a blended-finance model,” he said. “Recruiting retired and semi-retired technical experts, people with the appropriate skills, to prepare projects will be important for attracting funding.”

The government could base the model for its infrastructure fund on its highly successful Independent Power Producers renewable-energy program, Campher said, adding it could be expanded beyond energy to form a “project office on steroids.”

Big-ticket items for funding could also include initiatives in the areas of water and sanitation, broadband and student accommodation, Campher said.

If prescription is introduced, there is a good chance that R2.5 trillion in foreign capital invested in South African equities could flow out of the country, he said.

Article by Roxanne Henderson & News24

The judge declared that the bulk surveillance activities and foreign signals interception undertaken by the National Communications Centre were unlawful and invalid.

After a drawn-out court battle first initiated by amaBhungane, Judge Roland Sutherland at the High Court in Johannesburg has declared the Regulation of Interception of Communications and Provision of Communication-Related Information Act (Rica) unlawful.

amaBhungane started legal proceedings in April 2017 after learning that managing partner and investigative journalist, Sam Sole, had been the target of state surveillance under Rica while investigating the decision by the National Prosecuting Authority to drop corruption charges against former President Jacob Zuma.

Earlier this year, Right2Know and Privacy International argued at the High Court in Pretoria that bulk surveillance is an extraordinary violation of rights and demanded an end to the practice.

The two organisations joined amaBhungane Centre of Investigating Journalism as friends of the court to declare some sections of Rica unconstitutional and invalid.

A senior counsel representing the State Security Agency (SSA), advocate Vuyani Ngalwana later countered this by arguing that journalists were not entitled to dictate how Rica should be implemented in order to accommodate them.

Ngalwana said journalists could not be given preferential treatment or risk national security when it came to terrorism threats.

He argued that he did not see the feasibility of post-surveillance notification, saying it served no purpose and would only compromise the intelligence agencies and national security.

“Courts are not there to dance to the tune of the media for brownie points. In any event, it is impermissible for the court to enter into the fray of powers of a legislative nature,” he said.

He said journalists should raise their concerns during public consultation periods.

“They cannot opt out of that process and come to court and seek to force their own version of what the law should say, when they are not accountable for the high crime rate, politicians are.”

In his closing statement, Ngalwana said amaBhungane should be ordered to pay costs because they knew as early as June 2017 that there was a bill in process to amend Rica.

UPDATE: 

amaBhungane’s first challenge targeted the constitutionality of several provisions of RICA, which permits the interception of communications of any person by authorised state officials, subject to prescribed conditions.

The second challenge related to “bulk interceptions” of telecommunication traffic by the State on the basis that no lawful authority exists to do so.

Judge Sutherland said part of the dynamic of investigative journalism was for investigative journalists to obtain information from whistleblowers and others who inform on their bosses without wanting to be identified.

Therefore, a need to keep sources private and secretive is “axiomatic to the exercise”.

Among the five orders granted, was an order that sections 16(7), 17(6),18(3)(a), 19(6), 20(6) and 22(7) of RICA were inconsistent with the Constitution and invalid to the extent it failed to prescribe procedures for notifying the subject of the interception.

“RICA, including sections 16 (7) thereof, is inconsistent with the Constitution and accordingly invalid to the extent that it fails to adequately provide for a system with appropriate safeguards to deal with the fact that the orders in question are granted ex parte (without notice) and the declaration of invalidity is suspended for two years to allow Parliament to cure defect.”

He suspended the declaration of invalidity for two years to give Parliament time to amend the act.

There was no costs order.

Article by Kaunda Selisho & The Citizen

The Department of Mineral Resources and Energy is considering legislation that will give government a 20% free carry share in upstream petroleum, Parliament heard on Friday.

This is as the development of petroleum resources is being regulated under the Mineral and Petroleum Resources Development Act, which lapsed and created the opportunity for separate petroleum provisions.

The proposed legislation – which is yet to be presented before Cabinet or Parliament – seeks to give effect to state custodianship of the country’s petroleum resources, and to regulate upstream petroleum resources industries.

Speaking to the committee of mineral resources and energy, deputy director general of mineral policy and promotions Ntokozo Ngcwabe said a lack of petroleum upstream regulation had hampered development, and that the department was working on entrenching security of tenure in petroleum.

Ngcwabe said empowerment provisions in the draft legislation would make provision for 10% broad-based black economic empowerment participation at a project exploration and production stage.

“The minister will be empowered to reserve a block or blocks for 100% black-owned companies with relaxed requirements. The bill will also empower the minister to develop a Petroleum Resources Charter to pursue the transformation agenda,” said Ngcwabe.

Ngcwabe said the bill proposed 20% carried state participation be applied to exploration and production rights in petroleum, with provisions for the state to be represented on boards of operations where it participated.

“Provision is made for cost recovery from the exploitation of the resources. Different models are being considered and the state interest will be held by a state-owned company,” Ngcwabe said.

She said the while Cabinet was still to be fully briefed on the legislative proposals, the department was working with National Treasury to determine guidelines in various aspects of the provisions.

Members of the committee welcomed the submission but urged the department to have a draft bill ready so that Parliament could properly engage the proposals.

Article by Khulekani Magubane, Fin24