The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
Oil and gas
The MPRDA regulates the issue or grant of technical cooperation permits, reconnaissance
permits, exploration rights and production rights in respect of petroleum.
The manufacture, wholesale or retail of any petroleum fuel or lubricant and the
development of any site for the retail of petroleum products may only be carried out
under a licence from the Controller of Petroleum Products issued in accordance with the
Petroleum Products Act. Such licences are evergreen provided that the licensed activity
remains a going concern and in the case of a site licence there is a valid retail licence for
that site.
The construction and operation of petroleum pipelines, marine loading facilities
and bulk storage facilities (except for those pipeline and facilities which are specifically
excluded) may only be carried out under licence issued under the Petroleum Pipelines
Act. The minimum licence period for these licences is 25 years and the licensee is entitled
to the renewal thereof provided it has complied with its licence conditions.
The construction and operation of gas transmission, storage, distribution and
liquefaction facilities and regasification facilities, the conversion of existing infrastructure
into gas transmission, storage, distribution and liquefaction facilities and regasification
facilities, and the trading in gas may only carried out under licences issued by NERSA
in its capacity as the Gas Regulator. In addition the owner of any operation involving
the production or importation of gas, the transmission of gas for own use and small
biogas projects supplying to rural communities must register such operation with the Gas
Regulator. The licence application process is similar to the process under the Petroleum
Pipelines Act. The minimum licence period for these licences is also 25 years and the licensee
is entitled to the renewal thereof provided it has complied with its licence conditions.
The trading of gas (that is, the sale and purchase of gas as a commodity and
associated services) that is transported by pipeline requires a gas trading licence from the
Gas Regulator under the Gas Act.
iii Ownership and market access restrictions
For all the sectors covered in this chapter, there are no prohibitions or limitations on
foreign ownership of energy assets or licensed activities. Instead, ownership controls
relate to requirements for minimum equity ownership in licensed entities by historically
disadvantaged South African citizens (‘HDSAs’) (that is, requirements for meaningful
economic participation through beneficial equity ownership by South African citizens
qualifying as HDSAs). These requirements are typically incorporated as conditions
under the relevant licence or as contractual obligations in any concessions awarded
by the government for the holding or carrying on of energy supply activities through
public–private partnerships.
Electricity
The ERA currently provides for the Minister of Energy to make regulations setting out
criteria for or prohibiting cross-ownership or vertical and horizontal integration by
generation, transmission or distribution licensees. To date, no such regulations have been
published.
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