IDC funds earmarked for new SOE focused commercial shipping

IDC funds earmarked for new SOE focused commercial shipping

A NEW state-owned enterprise (SOE) is on the cards following the release of a Pre-Draft South African Shipping Company (SASCO) Bill 2022, which will see the establishment of a state company that will engage in the commercial shipping business.

The aim of establishing the SASCO, which will be financed by the Industrial Development Fund, is to see the state participating in the exportation and importation of essential goods.

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The formation of the SASCO, according to the bill, is to transform and empower the South African government to be in charge of the transportation of goods by sea.

“Despite the country being a cargo-owning nation that generates approximately more than 80% of export cargo, the carriage of cargo is predominantly undertaken by foreign-owned ships,” read the bill.

The bill also stated that President Cyril Ramaphosa, or whoever will be the head of the state when the bill becomes an act, would appoint a cabinet member, most probably the transport minister, to be the shareholder of SASCO on behalf of the state.

In case the SASCO falls under the Department of Transport, that Department’s minister – currently Fikile Mbalula – is set to be the shareholder.

However, the much-anticipated outcome of the ANC elective conference to take place in December is set to determine whether or not Ramaphosa and Mbalula would still be holding their respective positions when the bill is finalised.

The shareholding minister will appoint between seven and 13 board members of the SASCO and also foresee its incorporation into Section 11(3)(c)(iv) of the Companies Act.

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The minister would also have to take steps to register the company with the Registrar of Companies for it to start conducting business as a corporate entity whose sole shareholder would be the state.

“The State has the power to acquire in whole or in part, a shipping going concern or a company or companies during the incorporation of the South African Shipping Company.

“Any acquisitions undertaken in terms of this section must be done in accordance with principles of fairness, equitability, transparency, competitiveness and cost-effectiveness,” read the copy of the bill.

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The Industrial Development Fund would provide funds for the acquisition of a strategic fleet.

According to the document, any acquisition undertaken in connection with the new company “must be preceded by an independent business and financial analysis and due diligence and be approved by the cabinet” and the Public Finance Management Act (PFMA) must be applicable to the company.

For the SASCO to function effectively, it would have to own and manage a strategic fleet of vessels acquired or built and registered in terms of the South African Ship Register.

Its responsibilities would also include promoting shipping research, innovation, training and education. It would conduct goods clearance, stevedoring, warehousing and other logistics infrastructure and services. It would engage in tanker, bunkering, container, bulk cargo, and coastal shipping services.

In case SASCO runs into serious financial or management difficulties, “the South African Shipping Company may not be placed under judicial management or liquidation, except if authorised by an Act of Parliament enacted specifically for that purpose”.

Board members must be specialists who are experienced in shipping trade, corporate management, business studies, maritime transport, transport and logistics, ship agency, clearing and forwarding, commerce, banking, finance, and economic or legal matters.

“Members of the Board must exercise their functions with due diligence, skill and care, in a transparent and impartial manner, in good faith and must, at all times, promote the business interests of the South African Shipping Company, for the benefit of the economy,” read the bill.


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