There is dissatisfaction with port tariffs and services. New port tariffs are being implemented through the Port Tariffs Incentive Programme (PTIP). The Ports Regulator of South Africa, in consultation with the National Ports Authority, the Department of Trade, Industry & Competition (the dtic), the Department of Transport (DOT) and various other government departments, has launched a Port Tariff Incentive Programme (PTIP) in support of beneficiation, industrialisation, and localisation through port tariff regulation. The PTIP programme serves as a mechanism by which cross-subsidies within the port tariff structure may be quantified and implemented in the public interest. The Programme is open to all port users, with an emphasis however on small to medium-sized enterprises, to support them to enter the market as well as to aid economic growth, beneficiation, national shipping revitalization, localisation, and industrialisation. The programme affords port users an opportunity to apply for a discounted tariff as per the official Tariff Book of the National Ports Authority (TNPA). Further information on the application process and sector qualification can be obtained on the link provided below: https://www.portsregulator.org/economic/tariffs/port-tariff-incentive-programme Common complaints with the rail and port facilities are listed in Annexure E. The dtic will work with the DPE to facilitate a discussion between Transnet and the Steel Oversight Council to explore solutions to these disincentives to investment and exports. The discussion will include freight and port tariffs which has been raised as a significant cost driver in the sector. 1.2 Energy prices and security of supply: The uncertainty regarding the price and security of supply of electricity is a serious disincentive to investment. Investors expect to be able to project ROI in the long term, which is made difficult by changes in the electricity-pricing models. Some of the larger users are considering self-generation to take them partly or completely off the grid. Electricity is a major cost component for many sectors of the industry, not limited to the mills and the foundries only. Recent price increases have had a serious effect on costs and competitiveness. Load shedding by Eskom affects the reliability and lifetime of blast furnaces and smelters and cuts the operating time of many plants. This is compounded by poor maintenance of their distribution networks by some municipalities. The Eskom winter tariff in particular has been reported to be a problem. This contributes to a loss of efficiency and productivity. Plants which obtain electricity from municipalities are particularly vulnerable to power outages and to cost escalation. A means must be worked out which will allow these plants to move to Eskom direct supply and so avoid the additional supply insecurity and cost disadvantages of municipal supply. The short-term framework for a more affordable Eskom tariff for energy-intensive users has been amended and signed off by the DMRE. An interim long-term framework is in place; applications are done through Eskom or the municipal supplier. A summary of the short and long-term frameworks is attached in Annexure D. The Steel Oversight Council, with the dtic, the DPE and the DMRE, should consider this as a priority. 1.3 The supply of affordable ferrous scrap is a problem. An adequate supply of scrap to the domestic industry must be ensured. The scrap collection and recycling industry is a large employer and must also remain viable. Estimates suggest that there may be an absolute shortage (i.e., not an affordability issue) of as much as 1 million tons per year by 2021. Finding sufficient consensus on measures to ensure adequate supplies of scrap to the steel and engineering industry depends partly on having agreed estimates of the supply shortages or excess. This estimate is therefore currently being confirmed in discussions with the consumers and suppliers of scrap. In the longer term, there is likely to be increased pressure on the scrap supply as new mill capacity comes on stream during 2021 and 2022 and as more scrap is converted into billets for export. Discussions are taking place with the SOEs to obtain a commitment to sell scrap directly to the mills, foundries and smelters. The new ad valorem scrap export tax is expected to come into effect in 2021. There is potential to avoid the export tax by exporting through the Southern African Customs Union and free trade areas and especially through Maputo. This loophole must be closed if the tax is to be effective. The dtic is discussing with ITAC the retention of the new export permit measures initiated in September and November 2020 by ITAC after its investigation of the effectiveness of the scrap export control measures requested by the Minister. Some of the key changes to the PPS include
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The South African Steel and Metal Fabrication Master Plan 1.0
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