Petroleum and Liquid Fuels Draft Sector Code

Feb 12, 2018 | B-BBEE Blog

The draft Sector Code has not been published by the DTI yet so it is just an indication of the Liquid Fuels Sector and covers the following Liquid Fuels Sectors with differing scorecards:

  1. Wholesale
  2. Manufacturing
  3. Gas
  4. Infrastructure
  5. Biofuels
  6. Energy Public Sector

Thresholds for EME and QSE vary significantly between the 6 sectors and in also by sub-sectors within these.  EME and QSE qualifications are based on volumes, turnover and gross profit.

EMEs will require a BEE certificate from a Rating Agent and enhanced recognition is as follows:

  • < 30% Black Owned: BEE Level Five
  •   30% Black Owned: BEE Level Four
  •   51% Black Owned: BEE Level Two
  • 100% Black Owned: BEE Level One

An EME’s BEE Certificate will specify Ownership, Revenue/Gross Profit and the Socio-Economic Development Element performance based on the QSE scorecard.  If full points are not achieved under SED, the BEE Recognition Level will be reduced by one level.

The various scorecards are at the 190 points level and Priority Elements with 40% sub-minimums apply.

Black Ownership targets are between 30% to 50% and yield 20% of the ownership score of 49 points.  The balance of the points are distributed across indicators measuring equity held by Black Women, Black Youth, Black people with disabilities, Black military veterans or cooperatives, Black ESOPs, Black Rural broad-based schemes and Black African people. Priority Element compliance requires the 40% sub-minimum to be achieved on the net value plus on at least 3 of these 7 ownership categories with ESOPS and Black Women ownership being compulsory.

Management Control incorporates Demographic Targets and generally follows the COGP pattern of targets and points.

Skills Development targets are structured differently from other sector codes and demographic targets apply.

  • Skills Development expenditure targets are at 6% of the Leviable Amount (payroll) of which 75% must be spent on black employees; the balance can be spent on black people who are not employees.
  • Capacity Building Interventions award points for the number of black people in senior, middle and junior management and in semi-skilled positions who participate in advancement programmes. There are additional points for promotions at the end of the intervention.
  • Learnership targets based on staff numbers are 3% for black employees and 4% for previously unemployed black people.

Enterprise and Supply Chain elements vary across the sub-industries but typically drive purchasing from:

  • Empowering suppliers based on recognition levels (4 points with an 80% target)
  • Level 1 and 2 QSEs (3 points with a 20% target)
  • Level 1 and 2 EMEs (4 points with a 20% target)
  • 51% Black owned entities – (9 points with a 50% target)
  • 30% Black women owned (5 points with a 15% target)
  • Local Suppliers –  specific indicators motivate purchasing from suppliers owned by Black people, black women, black youth, black disabled, black veterans and cooperative. (A sum of 10 points is devoted to these categories with 5% targets for each category)
  • Supplier Development targets also incorporate local supplier development.
  • Recognised Enterprise and Supplier Development initiatives are restricted to those within the sector

The Access to Supply and Infrastructure element is restricted to that sub-sector and has targets including:

  • Capacity allocated to 51% Black owned companies
    • (5 points with a 20% target on currently licensed and 50% for new or renewals)
  • Capacity allocated to 51% Black African owned companies
    • (2.5 points with a 16% target on currently licensed and 40% for new or renewals)
  • Capacity allocated to 51% Black African women owned companies
    • (2.5 points with an 8% target on currently licensed and 20% for new or renewals)

Socio-economic Development follows the COGP model but has half the points allocated to contributions towards universal access to energy and under-developed communities.

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