The primary objectives of the Centre for Real Economy Study (Crest) are to catalyse economic research with a sectoral focus, especially relatively under-researched service sectors, and to improve the flow of information on relevant research between the policy and academic communities. The Provincial Economic Intelligence Unit’s (PEIU’s) objectives are to develop sub-national economic analysis capacity so as to inform Provincial Growth and Development Strategy processes. The SADC Trade Development Project is a three-year partnership between AusAID and TIPS created to conduct a number of research projects on trade reform in Southern Africa. The project aims to develop research infrastructure in the region by creating new databases, formulate policy- and private sector-relevant information tools and publications to inform policy, and build capacity in the region. The Trade & Industry Monitor’s main objective is to disseminate policy-relevant economic research, from macroeconomic policy to competition and regulation policy, ‘development’ issues in general, as well as sub-national economic policy issues, in an accessible format to policy-makers and analysts. The Academic Data Access and Training facility (ADAT) seeks to reinvigorate the relationship between TIPS and the economics departments of tertiary institutions. The ADAT facility will provide post-graduate students with access to new economic data not readily available to Universities as well as provide Small Research Grants to researchers undertaking policy-oriented studies in TIPS’ programme areas. The Southern African Development Research Network is a broad-based policy and research network which aims to increase the supply of policy-relevant research in the region and strengthen evidence-based policy-making. SADRN will initially focus on industrial policy and sector development at the regional level, service sector development and the impact on poverty, and trade policy and its linkages to pro-poor growth. Under the Small Enterprise Development (SED) programme, TIPS as an independent, credible institution not directly involved in the delivery of SMME services has since 2004 undertaken a number of broad-ranging, qualitative assessments of the outcomes of government's policy, strategy and initiatives in small enterprise development. The purpose of this project is to contribute to reducing poverty and inequality in South Africa by supporting the government to develop a Strategy for the Second Economy, as part of its Accelerated Shared Growth Initiative of South Africa (Asgi-SA), located in the Presidency. Economic Regulation
Home

Economic Regulation Research Programme: Concept Paper

Author(s): van Basten, C.
Abstract:
Economic Regulation Research Programme: Concept Paper
TIPS has added Economic Regulation as one of its main research areas, where we'll focus mainly on essential services (energy, telecoms, transport and water) because of their social impact and network characteristics, to ensure universal and affordable access to essential services. The purpose of the paper is to provide some food for thought and to raise issues that can lead to further discussion and research. It covers the rationale for economic regulation, principles of regulation, a few country experiences in economic regulation, a snapshot of the South African situation and a concluding broad discussion and recommendations.
van Basten, C. (2007) Economic Regulation Research Programme: Concept Paper [704.17 KB]
»

Economic regulation study

Submitted by Richard Walker, Economic Research & Policy Co-ordination, Office of the Director-General, Department of Trade & Industry, on Friday 20 July 2007 16:35

Hi Cornel

I am currently busy with an assessment of the policy and implementation gaps in economic regulation of key sectors (ports, rail, electricity etc.). In this regard, your paper "Economic Regulation of SA's public utilities" has been most useful.

In your paper you make the statement that: "an independent regulator has been established in terms of the National Ports Act. It does appear however that in terms of the National Ports Act the Minister will still play a role in the regulatory environment, which may give rise to uncertainty regarding role clarity."

I'm interested in the bit which I've bolded:

1. How will the minister play a role in the regulatory environment?

2. What in the Act gives you this impression?

3. What uncertainty do you think will arise regarding role clarity?

Furthermore:

4. Do you have a sense of how the ports regulator will be funded?

5. In making decisions, does the regulator have to revert to the relevant government department?

Basically, I'm trying to get a hold on the independence of the regulator, which I think will say a lot about the likely success of the regulator in this situation.

As an aside:

7. What is the situation regarding an independent regulator in the rail sector?

»

Re: Economic regulation study

Submitted by Cornel van Basten, Programme Manager: Economic Regulation, TIPS, on Monday 23 July 2007 10:15

Dear Richard

These are only my views. I know the Energy Regulator Act and its sectoral acts well. The Ports Act I have only studied in passing. So, if you do not agree with me on things....I will be glad if we can discuss it.

First of all, what is worrying in a sense is that there are only part-time Regulator members in the Ports Regulator. I am one of the few that believe that regulation is a complex job and that you can not really do justice to it by being only a board of part-time members, except if you have such a good staff complement that they can do all the work and the Regulator just have to sign off. This does not happen in practice however.... Issues are so complex usually.

Regarding the issue of independence and the role of the Minister:

In reading the Act, especially from section 30 I can see difficulties for the Regulator having to acquire concurrence by the Minister on all the issues in section 30(2)(3). For the Regulator to have concurrence on issues such as basically how they're going to do their job, does not for me illustrate true independence.

See section 30(2)(5) - Whenever necessary or required by the Minister, the Regulator must report to the Minister on any matter relating to the application or purposes of this Act. This leaves scope for interference.

Section 31(2) and (3) - for me, the Minister can then actually appoint anyone. The whole calling for nominations can hypothetically only be done for the "show". The Regulator members are thus politically appointed, which also place a question mark on "independence", because sometimes you'll find that political appointees find it difficult to distinguish between the political objectives and the objectives if they were truly independent.

You'll see that when you read further through that section that the Minister is very much involved in the appointment processes of staff of the Regulator.

I think the National Energy Regulator Act is for me an example of a legal framework for an independent regulator.

The issue of role clarity - I guess for me the risk here is that there is not a clear division between the regulator and the minister - they must basically concur on almost everything. So why then is it not called a ministerial regulator and why is it called an independent regulator?

4. According to the Act the Regulator can be funded either by monies appropriated by Parliament, interest on investment or fees charged for filing of complaints or appeals. To me this shows that the Regulator will also be very much dependent on government for funding, which places another question mark on its independence.

5. I do not get that sense. It seems it must be written and based on facts, reasons and evidence - the decision-making process looks good to me. However, what I do not get from the Act is what a party can do if they do not agree with a decision of the Regulator. The only thing I can see regarding appeals is where a party does not agree with a decision by the Ports Authority it can then appeal to the Regulator.

7. Sorry, I could not find a no. 6. What I've heard is that there are no decisions regarding an economic regulator for the rail sector, which makes Transnet player and referee at the moment.

»

Would you like to be kept updated with the latest TIPS research?

Subscribe to our research update newsletter.
Indigenous growth TIPS
Physical address: 826 Government Avenue Arcadia 0083
Pretoria South Africa
Tel: +27 12 431 7900
Fax: 012 431 7910