South African exporters of manufactured goods are set to see port tariffs fall by about 49 percent as Transnet National Ports Authority (TNPA) moves to bring port charges into line with the government’s industrial policy to promote the manufacturing sector.
The announcement that tariffs at the country’s ports would be reduced as early as next month was made yesterday at a colloquium organised by the portfolio committee on trade and industry to discuss the impact of administered prices on the manufacturing sector.
Transnet chief executive Brian Molefe told the colloquium that while TNPA’s overall revenue from port tariffs would not be reduced, there would be a significant restructuring of the tariffs to bring pricing into line with the government’s industrial policy.
The port costs for exporting manufactured goods would drop significantly while the cost of exporting unbeneficiated goods would increase significantly. Costs for the import of manufactured goods were also likely to increase as part of the rebalancing process.
“The [TNPA] pie will increase by the 4.5 percent allowed by the port regulator but we will slice that pie differently in order to encourage manufactured exports,” Molefe said.
He said TNPA reinvested all of its profit, which was currently about R4 billion a year.
Manufacturing Circle executive director Coenraad Bezuidenhout called the announcement “fantastic news”.
“Following on last week’s decision [to limit electricity price hikes] by the National Energy Regulator of SA [Nersa], it sends out the message that there are sections of government that have the interests of manufacturing at heart,” he said.
Department of Trade and Industry director-general Lionel October commended the TNPA and welcomed its recommendation to reduce tariffs on manufactured exports. “We have been subsidising the sector [mining] that is best able to carry the costs at the expense of the manufactured sector.”
October added that he wanted to stress that agricultural exports would benefit from the reduced charges.
Molefe confirmed to Business Report that because most agricultural produce was exported in refrigerated containers, the products would qualify for the reduced tariffs.
Molefe told the committee that indications at this stage were that tariffs on containerised cargo would be reduced by 49 percent and tariffs on automotive goods would be cut by 43 percent. Exporters of dry bulk goods such as coal and iron ore would face stiff tariff increases of 68 percent.
Molefe stressed that these were indicative figures.
The committee heard that South African port tariffs were 874 percent above the global average for containers and 744 percent above the global average for automotive cargo. By contrast, port tariffs on coal exports were 50 percent below the global average and tariffs for iron ore exports were 10 percent below the global average.
Trade and Industry Department deputy director-general Garth Strachan said port charges “represent a very significant constraint to exports of value-added, labour intensive, tradable manufactured goods”.
He said exporters were further constrained by “significant inefficiencies” at ports.
Molefe said that the TNPA was investing to address these inefficiencies.
The committee also heard yesterday that Nersa might have misled the public into believing electricity price hikes would be limited to 8 percent.
SA Local Government Association executive director of municipal infrastructure services Mthobeli Kolisa said: “This may not be the case because Nersa has granted Eskom about 84 percent of the more than R1 trillion revenue amount it applied for.”
Kolisa said it was difficult to see how this 84 percent figure could be achieved through the 8 percent increase.
The colloquium heard concerns about the ability of municipalities to add surcharges to Eskom’s price. Kolisa countered that municipal electricity prices had to be approved by Nersa “after careful if not conservative consideration”.