Londiwe Buthelezi
Transnet’s proposed tariff increases for the new multi-product pipeline (NMPP) and the F-factor allowance for assets in operation might respectively add 5.5c and 10.6c a litre to fuel pump prices, Transnet spokesman Mboniso Sigonyela confirmed yesterday.
The parastatal has reportedly asked the National Energy Regulator of SA (Nersa) for an 83 percent pipeline tariff increase to recoup the costs of developing the NMPP and also a debt obligations (F-factor) allowance for assets in operation for the tariff period under review of R780.6 million.
Transnet said it required R2.47bn basic allowable revenue for the pipelines division in the 2012/13 tariff year. This translates to a total revenue requirement of R3.55bn, compared with R1.95bn in the current year.
“This increase results from new assets of the NMPP project being brought into operation for the first time,” Sigonyela said.
“The F-factor allowance amounts to an additional 10.6c a litre at the pump. This will be returned to consumers in future tariff periods via lower tariff increases.”
Through its pipelines division, Transnet operates approximately 2 775km of pipelines conveying refined petroleum products, crude oil and gas. It also operates a storage facility for petroleum products at Tarlton near Krugersdorp.
Last year the utility applied for a 128 percent increase in allowable revenue of which Nersa only approved 59.9 percent, exclusive of VAT.
The regulator specified that when the construction of the NMPP was completed any balance between the monies received in terms of this grant funding agreement and the allowance for funds used during construction would be included in the regulatory asset base.
Transnet has completed construction of most of the assets that form part of the NMPP. The project is designed to meet the growing demand for liquid fuels in the inland market for years to come. The NMPP consists of pipelines in the inland area of Gauteng and Mpumalanga, a 61cm wide trunkline from Durban to Gauteng and terminals in Durban and Gauteng.
The new trunkline would start operating in January next year, and has four times the capacity of the existing Durban to Johannesburg pipeline, which is said to be nearing the end of its economic life.
Sigonyela said the cost of this large project now had to be included in Nersa’s pipeline tariff setting calculation in order to recover the capital costs over its 75-year economic life. Transnet said it anticipated bringing its Jameson Park terminal into operation on January 1, 2013 and had thus included the asset into the 2012/13 regulatory asset base for a period of three months.
As for the F-factor, Transnet said it was a temporary measure to assist it during periods when the required cash interest cover could not be achieved for assets in operation with basic tariffs. But the debate over whether Transnet tariffs are among the highest in the world is continuing and the utility has commissioned a study to ascertain if this is the case.
NKC Independent Economists political analyst Gary van Staden said yesterday that state-owned enterprises could not be run on a profit-driven basis because their core reason for existence was to provide services.
Van Staden said the problem was that Transnet was run as a private enterprise while it was supposed to primarily focus on service delivery.
“You can’t have the best of both worlds. The problem with Transnet and most of the state-owned companies in South Africa is that they want to be both like private enterprise and deliver on their social mandates. It has got to be a welfare benefit,” he said.
Ebrahim-Khalil Hassen, an independent public policy analyst, said Transnet needed to look at ways to facilitate sustained economic growth, which the utility had so far failed to do.
He said that would involve bringing down costs and not raising them.
“I don’t have a problem with Transnet losing money over the years as long as there is a question of economic inclusion,” he said.