Johannesburg - The National Energy Regulator of South Africa (Nersa) has granted Transnet a 23.03 percent increase in allowable revenue for its petroleum pipeline system.
Transnet – whose subsidiary Transnet Pipelines is the principal operator of South Africa’s fuel pipeline system – had applied for a 25.8 percent increase, which would have lifted tariffs by 21.3 percent.
Read: Transnet seeks pipeline tariff hike
The tariff increase would result in a petrol price hike of 5.4 cents per litre, which was a 0.44 percent increase on the March 2016 retail price of 93 octane petrol in Gauteng, Nersa said. The approved tariffs are for the period from April 6, 2016, to April 4, 2017.
As a result, tariffs for pipelines will increase by 18.56 percent, with effect from Wednesday next week.
This above inflation increase is a consequence of the addition of further New Multi Products Pipeline (NMPP) infrastructure assets coming into operation in the coming tariff year.
In Nersa’s view, this will strike a satisfactory balance between the various factors that it had to consider.
The NMPP assets were valued at approximately R4 billion, Nersa said.
The increase would put more pressure on the already squeezed consumer.
Finance Minister Pravin Gordhan last month announced a 30c per litre increase in the general fuel levy to R2.85 per litre for petrol and R2.70 per litre for diesel, also effective from April 6, 2016.
Nersa earlier this month granted Eskom a 9.4 percent increase in electricity tariffs, with effect from Friday. A tyre levy will also be implemented with effect from October 1.
“In arriving at its decision, the National Energy Regulator weighed a variety of factors, including public interest, regulatory certainty and Transnet’s forecasts for the completion of certain parts of its NMPP project,” Nersa said.
The regulator has been critical of Transnet’s handling of the NMPP project, specifically with regard to cost escalation and delays.
Nersa said in making the decision, it had resolved to put a temporary hold on the inclusion of NMPP project assets at Transnet’s 2015/16 forecast value of R26.2bn. This was due to the uncertainty and “many” changes in the costs and the timing of Transnet’s forecasts.
“We will use the R26.2bn figure until the project is complete and all balances are reconciled,” Rod Crompton, Nersa’s member responsible for petroleum pipelines said yesterday.
The approach is Nersa’s way of keeping Transnet on a tight leash.
At present Transnet is forecasting that the NMPP project will be complete in 2019.
“In 2012, the National Energy Regulator welcomed Transnet’s stated intention to apply for a multi-year tariff decision in its next application, as this would enable longer term price signals to be sent to customers, financiers and other stakeholders. Regrettably, Transnet decided not to proceed with this intention.
“This year, Transnet has again not submitted a multi-year tariff application. It appears that Transnet’s inability to complete parts of its NMPP project by the forecast dates, and the repeated need to change these dates is the reason behind Transnet’s persistence with single-year tariff applications,” Nersa said.
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