Announcement of 2009/10 petroleum pipeline tariffs for Transnet Limited
At its meeting held on Thursday, 30 April 2009, the National Energy Regulator of South Africa (NERSA) decided on an average tariff reduction of 10.38% for the transport of petroleum through Transnet Limited pipelines for the 2009/10 financial year.
However, in view of the fact that the first month of Transnet's financial year (April) has already expired, the adjustment will be spread over 11 months, resulting in an actual tariff reduction of 11.17% over the remaining months of this tariff period. This translates into a 1.37 cents/litre reduction in the Gauteng petrol price.
The new tariffs will apply from 06 May 2009. When and how this adjustment will be incorporated into the prices of regulated petroleum products has still to be determined by the Department of Minerals and Energy.
In setting the tariffs, the Energy Regulator took into account:
- the Petroleum Pipelines Act 2003 (Act No. 60 of 2003) and the Regulations in terms of this Act (GN R342 Government Gazette No. 30905 of 04 April 2008);
- the National Energy Regulator Act, 2004 (Act No. 40 of 2004);
- the NERSA tariff methodology for the Petroleum Pipelines Industry;
- written comments submitted by the public and stakeholders; and
- comments received from the public and stakeholders during the two public hearings which were held on 26 February 2009 and 16 April 2009.
In its initial (12 November 2008) tariff application Transnet applied for a tariff increase of 82.5%. Transnet attributed much of that increase to its need to finance the construction of its new multi-product pipeline (NMPP) between Durban and Gauteng.
Revisions made by Transnet to its NMPP construction schedule resulted in Transnet submitting a revised application for a tariff increase of 74.42%. This revised application was presented by Transnet at the NERSA public hearing on 26 February 2009. A second public hearing was held on 16 April 2009, to provide stakeholders with an opportunity to comment on Transnet's revised tariff application.
The single largest factor contributing to the difference between NERSA's decision and Transnet's application (as revised) is that the law does not allow NERSA to set tariffs for existing pipelines to enable a licensee to recover the costs (including financing costs) of pipelines which are still in the process of being constructed.
The Energy Regulator has opted for an across-the-board average percentage tariff adjustment. Changes to the current tariff structure affect the "locational advantage" of inland refiners and thereby the relative competitive positions of competing oil companies. These are complex matters and the Energy Regulator will engage in further public consultations on the tariff structure during 2009 in preparation for the next tariff review.
The full decision by the Energy Regulator and the Reasons for the Decision will be published on NERSA's website shortly.
The Transnet tariffs for 2009/10 financial year are attached as Annexure A hereto and do not include VAT.
Statement issued by the National Energy Regulator, Pretoria, May 4 2009
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