Transnet pipeline tariff announced

The petrol price in Gauteng may rise another four cents a litre in April following the National Energy Regulator SA’s announcement on Thursday of new tariffs for Transnet’s petroleum pipelines.

“If the minister of energy decides to use the pipeline tariff as a proxy for the cost of transporting fuel from Durban to Johannesburg, as has been the case in the past, the consequent petrol price rise is expected to be four cents per litre,” Nersa said in a statement.

Petrol is already due to increase by 28 cents a litre in April.

Finance Minister Pravin Gordhan announced in his Budget that the general fuel levy on petrol and diesel would increase by 20 cents a litre and the Road Accident Fund would increase by eight cents a litre. In light of Nersa’s announcement, it could now increase by 32 cents a litre in Gauteng. This did not take into account possible fuel price increases to be announced by the Central Energy Fund at the end of March.

The new pipeline tariffs apply from April 2012 to April 2013.

Transnet had applied for an 83.3% increase in its allowable revenue that would have resulted in a 12.5 cents a litre increase in inland petroleum product prices.   It wanted this large increase to help pay for its new multi-product pipeline (NMPP).

“Transnet has raised significant debt to fund its NMPP project and it sought substantial additional funding to satisfy ratings agencies that it had sufficient revenue to cover its debt repayments,” Nersa said.

Nersa had published a draft tariff determination for public comment proposing a 76.7% increase in allowable revenue. 

“There was strong opposition from many quarters to an increase of this magnitude.”  Nersa had weighed various factors, including the public interest, regulatory certainty, the NMPP project reaching its peak and current and future debt funding.

“Consequently, Nersa has set petroleum pipeline tariffs that will allow Transnet to realise a 31.6% increase in allowable revenue compared to the 2011/12 tariff period.”