National energy regulator cuts pipeline tariffs

The National Energy Regulator of South Africa (Nersa) reduced tariffs for transport of petroleum products via Transnet’s pipelines despite a plea from the rail and logistics firm for a substantial hike, Nersa said on Monday.

Nersa said it would reduce the tariffs by 10,38% for the 2009/10 financial year, resulting in a 1,37 cents per litre reduction in the Gauteng province’s petrol price.

Transnet had applied for a tariff increase of 74,42% to help fund the construction of a new multi-product pipeline between Durban and Gauteng.

It had initially applied for an 82,5% increase, prompting wide criticism from the local petroleum industry, which said higher tariffs would benefit inland producers such as the world’s biggest coal-to-diesel producer Sasol and Total.

Nersa said it was not in the position to set tariffs that would help Transnet recover the costs of its investments, and had opted for an average tariff adjustment across the board.

Rod Crompton, Nersa’s member responsible for petroleum pipelines regulation, said the adjustment was meant to better balance the interests of the public, Transnet and its customers.

“After running our models, we have decided this is the appropriate revenue for the assets they have in operation at this time,” Crompton said.

“The world has moved on, the cost of debt has lowered since our previous decision, the economic climate has changed … all this has influenced our decision.”

Transnet said it would comment on the tariff decision later.

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