South Africa’s energy regulator on Thursday granted freight logistics firm Transnet a 59,9% increase in fuel pipeline tariffs, less than half what it wanted, to help pay for a new pipeline.
Transnet said in December that the cost for the pipeline, meant to replace a line from Durban to Johannesburg built in 1965, had doubled after the company revised the schedule and scope of the projects.
Charl Moller, chief executive of Transnet’s pipeline unit, said he welcomed the decision, even though the state-owned firm had requested that tariffs be raised by 128%.
In the past the gap between what the company asked for and what it was granted was much greater.
“We came a long way to be closer to one another and that’s really positive,” Moller told Reuters, adding that the difference will not affect the building of the pipeline.
“The project will carry on and there will be no hold up. The [building] process is over several years. The gap is not such that it will endanger the project,” he said, adding that the company expected to raise the rest of the money through tariff increases in coming years.
The increase will put further upward pressure on inflation via higher fuel prices, which are already on the rise due to international oil prices. Transport costs already have the second-biggest weighting in the consumer inflation basket.
Companies operating in South Africa’s fuel sector have said a 60% increase would affect the viability of their businesses. — Reuters