Further fuel hikes for inland motorists announced

Inland motorists can expect a fuel hike of 32c on April 4 following further increases in petroleum pipeline tariffs.

The National Energy Regulator of South Africa (Nersa) announced on Thursday that it would increase the pipeline tariffs, which will result in a 4c price hike of the inland fuel price. This is in addition to the countrywide increase of 20c in fuel levies and a further 8c for the Road Accident Fund which will come into effect on the same day, as announced in February’s budget.

“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 4c per litre,” Nersa said.

This represents a 0.37% increase in the retail price of petrol in Gauteng and a 22% increase in the pipeline tariff.

The tariffs will also allow Transnet to realise a 31.6% increase in allowable revenue compared to the 2011/12 tariff period—an increase from R1.9-million in 2011/12 to R2.6-million in 2012/13.

Transnet originally applied for an 83.3% increase in its allowable revenue that would have resulted in a 12.5c per litre increase in inland petroleum product prices.

The size of Transnet’s application is partly attributable to the significant debt raised by the parastatal to fund its new multi-product pipeline (NMPP).

Nersa published a draft tariff determination for public comment proposing a 76.7% increase in allowable revenue and recorded a “strong opposition from many quarters to an increase of this magnitude”.

Nersa said it “had to exercise its discretion and in doing so to weigh a variety of factors including the public interest, regulatory certainty, the NMPP project reaching its peak and current and future debt funding”.

But delays and increasing cost of Transnet’s NMPP—a R23.4-billion endeavour—caused Minster of Public Enterprise Malusi Gigaba to launch an independent review of the project.
The results are expected to be made public next week.

Transnet forecasts an overall 2.5% increase in volumes to be transported in the 2012/13 tariff period. This includes an approximate 15% increase in petroleum product volumes transported from the coast to the inland region as a result of the new pipeline capacity that Transnet has brought into operation.

“A welcome consequence of this is a corresponding reduction in the volumes of petroleum products that need to be transported by road and rail and thus reducing health, safety and environmental risks.” Nersa said.

It added: “Increased pipeline volumes are desirable as it lowers tariffs.”

In its next tariff application, Transnet said it intended to apply for a period of more than one year. Nersa said this would enable long term price signals to be sent to customers, financiers and other stakeholders.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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