Nersa hikes pipeline charges by 6.4%

Nersa said on Wednesday (13 March) it regretted Transnet's failure to follow up its proposal last year of asking for a multi-year price determination.

State-owned electricity utility Eskom had asked for an average annual 16% increase over five years at the start of the year and last month Nersa granted it an 8% per year increase for the next five years.

Nersa said that if the Minister of Energy decided 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 was expected to be 1.4 cents per litre (c/l)‚ which represented a 0.1% increase in the February 2013 retail price of 93 octane petrol in Gauteng.

Nersa published a draft tariff determination for public comment proposing a 7.3% increase in allowable revenue.

Further information came to light during public consultations.

In arriving at its decision‚ Nersa weighed a variety of factors‚ including the public interest‚ regulatory certainty‚ the New Multi-Product Pipeline (NMPP) project reaching its capital expenditure peak and current and future debt funding. Consequently‚ Nersa has set petroleum pipeline tariffs that will allow Transnet to get an 8.53% increase in allowable revenue compared with the 2012/13 tariff period.

Concerns

Nersa was concerned to see that Transnet Pipelines reported a 7.1% reduction in total petroleum volumes pumped over the past two years, from 18.025bn litres in 2010/11 to 16.741bn litres in 2011/12.

Transnet has forecast an overall 4.6% increase in volumes pumped in the 2013/14 financial year - from 16.9bn litres to 17.7bn litres in the coming year.

This includes a 5.96% 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‚ thus reducing health‚ safety and environmental risks.

Nersa would continue to monitor the transition of volumes away from road and rail to pipeline transport‚ as there is still scope to move more volumes away from road and rail transport to the pipeline.

With the view to improving pipeline efficiencies‚ Nersa decided that Transnet should provide it with a proposed system of penalties to be included in future tariffs.

The idea is to penalise Transnet's customers who cause inefficiencies in the operation of the pipeline system by‚ for example‚ not delivering slugs to the pipeline on schedule or by failing to take delivery of slugs on schedule.