Bloomberg News

Transnet Tariff Increase to Boost Pipeline Revenue by 32%

March 15, 2012

The National Energy Regulator of South Africa approved petroleum-pipeline price increases for Transnet SOC Ltd. that will raise the ports and rail utility’s revenue from that unit by 32 percent in 2012-13.

The 22 percent increase approved for the pipeline from Durban to Johannesburg, which is used as a benchmark, will raise the retail price of gasoline in the Gauteng province by 4 cents a liter (0.3 gallon), the regulator said in an e-mailed statement today. Revenue from the 25-pipeline system will climb to 2.58 billion rand ($337 million), Rob Crompton, a member of the regulator, said by phone from Pretoria. Transnet applied for an increase that would have raised revenue by 83 percent.

The regulator struck a “satisfactory balance between Transnet’s and petroleum pipelines users’ needs”, Avhapfani Tshifularo, executive director of the South African Petroleum Industry Association, said in an e-mailed statement.

Nersa decides each year the extent of Transnet’s tariff increases. The company charges oil producers including Royal Dutch Shell Plc (RDSA), BP Plc (BP/), Total SA (FP), Sasol Ltd. (SOL) and Chevron Corp. (CVX) for use of its pipelines, including the route between the east- coast city of Durban, where most refineries are located, and Johannesburg, the country’s economic hub.

Volume Increase

Transnet expects total volumes on its petroleum pipeline system to increase by 2.5 percent in the year to 2 April, 2013, including a 15 percent advance in the volumes transported by its new multi-product pipeline system, Nersa said in the statement. The 555-kilometer (345-mile) system was opened in January to transport diesel and is expected to be fully operational by the end of 2013, Crompton said.

“Increased pipeline volumes are desirable as it lowers tariffs and also reduces the health, safety and environmental risks associated with road and rail transport,” Nersa said.

Transnet intends to apply for multi-year increases in its next tariff application. “Nersa welcomes this intent as it will enable longer term price signals to be sent to customers, financiers and other stakeholders,” it said.

Transnet welcomed the decision, spokesman Mboniso Sigonyela said by mobile phone from Port Elizabeth.

To contact the reporter on this story: Jana Marais in Johannesburg at jmarais@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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