http://www.businessday.co.za/Articles/C ... ?id=138877
From Business Day, 31 March 2011:Transnet gets 59,9% increase in tariffs
Price of petrol could rise 6,4c a litre
DES LATHAM
Published: 2011/03/31 04:58:03 PM
Transnet got the green light his afternoon from the energy regulator to increase its petroleum pipeline tariffs by 59,9% to help pay for a new pipeline.
Transnet initially applied for a 69,1% increase in allowable revenue, but then revised its application to a 128% increase.
The National Energy Regulator of SA said the increase application was too high and has only allowed for a 59,9% increase in allowable revenue compared to the 2010/11 tariff period.
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 6,4c per litre, according to a statement by Nersa’s Dr Rod Crompton.
Transnet should increase income from R1223,63m in 2010/11 to R1957,72m in 2011/12 for its pipeline business. Nersa says the increase is largely attributable to the fact that a significant part of Transnet’s New Multi-Product Pipeline (NMPP) will commence operations during 2011/12 and have therefore been included in the regulatory asset base.
This includes the 24-inch diameter trunkline from Durban to Jameson Park that is scheduled to commence operations in January next year, it said.
The approved increase in allowable revenue would have been 92,38% had it not been reduced by clawback adjustments of -32,39% from previous years, it added.
Nersa says it is concerned about the unpredictable nature of Transnet’s tariffs as a result of delays in the commissioning of new pipelines and regular increases in the forecasted cost of the NMPP project.
Before this year, Nersa was not informed by Transnet of the rationale for its tariff hikes.
After extensive consultation with stakeholders, Nersa has for the first time been able to set tariffs on a rational and systematic basis for Transnet’s pipeline system, it said.
http://www.businessday.co.za/Articles/C ... ?id=138827
From Business Day, 5 April 2011:Grain logistics - Working with Transnet
Published: 2011/03/31 11:42:44 AM
Transnet has undertaken to work with SA’s grain industry to find solutions to transporting the country’s mounting maize surplus.
Transnet GM Divyesh Kalan told a recent symposium of the Grain Handling Organisation of Southern Africa that the industry was forced to compete with the mining industry for Transnet’s bulk transport facilities.
Miners can afford to pay higher rates to secure Transnet wagons. This leads to an inability to export SA’s surplus grain because the inadequate transport infrastructure means there is competition for wagons and export allocation through ports.
Louis Dreyfus Commodities commercial director Cesar Soares believes that if the transport problems were resolved, the large maize surplus could give SA an opportunity to establish itself as the largest agricultural commodity exporter in Africa.
To do so SA would have to export about 350000t of maize monthly between May and September. This would require commitments from Transnet to dedicate rail resources within the period; silos would have to improve loading capacity and efficiency; and the National Ports Authority would have to invest in infrastructure.
Soares says cross-border co-operation and an innovative look at existing facilities — such as exporting maize through Durban’s sugar terminal — could be key to turning the situation to SA’s advantage.
Ironically, the grain surplus has become a threat to future food security because it has kept local prices lower than international prices and given rise to fears that many hard-pressed farmers who cannot make a profit from maize will stop planting.
Grain Handling Organisation of Southern Africa president Annatjie Loio says an 11Mt maize crop was expected this season. The domestic requirement is 9Mt.
“That makes a surplus of 2Mt, further swelling a possible 3,5Mt carryover stock,†she says.
Compounding the infrastructure problems is the fact that Zambia also enjoyed an exceptionally good harvest. It may be able to sell its grain more cheaply to its neighbours, which make up SA’s traditional export market .
Loio, too, points out the irony of the situation: while SA battles with a surplus, the world is experiencing low grain supply, which is leading to escalating food prices.
Though admitting that transporting ore and coal is more lucrative for Transnet, she says agriculture is vital to SA and urges Transnet to come up with solutions to allow for the export of the grain stockpile.
Kalan says there is “a new attitude†to agriculture among Transnet’s new board and a meeting of the parties will be held to form a committee to tackle the grain industry’s problems.
“We are keen to communicate, to better understand each other’s business. The ideal procedure is for the grain organisation and Transnet to establish work teams that can operate more closely and plan ahead .â€
There is also pressure for rail transport to replace road transport, not least because of a rapidly escalating oil price in the face of instability in a number of oil- producing countries.
University of the Free State agricultural economist Johan Willemse sketches a dark scenario for the grain industry if oil prices rise further. He believes diesel could climb to a “crippling†R15/l.
http://www.businessday.co.za/Articles/C ... ?id=139223
Transnet Freight Rail tariffs run into criticism
New costs for transporting coal could see utility hauled before competition body, writes Allan Seccombe
ALLAN SECCOMBE
Published: 2011/04/05 07:34:23 AM
TRANSNET Freight Rail (TFR) could be hauled before the competition authorities for its new tariffs on the coal export railway line to Richards Bay, says Bell Dewar lawyer Neil Mackenzie, but TFR says its clients have agreed to the increase and it has hefty costs to cover.
TFR has raised the average tariff for its 2011 financial year to R116,64 a ton from R92,93 , a 26,3% increase year on year from April 1.
Mr Mackenzie, an associate in the competition law department at Bell Dewar, says in a note these tariffs are not regulated and were agreed on by TFR and its customers, meaning the agreements are subject to the Competition Act.
The act rules that a dominant group may not charge excessively to the detriment of consumers, he says, and Transnet is the country’s dominant railway company.
Drawing on the Harmony Gold case brought before the competition authorities against ArcelorMittal, arguing the steel maker was charging excessively, Mr Mackenzie says a ruling by the Competition Appeal Court showed excessive pricing could be proved if a dominant firm increased prices without a corresponding increase in its costs.
"If it can be shown that the proposed tariff increase is not proportionate to an increase in the costs of providing the relevant rail services to Richards Bay, Transnet may be at some risk of pricing excessively."
It would need a complaint to be lodged with the competition authorities for an investigation to be launched into TFR’s tariff. No such complaint has been made, he says.
TFR spokesman Sandile Simelane said the increase took into account the 25% increase in Eskom’s electricity tariffs, operating costs, and a R37bn capital expansion programme to increase capacity on the line connecting the Mpumalanga coalfields to Richards Bay to 81- million tons over the next four years. TFR’s average tariff has increased from R78,44 a ton in the 2009 financial year.
"While Transnet’s intentions seem honourable, discontent among its customers would therefore be understandable," Mr Mackenzie says.
"The effect appears to be that users of the rail network will have to pay for building the proposed infrastructure. There would be no immediate improvement in the services which they would be provided in exchange for the prices paid," he says.
But Andy Clay, a director at Venmyn, which advises mining companies on complying with the law and on project valuation, says: "If that’s what it costs to put up and maintain that infrastructure, that’s what you’ve got to pay."
Mr Mackenzie says his firm has experience in competition matters and that the points raised in his note are relevant.
"To determine whether Transnet’s conduct would contravene the Competition Act, the critical question is likely to be whether expenditure on infrastructure and capacity improvements can legitimately be considered a ‘cost’ which can be covered by a price increase of this scale, bearing in mind Transnet’s monopoly position," he says.
Mondo Ntlha, who heads the competition department at law firm Cliffe Dekker Hofmeyr, says there are very few excessive pricing cases brought before the competition authorities.
"Excessive pricing is a notoriously difficult case to prove. There’s only been one case, which was brought by Harmony against ArcelorMittal and unfortunately that didn’t lead to any conclusion on the issue." She says the parties had settled.
"The jury is still out on how to prove excessive pricing," she says. The Harmony case threw up the question whether a service provider was earning "super profits" but the definition of what that meant remained undetermined.
"So, in theory it is possible (to start a process against TFR). To file a complaint with the commission is a simple matter of alleging misconduct, but proving it is something else entirely."
Coal producers have consistently criticised TFR’s performance as a constraint on their ability to ramp up exports, which earn far more per ton than their domestic sales, which are predominantly of a lower quality and sold largely to Eskom.
TFR has countered that blame for reduced tonnages delivered to Richards Bay also lies with producers who either do not have the coal ready to load on to trains or take a long time to load the coal .
TFR has trimmed its forecast coal deliveries to Richards Bay from 70-million tons to 68-million tons. The railway line has been affected by derailments.