HomeIndustry SectorsFinance and PolicyTransnet gets 60% increase in fuel pipeline tariffs

Transnet gets 60% increase in fuel pipeline tariffs

Construction on latest
expansion of the Durban
-Gauteng multi-product
Johannesburg, South Africa — ESI-AFRICA.COM — 04 April 2011 – South Africa’s energy regulator has granted freight logistics company  Transnet an increase of just under 60%  in fuel pipeline tariffs for 2011/12 “’ less than half of what it wanted “’ to help pay for a new pipeline.

Transnet said in December that the cost for the pipeline, “’ which was meant to replace a line from Durban to Johannesburg built in 1965 “’ had doubled, after the company revised the schedule and scope of the project.

Transnet pipeline unit chief executive Charl Moller 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 had been much greater. “We came a long way to being closer to one another, and that’s really positive,” Moller told Reuters, adding that the difference would not affect the building of the pipeline.

“The project will carry on and there will be no hold up “’ it will be 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 new tariffs were effective as of April 1.

The increase will put further upward pressure on inflation via higher fuel costs, which are already on the rise due to international oil prices. Transport costs already have the second-biggest weighting in the consumer inflation basket.

Retail fuel prices in South Africa have risen 20% since the start of 2010, and another big increase is expected from next week. The regulator said the increase in the pipeline tariff was likely to add 6.4 cents per litre to the fuel price.