‘Expect a pruned port tariff increase’

It is an odds-on bet that the Ports Regulator will once again prune the Transnet National Ports Authority’s application for an 18.06% tariff increase for the financial year 2012/13. The PR is currently considering the application and has already noted that the TNPA is requesting an increase which is almost 14% above last year’s allowed increase. To gather in cargo owners’ and port users’ comments on the matter, the PR has just held tariff hearings in all of the major centres (Johannesburg, Durban, Port Elizabeth and Cape Town) to gauge public opinion. In addition, the TNPA has made certain representations. The prime comment, which was at the forefront of most of the port clients’ thinking, was their basic inability to pay for this high double-figure increase. “They said they could just not absorb such an additional cost,” PR CEO Riad Khan told FTW. “So, once the consultative process is complete,” said, “we will then move towards a tariff determination, taking all the comments into account.” FTW’s reason for setting bets at odds-on is based on what else Khan added. His first additional point was that TNPA was looking for an increase in revenue to R7.6 billion for 2012/13 – almost 17% more than last year’s PR-approved R6.5 bn. “They were allowed that increase last year, but they actually earned more revenue than that,” Khan added. Not only last year (the third year of the PR’s appointment), but TNPA also earned more than its estimated revenues in years one and two. And, with this being the fourth year of the PR’s existence, this continued over-recovery will have to be remedied. “There will be a clawback of the over-recovery of revenue for years one, two and three,” said Khan, “which will be added to the deduction from the estimated revenue for 2012/13.” And, in assessing the TNPA application for that 18.06% tariff increase, the PR will take into account the authority’s operating expenses, its other predicted costs, its profits, and the like – and the TNPA will have to justify all of these. Lay down your bets.