Independent regulator could save R22-m a year in airline fuel bills

AIRLINES CAN save up to R22 million annually if the government agrees to appoint an independent regulator to overhaul transport tariffs for jet fuel, Shell South Africa has claimed.
Parliament's portfolio on transport received a presentation from Shell officials last week in which they revealed thay have been under increasing pressure from airline clients to intervene in the argument surrounding jet fuel prices, which it is claimed is affecting the economy.
According to Shell's aviation manager, Lyn Bayes, an independent regulator would take the decision on setting up prices away from Sasol and Transnet, who currently monopolise rail and pipeline supply routes for jet fuel, enabling tariffs to be set on an internationally competitive cost-recovery basis.
She pointed out that of the 1,7 billion litres of jet fuel consumed in this country, 65% was used at Johannesburg International Airport, where the price is 81,3c a litre compared to 67,7c litre at the coast. The difference of 13,6c a litre was absorbed into railage costs. It would be cheaper to send jet fuel to Johannesburg from Durban on Petronet's white oils pipeline, she said.
If rail tariffs were only applied to 25% of fuel and the rest was transported through the pipeline the airline industry would save R22 million a year, she said.
An independent regulator would also ensure that Transnet and pipeline subsidiary Petronet received full payment for the use of the pipeline instead of most of it being paid over to Sasol.
Sasol, she said, for historical reasons probably received R70 of each R100 paid for the use of the Petronet jet fuel pipeline from Natref to JIA.
By Leonard Neill