Industry questions TNPA's tariff increase methodology

The methodology used by Transnet National Ports Authority (TNPA) in determining its annual tariff increase is causing greater concern than the actual tariff increase, the Cape’s Port Liaison Forum (PLF) recently heard. Consultants believe the industry should question the methodology and FTW understands a working group has been established to discuss the issue at Nedlac. “Administered prices is a general issue in South Africa that comes up in the parastatal environment,” said one consultant. “When it comes to ports though there is a general acceptance that it is a very technical area and that there is a need for a new methodology.” According to the Ports Regulator of South Africa (PRSA) there are continuous attempts towards the refinement and development of the methodology. The multi-year methodology approach is part of these attempts. Previously an interim one-year methodology was applied. Now tariff increases will be fixed for three years with annual reviews and an annual adjustment of tariffs if required. This approach is said to have been incorporated to protect port users from possible large step changes in the tariff, allowing them to plan upfront for the increases over a three-year period. By allowing for an annual review of these set prices they can be adapted more efficiently and appropriately if required. It is also an attempt to lower regulatory uncertainty in the industry and will ultimately narrow the gap between what is requested by TNPA and subsequently granted by the Regulator. Industry stakeholders, however, maintain that this particular methodology is not creating a stable environment at all. “They have not applied their minds to this process at all. In a sense they have made it worse. We already have a monopolistic port system and now they are going to set tariff increases for three years but retain the right to change them annually if they deem necessary,” one of the role-players told FTW. INSERT We already have a monopolistic port system and now they are going to set tariff increases for three years but retain the right to change them annually if they deem necessary.