‘Major industry resistance’ expected against port tariff increase

With Transnet National Ports Authority (TNPA) having applied for a tariff increase of 14,39% for 2014/15 port stakeholders and users have been advised to make submissions to the Port Regulator ahead of the end of the month deadline in an effort to see this figure significantly reduced. The Port Liaison Forum (PLF), an initiative of the Cape Town Chamber of Commerce, said they expected to see some major industry resistance against the tariff adjustment requested by TNPA especially in the light of the country’s ports already being deemed the most expensive in the world. PLF chairman, Mike Walwyn, urged port users as well as industry-allied bodies to make representations to the Regulator by October 29, the deadline for any written submissions. The Port Regulator on September 30 kicked off a weeklong roadshow, which saw consultations take place in Cape Town, Johannesburg, East London and Durban around the 2014/15 application for a tariff increase. According to TNPA, the rollout of its CAPEX programme in terms of Transnet’s Market Demand Strategy (MDS) will result in spikes and troughs for future tariff adjustments when applying the Revenue Requirement formula as they are stipulated to do. “The Authority’s projection of future tariff adjustments (beyond 2014/15) using similar parameters for 2014/15 will then range between 7.0% and 12.89% per annum. In the last tariff application for 2013/14, the Authority commenced with discussions on a multi-year tariff application approach which would assist with smoothing the tariff trajectory,” reads a statement by TNPA. “This approach would result in a smoothed tariff increase of 9.70% from 2015/16 to 2018/19.” The Port Regulator, however, has yet to make a decision on this approach. Walwyn said an increase of 14.39% was considered exceptionally high and resistance to such an increase by industry would be justified. TNPA has, however, said the tariff increase could be significantly lower at around 8.5% on provision the Regulator releases some R454m of the Excessive Tariff Increase Margin Credit (ETIMC) provision previously created. TNPA maintains this approach is a more sustainable approach and shows the organisation’s commitment to reducing the cost of doing business in the country. According to the PLF, all of these requests by TNPA should be open to scrutiny by industry. “It all has to be looked into with a lot more detail,” said Walwyn. “Already our ports are very expensive. We cannot afford any further increases that will push up costs even further.” The Port Regulator is expected to make a decision on the tariff increase by December this year. INSERT & CAPTION We cannot afford any further increases. – Mike Walwyn