Petrol pipeline beats other modes despite hike

Despite the Transnet petroleum pipeline tariffs having increased by 6.9% for the 2015/16 financial year, it will still be the cheapest means of transporting bulk fuel between Durban and Gauteng. Although it costs his company long-haul trucking business, Steve Hills, CEO of Tanker Services, quite openly admitted that pipelines or rail transport should always beat the cost of road transport in moving this commodity over a distance. “At least that’s the case overseas,” he told FTW. “Although here rail is just not reliable.” Indeed, he agreed that excessive “evaporation” was a big hitch in any switch to rail. “So,” Hills added, “from the point of view of cost and security from theft, the pipeline beats rail hollow.” But, although the pipeline price is still the cheapest, Transnet and the government have still come in for some f lak over the 6.9% tariff increase – which the National Energy Regulator of SA (Nersa) had actually cut from Transnet’s original application for an 8.2% increase. According to press reports, there were strong objections to this tariff jump – especially when added to the budget’s 30.5c a litre increase in the general fuel levy, which was going to drain the public pockets of another R6.5 billion a year. Critics accused the government of being determined to write off the price decrease fuel users had been enjoying after the recent plunge in the price of crude oil. However, Nersa noted in a statement that it had considered public interest. But the other factors of regulatory certainty and Transnet’s forecasts for the completion of certain parts of its new multi-products pipeline project saw Nersa granting Transnet an allowable revenue increase from R2.94bn in 2014/15 to R3.36bn for 2015/16. The regulator also said it hoped to see pipeline volumes increase. This, it added, would result in lower tariffs and the reduced need for rail and road transport – which would lower the health, safety and environmental risks associated with these modes. And, indeed, Transnet forecast an overall 2.81% increase in volumes to be pumped in the forthcoming financial year – from 16.7bn litres in the 2014/15 latest estimate to 17.1bn litres for 2015/16. INSERT 6.9% The increase in pipeline tariffs for 2015/16.