Cross-subsidisation of port tariffs is only justifiable if it supports national objectives such as beneficiation and industrialisation says Mahesh Fakir, CEO of the Ports Regulator of South Africa (PRSA). Commenting on the Port Tariff Incentive Programme (PTIP) that was launched in December last year, Fakir said the unintended consequences of the strategy could be higher costs to the economy as a whole or the addition of unmanageable costs to the port system. (See story on page 1.)
The PTIP formed part of phase three of the Regulator’s tariff strategy process and served as a mechanism through which cross-subsidies within the port tariff structure could be implemented and quantified, he said. Correcting anomalies and imbalances in the tariff structure has been part of the process in developing the new tariff strategy that was first published in 2015.
The central goal of the strategy is to establish costreflective tariffs in the South African port system over a ten-year period aimed at progressively eliminating unfair cross-subsidies.
During the first phase the Regulator benchmarked the port prices for a single vessel in South Africa’s ports against international ports, while the second phase saw the drafting of overarching guiding principles and the framework for tariff structure setting. Phase two also included the determination of how assets should be allocated to port users, as well as the review and simplification of tariff lines.
“The port tariff methodology now has a strategy to allow for incentives or cross-subsidisation in the best interests of the public and aligned to government policies. “It is intended to support beneficiation, industrialisation, and localisation through port tariff regulation." He said the incentive process was not linked to a specific industry, sector, tariff or service but was broad-based and would apply to a specific tariff level. “A reduction in tariff – if justified – will be granted through the amendment of a specific tariff line.
“The effect will be monitored throughout the period of the reduction and will be subject to a sunset review.” Anyone interested can apply via the PRSA website where the application process is explained in detail.
Quote: The port tariff methodology now has a strategy to allow for incentives or cross-subsidisation in the best interests of the public. – Mahesh Fakir
