Port tarrif road shows get a resounding thumbs up

CEO of the Ports Regulator, Riad Kahn, has given a resounding thumbs-up to the recent road show that allowed stakeholders within the ports environment to interact over Transnet National Port Authority’s (TNPA) proposed tariff methodology and pricing strategy. Held in Johannesburg, Cape Town, Port Elizabeth and Durban, the discussions enabled industry to actively engage not only with the regulator but also TNPA. TNPA has asked for a massive ramp-up of cargo dues for high-volume commodities such as coal and iron-ore exports and petroleum imports, but a gradual reduction of cargo dues for containers, while at the same time increasing their revenues by upping port rentals year on year. “In layman’s terms the tariff methodology really refers to how big the cake is that we give them, while the pricing strategy is about which slice of cake goes to which party and how big the slice of cake is that they get,” explained Kahn. While the TNPA has asked for an average adjustment of 5.4%, the reality of its application is that certain commodities will increase dramatically. Coal, for instance, if approved will increase by a whopping 104.8% and chrome by 13.2%. Many companies have declared these figures unsubstantiated saying the mining industry is already facing some tough challenges while at the same time being very sensitive towards any tariff increases. BHP Billiton said they found the tariff increase to be excessive while Business Unity South Africa submitted documentation stating the proposed increase would ultimately hamper economic growth and development as the proposed profit margins would have a devastating effect. Another concern raised by industry is TNPA’s plan to decrease the impact on cargo owners by cutting the cost of containers, but increasing the rental from tenants. In its submission, the Cape Chamber of Commerce said with Transnet Port Terminals being the main tenant it seemed as if TNPA was only transferring costs and not truly reducing them. “Our concern is that the new pricing strategy will not bring any positive benefits to exporters and importers,” said a spokesman for the Chamber. “Also we are concerned that the TNPA strategy does not address the fundamental problems of our ports – their international reputation for high costs and poor performance.” Kahn said that with the input into the pricing strategy received they were now starting the process on the TNPA tariff methodology.