Port users label 8% increase 'unaffordable'

As the Ports Regulator of South Africa
concluded public hearings in Durban,
Johannesburg, Port Elizabeth and
Cape Town last week, stakeholders
were cautiously confident that Transnet
National Ports Authority (TNPA) would
not get its requested 8% tariff increase.
With interested parties and
roleplayers still able to submit written
commentary and proposals on the tariff
application until September 30, the
Cape Town Port Liaison Forum (PLF),
an initiative of the Cape Chamber,
called on industry not to take their eye
off the ball and give input into why the
regulator should not grant the increase.
“We cannot get blasé about this,” said
PLF chairman, Mike Walwyn. “In light
of the current economic environment,
an 8% increase is exceptionally high.”
Of more concern is the 26% the
authority has requested for 2018/19.
While TNPA would need to reapply for
this next year – in accordance with the
multi-year tariff methodology currently
being used in the country – it does give
an indication of where TNPA is heading
with tariff increases.
The authority has continued to
decline to comment on the tariff
increase application currently under
review by the Ports Regulator. Chief
executive Richard Vallihu did however
tell FTW earlier this month he was
hopeful that the 8% would be granted
– especially in light of the fact that
the authority had been granted a 0%
increase this year despite requesting
5.9%.
It is expected that role-players –
including the various shipping lines, the
freight forwarding industry and others –
will submit written concerns stating the
increase is too high.
At the PLF there was consensus that
the present state of the South African
economy remained poor and with talk
of recession, an increase in port tariffs
of 8% was unaffordable.
Concerns over commodity prices
remaining low as well as declining
export and import volumes have
prompted questions about the feasibility
of the capital expenditure of TNPA
through its Market Demand Strategy.
“The most critical element in arriving
at a valid revenue requirement is the
assessed value of the assets on which
a reasonable return is appropriate.
Without an accurate valuation attempts
to arrive at a fair return are really just
estimates,” said Walwyn.