Regulator calls for new submissions on port tariff

Industry has reacted with some
concern to a massive in-house
miscalculation by Transnet
National Ports Authority
(TNPA) in its annual tariff
application, but has reiterated
its stance that regardless of the
mistake, the requested hike
remains too high.
In its original tariff
application for 2018/19 TNPA
asked for an 8.45% hike and
R81 million from the Excessive
Tariff Increase Margin Credit
(ETIMC) fund to cover its
shortfalls.
It has since transpired that
the authority in fact requires
an additional R265 million
from the ETIMC because it
miscalculated the amount
required for the shortfall.
This means instead of the
8.45% tariff hike applied for,
the actual hike required by
TNPA is 11.43%.
Various stakeholders
contacted by FTW said the
error, which came to light last
week, was concerning with
some saying it was more “sloppy
work” than “miscalculation”.
Whilst the Ports Regulator
has called for new submissions
from industry – due November
17 – after the discovery of
the miscalculation led to an
amended tariff application
by TNPA, industry roleplayers
told FTW they did not
foresee any change to original
submissions made.
Mike Walwyn, chairman of
the Cape’s Port Liaison Forum,
said most submissions made
to the regulator on the original
tariff application would stand
as the requested 8.45% was still
simply too high.
Industry maintains that an
above-inflation rate tariff hike
would be unaffordable, hitting
business hard in the current
economic environment where
the country is struggling to
maintain a 1% growth rate.
Dave Watts, a consultant for
the South African Association
of Freight Forwarders, agreed
with Walwyn saying opinions
regarding the unacceptable
level of the indicated increases
would not change, but he said
the mistake was concerning.
“We are more than taken
aback by the size of this error
and the consequent use of the
ETIMC slush fund at the levels
planned,” he told FTW.
According to the Ports
Regulator the amended tariff
application has not seen TNPA
increase the tariff hike from
8.45%, but the authority has
requested the additional R265
million from the ETIMC.
“I don’t think many of the
submissions to the Regulator
will change since most
objections are based on the
flawed tariff methodology,
and the size of the Regulated
Asset Base, rather than on the
actual quantum of the increase
requested by TNPA,” Walwyn
told FTW.
He said industry remained
hopeful that the Regulator
would not allow increases of
this magnitude.
According to Watts the
error seems to have appeared
due to TNPA having used the
Regulator’s Record of Decision
revenue amount for 2017/18
as R9387 million instead of
the estimated actual R8646
million to calculate the clawback.
“The difference is R741
million which reduces the clawback
by R371 million, 50% for
each of 2018/19 and 2019/20.
This results in the 2018/19
forecast clawback
in favour
of port users
reducing from
the original
R1531 million
to R1266
million – R371
million less the
R106 million
roll over from
the previous
year and R371
million in
favour of TNPA in 2019/20,” he
explained.
Industry commentators told
FTW that nothing had changed
on the bottom line and seeing
as TNPA would be taking
funds out of the ETIMC to
cover the error, it did add to the
R593 million currently in this
year’s plan.
“That is almost 50% of the
approximatelyR2 billion in
the ETIMC and it will have
been used up over these two
years. So the “Excessive Tariff”
overcharge port users have paid
over past years will have found
its way back into Transnet
coffers within a few more years
begging the question, ‘then
what’,” said one commentator.
Chris Lötter, head of
economic regulation at the
Ports Regulator, said while
it was understandable that
stakeholders
were concerned
about the error,
it was not a
difficult one to
make.
He said
it would not
impact on
the deadline
of December
1 when the
regulator
is expected
to announce the record of
decision on the 2018/19 tariff
application.
Commenting on the use of
the ETIMC, he said it was a
regulatory instrument that
allowed the Regulator to
smooth tariffs when necessary.
“There is nothing sinister to it.”
Lötter said in a regulatory
environment transparency and
consistency were extremely
important and by addressing
the error sooner rather than
later it remained a transparent
process.
INSERT & CAPTION
Most submissions
made to the regulator
on the original tariff
application will stand.
– Mike Walwyn