Transnet hits out at Regulators

In an unusual step that sees one government institution publicly criticising another, Transnet has voiced its concern over “the adverse impacts of the Regulators’ unpredictable decisionmaking on the business.” In his statement in the annual report, acting chairman Prof G.K. Everingham says: “Transnet accepts the importance of economic and safety-related regulations to ensure fair and equitable business practices and acknowledges that the new Regulators require time to assess the regulatory environment in order to design appropriate frameworks. “However, the Board is perturbed about the continued lack of clarity of the regulatory framework in relation to Pipelines and National Ports Authority, two of the operating divisions that are subject to economic regulation,” he says. Acting group chief executive Chris Wells also refers to the regulator: “The poor economic conditions, which saw many South African companies collectively shedding almost one million jobs, were worsened by the growing uncertainty of the regulatory environment and its impact on future tariff increases. “The present regulatory dispensation is still unpredictable and inconsistent, and persistent changes have made planning for optimal funding solutions increasingly difficult. As late as the last quarter of the review period, the National Energy Regulator of South Africa (Nersa) – by far the most established of the two regulatory authorities – continued to effect changes to its tariffing methodology. “Also, the impact of Nersa’s decision in 2010 to cut pipeline tariffs by 10.4% resulted in approximately R1 billion loss of revenue compared to budget and is perceived by Transnet to have been caused by persistent inconsistencies in the application of the law,” he said.