Transnet’s tariff increases under scrutiny

This week the bell rang for the first round of the tussle over the Transnet National Ports Authority (TNPA) tariff increases for 2013/14, with the SA Ports Regulator the first to move forward to the centre of the ring. On Wednesday, the regulator’s web page sprang to life, leading with a straight jab at the question of tariff methodology, followed by a right hook into pricing strategy. This combination was backed up by the well-developed muscle of submissions to the regulator from the private sector freight industry, testing the defence for the TNPA’s application for a 14.2% tariff increase for 2013/14. According to Riad Khan, CEO of the SA Ports Regulator, what the contest is set to provide are the ground rules for tariff moves in forthcoming years – an attempt, he added, to achieve a tariff structure where the moves can be forecast by everyone in the freight and trading industries, and forward planning can be done. The tariff methodology will define how TNPA must calculate the changes in the tariff from year to year, and what the rules are that will dictate whether there is a tariff increase or not. Khan defined the tariff methodology as the means of deciding the size of the cake that the TNPA will be granted. The pricing strategy, meantime, will be which and what size of slice of cake everybody in the freight industry will contribute to the cake as a whole, Khan added. This is basically to lay down ground rules for just where and by how much the TNPA can move tariffs into other income areas other than the container charges. One example was the TNPA proposal to hold back on container tariffs and increase its port rental charges. However, Khan added, at the same time, the TNPA assured the regulator that Transnet Port Terminals (TPT) – its main harbour tenant – would not increase its container handling charges by more than the inflation rate. Also on its way is a benchmarking of other ports’ charging structures to give a comparative norm to measure against SA’s. Another query is just how the TNPA application aligns with other government price strategies. The contest is at an early stage. But next week, Khan told FTW, the regulator’s own research will be made public.