D-day approaches for port tariff verdict

Friday is D-day for the announcement by the Ports Regulator (PRSA) on whether to approve Transnet National Ports Authority’s (TNPA) port tariff application.

As reported in FTW last month, industry raised several objections to TNPA’s proposed weighted tariff increase of 4.21%, for varying reasons.

During the public consultation roadshows held in September the PRSA made it clear that the application by the NPA did not fully comply with the information requirements of the Regulator, and suggested a meeting with the Transnet board.

The meeting was held earlier this month and the PRSA is now satisfied that it has sufficient information to fully assess the sustainability concerns expressed by the Authority.

Industry concerns were raised t that the revised methodology – prescribed by the PRSA – for valuing the port authority’s Regulatory Asset Base (RAB) had not been used in the 2019/20 tariff application. Because of this, both the South African Association of Freight Forwarders (Saaff) and South African Association of Ship Operators and Agents (Saasoa) contested the application on the grounds that TNPA’s asset values had been inflated, resulting in increased tariffs and revenue.

“The regulator, in adjusting the RAB methodology, has tacitly acknowledged that port users have been overcharged, at least since the TNPA’s RAB estimates were estimated in the 2010/11 record of decision,” Saasoa CEO, Peter Besnard, wrote in his comment submission. “The TNPA has for close on a decade been able to reap super-nominal profits from the use of elderly capital stock that has been overvalued for the purposes of determining what constitutes its required normal profit.

“It has made minimal investments in new capital over the past few years, effectively paying the equivalent of massive dividends to the Transnet Group.”

The Regulator’s Record of Decision on the Tariff Application for 2019/20 will be announced at a press conference at the Regulator’s offices on Friday 30 November at 11:00.

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