The National Energy Regulator of South Africa (Nersa) has postponed public hearings into gas transmission pipeline company Rompco’s tariff application for a gas pipeline expansion project, in Mozambique, until January.

Rompco is seeking approval from Nersa for a baseline tariff of R49.87/GJ for the 2017 financial year.

The company is building a pipeline budgeted at R2.7-billion, called Loop Line 2, which expands the capacity of the existing 865 km gas pipeline from Temane, in Mozambique, to Secunda, in South Africa.

It would add 24 MGJ/y of capacity to the existing pipeline system, increasing capacity to 212 MGJ/y.
Initial supply to South Africa, enabled by this Loop Line 2, would be 7.8 MGJ/y.

The public hearings have been postponed to January 25.

“The delay will cost Rompco in excess of R20-million a month,” GM Louis Bosch said at a press briefing earlier this week.

He noted that the tariff, if approved, would not apply singularly to end-users of the gas transmitted through the pipeline, since the end-users pay a volume weighted average of Rompco’s three tariffs (including this tariff), making the impact of this tariff about 2% on the final cost of gas to end-users. This impact is expected to drop to 0.5% as more users take up capacity.

According to Nersa, stakeholders, including customers who will be directly negatively impacted on by the increase in Rompco’s transmission tariff, submitted extensive comments that require thorough and careful analysis.

“There are issues raised by stakeholders and Nersa which require clarification from Rompco,” Nersa piped-gas full-time regulator Nomfundo Maseti told Engineering News Online.

Nersa emphasised that the relevant and applicable legislation demands that persons that might be affected by its decision are afforded a fair opportunity to meaningfully participate in its processes before a decision is taken.

“As part of its process, Nersa, on October 27, published a discussion document which [included] crucial information on the Rompco tariff application [and] invited stakeholders to provide comments.”

Stakeholders were given 21 working days to submit their comments.

“This period proved to be insufficient to enable stakeholders to obtain the relevant clarification from Rompco on issues raised prior to proceeding to the public hearing stage,” Maseti said.

Bosch said, however, that Rompco had responded comprehensively to the discussion document published by Nersa, as well as to many supplementary questions raised by the regulator.

“We believe Nersa should [approve] our tariff. We have [submitted] two tariff applications now and I think we have addressed all [of Nersa’s] concerns,” he noted.

Bosch added that based on the small impact that this tariff would have on the price of gas to the end-users, and the value that this additional gas will add to the local economy, Loop Line 2 is in the public interest and supportive of the objectives in the Gas Act.

“Without this Loop Line 2, gas delivery to South Africa will remain limited to 153 MGJ/y and will deny the local market the benefit of additional gas, and cross-border gas trade between South Africa and Mozambique will not be facilitated, to the detriment of both countries.”