The National Energy Regulator of South Africa (Nersa) has increased petroleum pipeline tariffs by 0.30%, allowing Transnet Pipelines to realise a 1.43% year-on-year increase in allowable revenue (AR) for 2017/18.

If Energy Minister Tina Joemat-Pettersson decides to use the pipeline tariff as a proxy for the cost of transporting fuel from Durban to Johannesburg, as has been the case in the past, the consequent increase of 0.30% will result in a 0.11c/l increase in the petroleum transportation levy for the Durban-to-Alrode destination.

In November 2016, Nersa received the Transnet Pipelines System tariff application for the 2017/18 tariff period, as a condition of Transnet Pipelines' licence to operate its petroleum pipelines system. The tariffs are set for a period of one year, from April 5, 2017, to March 31, 2018.

Transnet Pipelines applied for a decrease in AR from the R4.13-billion approved by Nersa for the 2016/17 tariff period to R3.84-billion in 2017/18. This translated into a 6.83% decrease in AR, which would have resulted in a 7.87% decrease in tariffs.

With regard to the Durban-to-Alrode destination tariff, which is used to determine the transportation levy, Transnet applied for a tariff of 31.79c/l.

Nersa set the Durban-to-Alrode destination tariff at 34.61c/l.

The reduction in AR, as applied for by Transnet, was due to the Coastal Terminal (TM 1) and Inland Terminal (TM 2) assets not being operationalised by Transnet as envisaged and resulted in a clawback of R687.96-million.

Nersa decided to smooth the tariff increase to ensure a stable and predictable price path by using the clawback mechanism, owing to the admission of the new multiproduct pipeline assets.

The energy regulator will spread the clawback over a period of two years, deducting 50% of the total clawback from the 2017/18 AR with the balance to be deducted from the AR for 2018/19.