The National Energy Regulator of South Africa (NERSA) has approved an increase of 7.69% in Allowable Revenue (AR) for Transnet compared to the 2018/19 tariff decision (from R5 276.68 million to R5 682.45 million).

This translates to a 10.95% increase in the tariff for the Durban-to-Alrode destination.

The Energy Regulator noted that if the Minister of Energy, Honourable Jeff Radebe, 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 increase of 10.95% will result in an increase of approximately 4.5 cents per litre (c/l) in the petroleum transportation charge for the Durban-to-Alrode destination.

In arriving at its decision, the Energy Regulator considered the following:

a) The exclusion of assets from the RAB, which are not operational at the beginning of the tariff period under review (2019/20);

b) Deferment of the clawback of R197.25 million in favour of Transnet, emanating from cost overruns and delays of the NMPP project (i.e. lateness of ‘ability to operate’ dates of the assets), until the Energy Regulator concludes its comprehensive prudency review/assessment of the NMPP project; and

c) Smoothening the tariff increases by spreading the increase in the AR over a period of four years. In addition, the Energy Regulator took cognisance of the costs expended on the NMPP project.

Therefore, based on the Prudency Guidelines developed in the 2018/19 financial year, the Energy Regulator will undertake a comprehensive prudency review/assessment of the NMPP project in the 2019/20 financial year.