Transnet seek Raise On South Africa’s Oil, Gas Pipeline Prices 5.1%


Transnet SOC Ltd.CEOSouth Africa’s energy regulator approved increases for Transnet SOC Ltd. oil and gas pipelines that will raise the ports and rail utility’s revenue from that unit by 5.1 percent in the year starting in April.

Allowable revenue will increase to 2.9 billion rand ($269 million) in the 12 months through March 2015 from 2.8 billion rand in the current year, the Pretoria-based regulator said in an e-mailed statement today. Transnet, which had asked to raise its allowable revenue by 20 percent, changes it pricing application more than once because of “challenges in the construction” of its new multi-product pipeline, resulting in delays of dates by which new assets would be brought into operation.

“These changes had the effect of lowering the allowable revenue needed by Transnet,” the regulator said in the statement.

Transnet charges producers including Royal Dutch Shell Plc (RDSA) and BP Plc for use of its 3,800 kilometers (2,361 miles) of oil and gas pipelines that traverse five provinces, including the route between the east-coast city of Durban, where most refineries are located, and Johannesburg, the country’s economic hub. Transnet plans to invest 300 billion rand over seven years to add new rail lines, ports, pipelines and improve infrastructure in Africa’s biggest economy.

The company’s total petroleum volumes pumped in the year through March 2013 fell 5.1 percent to 15.9 billion liters (4.2 billion gallons) after declining 7.1 percent the previous year.

Declining Trend

The regulator “is collaborating with the Department of Energy in investigating the causes of this trend and to see what, if anything, can be done about reversing it.”

The utility forecasts a 0.9 percent increase in total volumes pumped in the year through March 2015 to 16.2 billion liters even as volumes transported from the coast to inland areas will probably decline 5.8 percent, it said.

“This is a concern in view of the new pipeline capacity that Transnet has brought into operation,” the regulator said.

While the utility in 2012 said it would apply for a multi-year tariff decision, it didn’t submit this application.

“Transnet’s inability to complete parts of its new multi-product pipeline project by the forecast dates, and the repeated need to change these dates, is the basis for Transnet’s persistence with single-year tariff applications,” it said.

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