Regulator considers new port charges

The new framework aims to bring the charges in line with global practice and the government's economic policies. Last month, the regulator published a study of SA's port costs as part of its work to solicit responses from users and Transnet, which through the National Ports Authority owns all of SA's ports.

The study revealed contradictions in port costs. It found that SA's port charges were 874% above the global average with the charges for containers being particularly high.

But all vessels faced lower overall costs compared with other averages in the study - ranging from 26% below the average on containers and 57% for iron ore vessels.

"We are not saying we must be exactly at the global average, but the study does give us an indication of how good or bad our tariff structure is," Khan said in an interview with Business Day.

"If we have job creation and manufacturing as our priorities and our port pricing doesn't support that, then it doesn't make any sense," he added.

Collate responses

The regulator would collate responses from affected parties until the end of May. Two processes are being run in parallel with a tariff methodology study that will determine the overall revenue that Transnet is allowed to recover from the ports.

Khan said a separate pricing policy would determine "who gets to pay what portion of the total revenue that Transnet is allowed to generate". Once the processes were completed, an implementation framework would be put in place to "determine how quickly these changes must be put in place".

The issue of SA's excessive port costs is an old bugbear for Transnet, which has rejected the methodology used by the regulator in the study.

Transnet's chief executive Brian Molefe said the "fundamental problem" with the regulator's study was that "it tries to compare apples with pears".

He objected to the Transnet National Ports Authority being compared with smaller ports elsewhere in the world. Some of those ports were owned by municipalities and could rely on the government for their capital expenditure budgets.

"The capital expenditure for those ports is budgeted for (by the owners). We have to pay for (ours) out of tariffs," Molefe said.

"If you take the ports the regulator is comparing us with, then you have to look at their institutional arrangements. If you set out to prove our port system is expensive, you will prove that."

Molefe said when adjusted for the differences in the funding models of the ports Transnet was compared with, "we actually don't look that bad". He claimed the ports included in the study were in many instances subsidised by national, provincial or local governments, which made their charges lower.

"We are not getting a cent from National Treasury," Molefe said. "We have to raise two-thirds of our capital expenditure from operations.

Commenting on the R1bn given to manufacturers in tariff relief last year, he said injecting money in this way into the system was "simply taking money from one pocket and putting it into another; the societal cost is the same".

Source: Business Day via I-Net Bridge