Ports penalised for under-spending

Transnet's tariffs will go up by 5,9% for goods moved through the harbours it controls. Image: Urban Africa

The regulator rejected the TNPA's tariff increase application of 14.39% for 2014/15 last week‚ approving instead an increase in cargo fees of 5.9%. In its record of decision it said budgeted operational expenses had to be incurred.

The regulator has clawed back funds from TNPA regularly in previous years‚ because it accumulated more revenue than expected after moving higher volumes of cargo.

In 2012/13‚ for example‚ the regulator decreased port tariffs significantly‚ because of over-recovery.

Lower tariffs were in line with the government's commitment to providing rebates to exporters of manufactured goods.

Container export tariffs were cut 43.2%‚ container imports 14.3% and vehicle export tariffs 21.1%.

This time‚ the regulator's policy analyst‚ Chris Lötter‚ said that tariffs were increased because volumes fell‚ causing TNPA's revenue to fall. The claw-back mechanism therefore worked in the port authority's favour this time. The claw back applied in the 2012/13 tariff year was R396m.

Tariff increases welcomed

For 2013/14‚ the regulator estimated a negative claw back of R103m because TNPA's volumes dropped. Consequently‚ tariffs were increased. Lötter said the regulator's record of decision was sending a strong message about the utility's operational budget.

"If capital expenditure plans are made‚ TNPA must spend that money and‚ if positions are budgeted for‚ fill them," Lötter said

The TNPA has consistently underspent on its capital expenditure budget. It spent R1.69bn in 2012/13‚ 71% of its budgeted R2.37bn and in 2011/12 it spent R1.75bn‚ against a target of R2.44bn.

For the financial year that ended this March‚ its capital expenditure budget was R2.55bn.

TNPA chief financial officer Mohammed Abdool welcomed the differentiated tariff increases awarded by the regulator. Dry bulk cargo dues for coal‚ iron ore and manganese and tariffs on marine services‚ were increased 8.15%.

This allowed for "a gradual alignment to the outcome of the principles outlined in the regulator's pricing strategy"‚ Abdool said.

Last year‚ Transnet announced plans to shift tariffs to support a more industrialised economy.

Its new structure‚ it said‚ would favour value-added goods‚ while exporters of raw materials such as coal and iron ore would be slapped with higher costs. The record of decision made it clear that the room for reducing tariffs‚ which has happened in previous years‚ had narrowed because volumes were lower.

Though it was difficult to predict trade volumes‚ the regulator's scope to reduce them in future tariff assessments may be limited.

The regulator received objections to the TNPA's tariff request from numerous organisations‚ including the Richards Bay Coal Terminal and shipping line Maersk.