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This presentation to the Parliamentary Portfolio Committee on Energy in March 2013 discusses Transnet's NMPP project with a network of 32 pipelines and its impact on tariffs. The delay in completion, cost escalations, and implications for motorists are highlighted. NERSA's review and concerns regarding declining volumes and cost drivers are also addressed. The presentation concludes with Transnet's forecast for volume increase in 2013/14.
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Transnet Pipelines2013/14 tariff Decision Presentation to Parliamentary Portfolio Committee on Energy 27th March 2013
Transnet has a network of 32 Pipelines • Approx 3,800km of pipelines
Transnet NMPP project • Transnet: 24” Durban to Gauteng + other • Running more than 3 years late. Not complete yet • Scheduled completion Q3 2010 – latest Q4 2013 • Cost escalations: • Initial estimate R9.5bn • 2007 R 11 bn • 2009 R 12.6 bn • 2010 R 15.4 bn • 2010 R 23.4 bn • next ???? • NMPP = big influence on tariffs • “User pays” policy - motorists carry the bigger burden. Budget speech – no mention of further help • Minister of Public Enterprises commissioned investigation. • NERSA starting a prudency review of NMPP
Decision: Allowable Revenue • Transnet application: + 22.6% • NERSA: + 8.5%
Notable “issues” in this application • Single year tariff application instead of multi-year • Large clawback • Decline in volumes – total network volumes decline
Impact on inland petrol price ULP 93 Decision 1.4 c/l 12
Petrol price structure Small business Job creation 26c/l • Cost drivers: • Accident rate • Admin costs 13
Pipeline Volumes • Lower volumes = higher tariffs = higher inland fuel prices • NERSA concerned Transnet annual report for 2011/12: 7.1% reduction in total volumes
Decline in volumes Transnet Pipeline Volumes trended monthly Refined Dbn - Gauteg Crude Inland Network Total System 600 1,600 1,400 550 1,200 500 1,000 Litres 450 800 600 400 400 350 200 300 -
Decline in volumes Possible reasons: • Price regulation: • Incremental Inland Transport Cost Recovery Levy; • Revised service differential in petrol price regulation - unintended consequence; • Oil companies: changing procurement and marketing strategies; • Market/Transnet: Increased demand for niche products not transported in pipelines; • Economy: lower/flat growth in fuel demand.
NERSA collaborating with DoE to see what, if anything, can be done • Transnet forecast 4.6% increase in volumes in 2013/14
Thank You www.nersa.org.za