Durban/Gauteng pipeline still three years behind

NERSA to review Transnet’s progress…

engineering news

engineering news

In commenting on NERSA’s decision not to allow Transnet’s application for a 22.6% increase but instead hold this back to 8.5%, Dr Rob Crompton as pipeline regulator was starting a “prudency” review of the Durban/Gauteng fuel pipeline project in view of the fact that it was three years behind.

It was unlikely to catch up and costs had escalated from an original R9.5bn in 2005 (at the last count in 2010) to R23.4bn.  The the overrun was now into unknown realms, he said.

Whilst Transnet has a network of 32 pipelines over 3,800km, the current new multi-product pipeline, or NMPP, has been giving headaches for some considerable time mainly due to its multifaceted product pumping nature.    NERSA said that they were using the word “prudent” because they did not wish to jump to conclusions or make any assessments themselves until the project was complete. The minister of public enterprises has called for an investigation into the escalating costs, meanwhile.

Pipeline volumes declining

It was notable NERSA,  as a whole, has to bear in mind that in the case of the Transnet application for a tariff increase the application was for one year only not multi-year. The worrying factor to NERSA, Rob Crompton said, was that volumes carried on the pipeline were declining – a lot of which was due to the fact that whilst some six grades of petrol, two diesel and also biofuels were carried, there also came a major complication with high and low sulphur content diesel where special tanks and road haulage had to be used.

As an outsider, Dr Crompton said that NERSA could see that Transnet had been asked to quadruple its assets but there had been no injection of capital with the result that Transnet seemed to be building on a “pay as you go “ principle, raising capital where necessary. This was far from satisfactory, he said.

Dr Crompton noted that no further help had been mentioned in the 2013 Budget speech

Fuel price structure complicated

NERSA said that of the nearly thirty items that went to make up the petrol price structure in South Africa, from road accident funding to wholesale margins, only about 16% of the price came in “administered prices” and NERSA, in establishing their views, had only studied one element of this.

He said that in studying Transnet’s application and finally setting a much lower figure, a balance had to be found between the principle adopted of “user pays”, in other words the motorist, and Transnet being able to “claw back” unspent sums or altering over-charged budgets.

Storage nearly finished

nmpp tanksIt was noted, however, that Transnet forecast a 4.6% increase in volumes in 2013/14 and that the tank storage projects at either end of the line should be finished shortly.

NERSA said it was trying to work with the department of energy to get consistent regulations on the whole, or at least a lot more parts, of the entire cost structure but it was unlikely as things stood whether pipeline tariffs would become “multi-year” to assist in longer term planning from what could be seen.

Parliamentarians were complimentary to the NERSA staff on their diligence and producing a result which had helped the consumer in difficult times.

Associated articles archived
http://parlyreportsa.co.za//uncategorized/transnet-says-freight-rail-operations-coming-right/
http://parlyreportsa.co.za//energy/nersa-complains-of-limited-oversight-on-new-oil-pipeline/

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