TRANSNET NATIONAL PORTS AUTHORITY Transnet National Ports Authority Tariff Application for Financial

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  • TRANSNET NATIONAL PORTS AUTHORITY

    TARIFF APPLICATION FOR FINANCIAL YEAR 2018/19

  • Transnet National Ports Authority Tariff Application for Financial Year 2018/19 __________________

    Page 1 of 84

    Table of Contents 1.Executive Summary…………………………………………………………………………………………………………………………………. 7

    2.Introduction……………………………………………………………………………………………………………………………………………10

    3.Legal Basis and Regulatory Requirements……………………………………………………………………………………………… 10

    3.1Section 72 of the Act sets out the Authority’s obligations in relation to “Authority’s tariff book” ........... 10

    3.2The Ports Directives ................................................................................................................................... 11

    3.3Tariff Methodology .................................................................................................................................... 12

    4.Proposal on Tariff Structure amendments………………………………………………………………………………………..…… 18

    4.1Implementation of the Tariff Strategy ....................................................................................................... 18

    4.2Unitised Automotive Tariff ........................................................................................................................ 19

    4.3Bunker Tariff .............................................................................................................................................. 20

    4.4Marine Services Tariff Structure ................................................................................................................ 20

    4.5An update on clauses in the Tariff Book .................................................................................................... 21

    4.6Incentive and discount schemes ................................................................................................................ 21

    5.The Business of the Authority………………………………………………………………………………………………………………… 21

    5.1Introduction ............................................................................................................................................... 21

    5.2Functions of the Authority ......................................................................................................................... 22

    5.3Tariffs in Perspective.................................................................................................................................. 23

    6.Port Infrastructure Development Plan and Capital Expenditure…………………………………………………………….. 25

    6.1Port Investment planning .......................................................................................................................... 25

    6.2The Authority’s Capital Investment Programme ....................................................................................... 25

    6.3Key Focus Areas of Capital Investment Program in FY 2018/19 to FY 2020/21 ........................................ 26

    7.The Authority’s Total Revenue………………………………………………………………………………………………………………. 28

    7.1Real Estate Revenue .................................................................................................................................. 28

    7.2Private Sector Participation in the Port Sector (Concession Programme) ................................................. 31

    7.3Marine Business Revenue .......................................................................................................................... 32

    7.3.1The Authority’s Volumes ......................................................................................................................... 32

    7.3.2Transnet Value Chain Coordination ........................................................................................................ 32

    7.4Cargo ......................................................................................................................................................... 33

    7.4.1Containers ............................................................................................................................................... 34

    7.4.2Automotives ........................................................................................................................................... 35

    7.4.3Coal ......................................................................................................................................................... 36

    7.4.4Iron Ore ................................................................................................................................................... 36

  • Transnet National Ports Authority Tariff Application for Financial Year 2018/19 __________________

    Page 2 of 84

    7.4.5Manganese Ore ...................................................................................................................................... 36

    7.4.6Liquid Bulk .............................................................................................................................................. 36

    7.4.7Marine Services ...................................................................................................................................... 36

    8.Tariff Application Approach…………………………………………………………………………………………………………………… 37

    8.1Revenue Requirement Formula ................................................................................................................. 37

    8.1.1Regulatory Asset Base ............................................................................................................................ 38

    8.1.2Weighted Average Cost of Capital.......................................................................................................... 40

    8.1.3Valuation of the RAB .............................................................................................................................. 41

    8.1.4Taxation .................................................................................................................................................. 42

    8.1.5Operating Costs ...................................................................................................................................... 43

    8.1.6Revenue Claw-back ................................................................................................................................. 43

    8.1.7Treatment of Tax .................................................................................................................................... 45

    8.2Revenue Requirement................................................................................................................................ 45

    8.3The Tariff Strategy ..................................................................................................................................... 47

    8.3.1Asset Cost Allocations ............................................................................................................................. 47

    8.3.2Tariff Book Proposal for FY 2018/19 ...................................................................................................... 48

    9.Port Efficiency……………………………………………………………………………………………………………………………………….. 52

    10.Weighted Efficiency Gains Operations…………………………………………………………………………………………………. 53

    11.Conclusion…………………………………………………………………………………………………………………………………………… 54

    ANNEXURE A: The Authority’s Tariff Book………………………………………………………………………………………………… 56

    ANNEXURE B: Capital Expenditure……………………………………………………………………………………………………………. 58

    ANNEXURE C: Volumes…………………………………………………………………………………………………………………………….. 66

    ANNEXURE D: Operating Expenditure………………………………………………………………………………………………………. 67

    ANNEXURE E: Unitised Automotive Tariffs……………………………………………………………………………………………….. 75

    ANNEXURE F: An Illustration of the Marine Services Tariff Structure………………………………………………………… 75

    ANNEXURE G: FY 2018/19 Tariff Book Changes………………………………………………………………………………………… 80