[Ferro-Alloys.com] Tariff Application by the National Ports Authority for the Tariff Years 2025/26-2027/28

 On 29 November 2024, Ms. Mukondeleli Johanna Mulaudzi, Chief Executive Officer of the Ports Regulator of South Africa stated as follows:

1. On 01 August 2024 the National Ports Authority (“the Authority”) submitted its tariff application to the Ports Regulator of South Africa (‘’the Regulator”) in accordance with Section 72 of the National Ports Act, 12 of 2005.

2. The Authority requested an average tariff increase of 7,90% for the period 01 April 2025 to 31 March 2026, along with indicative tariffs increases of 18,61% for the period 01 April 2026 to 31 March 2027 and 2,52% for 01 April 2027 to 31 March 2028.

3. After reviewing the Application, stakeholder submissions, presentations in the public consultation process, and the updated inflation as per the Medium-Term Budget Policy Statement (MTBPS, November 2024), the Regulator applied the Tariff Methodology, Tariff Strategy and the use of ETIMC to the Application and determined that an appropriate overall weighted average tariff increase for the Financial Year 2025/26 is 4,40%.

4. This will be differentiated as follows:

4.1. Marine services and related tariffs (Sections 1-8 of the Tariff Book, excluding Section 7 that deals with cargo dues) are to increase by 6.15%.

4.2. All cargo dues categories are to increase by 3.40%, except for:

4.2.1. Dry Bulk imports and exports which are to increase by 4.00%; and

4.2.2. Tariffs for empty containers on Deepsea and Transhipment will be equalised to Coastwise tariffs.

5. All marine tariffs (Sections 1-8 of the Tariff Book, excluding Section 7 that relates to cargo dues) for existing commercial South African flagged vessels, as well as commercial vessels registered in South Africa from 2019/20, will receive a 30% discount, applicable year on year until reviewed by the Regulator.

6. All license fees for port activities as per Section 5 of the Tariff Book, will continue to be discounted by 30%. Additionally, all license fees (Tariff) applicable per port for the tariff year 2025/26, can continue to be paid in equal instalments on an annual basis over the period of the license.

7. For the 2025/26 tariff year, a reduction in port dues will continue to apply in the following instances (as per Section 4.1.1. of the Tariff Book):

7.1. Vessels not engaged in cargo working for the first 30 days only;

7.2. Bona fide coasters;

7.3. Passenger vessels; and

7.4. Small vessels classified under Section 4, Clause 2 when visiting a port other than their registered port.

8. Vessels in port for longer than 30 days not engaged in cargo working or undergoing repairs will incur a 20% surcharge on the incremental fee of port dues.

9. Additionally, a 60% reduction will be granted to vessels calling for the sole purpose of taking on bunkers and/or stores and/or water or a combination of all three, provided the vessel’s entire stay does not exceed 48 hours. This reduction will not be enjoyed in addition to the 35% reduction granted for vessels not engaged in cargo working for the first 30 days only, bona fide coasters, passenger vessels and small vessels classified under Section 4, Clause 2.

10. The Authority’s request for a 10% reduction on port dues in liquid bulk tankers in possession of a Green Award Certification is supported by the Regulator.

11. Tariff Assessment and approved revenue for the NPA

11.1. The Regulator takes cognisance of the volatility and fluctuations on the components of the Required Revenue which are driven by economic factors, deviation from projected and actual volumes, and over/under recovery of revenues by the Authority.

11.2. A key component of this tariff assessment was the inflation number. The Medium-Term Budget Policy Statement (MTBPS) expects inflation to stabilise around the midpoint of the Reserve Bank’s 3.00% - 6.00% target.

11.3. The MTBPS figure suggests that the country has entered a transitional period to a low inflation trajectory. Whilst low inflation is favourable in increasing disposable incomes for households, in the adopted rate of return regulatory methodology low inflation increases the real return of capital. In an environment where volume growth is also muted, low inflation results in increased tariffs in the transitionary period.

11.4. As a result, the Regulator has opted to use ETIMC to soften the switch from high to low inflation phase. Going forward, the low inflation phase allows port users to afford increasing tariffs which will be necessary for the NPA’s investment program.

11.5. The Regulator considers the long-term sustainability and affordability of the port sector. As a result, the Regulator will use R225 million of the ETIMC to mitigate transition to the low inflation phase and smooth tariffs for the FY 2025/26 for port users.

11.6. The Authority is approved Opex of R6 854m, including Group Overhead costs. In so doing, the Regulator disallowed the difference between approved operational costs and actual costs incurred in FY 2023/24, amounting to R 185 million as it believes that the Authority ought to control operational costs and over expenditure should not be passed onto port users. Furthermore, an insignificant disallowance comes from fruitless and wasteful expenditure of R 12 million.

11.7. Reported irregular expenditure of approximately R169 million has been noted in the Authority’s information. Whilst the Authority has substantiated the causes of the expenditure and reported that no financial losses were suffered, the Regulator will follow up to establish the outcomes of the determination tests to decide whether to any of this amount should be clawed back in the next tariff application.

11.8. The Regulator notes that the Ship Repair Strategy, requested in the last Record of Decision, has not been published. The tariff increase on ship repair activities is contingent on the publishing of the Strategy by 30 September 2025. Failure to do so will result in a clawback on the additional revenue resulting from the tariff increase approved herein for ship repair.

11.9. The approved tariff adjustment amounts to revenue of R15 318 million as opposed to the R15 663 million applied for. This will be recovered from R 10 292 million in Marine Services and Cargo Dues, and R 5 026 million in Real Estate Revenue.

12. Port Efficiency

12.1. The Regulator has again noted reports of continued deterioration of port performance caused by lack of refurbishment and investments in equipment by terminal operators. South African ports continue to rank poorly in performance indicators compared with other ports regionally and globally, resulting in increased costs for shipping lines, cargo owners and ultimately South African consumers.

12.2. The deteriorating port efficiency levels, measured through the Weighted Efficiency Gains from Operations (WEGO), have resulted in a loss of R217 million.

12.3. The Regulator will continue to monitor port performance and efficiency levels through the stakeholder engagement process.

13. Corporatisation of the National Ports Authority

13.1. The corporatisation of the NPA, first announced in June 2021 by the President, is expected to be finalised by 30 April 2025. The Minister of Transport, who now represents the shareholder of Transnet SOC Ltd (“Transnet”) has committed to this timeline, a position reinforced by the Minister of Finance (Treasury) through the reported conditions attached to the R47 billion guarantee facilities provided to Transnet.

13.2. The Treasury’s conditions reportedly include implementation of institutional reforms i.e. the corporatisation of the NPA and reform of Transnet Freight Rail business through the establishment of an infrastructure manager separate from rail operations, amongst others.

13.3. In noting the developments within government in relation to corporatisation of the NPA, the Regulator in evaluating the tariff application, has treated the Authority as a corporatised entity.

13.4. Furthermore, the Regulator anticipates that a corporatised NPA, will emerge as an autonomous entity, with an investment grade credit rating able to raise funding at a reasonable cost (interest rates) from the markets.

13.5. The Tariff Methodology is due for a review in FY 2025/26. During the review the Regulator will embark on an overhaul of all the aspects of the required revenue and tariff setting to suit the corporatised entity. The comprehensive review will include the assessment of the cost of funding, efficiency of the tariff structure and the strengthening of the abilities to provide adequate infrastructure.

14. Conclusion

14.1. The Regulator’s decision follows a prudent approach and takes cognisance of the economic environment within which port users, importers and exporters find themselves in. Even within the binding constraints evident in the ports sector, the Regulator is committed to incentivising National Ports Authority investment, managerial and operational behaviour that will lead to efficient ports.

14.2. The Regulator is guided by the Directives and in particular, Directive 23(1) that sets out the requirements and/or principles which must reflect and balance amongst others, the following:

1. A systematic tariff methodology that is applicable on a consistent and comparable basis;
2. Fairness;
3. The avoidance of discrimination, save where discrimination is in the public interest;
4. Simplicity and Transparency;
5. Predictability and stability;
6. Avoidance of cross-subsidisation save in the public interest; and
7. Promotion of access to ports and efficient and effective management and operations in ports.

15. The official tariff Record of Decision for 2025/26 tariff year can be found on the Ports Regulator website, www.portsregulator.org. The Tariff Book will be published by 31 March 2024.

End.

Click here full report. 

• [Editor:tianyawei]