Cape Town - Logistics utility Transnet has severely criticised energy regulator Nersa and the ports regulator, saying these institutions place serious limitations on the parastatal's planning ability.
Briefing parliament on Wednesday, Transnet group executive Vuyo Kahla said regulatory uncertainty is placing the parastatal's five-year R93bn infrastructure investment plan at risk.
According to Kahla, Transnet invested R73bn in infrastructure over the past five years and would be able to invest a further R90bn over the next five years.
However, he told MPs on parliament's public enterprises, transport and economic development committees bodies that the parastatal had to operate under uncertain and trying conditions.
He said rulings made by Nersa and the ports regulator were often unpredictable, adding that the bodies tend to act as policy makers instead of implementing existing policy.
"Regulators take on a policy-making role," Kahla said. "We would want parliament to assist us to make sure that policy making remains the domain of government and parliament."
Offering an example, Kahla said in Nersa's latest tariff determination for Transnet Pipelines, it didn't allow for the recovery of costs related to borrowing for the construction of the New Multi-Product Pipeline (NMPP).
This resulted in a R1bn revenue shortfall. Transnet asked Nersa for a 74% increase, but was granted 10.3%.
'Who regulates the regulators?'
"This will result in a specific spike in tariffs when the NMPP is commissioned," said Kahla.
In the 2009 financial year, Transnet applied for a 15% increase and was granted 4.4%. The year before that it applied for a 5.6% increase, which was denied.
As for the port regulator, Transnet applied for 19.3% hike for the 2011 financial year, or 10.62% for each of the three years to 2013. The regulator approved a 4.42% increase, but gave no reason for its decision.
"Who regulates the regulators?" asked Kahla. "Economic regulation in its current form is not conducive to investment in major infrastructure."
Aside from regulators, Transnet also has problems with government policy, saying it undermines Transnet as well as government's infrastructure priority.
For example, the current port, rail and pipeline policy assumes that splitting Transnet into separate state-owned enterprises will benefit the economy.
The National Ports Act of 2005 also provides for the corporatisation of the national ports authority.
Kahla said the prospect of having the business broken up as well as that of "corporatisation" were realities and risks that had "to be placed before potential investors".
The possibility of corporatisation jeopardises Transnet's ability to raise capital, Kahla said. Any move to corporatise the parastatal would also put it in breach of its major loan agreements.
- Fin24.com