Banele Ginidza
The National Energy Regulator of South Africa (Nersa) has recently announced pivotal changes that are set to affect the fuel prices across the nation in the upcoming financial years.
The regulator has sanctioned a fuel price increase proxy of 5.23 cents per litre (c/ℓ) for the 2025/26 financial year, which will be followed by a further increase of 3.80 c/ℓ in the 2026/27 financial year.
This increase primarily addresses the costs associated with transporting fuel from Durban to Johannesburg.
The Minister of Mineral and Petroleum Resources will ultimately determine the implementation of these increases, which are expected to allow Transnet to achieve a substantial increase in allowable revenue.
Forecasts indicate an 8.73% rise from R7.21 billion in the 2024/25 financial year to R7.84bn in 2025/26. Furthermore, allowable revenue is projected to escalate by 5.71%, reaching R8.29bn in the 2026/27 financial year.
Nersa’s decision, detailed in a statement issued on Tuesday, sets tariff rates for a defined two-year period from April 1, 2025, to March 31, 2027.
Transnet’s initial request proposed an allowable revenue of R8.71bn for 2025/26, representing a significant 20.77% increase from Nersa’s previous allowance which had deferred R800 million in regulatory assets, resulting in a lower revenue figure of R7.21bn for the preceding year.
In the previous determination, Nersa, having calculated the 2024/25 allowable revenue to be R8.01-billion, decided to defer R800-million in the form of a regulatory asset, resulting in allowable revenue of R7.21-billion being used in determining tariffs for 2024/25.
Transnet also applied for allowable revenue of R8.69-billion for the 2026/27 financial year, which is a 0.21% decrease compared with 2025/26.
The impact of these changes is significant. If Transnet’s application is fully implemented, consumers could experience a 13.34 c/ℓ increase in the Durban to Alrode tariff for 2025/26, albeit followed by a slight decrease of 0.58 c/ℓ in the subsequent year.
On August 2, 2024, Nersa received Transnet’s tariff application for the 2025/26 and 2026/27 tariff periods as a condition of its licence to operate its Petroleum Pipelines System.
In its deliberation, Nersa considered various critical factors, including public interest, regulatory certainty, and the ongoing struggle against criminal activities such as pipeline tampering and product theft, which have marred the country’s fuel transport sector.
“The pipeline system is generally the most cost-effective mode of transportation of petroleum and petroleum products from the coast to the inland area, apart from using rail or road transport,” Nersa said.
“This is of special importance for the alleviation of the pressure on both the rail and road infrastructure, noting the road accidents involving tankers in recent times.”
Nersa highlighted its awareness of the recent surge in such incidents, urging municipalities to strengthen bylaw enforcement to curb these criminal activities.
Additionally, Nersa praised the pipeline system as a cost-effective transportation method for petroleum products, especially in light of the growing need to alleviate the burden on both rail and road infrastructure, which have seen a spike in accidents involving fuel tankers.
BUSINESS REPORT
