Fuel pipeline tariff hike will cost economy R1bn, says BP

2011-04-01 11:09

The almost 60 percent fuel pipeline tariff increase could cost the economy R1 billion a year and lead to 40 000 job losses, BP said today.

“The cost to the economy could be up to R1 billion annually and conservative estimates are that 40 000 jobs will be lost with the National Energy Regulator of SA’s (Nersa) pipeline tariff increase of 59.9 percent,” BP said in a statement.

Business Day reported yesterday that Nersa had granted Transnet the increase to its petroleum pipeline tariffs to help pay for a new pipeline.

The new pipeline will replace the current ageing link between refineries in Durban and Gauteng, and will significantly increase the amount of fuel pumped up to Gauteng from the coast.

BP said the increase would result in South Africa’s tariffs being among the highest in the world.

“Our analysis shows that these tariffs exceed the global average by over 400 percent,” said Sipho Maseko, BP South Africa CEO.

“At these high input cost levels, business viability is at stake and will inevitably lead to major job losses in Gauteng.”

He said Nersa said the increase in the petrol price resulting from the higher tariffs would only make up a small fraction of the gross domestic product of inland provinces.

This “suggests that they view the magnitude of the increase to be insignificant”.

“However, their own figures show 40 000 job losses, which is very significant,” he said.

BP wanted the local pipeline tariffs to be benchmarked against those in other parts of the world.

“Nersa’s disregard for this request violates many of the Act’s objectives, which include promoting the efficient, effective, sustainable and economic distribution of petroleum and the promotion of access to affordable petroleum products.”

BP called on Nersa to review the implications of the tariffs “given its comparison with global benchmarks and the consequent implications for the competitiveness of the regional and South African economies”. 

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