Transnet Pipelines (TPL) has said it would increase vigilance on pipeline theft as it acknowledged the approval of a tariff decision which recognized the amount of work the division has put into protecting the pipelines.

This announcement comes in the wake of the National Energy Regulator of South Africa (Nersa) recent decision to approve a 7.83% tariff increase for the financial years 2025/26 and 2026/27, taking into account the efforts made by the division to combat the tampering and theft of petroleum products.

Nersa on Friday said the approved tariff adjustment, which gives the Minister of Petroleum Resources and Energy the authority to implement a R5.23-a-litre increase in fuel prices, reflected Nersa's commitment to ensuring both public interest and regulatory certainty in the energy sector.

The regulator is deeply concerned about the rising incidents of pipeline tampering and product theft, emphasising the need for robust municipal bylaws to tackle this growing threat.

“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. 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 said.

The tariffs are set for a period of two years, from April 1, 2025 to March 31, 2026, and from April 1, 2026 to March 31, 2027.

Nersa said it was concerned about criminal activities, such as tampering with the pipelines with the aim to steal product, and called for enforcement of bylaws by municipalities to mitigate this.

In response to Business Report, TPL welcomed Nersa’s tariff decision, which considered key economic factors and acknowledged the positive impact of enhanced security measures in reducing product theft.

"TPL is committed to delivering cost-effective services and ensuring security of supply to the inland market, TPL will continue collaborating with the Energy Regulator to support efforts to lower the cost of doing business in South Africa," it said.

The decision allows for the Minister of Mineral and Petroleum Resources to use the Nersa Petroleum Pipelines System tariffs as proxy for the cost of transporting fuel from Durban to Johannesburg, which may increase by 5.23c/ℓ in the 2025/26 financial year, followed by a 3.80c/ℓ increase in the fuel price in the 2026/27 financial year.

The decision sets the tariffs that will allow Transnet to realise an increase of 8.73% in the 2025/26 financial year allowable revenue, compared with that of the 2024/25 financial year, from R7.21 billion in the 2024/25 financial year to R7.84bn in the 2025/26 financial year.

It would allow an increase of 5.71% in the 2026/27 financial year allowable revenue, from R7.84bn in the 2025/26 financial year to R8.29bn in the 2026/27 financial year.

Transnet applied for an allowable revenue of R8.71bn for 2025/26, which is a 20.77% increase on the allowable revenue in the Nersa 2024/25 decision.

The Transnet application, if approved, would have resulted in an increase of 13.34c/ℓ in the Durban to Alrode tariff in 2025/26, followed by a 0.58c/ℓ decrease in 2026/27.

In the previous determination, Nersa, having calculated the 2024/25 allowable revenue to be R8.01bn, decided to defer R800 million in the form of a regulatory asset, resulting in allowable revenue of R7.21bn being used in determining tariffs for 2024/25.

TPL applied for allowable revenue of R8.69bn for the 2026/27 financial year, which is a 0.21% decrease compared with 2025/26.

According to Transnet's financial statements for the 2024 year, Transnet Pipelines is currently in a legal dispute with two customers relating to short payment for the transportation of crude and has been shorted R1.3m in the 2024 year, up from R1.2m in the previous year.

The total amount short paid by the customers as at 31 March 2024 was R1.31bn, up from R1.23bn.

Transnet cannot conclude that it is probable that it will collect the consideration to which it will be entitled in exchange for the goods or services transferred to the customers and has therefore not recognised the revenue.

The Pipeline networks were revalued in March 2024 by Kantey & Templar, an independent firm of professional valuers, at R37.4bn for all assets, a slight decline from R39.3bn in 2023 based on an index valuation conducted by Ernst and Young.

The discounted cash flow method resulted in a fair value of R40.9bn at 31 March 2024 for all assets, down from R42.7bn in 2023.

The external DRC valuation was applied to assets in the old pipeline network and resulted in a net decrease of R264m from R453m net increase in 2023 to the carrying value of the old pipeline assets. The new pipeline network assets remained at carrying value as per the point of range methodology.

BUSINESS REPORT