Exporters on edge

22 February 2011

Contacts

If the port landlord, Transnet National Ports Authority (TNPA), gets to go ahead with implementing some of its individual tariff increases from April 1, certain big export businesses could get blown clean out of the water.

Although there is some reason to believe that these specific tariff increases -exceptions to the general tariff increase, which was cut from TNPA’s expected 11.91% by the Ports Regulator (PR) to 4.49% - may not have been approved by the PR, this has not been made clear, and export companies are sitting in some doubt about whether their tariffs could go through the roof or not.

And they are not play-play amounts that are being talked about. Among some of the bigger export products from SA that are affected, the liquid bulk molasses tariff leapt up by an enormous 864.60%; breakbulk logs by 644.8%; and dry bulk timber woodchips by 612.37%. Even at the lower end of the scale, the big SA export of dry bulk chrome ore saw its tariff walloped up by 117.2%.

The exporters of these, and other products that have been hit with inordinately high individual tariff increases, have already made serious complaints to the Ports Regulator - and they are still sitting in an uncertain position.

It was pointed out to FTW that, whilst the Ports Regulator has been very critical of the TNPA, one item that has not received a lot of attention is the fact that the TNPA provided little or no information in support of any realignments or adjustments to these individual tariffs.

In certain instances, tariffs have been increased by huge amounts without any consultation with the parties that would be affected by such tariffs, and without any motivation whatsoever as to why such adjustments or realignments were necessary.

Said maritime lawyer, Andrew Robinson of Deneys Reitz, who is fighting against the tariff increase due to be slapped on woodchips: “"You will appreciate that many importers and exporters are in the process of revising their budgets and the tariffs play a crucial role in this regard. However, until the individual TNPA tariffs have been resolved, no importer or exporter can prepare any meaningful budget. Indeed, if some tariff realignments were to go through on 1 April 2011, certain industries supporting thousands of jobs will simply fail to stay in business.

“In certain circumstances, entire industries may be crushed by the TNPA's unilateral adjustment or realignment of tariffs. More shocking still is the complete lack of transparency by the TNPA in compiling their tariff for 2011/2012 and their complete failure to communicate with those industries and stakeholders that will be hardest hit by the individual tariff adjustments or realignments.”

The other big problem is that these mystified exporters are battling to get an understandable answer to their complaints. Neither the Ports Regulator nor the TNPA appear to be willing or able to tell the various stakeholders what the next step will be.

Robinson expressed some of the prevalent questions. “Will it be necessary for the TNPA to submit a further tariff application to the Ports Regulator for approval? Will the TNPA now have to justify those tariffs that have been adjusted or realigned? Will the Ports Regulator require the TNPA to institute a proper review of those tariffs that need to be adjusted or realigned so that the affected stakeholders have an opportunity of putting their case either to the Ports Regulator or to the TNPA? And ... can any of this be done before April 1 (when the new tariffs are due to come into action)?”

FTW approached Riad Kahn, the CEO of the Ports Regulator, for answers.

Kahn, however, said he could only stand by the official response already expressed.

This reads in part: “In the absence of a clearly articulated model that sets out the application of all factors in specific tariff determinations, the Regulator would have to make determinations on all tariffs that differ from a generalised tariff increase on a case-by-case basis. In addition, no information allowing assessment of individual tariffs was given for some of the requested increases or decreases against the overall requested tariff.

“The Regulator decision is therefore restricted to approving an overall increase with general application across all tariffs.

“The TNPA has indicated that it has commenced a tariff review project that will address these concerns. The review methodology considers among other factors the facilities used, the commodity value and the throughput, although the specifics have not as yet been made available to the Regulator.”

Norton Rose South Africa (incorporated as Deneys Reitz Inc) joined Norton Rose Group on 1 June 2011.