1. On 31 January 2024, Ms. Mukondeleli Johanna Mulaudzi, Chief Executive Officer of the Ports Regulator of South Africa stated as follows:
2. On 01 September 2023 the National Ports Authority (“NPA”/ “the Authority”) submitted to the Ports Regulator of South Africa (”the Regulator”) its Tariff Application (“the Application”) in terms of Section 72 of the National Ports Act, 12 of 2005. The NPA applied for an effective average tariff increase of 4.98% for the period 01 April 2024 to 31 March 2025.
3. The “indicative tariff increases” when the tariff methodology is applied with the latest estimated information and financial forecasts for the period 01 April 2025 to 31 March 2026 is 6.28% followed by 10.95% for 01 April 2026 to 31 March 2027.
4. The Regulator is guided by the Regulatory Framework, which incorporates the Tariff Methodology and Tariff Strategy specifically designed to suit the South African port system of eight commercial ports owned and managed by
5. The Regulatory Framework aims to provide certainty for investments, sustainability of the industry, quality of service, affordability, and accessibility to port users.
6. The financial year for which the tariff application being evaluated will apply coincides with the mixed economic conditions locally and globally. The sea trade and ports operate within the challenging space with geo-political tensions, climate change risks, higher inflation increasing input costs and effectively, customers with diminished disposable incomes.
7. The Regulator takes into consideration economic challenges facing port users and end-customers when evaluating the space within which the tariffs are applicable.
8. The proposed tariff increase of 4.98% by the Authority, includes an amount of R1 267 million retained in the Excessive Tariff Increase Margin Credit (ETIMC).
9. The Regulator deems it necessary to remind the ports sector that the purpose of the ETIMC is not to subsidise inefficiencies and/or profits for the Authority.
10. The operational efficiencies of the South African ports are declining and that is a concern for both the Regulator and port users. The Regulator has noted the deterioration of operational performance in FY 2022/23, with the Weighted Efficiency Gains from Operations (WEGO) results recording a 14.19% decrease, a further decrease of 12.05% was recorded in FY 2021/22 performance.
11. Having considered the application, input made by all stakeholders during the consultation period and their written submissions, and based on latest available data, the Regulator has concluded that an appropriate increase in overall effective weighted average tariff for the financial year 2024/25 is determined at 0.00%. In particular:
o Marine services and related tariffs (Sections 1-8 of the Tariff Book, excluding Section 7 that deals with cargo dues) are to increase by 2.98%;
o All Container cargo dues are to decrease by 3.00%;
o Dry Bulk coal export cargo dues to increase by 3.00%;
o Dry Bulk magnetite export cargo dues are to increase by 3.00%;
o All other dry bulk cargo to are to increase by 2.70%;
o RoRo cargo dues are to decrease by 3.00%;
o Liquid Bulk cargo dues are to decrease by 3.00%; and
o All other tariffs are to decrease by 3.00%.
o All marine tariffs (Sections 1-8 of the Tariff Book, excluding Section 7 that deals with cargo dues) for all commercial vessels registered and flagged in South Africa from 2019/20, will receive a 30% discount applicable year on year until reviewed by the Regulator.
o The Authority’s request to introduce a motor vehicle permit fee in the tariff book has not been approved. The funds for road infrastructure in the ports have been recovered through required revenues and the Authority will be allowed to continue to recover investments made through the tariff determination process. As such the proposed changes to Section 5.2.3 ”Port Rule access permits for persons and vehicles” will, as part of all other tariffs, decrease by 3.00%.
o The Authority’s request for the introduction of a hull cleaning permit fee of R18 959 per annum under Section 5 of the Tariff Book is approved. The approval follows the completion of the pilot phase conducted by the Authority with port users of the hull cleaning service.
o All license fees for port activities as per section 5 of the Tariff Book will continue to be discounted by 30%, and all license fees (Tariff) applicable per port for the tariff year 2024/25, can continue to be paid in equal instalments on an annual basis over the period of the license.
o For the 2024/25 tariff year, as per section 4.1.1. of the Tariff Book a continued reduction of 35% in port dues applicable will be allowed in the following instances:
• Passenger vessels; and
• Small vessels classified under Section 4, Clause 2 when visiting a port other than their;
registered port; or
vessels in port for longer than 30 days not engaged in cargo working or undergoing repairs will be liable for a 20% surcharge on the incremental fee of port dues.”
o Further, a reduction of 60% will be allowed to vessels calling for the sole purpose of taking on bunkers and/or stores and/or water or a combination of all three, provided the vessel’s entire stay does not exceed 48 hours. This reduction will not be enjoyed in addition to the 35% reduction granted for vessels not engaged in cargo working for the first 30 days only, bona fide coasters, passenger vessels and small vessels classified under Section 4, Clause 2.
o The Regulator considers the long-term sustainability and affordability of the port sector. As a result, the Regulator will retain R983 million of the clawback arising from the 2022/23 tariff period, into the ETIMC to replenish the facility to mitigate volatilities and for the smoothening of tariffs in periods of large capital investments.
12. Tariff Assessment
12.1. As part of the tariff determination process, the Regulator takes into consideration volume imports and exports as well as a perspective on the country’s trading partners and various destinations of South African exported commodities and cargoes. These factors are in addition to analysis of the parameters and building blocks of the Tariff Methodology such as the cost of debt, operational expenditures, and cash flow requirements of the NPA.
12.2. Whilst the Regulator is cognisant of the ports and related supply chains severe constraints in the recent months, which contributes to the underperforming economy and pressure on port costs, this tariff determination is on a forward-looking basis for a slightly improved growth outlook and export volumes for the exporters.
12.3. The Regulator achieves its mandate when it ensures a balance between the sustainability of “an efficient operator as required by the Act”, the Authority in this instance, efficiency and affordability of the port services.
12.4. The Regulator has approved a revenue of R14 429 million as opposed to the R14 907 million applied for. This will be recovered from R 9 591 million in Marine Services and Cargo Dues; and R 4 838 million in Real Estate Revenue.
12.5. The Regulator is confident that the application of the Tariff Methodology and a deposit of R983 million into the ETIMC will ensure sustainability and provide the financial space for the Authority, to execute its projected CAPEX of R3 549 million in FY 2024/25 and possible R 5 747 million and R5 613 million in FY 2025/26 and FY 2026/27 respectively.
12.6. The Regulator is cognisant of the volatility and fluctuations on components of the Required Revenue driven by either economic factors and/or under-or-over recovery of revenue by the Authority. The ports sector which functions within the South African economy is exposed to volatilities. As a result, the Regulator has an objective to achieve stability in the longer term and these considerations have formed the basis of the FY 2024/25 tariff determination.
12.7. The Regulator will continue to monitor the execution of infrastructure investments and the Authority improvement plans, to ensure an efficient service is provided to port users in the form of projects that increase capacity, efficiency, and port safety.
13. Corporatisation of the National Ports Authority
13.1. The Regulator is awaiting confirmation of the status of the Authority as a corporatised entity.
13.2. In June 2021 the President announced the pending establishment of the Authority in terms of Section 3(2) of the Act. This was followed by the Minister of Public Enterprises’ gazetting of the intent to corporatise and call for nominations of members to serve on the Board of the Authority as per Section 14 of the Act. This was followed by the appointment of the Board of the NPA as a step towards corporatisation of the Authority.
13.3. Since its November 2018/19 RoD, The Ports Regulator, allowed the implementation of a varied and hybrid valuation of assets approach pending the implementation of Section 3(2) of the Act. These variations and conditions were thereafter incorporated into the Tariff Methodology applicable to this period.
13.4. The Tariff Methodology prescribes that in the instance of an announcement by the Minister of Public Enterprises on the corporatisation of the NPA in terms of Section 3(2), or alternatively Section 3(2) and Section 4(1) of the Act, some information which includes amongst others, the Memorandum of Incorporation, Proof of Registration, Debt Portfolio and the Allocation Policy, must be submitted to the Regulator within 30 days of the announcement.
13.5. In 2023/24 tariff determination, the Regulator continued with the conditions for the varied implementation of the Valuation of Assets Methodology (VoA) as set out in the 2018/19 RoD as the Authority remains a division of Transnet SOC Ltd.
13.6. Noting that the Authority in its Application for 2024/25 did not meet the requirements set out in the Methodology for 2024/25 – 2026/27 period, the Regulator is considering implementing the VOA for a non-corporatised Authority in the 2025/26 tariff period.
13.7. Furthermore, the Regulator is considering an evaluation and/or comparison of the Authority’s cost of debt to other similar entities of relatively lower risk functioning in regulated environments.
14. Other Measures in Support of The Economic Recovery Effort
14.1. The challenges in operational inefficiencies in the ports system cannot be ignored. The Regulator has again noted the continued deterioration of port performance caused by a myriad of factors including lack of adequate & fit for purpose marine craft, cargo handling equipment, exposing exporters and importers to loss of business.
14.2. The deteriorating port efficiency levels (across all ports) have resulted in an incentive loss of R226 million under the Weighted Efficiency Gains from Operations (WEGO).
14.3. The Regulator will continue to monitor port performance and efficiency levels through the stakeholder engagement process.
15.1. In conclusion, the Regulator in carrying out the tariff assessment continues to be guided by, amongst others, Directive 23(1) that sets out the requirements and/or principles which must reflect and balance amongst others, the following:
i. A systematic tariff methodology that is applicable on a consistent and comparable basis;
iii. The avoidance of discrimination, save where discrimination is in the public interest;
iv. Simplicity and Transparency;
v. Predictability and stability;
vi. Avoidance of cross-subsidisation save where cross subsidisation is in the public interest; and
vii. Promotion of access to ports and efficient and effective management and operations in ports.
15.2. The Regulator’s decision follows a prudent approach and takes cognisance of the economic environment within which port users, importers and exporters find themselves in. With the binding constraints evident in the ports sector, the Regulator is committed to incentivising the behaviour that will lead to efficient ports, through the implementation of WEGO on the Authority.
16. The official tariff Record of Decision for 2024/25 tariff year can be found on the Ports Regulator website, www.portsregulator.org