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 South Africa’s (Nersa) pipeline tariff increase of 59.9%.
BP says it is “strongly opposing the increase”, saying it will result in SA’s tariffs being among the highest in the world. Sipho Maseko, BPSA CEO says: “Our analysis shows that these tariffs exceed the global average by over 400%. At these high input cost levels, business viability is at stake and will inevitably lead to major job losses in Gauteng.
“Nersa argues that the increase in the petrol price arising from higher tariffs is only a small fraction of the GDP of the inland provinces, which 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.”
Maseko further points out that the decision favours inland refiners, as the pipeline tariff increase will raise the cost of doing business in the inland market relative to the coastal markets. This poses major challenges for Gauteng as the main business hub, he said.
In addition to the R1-billion per annum cost to the economy of the increase, by-products other than petrol such as gas, bitumen and the like will also incur the higher tariff when transported to the inland market. Nersa itself has estimated the cost of the proposed increase at around R500-million per annum.
BP has again urged 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.