Transnet Pipelines (TPL) has welcomed the National Energy Regulator of South Africa’s (Nersa) approval of a 7.83% tariff increase for the financial years 2025/26 and 2026/27. The decision reflects Nersa’s recognition of TPL’s efforts to combat pipeline tampering and fuel theft, while also addressing the rising costs of securing the nation’s critical energy infrastructure.
Tariff Increase to Combat Fuel Theft
The approved tariff adjustment allows for a R5.23-per-litre increase in fuel prices, with a 5.23c/ℓ hike in 2025/26 and a 3.80c/ℓ increase in 2026/27. This decision comes as Nersa expressed deep concern over the rising incidents of pipeline tampering and fuel theft, which have posed significant challenges to South Africa’s energy sector.
“The pipeline system is generally the most cost-effective mode of transportation for petroleum products from the coast to inland areas,” Nersa stated. “This is of special importance for alleviating pressure on rail and road infrastructure, especially given recent road accidents involving tankers.”
Enhanced Security Measures
TPL has intensified its efforts to protect its pipelines, implementing enhanced security measures to reduce product theft. The tariff increase will support these initiatives, ensuring the continued delivery of cost-effective and secure energy supplies to the inland market.
“TPL is committed to delivering cost-effective services and ensuring the security of supply to the inland market,” the company said. “We will continue collaborating with the Energy Regulator to support efforts to lower the cost of doing business in South Africa.”
Financial Impact of the Tariff Adjustment
The tariff decision allows TPL to realize an 8.73% increase in allowable revenue for the 2025/26 financial year, rising from R7.21 billion in 2024/25 to R7.84 billion. For 2026/27, allowable revenue will increase by 5.71%, reaching R8.29 billion.
While TPL had initially applied for a higher allowable revenue of R8.71 billion for 2025/26, Nersa’s decision reflects a balanced approach, considering both public interest and regulatory certainty.
Legal Disputes and Asset Valuation
TPL is currently embroiled in legal disputes with two customers over short payments for crude oil transportation. As of March 2024, the total amount short-paid by customers stood at R1.31 billion, up from R1.23 billion in the previous year.
In addition, TPL’s pipeline networks were revalued in March 2024, with the total asset value declining slightly from R39.3 billion in 2023 to R37.4 billion. The discounted cash flow method resulted in a fair value of R40.9 billion, down from R42.7 billion in 2023.
Nersa’s approval of the tariff increase marks a significant step in addressing the challenges posed by fuel theft and pipeline tampering. By supporting TPL’s security efforts, the decision aims to ensure the reliable and cost-effective transportation of petroleum products across South Africa.
As TPL continues to strengthen its infrastructure and combat theft, the tariff adjustment will play a crucial role in safeguarding the nation’s energy supply and supporting economic growth.
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