ROMPCO 120 ( GTA1 ) 2013 (2013 Q2)

Transcription

1 Consultation Document regarding the change in the RSA Producer Price Index (PPI) base used in the calculation of ROMPCO s tariff for volumes not exceeding 120 million gigajoules per annum ( GTA1 tariff ) with effect from the second quarter of 2013 (2013 Q2) 1. INTRODUCTION 1.1 The Energy Regulator is mandated in terms of the National Energy Regulator Act, 2004 (Act No. 40 of 2004) ( NERSA Act ) to regulate the electricity, piped-gas and petroleum pipeline industries in terms of the Electricity Regulation Act, 2006, the Gas Act, 2001 and the Petroleum Pipelines Act, In terms of section 4 of the Gas Act, the Energy Regulator is required to monitor and approve, and if necessary regulate transmission and storage tariffs for piped gas and take appropriate action when necessary to ensure that tariffs are applied in a non-discriminatory manner. 1.3 In line with this requirement, the National Energy Regulator of South Africa ( NERSA ) has given a notice in the media that it has published a Consultation Document regarding the approach to be used to apply the new headline PPI index for Final Manufactured Goods in the calculation of ROMPCO s GTA1 tariff. 1

2 1.4 Interested parties are invited to provide written comments to the Energy Regulator, which will be considered before taking a final decision on this matter. The deadline for submitting comments is 20 August BACKGROUND 2.1 Prior to 01 November 2005, the piped-gas industry in South Africa was not subject to industry specific legislation. During the late 1990s, while legislation for the regulation of the piped gas industry was still under discussion, Sasol Limited (hereinafter referred to as Sasol ) entered into negotiations with the governments of Mozambique and South Africa to source natural gas from Mozambique for importation into South Africa. These negotiations culminated into a Regulatory Agreement entered into between Sasol and ROMPCO. 2.2 The negotiations were completed in August 2001 in time for the Agreement to be made binding on the Energy Regulator in the Gas Act. In terms of this Agreement, Sasol was given a Special Regulatory Dispensation up to a period of ten years (until 25 March 2014). 2.3 The Agreement has two parts, namely; the Agreement concerning the Mozambican Gas Pipeline between the Government of the Republic of South Africa and Sasol Limited ( the Pipeline Agreement ) and the Regulatory Agreement between the Minister of Minerals and Energy, the Minister of Trade and Industry and Sasol Limited, which is in the form of a Schedule to the Agreement ( Schedule One to the Agreement ). 2.4 The Pipeline Agreement sets out the rights and obligations of the parties in relation to the transmission pipelines which transport gas from Temane in Mozambique to Secunda in South Africa. This pipeline is known as the 2

3 Republic of Mozambique Pipeline Investments Company (Pty) Ltd ( ROMPCO ). 2.5 The pipeline is owned by Sasol Gas Limited, igas Pty (Ltd) and Companhia Mocambicana de Hidrocarbonateos S.A.R.L (a company nominated by the government of Mozambique as its participant in ROMPCO). 2.6 In summary, the Pipeline Agreement gives the South African Government and the Mozambican Government the option to each take up a 25% stake in the transmission pipeline from Temane in Mozambique to Secunda in South Africa subject to various conditions as set out in the Pipeline Agreement. 2.7 Two of the conditions in the Pipeline Agreement are that the Pipeline Company shall appoint Sasol as the operator of the transmission pipeline. Another condition sets the tariff for the ROMPCO pipeline. 2.8 The purpose of the Schedule One to Agreement is to set out the regulatory dispensation, which is binding the Energy Regulator. The Regulatory Dispensation is applicable to Sasol s current piped gas business, the supply of natural gas from Mozambique and the sale of that gas into markets within South Africa. 2.9 The Regulator is bound by the Agreement for ten years from First Gas (26 March 2004) in terms of section 36 of the Gas Act. The Provisions of the Schedule One to the Agreement constitute licence conditions. 3. DISCUSSION 3.1 The tariff for the ROMPCO pipeline is monitored in terms of clause (7) of the Pipeline Agreement. In terms of the Pipeline Agreement, the tariff for the ROMPCO pipeline for the transportation of 120 million Gigajoules of natural gas per annum from Mozambique to South Africa was set at R4.64 3

4 per Gigajoule as at January This tariff has to be adjusted quarterly using the RSA Producer Price Index (PPI), excluding any expansion related charges, based on a ship or pay for 80% of the 120 million Gigajoules per annum. 3.2 NERSA calculates the ROMPCO GTA1 tariff on a quarterly basis and publishes it on NERSA website to ensure price transparency and to enable consumers to make informed market decisions. ROMPCO GTA1 tariff was calculated from the year January 2000 (2000 Q1) to 31 March 2013 (2013 Q1) as shown in Annexure A (ROMPCO Gas Transmission Tariff 2000 Q1 to 2013 Q1). 3.3 In January 2013, Statistics South Africa introduced the new PPI based on the stages of production concept which separate economic activity into distinct sectors namely: Agriculture; Forestry & Fishing; Mining & Quarrying; Electricity & Water; Intermediate Manufactured Goods; and Final Manufactured Goods. The PPI for the Final Manufactured Goods (2012=100) is the new headline index and replaces the PPI for Domestic Output (2012=220.5). 3.4 The rebasing of the PPI means that the base tariff set at R4.64 per Gigajoule as at January 2000 has to be reset to R10.83/GJ, which is the last tariff calculated using the old Domestic Output PPI for the period January 2013 to March 2013 (2013 Q1). The new PPI index will then be applied to the R10.83/GJ base with effect from 01 April 2013 (2013 Q2) in line with the tariff formula as per article 3.2 of the Gas Transportation Agreement (GTA) between ROMPCO and Sasol Gas Limited. 4

5 3.5 The tariff formula will be applied as follows: Tn = T0(PPIn/PPI0) Where T 0 = the tariff as at January 2013 March 2013 and is equal to R10.83/GJ; T n = the tariff (expressed in R/GJ) applicable to the Quarter n; PPI 0 PPI n n = the South African PPI for Final Manufactured Goods for the period of October 2012 as reported by Statistics South Africa and is equal to 101.7; = the arithmetic average of the South African PPI for Final Manufactured Goods as published by Statistics South Africa using three months (August, September, October) for January tariff adjustment, (November, December, January) for April adjustment, (February, March, April) for July adjustment and (May, June, July) for October adjustment; and = the applicable Quarter. 4. CONCLUSION 4.1 Therefore, if the new headline PPI for Final Manufactured goods is applied, the tariff for 2013 Q2 (1 April- 30 June 2013) and 2013 Q3 (1 July- 30 September 2013) will be as follows: Table 1: ROMPCO Gas Transmission tariff 2013Q2 and Q3 Year Base PPI (PPI0) Average PPI (PPI n) Tariff R/GJ 2013 Q R Q R

6 Annexure A ROMPCO Gas Transmission Tariff 2000 Q1 to 2013 Q1 Year Tariff R/GJ % Change 2000 Q Q % 2000 Q % 2000 Q % 2001 Q % 2001 Q % 2001 Q % 2001 Q % 2002 Q % 2002 Q % 2002 Q % 2002 Q % 2003 Q % 2003 Q % 2003 Q % 2003 Q % 2004 Q % 2004 Q % 2004 Q % 2004 Q % 2005 Q % 2005 Q % 2005 Q % 2005 Q % 2006 Q % 2006 Q % 2006 Q % 2006 Q % 2007 Q % 2007 Q % 2007 Q % 2007 Q % 2008 Q % 2008 Q % 2008 Q % 2008 Q % 2009 Q % 6

7 Year Tariff R/GJ % Change 2009 Q % 2009 Q % 2009 Q % 2010 Q % 2010 Q % 2010 Q % 2010 Q % 2011 Q % 2011 Q % 2011 Q % 2011 Q % 2012 Q % 2012 Q % 2012 Q % 2012Q % 2013Q % 7