Response to NERSA tariff methodology for petroleum loading and pipelines
Following on changes to the Petroleum Pipeline Regulations, NERSA proposed substantial changes to the tariff methodology to be used for loading and storage tariff approvals. The regulator called for public comments. The tariff methodology is a critical factor in the business case for new investors in infrastructure, such as Burgan Cape Terminals.
Meridian was requested to conduct a comprehensive analysis of the implications of the new methodology, and to prepare a submission to NERSA on behalf of the client. We developed a financial model to compare the impact of the three possible tariff methodologies being considered and evaluated each from the perspective of the client’s commercial and financing strategy. It became clear that the new proposals exposed investors to significant new risks, which, if not adequately addressed by the regulatory regime, could scupper new investment. We are also assisting the client with ongoing engagements with the Regulator regarding their concerns about the new methodology.
Expertise: Analysis of Legal regulatory Frameworks, Client Representation at Public Hearings, Cost of Capital Assessment, Expert Reports, Infrastructure Economics, Regulatory Economics, Regulatory Engagement, Scenario Assessments, Tariff Application Strategy, Tariff Design