Tariff Calculation and Regulatory Application for a petroleum product import terminal

Aug 30, 2014

Our client was in the process of constructing a petroleum products loading and storage facility for imports to the Western Cape and required an approved tariff as condition of their operating licence. The tariff needed to allow the facility to compete with product imported by road and thus had to be carefully crafted with appropriate starting level and escalation.

Project Description

After lengthy engagement with the regulator regarding methodology we calculated an appropriate tariff path that would meet both the client’s needs and the regulator’s requirements. This required the calculation of a levelised cost tariff that increases by inflation every year, and the calculation of a Rate-of-Return tariff for the same facility and the demonstration of parity between these two different tariff profiles. We also documented the financial calculations (model) and drafted the technical (and primary) sections of the tariff application document. Following the submission of the application, we remain active on the project to assist Sunrise with the finalisation of the NERSA tariff approval process.