Transnet Limited, South Africa's ports and freight rail operator, said a decision that limited a pipeline tariff increase for its customers was drastically wrong.

Mr Chris Wells acting CEO of Transnet said that the National Energy Regulator of South Africa, which decides each year how much Transnet can raise pipeline tariffs, awarded the company less than it wanted for each of the last two years.

He added that "I'm not going to say who's right and wrong. What we will say is that where you have that degree of variance there's something drastically wrong."

NERSA, as the regulator is known, awarded Transnet an 11.9% tariff increase in March, less than the 51.3% the company applied for. A year earlier, Transnet got an award of 12.5%, well below the 63.4% it wanted to charge customers such as BP Plc and Royal Dutch Shell Plc.

NERSA said on March 26th 2010 that it's concerned about the unpredictable nature of Transnet tariffs as a result of delays in the commissioning of new pipelines and regular increases in the forecasted cost.

Mr Wells said that Transnet conducted a tight review process internally and its tariff requests were reasonable. He added that "The big increase came in the freight rail business, primarily in the growth of iron ore volumes."

Mr Wells said that group revenue advanced 6% to ZAR 35.6 billion, while capital investments fell 4.4% to ZAR 18.4 billion.

(Sourced from www.bloomberg.net)