Invitation to comment on tariff applications the following petroleum storage facilities 5 June 2026

The National Energy Regulator of South Africa (NERSA) has issued an invitation for public comment on tariff applications for petroleum storage facilities, a critical regulatory step under its mandate. This process, governed by the National Energy Regulator Act, 2004, and the Petroleum Pipelines Act, 2003, allows stakeholders to influence the pricing structure of essential energy infrastructure. The invitation underscores NERSA's commitment to transparency and public participation, as enshrined in the Promotion of Administrative Justice Act, 2000. Legal professionals and affected parties must engage rigorously with the submitted tariff methodologies and underlying financial data to ensure fair, efficient, and cost-reflective outcomes that balance industry viability with consumer affordability.

The National Energy Regulator of South Africa (NERSA) recently announced an invitation for public comment on tariff applications submitted by various petroleum storage facilities. This development, issued on 5 June 2026, represents a crucial phase in the ongoing regulation of South Africa's energy sector, particularly the downstream petroleum industry. Such invitations are integral to NERSA's mandate to ensure fair and transparent pricing for critical energy infrastructure, directly impacting the operational costs for petroleum product suppliers and, ultimately, the prices paid by end-consumers.

NERSA is a statutory body established under the National Energy Regulator Act, 2004 (Act No. 40 of 2004), with a broad mandate to regulate the electricity, piped-gas, and petroleum pipelines industries. Its powers include setting and approving tariffs for petroleum pipeline operations and approving tariffs for petroleum storage and loading facilities. This regulatory oversight is primarily exercised in terms of the Petroleum Pipelines Act, 2003 (Act No. 60 of 2003), which empowers NERSA to issue licences for the construction and operation of such facilities and to approve the tariffs charged for their use. The broader framework for petroleum products, including aspects of pricing and licensing, is also influenced by the Petroleum Products Act, 1977 (Act No. 120 of 1977).

In fulfilling its tariff-setting function, NERSA relies on a structured methodology. On 31 March 2022, NERSA approved the "Tariff Methodology for Petroleum Storage and Loading Facilities – Version 5," which provides the framework for licensees to either use this methodology or submit their own for tariff applications. The objective of this methodology is to ensure that tariffs are fair, efficient, and reflective of competitive market conditions, while allowing licensees to recover investment, cover operational costs, and earn a profit commensurate with risk. Key components of the methodology include calculations based on Allowable Revenue (AR), which considers the Regulatory Asset Base (RAB), Weighted Average Cost of Capital (WACC), operating expenses, depreciation, clawback adjustments, and taxes.

The invitation to comment on tariff applications is a direct manifestation of NERSA's commitment to public participation, a fundamental principle of South African administrative law. This commitment is rooted in the Constitution of the Republic of South Africa, 1996, particularly Sections 33 (right to just administrative action) and 195 (principles of public administration), and is given effect by the Promotion of Administrative Justice Act, 2000 (PAJA) (Act No. 3 of 2000). Section 4 of PAJA specifically outlines procedures for administrative action affecting the public, including notice and comment procedures or public inquiries.

For legal practitioners, this invitation presents a critical opportunity to engage with the regulatory process on behalf of their clients. Submissions should meticulously scrutinise the applicants' adherence to NERSA's Tariff Methodology Version 5. This includes a detailed review of the proposed cost inputs, demand forecasts, capital expenditure plans, and the calculation of the Weighted Average Cost of Capital (WACC), which significantly influences the allowable revenue. Any deviations from the approved methodology or unsubstantiated assumptions should be highlighted. Furthermore, stakeholders should assess the potential impact of the proposed tariffs on competition, market access for third parties, and the ultimate affordability for consumers, aligning comments with NERSA's strategic objectives of promoting competition and accessible energy.

NERSA is legally bound to consider public input, and its final decisions must be in writing, consistent with the Constitution and applicable laws, in the public interest, and based on reasons, facts, and evidence. Should NERSA's final decision be perceived as procedurally unfair, unreasonable, or unlawful, it may be subject to judicial review in the High Court under PAJA. Recent jurisprudence, such as the High Court's findings regarding NERSA's approval of municipal electricity tariffs, underscores the importance of meaningful public participation and transparency, particularly concerning the disclosure of underlying cost studies. This precedent reinforces the need for comprehensive and well-reasoned submissions from all interested parties to ensure that NERSA's decisions are robust and legally defensible.

The invitation to comment on petroleum storage facility tariff applications is a vital mechanism for ensuring accountability and fairness in South Africa's energy sector. For legal practitioners, this is a prime opportunity to demonstrate value by guiding clients through the complexities of energy regulation, assisting in the preparation of detailed and impactful submissions. Failure to participate effectively can result in tariffs that may not adequately reflect market realities or public interest, potentially leading to increased operational costs for businesses and higher prices for consumers.

Practitioners should advise clients to meticulously analyse the tariff applications, focusing on the economic rationale, adherence to NERSA's approved methodologies, and the broader implications for the petroleum value chain. Monitoring NERSA's subsequent decisions and the reasons provided will be crucial, as these will set precedents for future tariff determinations and may inform potential avenues for judicial review. Active and informed engagement in this public participation process is not merely a procedural step but a strategic imperative for all stakeholders in the South African petroleum industry.