Burgan Cape Terminals (Pty) Ltd. multi-year tariff application for its pipeline, loading and storage facilities

Background and context

Burgan Cape Terminals (BCT) is a multi-purpose fuel storage and distribution facility located in the Port of Cape Town. The terminal supports the receipt, storage, and dispatch of both locally produced and imported refined petroleum products. BCT’s storage, loading, and pipeline infrastructure is regulated by the National Energy Regulator of South Africa (NERSA).

Purpose of the engagement

BCT appointed Nova Economics to prepare its fourth multi-year tariff application for the period from 1 January 2026 to 31 December 2028. The application was required to align with the latest approved tariff methodologies and reflect anticipated capital and operational expenditure as well as prevailing economic conditions, covering BCT’s pipeline, loading and storage operations.

Our approach:

The engagement commenced with a review of the most recent NERSA tariff methodologies and the identification of changes relevant to the application. These included:

• Tariff Methodology for the Approval of Tariffs for Petroleum Storage and Loading Facilities (Version 5, March 2022)
• Tariff Methodology for the Setting of Pipeline Tariffs in the Petroleum Pipelines Industry (Version 8, May 2023)

BCT’s tariff models were then updated to align with the applicable methodologies, incorporating the latest audited financial statements as well as updated capital and operational expenditure forecasts.

In line with NERSA’s methodologies, the team:

• Recalculated the regulatory asset base (RAB) and weighted average cost of capital (WACC)
• Determined the clawback/payback related to the third tariff period
• Estimated tax liabilities
• Calculated allowable revenue
• Calculated the final tariff by dividing allowable revenue by expected volumes

Engagements were also held with NERSA to test preliminary calculations and confirm the appropriateness of key assumptions and tariff outcomes.

Key findings

The updated tariff application was approved internally by BCT after incorporating feedback from NERSA. At the time of writing, the application has been submitted to NERSA for formal consideration and public comment.