Transport pricing: private sector safe – for now

What does the Economic Regulation of Transport Bill 2018 mean to transport operators? MALCOLM HARTWELL explains.

The Portfolio Committee recently sat to consider the Economic Regulation of Transport Bill of 2018. The Committee has asked for a more detailed information on the financial, human-resources and legislative implications of the Bill and enquired about the incorporation of public submissions. They also discussed the interface of the Bill with information protection legislation, the Competition Commission and the funding of the Regulator before performing a clause-by-clause analysis of the Bill.

Road hauliers apparently ignored the government’s invitation to comment on the Economic Regulation of Transport Bill 2018, probably because it does not seem to affect them directly. That is correct in so far as it applies to all the state-owned entities involved in transport, but the Minister can apply the legislation to any transport company if satisfied certain circumstances exist; and in any event, the economic regulation of state-owned transport will indirectly affect road hauliers and logistics companies.

The Bill’s stated intention is to promote an effective, efficient and productive transport sector. In order to do so, it establishes two parallel and independent regulatory agencies. These bodies will determine price controls and service standards, collect regulatory and industry information, and resolve disputes affecting all the regulated entities.

The first body – to be known as the transport economic regulator – will be the primary technical administrative and enforcement regulator under the Act. It will be responsible for carrying out education, research, price control approval, the investigation of complaints and enforcement of the Act.

The transport economic council will monitor the conduct of the regulator, review the regulator’s decisions and review the decisions of the regulated entities.
The Bill provides broad powers to the regulator and council, and creates a host of offences with penalties of up to five years’ jail and/or an appropriate fine.
At this stage, the legislation only applies to the National Ports Authority, Transnet’s rail and port terminal operations, PRASA, SANRAL and the Air Traffic and Navigation Services Company. It does, however, also extend to any operations where SANRAL has granted a concession and, more importantly, to any other market, entity or service, whether state or privately owned, that has been declared by the Minister to be subject to the Act.

The Minister can only apply the Act to, for example, road hauliers, if the Minister has determined either that they are a monopoly operator or that they are not
functioning competitively, or is of the view that economic regulation can address the non-competitive nature of the market.

This is a very broad discretion which the Minister would have to exercise reasonably, but it is entirely possible that the Minister might decide that the Act should apply to, for example, all road hauliers operating on the Gauteng-KZN corridor, in which case it would directly affect the readers of this magazine.

Even if the Minister does not extend the Act to private companies, the economic regulator will, amongst other things, determine prices to be charged by Transnet rail or road hauliers, which in turn will have an effect on the prices that private operators can charge.

The period for commenting on the Bill has closed and it is not yet clear when this legislation will work its way through Parliament. Road hauliers and logistics companies do, however, need to be alive to the fact that state-owned entities should become much more price competitive and that there is a possibility the Minister will extend economic regulation into the private sector. This measure would obviously have far-reaching implications for road hauliers and logistics companies, who would be well advised to closely monitor the progress of this Bill.