Airports Company South Africa (Acsa) is expected to post a loss of up to R500 million in the year to March, its first loss since inception 17 years ago, due to delays in finalising new tariffs.
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is likely to affect its ability to borrow in future as its gearing ratio is already high at 65 percent, with a R16 billion debt following its infrastructure investment ahead of the World Cup. Acsa has to pre-fund its capex and it is only allowed to recover its investment from tariffs once the asset is operational.
Yesterday Acsa finance director Priscillah Mabelane said: “The delay in finalising an appropriate tariff structure has resulted in significant erosion of our financial earnings. Further, given the regulatory uncertainty, it is impossible to commit to future infrastructure investment.”
The company had requested a 133 percent hike, but its regulator only approved a 40.7 percent increase. Mabelane said the figure was off the mark.
Acsa did not accept this decision and approached the courts seeking a review of its regulatory regime. But the minister of transport intervened, halted the legal action and set up a task team.
The task team was appointed to assess whether the regulator had done its job in determining the 40.7 percent increase. A final report was submitted to the minister earlier this year with recommendations.
Although Acsa did not implement what the regulator had proposed, it did effect a 33 percent increase as per the current permission. A permission is approved for five years but is reviewed in the third year. Acsa said it would have been in a similar financial position even if it had implemented the 40.7 percent increase.
Mabelane said while encouraged that the task team had completed its review, there were concerns about the impact that the delay would have not only on Acsa, but on the passengers and airlines as the tariff would have to recovered over a short period of time.
Mohammed Sizwe, the chairman of the regulator, said yesterday that the task team had concluded that the regulator had done everything above board. He said the minister had asked it to consider the tariff application again.
“There are a number of issues like the treatment of the old Durban International Airport site. We had considered a figure from the sale of that site based on information from the department (from the previous minister and director-general) that the land would be sold, which would have been income to Acsa,” Sizwe said.
“But the land has not been sold and we have been told it is still going to take some time before it is sold. But that is simple, all we have to do is take that figure out. It was a total of R2bn,” he said.
Acsa is negotiating with Transnet, which wants to build a new dug-out port for R100bn at the site.
Also to be considered, was a figure of about R650m which Acsa received for selling a piece of land around the King Shaka International Airport. Sizwe said the money was taken into account, but Acsa argued that it should not be part of the regulated portion as the land was never used for aviation.
“We are still waiting for some documents from Acsa before deciding on that. We hope we will be done by the end of April because our term ends on April 30, so we are also under pressure,” Sizwe said.
While the regulator would not want to shock the industry with its tariff decision, it was also mindful of the time that had lapsed during which Acsa had relied on old tariff hikes.
Mabelane said financial results would be released sometime during the second quarter.
In the year to March 2010, Acsa posted a 6 percent rise in normalised earnings before tax, interest, depreciation and amortisation to R1.8bn. Its cash balance was R434m. - Business Report