Total then went to the High Court to seek a court order that made the amending agreement binding and ordered transnet to implement its conditions by ensuring that the percentage increase in crude oil duty did not exceed the weighted average percentage of gasoline, diesel and Avtur tariffs. However, when the delivery regime for petroleum products changed in 2005, Transnet refused to recognize the variation agreement that embodies the principle of neutrality. This amendment was introduced when the National Energy Regulator Act, 2004 and the Petroleum Pipelines Act , in 2003 («AAE») came into force in September and November 2005, respectively. The AAE has given the regulator of Petroleum Pipelines (the Authority) the authority to issue licenses for the construction and processing of pipelines, loading and storage terminals, as well as for the operation of these pipelines. It is important that it also gave the Authority the power to set or approve tariffs and taxes in the manner prescribed by law. The National Energy Regulator Act has created a regulator, the National Energy Regulator of South Africa (NERSA), which serves the Authority.  Nothing could be clearer. Transnet receives a discount and the neutrality principle enshrined in the variation agreement requires it to allow a discount for the transport of crude oil to the Natref refinery. The evidence of Transnet presented by Mr. L Moodley was that coastal customers are currently treated as the Natref refinery. It is unfair discrimination that penalizes Natref`s shareholder.
This is clearly the objective of the NERSA decision, which must be avoided, and why it allows a maximum tariff and a discount rate of these tariffs.  In these circumstances, it is clear that Transnet is bound by the 1991 Variation Agreement. This is consistent with the general principle that new legislation does not infringe on the rights to the free movement of persons: see Fedlife Assurance Ltd/Wolfaardt  ZASCA 91; 2002 (2) All SA 295 (SCA) point 16. Transnet`s defence against the plea must fail, as the Supreme Court found.  Following SATS, Transnet initially refused to recognize the principle of neutrality. However, in 1991, a variation agreement was reached between the parties following meetings between Total, Sasol and Transnet. Transnet has committed not to exceed the percentage increase in the crude oil tax imposed by sasol and Total (Natref shareholders) that would not exceed the weighted average percentage of potential price adjustments for gasoline, diesel and Avtur (so-called white fuels). The variation agreement, which also embodied the principle of neutrality, was widely respected until March 2005.
Neutral Line: Transnet v Total (728/2015)  ZASCA 116 (September 14, 2016) This article was first published by ENSafrica on October 25, 2016. As a licensee, Transnet not only had the right to neglect the cost of transporting crude oil to domestic refineries, but it was also required to do so within the meaning of the principle of neutrality. The variation agreement was therefore consistent with the general principle that new legislation should not infringe on rights rights, and Transnet`s appeal was dismissed.  The first rate fixing by NERSA, which is at issue, was carried out for 2010/2011 effective April 1, 2010. Transnet argues that the principle of neutrality did not prevail over this decision and that the variation agreement was effectively denounced by the regulatory system put in place by the NERSA Act and the AAEs. As a result, Total filed a lawsuit for a post-suspension declaration of the amending agreement and ordered Transnet to implement its terms and conditions by ensuring that the percentage increase in crude oil tariffs did not exceed the weighted average percentage of gasoline, diesel and Avtur tariffs. It also sought payment for the default it would have suffered because Transnet was not applying the principle of neutrality.