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5.5 Tariff
As mentioned at Section 5.2 above, the facility owner will charge the gas producer a
tariff in relation to the tariff services. The tariff is normally expressed as a formula
assessed on the volume of gas processed at the facility. In charging the tariff, the
facility owner is looking to recover both infrastructure and operating costs whilst
receiving a return on the business of processing the gas.
There may be regulatory issues to consider in charging a tariff to the gas producer
especially in relation to the Gas Act 1995 and third-party access to the facility (see
Section 3.1). In summary, the tariff must be fair and reasonable.
The agreement should also stipulate the currency under which the tariff is
payable and deal with indexing the tariff to take into account general inflation.
Mention should be made as to whether any form of tax is included in the tariff,
such as VAT or environmental taxes. The facility owner will normally request
reimbursement of any tax incurred via its processing of the gas on behalf of the gas
producer.
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