Gigaba wants answers on R23bn pipeline

Pretoria - Public Enterprises Minister Malusi Gigaba wants answers from Transnet on why its new multi-product pipeline has gone so far over budget, his office said on Thursday.

"The costs have increased substantially from the estimate of R9.5bn in 2006, to the recently announced R23.4bn," a statement from his office said.

"Furthermore, the delayed delivery of the pipeline poses a risk to security of fuel supply to the inland, since the pipeline and all related infrastructure should have been completed by December 2011, as per the construction licence awarded by (the National Electricity Regulator of SA)."

Gigaba is commissioning a team of specialists to investigate and make recommendations on what course of action to take. He will meet the chairperson and acting CEO of the state-owned enterprise to make sure the company sticks to delivery and revised budget commitments.

"In future, the shareholder will not tolerate any inadequate planning on the part of state-owned enterprises which would impact negatively on their ability to deliver on their respective mandates, and thus impeding the achievement of the state's objectives."

Transnet said on Wednesday the additional costs were due to a number of factors, including changes to comply with environmental laws and redesigns. It said costs will be R23.4bn by the end of the project, but it did not know this sooner.

The new pipeline will replace the current ageing link between refineries in Durban and Gauteng, and will significantly increase the amount of fuel pumped up to Gauteng from the coast.