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Cape Town - PetroSA's envisaged 400 000 barrels per day giant refinery makes sense, because existing domestic fuel production is inadequate for South Africa's current needs.
A large part of the fuel required to meet South Africa's needs has to be imported.
PetroSA's project therefore entails macroeconomic advantages because it brings the value-add to South Africa, instead of overseas refineries deriving the benefit.
This is a the view of Econometrix economist Tony Twine, following the warning by BP's local head, Sipho Maseko, that government should carefully reconsider PetroSA's plan because the world currently has an oversupply of fuel products and refinery capacity.
One point of criticism of PetroSA's project is Coega's distance from its natural market. Someone else will have to invest in the necessary pipeline.
A fuel pipeline to the interior can be built only a couple of decades after the refinery is in operation.
On the other hand, Twine warns that one cannot assume that Gauteng and its environs will still be the economic heartland of South Africa in 30 years' time.
By that time there won't be enough water, and mineral resources will be further depleted.
A shift in the manufacturing and mining complex to other economic sectors will be accompanied by a transfer of economic activity to the coast.
Twine says the refinery complex in Durban (where BP and Shell together own the Sapref refinery and Engen operates the Enref refinery) would of course not welcome a competitor which either has its own pipeline (from Coega) to the interior, or which transports its product through Durban's pipelines - which they want to use for their locally produced and imported fuel.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.
