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Gigaba orders pipeline costs probe

Jan 31 2011 18:01 Sapa

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Johannesburg - The Minister of Public Enterprises Malusi Gigaba has appointed a panel of experts to investigate why Transnet has gone over budget on its new multi-product pipeline.

It will probe "the cost overruns and time delays associated with Transnet's new multi-product pipeline (NMPP)", Gigaba's ministry said on Monday.

The costs had increased substantially from an estimated R9.5bn in 2006, to R23.4bn by the end of 2010.

"The minister has previously raised his concern at the rise in the costs of the project, which will have implications for its expected date of completion, and consequently for security of fuel supply," the ministry said.

Gigaba expects construction of the pipeline to be completed by December 2011, as per the construction licence awarded by the National Energy Regulator of SA.

The panel of experts comprises a pipeline specialist, Ian Thompson; a project management and construction specialist, Raymond Nkado; senior advocate Kevin Trisk; regulatory and compliance specialist Inba Thumbiran; and department of public enterprises project manager Adam Seedat, a financial analyst.

"The project deliverables are three independent reports on the governance, engineering and project management aspects, as well as independent legal opinion," the ministry said.

"These should recommend the appropriate course of action to be taken by the shareholder."

The panel is to provide a complete report by the end of April.

Transnet said in December the additional costs were due to a number of factors, including changes to comply with environmental laws, and redesigns.

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.

transnet  |  malusi gigaba  |  nersa
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