Fin24

Questions over ECape oil refinery site

2012-10-17 15:47

Cape Town - MPs on Wednesday expressed concern about the proposed new Mthombo oil refinery to be built in the Eastern Cape.

"My reservations are partly where they want to site it..." Lance Greyling of the Independent Democrats said after a presentation by PetroSA to Parliament's energy portfolio committee.

The proposed site - the Coega Industrial Development Zone near Port Elizabeth - had no infrastructure in terms of pipelines to the inland part of the country.

This would probably add an extra R40bn to R50bn to the investment.

Greyling questioned where the money and energy requirements would be sourced from.

"In PetroSA's mind it might be a foregone conclusion, but it really needs to make sense from a financial point of view, because the money is going to have to be raised somewhere; Treasury is going to have to be involved, we going to have to take loans.

"We are going to have to make sure we don't overspend and aren't able to repay that, and in the end it pushes up prices for consumers in a way that they can't afford."

Greyling said serious debate was needed in the country before a firm decision was made to go ahead with the project.

PetroSA's plans also clashed with the National Development Plan, he said.

The NDP stated no firm decision needed to be made immediately.

It would be less risky and more cost-effective to continue importing a share of the refined product until the country reached a stage where it could absorb the costs associated with building a new refinery, Greyling said.

PetroSA CEO Nosizwe Nokwe-Macamo said the refinery's location was unlikely to change from the planned site at the Coega IDZ.

However, she was unclear about how the refined product would get from Coega to where it was needed inland.

The pipeline from Durban could be used to get fuel to Gauteng, where demand was highest.

"The pipeline is there, it exists, we sweat (derive value from) an asset and you are going to have to find ways of shuttling the product."

Nokwe-Macamo would not say whether the end product would be shipped from Port Elizabeth to Durban, insisting they would only be able to answer that question after she received the results of a feasibility study to be completed by year-end.

"We don't know yet, let's wait to December because we don't want to say vessels will be running all over the show, then you've got the environmentalists saying where are your EIAs?" she said.

The study, which was being done in collaboration with Chinese state-owned company Sinopec, would give PetroSA an indication of the market size they were dealing with, what size plant was needed, and other issues on configuration.

The results would also include a proposal on what equity stake Sinopec would get in the refinery, she said.

Experts have warned the costs of building a refinery at Coega, along with building other related infrastructure, such as a power station and a pipeline, could be excessive and could see costs passed on to South African fuel users.
 

Comments
  • trevor.myburgh.12 - 2012-10-17 15:54

    Is the (infrastructure) ANC pockets?

  • Alan - 2012-10-17 15:56

    Many backhanders have to be negotiated before this project gets underway.

  • trevor.bush.9655 - 2012-10-17 16:11

    Yep, one can read the writing on the wall for Port Elizabeth, I see it here in China, PE will be in the next few years, just like Hong Kong, utter mess,polluted,dirty and smog covered. We have Carbon Black Plant, Catalytic Convertor plant, Iron Ore Refinery and now an Oil refinery, NOWHERE in the world bar China do they combine such heavy industry in one area due to the pollution levels they bring, imagine ALL combine in Coega...PE and surrounding areas like Uitenhage will be perminantly covered in Smog...just like here in China...ANC rapists

      omtimka - 2012-10-17 17:04

      Coega is one of few areas in the world that have over 100+ studies done in a single area

  • xozamandi - 2012-10-17 16:17

    what is R50b in a project that will help masses who are jobless to R250million to build just a house for Zuma, come on you greedy, selfish politicians...

      sedick.gydien - 2012-10-17 16:39

      Surely spending the R50b where it would be most effective would be the optimum. It is pointless spending R50b, but only getting R10b worth. As an example, we had a perfectly good airport in Durban, spending untold millions of rands in upgrades since 1997, and then we waste R7b+ on Shaka airport to appease the Zulu faction. Now ACSA has gone from one of the most profitable companies to being forced to increase their fees way above the norm - now it is one of the most expensive in the world.....

  • msturmair - 2012-10-17 19:10

    bugger them, time eastern cape gets a boost, there are means and ways to make it happen.....

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