DA welcomes Nersa probe into Transnet

2013-08-02 13:50

The DA welcomed an investigation into the rising cost of Transnet’s new multiproduct fuel pipeline.

“Transnet’s own admission (is that) costs of the construction of the pipeline have doubled due to their underestimation of the complexity of the project,” Democratic Alliance spokesperson Jacques Smalle said today.

“Costs have now escalated from R12.7 billion to R23.4 billion,” he said in a statement.

“The pipeline cannot become Medupi 2 – marred by continuous delays and increasing cost.”

The DA would submit parliamentary questions to Public Enterprises Minister Malusi Gigaba about the pipeline.

Earlier, Business Day reported that the National Energy Regulator of SA (Nersa) was investigating the near-doubling of the cost of the pipeline.

According to the newspaper, Nersa assigned an independent expert, Cresco Project Finance, to conduct a “prudency review” of the first phase of the project.

If the review found irregularities, Transnet could possibly face punitive tariff adjustments.

The pipeline had a 70-year design life and could transport 93-grade and 95-grade unleaded petrol, low-sulphur diesel, ultra-low-sulphur diesel and jet fuel.

According to the newspaper, analysts welcomed the investigation, calling it timely as it could introduce stricter accountability.

The public enterprises department also welcomed the probe, the newspaper reported.

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