Transnet pipeline costs soar to R15bn

2010-03-10 09:45

THE cost of Transnet’s multiproduct petroleum pipeline has risen by R2.75 billion to R15.42 billion, Business Day reported today.

“The R2.75 billion includes costs associated with construction, buying and expropriating land, steel and back-up power generation,” the newspaper wrote.

It cited Neville Eve, Transnet GM for project development and execution, as saying that when the project started it was driven by demand for petroleum products in the inland market.

“It began before detailed engineering was completed.”

The newspaper quoted Transnet acting CEO Chris Wells as saying it was the government’s decision to build the pipeline following a fuel supply crisis in 2005.

The Moerane commission, which investigated the crisis, concluded that there was urgent need for an additional petroleum products pipeline to supply the inland market, Business Day said.

It quoted Wells as saying that at the time, there was uncertainty about the regulatory framework.

“There was no certainty of cash flow,” he said.

While the pipeline would begin operation at the end of March next year, it would be completed in December 2012, a year later than initially thought.

Transnet Pipeline CEO Charl Moller was quoted as saying the delay in the completion of the pipeline would not have an effect on security of supply.

Until the completion of the new pipeline, Transnet would continue to transport petrol and jet fuel using the existing pipeline between Durban and Johannesburg, he said.

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