Gigaba: Pipeline a disaster

2012-11-30 00:00

THE project to build a new pipeline between Durban and Johannesburg designed to pump fuel and other products was a ghastly failure that virtually tripled in cost.

At nearly every level, the project was a mess, said Public Enterprises Minister Malusi Gigaba at a function in Durban yesterday.

Miraculously, the pipeline is now operating, albeit at a cost of R24 billion, way beyond the R9 billion budgeted four years ago.

Gigaba said a review team, which consisted of experts in the fields of pipelines, project management, construction, economics, regulation, compliance, finance and law, found there were “systemic failings” that compromised the intended outcomes of the project.

“These failings occurred within all levels of key role players including failings within Transnet as client and failings at Engineering, Procurement and Construction Management [EPCM], main contractor levels and at the shareholder level.”

In addition, the project management setup within Transnet Capital Projects “lacked sufficient capacity and was found to be out of its depth and lacked experience to execute a project of this magnitude”.

“There was an inadequate analysis of risks and an over-reliance on the EPCM contractor,” he explained.

Gigaba said that the government and the state-owned enterprise learned some valuable lessons from the project, as it was also the first of its magnitude to be tackled by both parties.

The new pipeline has replaced a 45-year-old version, which was deemed defective. It is 555 km long and 61 cm wide.

Yesterday’s function marked the completion of the first phase. The pipeline has been transporting up to one million litres every hour.

The 24-inch trunk line between Durban and Gauteng has been operational since January and construction of the three pump stations at Tweni in Durban, Hilltop near Pietermaritzburg and Mnambithi Pump Station near Ladysmith have been completed. In total, 712 km of the pipeline network is complete and commissioned.

Charl Moller, chief executive of capital projects at Transnet, said the expected lifespan of the pipeline is about 75 years.

“At present, the project is phase one of five which enables a capacity of up to one million litres an hour.”

The pipeline will transport fuels such as unleaded petrol, 93 and 95, low sulphur diesel and ultra-low sulphur diesel and jet fuel.

Gigaba said the pipeline would ease congestion on the roads and reduce carbon emissions.

“We will see efficiencies in fuel movement. It is convenient, cheap and time efficient,” he said.

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