No oil plant for Richards Bay on cards

2012-09-26 00:00

PETROSA has denied reports that a proposed multi-billion rand oil refinery project for Coega industrial development zone (IDZ) in Port Elizabeth will be moved to Richards Bay due to political infighting in the Eastern Cape.

PetroSA communications officer Thabo Mabaso denied the reports, but would not comment on the political situation in the province or whether it had any bearing on planning where the plant should be built.

“Last week, the CEO, Nosizwe Nokwe-Macamo, told the Nelson Mandela Bay Business Chamber that Project Mthombo would be going ahead,” said Mabaso.

Sister paper City Press reported that Project Mthombo, the tag name attached to the proposed project, could be moved to Richards Bay because of political infighting within the ANC in the Eastern Cape.

Nokwe-Macamo told the chamber: “Project Mthombo is an important project not only to us at PetroSA, but also to the Nelson Mandela Bay Municipality.”

She said the refinery could drive ­intra-regional crude and product trade and was an enabler for distributing clean fuels to sub-Sahara Africa.

PetroSA said the refinery, which is to be built for an estimated R110 billion, would be the biggest crude refinery in Africa and would produce 360 000 barrels per day.

South Africa’s fuel needs are expected to grow at 4,5% per year for diesel and one percent per year for petrol between 2012 and 2020.

Without the added capacity envisioned, South Africa was expected to be importing 180 000 barrels per day.

Ike Nxedlana, the CEO of Richards Bay IDZ, where the refinery would most likely move to if it became a reality, said he was not aware of any such move, but that it would be welcomed if it came to fruition.

uMhlathuze Municipality’s infrastructure and development department said it had not been contacted by any authority about the possibility of the oil refinery relocating.

City Press quoted economist Dr Neal Bruton, a former economic analyst with the Nelson Mandela Bay Business Chamber, as saying that no investors would put their money where they were not sure of getting returns. He said political infighting was having negative impact on the region.

The region has been experiencing ugly power battles between the ANC’s regional leadership, led by Nceba Faku, and its deployees in the Nelson Mandela Bay Municipality, headed by Mayor Zanoxolo Wayile.

Although the political infighting has received extensive coverage in the media, the regional ANC denied there were problems.

Regional secretary Zandisile Qupe said the political infighting was the creation of the media.

The departments of Energy and Trade and Industry referred The Witness to PetroSA.

This is not the first time there has been talk of an oil refinery close to Richards Bay. Between 2005 and 2007, a company called Drako Oil and Energy planned to build a $4 billion (R32,6 billion) refinery pumping out 360 000 barrels a day, piping its product to Gauteng and shipping it out from the port of Richards Bay.

The company had also earmarked Coega for a refinery. The location of a third proposed site was not disclosed. The deal fell through when Drako failed to come up with the necessary capital.

In 2007 a consortium only known as “African investors” attempted to buy 2000 ha of farmland in Mtunzini, about 50 km south of Richards Bay at nearly R56 000 per hectare, far above the real market value of between R18 000-R25 000.

It was believed the land would be used for an oil refinery, but the sale fell through when farmers didn’t receive their first payment in December that year.

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