Cape Town – Government is considering calling on its Brics partners to help fund a refinery in South Africa, Energy Minister David Mahlobo told Parliament on Tuesday.
Mahlobo was briefing the portfolio committee on energy about the country’s energy needs – from electricity generation to oil and gas security.
The country has been considering the establishment of a new oil refinery for some years now. In May this year, former energy minister Mmamoloko Kubayi said in her budget speech that South Africa is ready for a new refinery investment.
She said at the time she would approach Cabinet in the next months to get the final go-ahead for the project, which she said should ideally be a public-private partnership and majority South African-owned.
Kubayi said South Africa could consider West Africa and the Middle East, including Iran, for potential partners on a new refinery project.
The rationale behind a new oil refinery is to make South Africa less reliant on importing finished products, which Kubayi said was neither positive in respect of energy security nor for the advancement of industrialisation in the country.
Mahlobo on Tuesday said a new refinery which should be able to deliver 400 000 barrels per day, will be structured by senior debt and equity, Reuters reported.
He told members of the committee that the cost of a refinery was estimated at $10bn in 2010.
“Local production is very important for our economic growth, Mahlobo said,” adding that government would want local entrants to participate in the refinery space.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER