Business

Eastern Cape worried about losing R80bn oil project to KZN

2019-02-27 11:18

The Eastern Cape is anxious about possibly losing its R80 billion oil refinery project to Richards Bay in KwaZulu-Natal.

For more than a decade, the initiative, known as Project Mthombo, was planned for location at Port Elizabeth’s Coega special economic zone. But this, as well as a possible investment by Saudi Arabia in the project, could soon be lost because of the Durban/Gauteng oil pipeline that is already in existence.

Oscar Mabuyane, the Eastern Cape MEC for finance, economic development, environmental affairs and tourism, said there was uncertainty about the project because a decision had yet to be made.

“It is clear that there are two sites being explored: the Coega site that government has worked on for some time now, as well as the Richards Bay site, which has been added to the equation,” he said. “Our argument is that government has already incurred costs in developing the Coega site, so this could result in fruitless expenditure.”

Mabuyane believes that, more than an economic project, the initiative also carries political clout in that it will take bold political decision making to keep Project Mthombo in the Eastern Cape. And, he believes, doing so will also address a potential fuel security risk.

Project Mthombo was mooted by PetroSA as its answer to South Africa’s persistent fuel supply problems, given the refinery’s projected output of 300 000 barrels a day of crude oil. As things stand, South Africa’s fuel demands make the country vulnerable to imports, and it is hoped that this project goes some way towards mitigating that.

“People use the argument of Richards Bay’s connection to Durban and Johannesburg via an already existing Transnet pipe that pumps oil from that side,” said Mabuyane. “But from a security point of view, it is a risky situation. If something happens there, what then? How do you connect to Johannesburg? We have an opportunity as government to look at the situation broadly and open our minds.”

He said the private sector could easily fund a pipe connection between Port Elizabeth and Johannesburg.

Mabuyane said the project, as currently mooted, was solid and was the result of a 15-year investment by government.

“Project Mthombo is massive. It is unprecedented.

It is one project that connects about five regions in the province, including municipalities such as Sarah Baartman, Buffalo City, Amathole, Chris Hani and Nelson Mandela Bay.

“When you talk about the project you also talk of the biofuel project in Cradock, and the opportunity from that.

“We believe that it is a project that will be really catalytic, in the literal sense of the word. Driving it from here means that its impact and expansion – and how it connects with almost every participating region in the province – will be felt by many, and its potential of attracting more than 27 000 jobs cannot be ignored.”

Mabuyane expressed the view that government should work with the province and stop sending mixed signals about the project as it was “high time” that there was this kind of investment in the Eastern Cape.

Mabuyane said that, for too long, the province had been isolated, and government needed to change this.

“We believe that a lot needs to be done to lift our province to the level of other provinces, so that it can also participate in the country’s GDP.


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August 18 2019