Construction of a new pipeline linking Durban and Johannesburg is already late. And further delays are likely.
Last week, the National Energy Regulator of SA finally awarded the licence for the new pipeline to Transnet Pipelines, formerly Petronet.
Deyar Natha, CE of the losing iPayipi Consortium, says the company was disappointed with the decision. It had spent about R25m on the bid.
"We complied with all the requirements and thought we had a competitive bid," says Natha. The consortium includes heavyweight shareholders like James Motlatsi, deputy chairman of AngloGold Ashanti, and Clifford Elphick, former head of E Oppenheimer & Sons.
iPayipi, says Natha, is writing to Nersa "as a matter of urgency", requesting the regulator to furnish its reasons for awarding the licence to the incumbent.
Once iPayipi has the reasons from Nersa, it says, it will evaluate its options - one of those could be an appeal to challenge the decision, which will cause further delays. Construction on the pipeline should have begun three months ago to avert serious fuel supply problems to Gauteng.
According to the announcement by Nersa, the R11bn, 61 cm diameter pipeline is due to begin moving fuel in the third quarter of 2010, "by which time the existing pipeline is forecast to be short of capacity and will need to be supplemented by rail and road transport. This pipeline is expected to have sufficient capacity to last until 2030."
But according to government's liquid fuels master plan, the pipeline needs to be up and running in the second quarter of 2010, otherwise the country could be in "very serious trouble".
Transnet CE Maria Ramos said in a statement that the group's track record as an operator was clear evidence that it was "a good option and we are heartened by the faith bestowed on us to deliver this ".
Already behind schedule and with the slow-moving environmental impact assessment process still ahead, even the third-quarter target is ambitious.
But department of public enterprises DG Portia Molefe says there is a plan to use the Natref crude pipeline to move fuel to the inland region. She says the pipeline is operating at only 60% of its capacity and that, with a few modifications, it will be able to alleviate some of the pressure caused by the lack of capacity in the Durban- Johannesburg pipeline.
Inland demand is outstripping capacity by about 2bn litres a year.
This is the second pipeline licence to be issued. Recently Petroline Holdings was granted a provisional licence to build a fuel products pipeline from the Matola harbour in Mozambique to Kendal, near Nelspruit in Mpumalanga. Petroline is backed by a consortium of Mozambican and SA investors.
Petroline plans to have the pipeline operational before the end of 2009. It will have an initial capacity of 1,5bn litres a year but this will rise to 3,5bn litres a year. However, demand will have significantly outstripped that by then.
