SOUTH Africa would build a state-owned petroleum refinery in the Eastern Cape port of Coega, PetroSA CEO Nosizwe Nokwe said on Wednesday.
While there has been widespread agreement within the government about the need for a refinery to reduce dependence on imported petroleum products, a decision had not yet been made by the government to proceed with construction.
Plans for building a refinery in the Eastern Cape were first announced in 2007 by then PetroSA CEO Sipho Mkhize, who said at the time that the cost would be about R39bn to build a refinery that could produce about 200,000 barrels of crude oil per day.
During the parliamentary energy committee questions session on Wednesday, Democratic Alliance energy spokesman Lance Greyling said he had reservations about the location as it had no infrastructure, and this could add up to R50bn to the overall costs. "In PetroSA’s mind it might be a foregone conclusion, but it really needs to make sense from a financial point of view because the money is going to have to be raised somewhere; Treasury is going to have to be involved, we going to have to take loans," he said.
Speaking on the sidelines after yesterday’s presentation to Parliament, Ms Nokwe said while it was the state’s prerogative to decide the go ahead and the location, it was PetroSA’s responsibility to decide on the size and production of the refinery.
She refused to give any comment on cost estimates, saying a feasibility study, which would have details, would be completed by December. Ms Nokwe said China’s state-owned oil company Unipec was still involved in the feasibility study.
She refused to say if any plans had been made on how to get the refined products from Coega to the major inland markets such as Gauteng, and she would not commit herself to how the products would travel between Coega and Durban.
Ms Nokwe said PetroSA was working with Eskom to find a way to power the refinery, but that there was a possibility that shale gas from the Karoo may be used.
Mr Greyling also questioned PetroSA’s business plans, saying most parastatals were loss-making. "Clearly (we) need to question PetroSA’s investment decisions — whether they are in PetroSA’s interests or in the interests of South Africa. "
For the year ended March, PetroSA posted a R1.4bn rise in net profit — a 54% increase on the 2010-11 year. PetroSA chief financial officer Nkosemntu Nika said that over time the expansion programmes would improve the firm’s balance sheet.