Transnet: Commisions new pipeline

[Steve Appleton]

From Business Day, 12 January 2012. http://www.businessday.co.za/articles/C ... ?id=162389

Transnet commissions new pipeline
Pipeline will ensure security of liquid fuels supply for the inland market and reduce the use of tankers for transporting fuel from Durban to Gauteng

SISEKO NJOBENI
Published: 2012/01/12 07:03:36 AM

TRANSNET yesterday commissioned its new multiproduct pipeline in a move that will ensure security of liquid fuels supply for the inland market and reduce the use of tankers for transporting fuel from Durban to Gauteng. Speaking at the commissioning of the pipeline in Jameson Park, Heidelberg, yesterday, Transnet CE Brian Molefe said all construction on the 712 km pipeline was now complete.

The 24-inch (60cm) pipeline was partly commissioned last year, with the 16-inch network of the project between Kendal in Mpumalanga and Waltloo in Gauteng operational since May.

Two terminals, one in Durban and the other in Jameson Park, will be completed next year. The Heidelberg terminal is under construction. Because the terminal in Heidelberg was still under construction, the pipeline would operate at half of its capacity, which is 500 000 l/h, and only with diesel, Transnet Pipelines CE Charl Möller said yesterday.

Mr Molefe said: "We have completed one of the most cutting-edge and innovative infrastructure investments in the world. In delivering the [pipeline], Transnet is fulfilling two commitments. First, ensuring that the inland market demand is met. Second, it will ease road congestion by reducing the number of tankers on our roads."

Transnet has previously come under fire for delays in the implementation of the project and its rising costs. The project’s costs have risen from an initial R 9.5bn in 2006 to R 23,4bn. The completion and commissioning of the pipeline will result in Transnet asking for higher petroleum pipelines tariffs from the National Energy Regulator of SA (Nersa). Transnet has already said the cost of the pipeline project would have to be included in Nersa’s pipeline tariff-setting calculation to recover the capital costs over the pipeline’s life span, estimated at 75-80 years.

Transnet last year submitted an application to Nersa requesting a tariff increase of 83% for the 2012-13 financial year, which, if granted, would add 16.1 cents to the price of fuel in Gauteng. A large portion of the requested increase in allowable revenue — from R 2bn to R 3.5bn — is due to a special revenue allowance to ensure Transnet maintains its investment rating. If the allowance portion is excluded, Transnet has asked for a 26.7% increase in allowable revenue.

The pipeline was built to prevent fuel shortages, especially inland. The Moerane commission, which looked into the 2005 fuel shortages, said additional pipeline capacity was "urgently required to supply the inland markets" and that Petronet (now Transnet Pipelines) should expedite the development of a new pipeline from Durban to Gauteng.