BuaNews (Tshwane)
Sydney Masinga and Oupa Segalwe
12 April 2007
Nelspruit — Hopes are up that the building of a R4 billion pipeline to transport fuel directly from Maputo to South Africa may see a drop in the price of petrol in Mpumalanga and Gauteng, in the long term.
The National Energy Regulator of South Africa (Nersa) gave Petroline RSA a licence on 29 March to build a liquid petroleum pipeline from Mozambique to Kendal in Gauteng, via Nelspruit.
"We hope that fuel prices will drop in Mpumalanga and some parts of Gauteng, because we will be getting fuel directly from the coast of Mozambique, and we know that fuel prices are lower on the coast than in inland cities," said Petroline RSA director Pinky Moabi.
Nersa awarded the license to Petroline RSA, instead of the state-owned Petronet.
Nersa agreed with the option to build the pipeline from Mozambique, instead of a larger 24-inch line from Durban to Johannesburg, because it would be cheaper.
Nersa spokesperson Nhlanhla Cebekhulu said Petroline was also an empowerment company, which included empowering women.
"Their application included giving women a 50 percent shareholding in the project, and they are a private company that would contribute to the GDP (growth domestic product)," he said.
ABSA economist Chris Hart told BuaNews that the pipeline's effect on prices would be felt in the long, rather than short term, in all probability.
"The pipeline is unlikely to have an effect of the fuel prices in the shorter term as the consumers would have to pay for it."
However, he said, "it might cut costs to a certain extent in the main market in the long run."
"Currently, about two thirds of South Africa's fuel is imported. There is refinery capacity shortage in the country," said Mr Hart.
Petroline said in a statement that the pipeline would carry 3.5 billion litres of fuel a year and supply 25 percent of the fuel demand in Mpumalanga and Gauteng.
The project will be conducted jointly by Petroline RSA and its equal partner in the venture, Petroline SARL of Mozambique.
The pipeline will run from an existing coastal fuel storage depot at Matola Harbour in Mozambique, to Nelspruit.
In Nelspruit, an inland depot will be built, complete with rail and road loading infrastructure.
Ms Moabi said the project would start at the end of the year and was expected to be fully operational by the end of 2009.
Detailed design and environmental impact assessments for the project are already underway.
The agreement between Mozambique and South Africa to use Matola harbour would reduce South Africa's reliance on Durban Harbour for liquid fuel.
The Mozambican government has already approved the construction of the pipeline, said Ms Moabi.
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