South Africa: R650m fuel storage injection for Cape economy

*Burgan Cape Terminals.

*Burgan Cape Terminals.

21 November 2015, Cape Town – Burgan Cape Terminals commenced construction of the first independently-owned fuel storage facility in the Western Cape with a ground-breaking ceremony this week.

The terminal – designated as a strategic project – is the first to be implemented under the government’s Operation Phakisa and is expected to give the local economy a R650m boost.

Burgan Cape Terminals is a black-empowered South African oil storage company. It is a joint venture between Thebe Investment Corporation, broad-based black economic empowerment company Jicaro and Rotterdam-based international terminal operator VTTI.

Burgan was awarded a 20-year lease by Transnet for the development of the fuel storage facility, which is scheduled for completion in 18 months.

Speaking at the ground-breaking ceremony on Wednesday where a plaque was also unveiled, Netherlands State Secretary for Economic Affairs and Minister for Agriculture Martijn van Dam said the terminal would change the future of Cape Town’s oil and gas industry.

“It will address the shortage of fuel storage facilities at the port and improve security of supply. It should inject no less than R650m into the local economy, but it will also offer high-quality employment opportunities, both during and after construction,” said Van Dam.

Lionel October, director general for the Department of Trade and Industry, said the project has been long in the making and comes at an opportune time. “This investment is big for us, because we want to diversify the South African economy.”

The project is the culmination of seven years of hard work, according to Cape Town Port Manager for Transnet National Port Authority Sipho Nzuza. He added that the facility is in line with the National Development Plan.

VTTI’s Rubel Yilmaz said the ready uptake of the facility by customers shows a growing local demand for refined petroleum products in the region.

Diesel storage war with rival Chevron

Burgan’s rival Chevron, which has a major refinery which includes vast storage facilities at Milnerton in Cape Town, vehemently opposed the project. It said the importation of clean fuels “must be limited if South Africa is interested in maintaining its local manufacturing capacity”.

Chevron cited international experiences of “excessive imports” having decimated local refinery production and jobs, citing the example of the closing of 13 refineries in Europe which had affected 2 500 jobs.

At a hearing of energy regulator Nersa in late 2014, Chevron argued that if Burgan’s storage facility would be used for imported fuels, this would render Chevron’s Cape Town plant uncompetitive.

It argued that it would put 500 direct jobs and 13 000 indirect jobs in severe danger and could even cause the closure of the refinery plant altogether.

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