Motorists across the country, but particularly those still smarting from Gauteng’s latest fuel shortage, breathed a collective sigh of relief last Friday when Cabinet approved a new Energy Security Master Plan for liquid fuels. Since it’s not always possible to know whether your next litre of petrol will actually be available at the local service station, it is comforting to know that government Is Working On It. Don’t panic, they said. We have a Solution, detailed in excruciating paragraph upon paragraph, for 56 pages.
And what a solution it is. Take the small matter of the much-needed Multi-Product Pipeline, which would carry petrol, diesel and jet fuel from Durban to Johannesburg. The inland fuel market consumes 12-billion litres a year, says the document, but the present pipeline carries only 3,5-billion litres. The master plan is adamant that TransÂnet Pipelines, formerly Petronet, be allowed to build this pipeline, and that this approval should be given immediately.
Problem is, energy regulator Nersa is in charge of approving fuel pipelines, and private sector consortium iPayipi is also keen to win the construction licence. Cabinet approved the master plan, and, specifically, Transnet Pipelines’s construction plans.
Director General Sandile Nogxina is adamant that the plan, and Cabinet’s approval, does not preclude Âprivate investment in the strategically important sector. A department of minerals and energy statement released this week said Transnet Pipelines would still follow the normal licensing process. But it seems someone neglected to inform Nogxina’s deputy, Nhlanhla Gumede. He had already been quoted by Business Report as saying that government had no intention to allow private sector players to operate in the petroleum pipelines sector.
The plan also favours a rail upgrade, as road transport is dangerous and rail improvements would alleviate road congestion. Presently only a quarter of petroleum products are moved by rail. The plan’s authors want to see “block trains” each consisting of 32 rail cars, in order for Transnet Rail, previously Spoornet, to improve turnaround times to four days from the present 14 days. Industry should hold 28 days’ worth of commercial stock (at present between 16 and 20 days’ stock is held) which would be funded by petrol consumers at a cost of 4c/litre.
At present about 30% of South Africa’s fuel is sourced from our own coal and gas reserves, and the plan recommends that this level be maintained. It also promotes local refining and sees a greater role for PetroSA, which should get its own crude vessel. It recommends that a policy of limited imports be re-endorsed, and that an independent energy planning coordinator — who would coordinate infrastructure investments — be considered.
The energy security master plan appears to be at odds with the windfall tax task team’s recommendations, which suggest possible tension between national treasury, which appointed the team, and the department of minerals and energy. While the task team’s report discusses competition in the fuel market and renewable energy sources in detail, the master plan largely ignores these. Energy efficiency should be strongly promoted, the report acknowledges, and calls for a review of present programmes later this year or early next year.
Although the plan pays lip service to climate change, there is no mention of renewables and only three references to biofuels, although government has previously been enthusiastic about the concept. The possibility of carbon taxes, which are already beginning to be introduced, is not discussed. “In the short term, South Africa cannot sacrifice its development at the altar of the environment,” it says, but adds that mitigating climate change is important in the long term. Data collection and climate change modelling is required, it says.