Transnet’s new 550km-long pipeline to move fuel from refineries in Durban to Gauteng is expected to cost R23,4-billion, more than double the original estimate of R11,1-billion, the project’s director said in Sandton, Johannesburg on Wednesday.
“This pipeline would have cost R23,4 billion [anyway],” said Neville Eve, explaining the factors that contributed to the increase.
These included a change of the Durban site, environmental requirements, changes to engineering and hydraulics and security features.
The additional funds for the New Multi-Product Pipeline (NMPP) would be raised from the parastatal’s own balance sheet, and by issuing bonds on the international market.
The impact on the consumer is estimated to be less than an additional five cents a litre in terms of the fuel tariff. The pipeline has been designed to last 70 years.
Transnet considers the project, which will replace the 45-year-old current 12-inch pipeline, which is reaching the end of its lifespan, “fair value”.
It will cross 49 rivers, 481 wetlands and require the acquisition of 1148 properties.
“The NMPP is a very important first for South Africa’s economic future,” said Transnet’s acting general chief executive Chris Wells.
It will reduce the need to truck petrol and diesel from refineries and imported, up to Gauteng, and drastically increase the amount of fuel piped up to Heidelberg in Gauteng, where it joins a pipeline ring to serve parts of the province.
About R80-million will be spent on security for the pipeline, which is a National Key Point, to prevent sabotage or terrorism.
The project includes building a 200-million litre storage capacity in Island View for fuel received from refineries in Durban. This site was changed from the old international airport, which involved design changes.
In case of damage to the pumps, R147-million will be spent on standby pumps, and R180-million on generators to cover for power failures. It has also been designed to withstand the “once-in-50-years” serious storm.
It is expected to be completed by December 2013. — Sapa