Transnet justifies rising costs of Jo’burg-Durban pipeline

Despite heavy criticism over rising costs, Transnet says its state-of-the-art pipeline between Johannesburg and Durban will contribute to security of supply of petroleum products to the inland market for the next 70 years – safely, cost-effectively and in an environmentally friendly manner. Transnet was reacting to criticism by politicians who claimed in parliament recently that the utility had failed to explain the increased costs in building the 550km pipeline from Durban to Johannesburg, which stood at R11bn in 2007 before going up to R23.4bn last year. Transnet’s Mboniso Sigonyela said in a statement that the company had shared reasons for increased costs following a review led by the then-acting group chief executive, Chris Wells, under the direction of the board of directors. The construction of the NMPP, which consists of three inland 16-inch pipelines, a 24-inch NMPP trunk line from Island view in the Port of Durban to Jameson Park in Gauteng, and accumulation facilities in Durban and Gauteng, is licensed by the National Energy Regulator of South Africa (Nersa) in terms of the Petroleum Pipelines Act. “This is a complex project extending over long distances, going through different terrains and subject to a number of legislative and regulatory requirements. These have had a significant impact on our schedule and delivery,” Wells said at a briefing in December. Some of the reasons for the variation include: substantial delays in the acquisition of land and in obtaining the required statutory approvals such as environmental impact assessments; change of location for the coastal terminal and pump stations due to conditions imposed by environmental authorisations; complex and protracted coastal terminal land lease negotiations and the National Key Points Act and security of supply requirements. In addition to the schedule changes, Transnet revised the cost estimates for the pipeline to R23.4 billion. Through its pipelines and rail freight divisions, Transnet is at an advanced stage of developing a bridging plan that will enable it to move up to 10 million litres of fuel per week between Durban and Johannesburg. This gives the company a further opportunity to move more volumes from road.