View Full Version : Durban to Gauteng Multi product pipeline
October 8th, 2010, 10:50 AM
'New petrol line will reduce traffic'
Oct 8, 2010 7:01 AM | By Sapa
The petroleum pipeline under construction between Durban and Johannesburg will bring a marked reduction in tanker road traffic, says Transnet.
It said the portion of tankers carrying petroleum products to the inland market would go down by at least 60 percent.
Once completed, the Multi-Product Pipeline (NMPP) would ensure the security of petroleum products to the inland market, including Gauteng, South Africa's economic heartland, Transnet spokesman Mboniso Sigonyela said in a statement.
"It will reduce deterioration of the road network, road maintenance costs and congestion on the roads."
When fully operational, it would improve Transnet's and South Africa's carbon footprint by reducing carbon emissions from the road transportation of petroleum products.
"It is the safest, most cost effective and very efficient mode of moving petroleum products," said Sigonyela.
The remaining activities, inclusive of the accumulator tanks, were scheduled to be completed and ready for operation by December 31, 2013.
The National Energy Regulator of SA awarded Transnet the licence to build the 24 inch trunk-line pipeline including the 16 inch inland network and two terminals in December 2007.
The NMPP is to replace the existing and ageing Durban to Johannesburg pipeline which is operated by Transnet Pipelines – a division of Transnet.
It is the single biggest project in Transnet's R93.4 billion five-year capital investment portfolio.
Initially, Transnet intended to build a 16 inch trunk line from Durban to Gauteng. Following consultation with government as part of the energy security master plan for liquid fuels, the department of energy required that the company build a 24 inch pipeline.
The NMPP was the largest multi-product pipeline in the world and would have a lifespan of over 70 years.
October 8th, 2010, 12:19 PM
The building of this is quite visible along the entire N3 to Durban
October 8th, 2010, 12:24 PM
And will be a proper pain as its supposed to go alongside the M13 through Hillcrest !
October 8th, 2010, 01:59 PM
Cant wait till this is in operation, SAPREF & Engen tankers are on the N3 almost 24/7 so it will be a remarkable reduction in tankers.
October 14th, 2010, 04:37 PM
Construction ahead of schedule on Durban – Gauteng Pipeline
Wed, 13 October 2010
Construction on the 544 km Durban – Gauteng multi-product pipeline in South Africa is ahead of schedule and is now due to be completed in September 2011, more than a year earlier than previous estimates.
Transnet had previously indicated that December 2012 was its earliest completion date while August 2013 was the late completion date for all construction activities.
In 2007, Transnet (formerly Petronet) received a construction licence from the National Energy Regulator of South Africa (NERSA) to construct and operate the 544 km, 24 inch diameter Durban – Gauteng Pipeline and an associated 160 km, 16 inch diameter inland pipeline network.
The project involves the replacement and expansion of the Durban – Johannesburg Pipeline, which transports refined petroleum products from two refineries in Durban, as well as imported refined petroleum products from storage facilities located in the Port of Durban.
The new pipeline will include three pump stations and the construction of storage terminals in Durban and Johannesburg.
A joint venture between Arup and WorleyParsons was awarded the engineering, procurement and construction management contract for the project, and the coated line pipe has been supplied by South Africa’s Impumeleo Pipeline.
A joint venture between France’s Spiecapag and South Africa’s Group Five was awarded the construction contract in May 2008, with Spiecapag acting as operational leader for the project.
October 14th, 2010, 11:08 PM
^^ I think this pipeline has a pumping station or something on a farm my family owns (but since its a timber farm I have never been there) I just remember my dad metioning the fact that a section of the farm was needed for a pipeline about 2 years ago.
October 15th, 2010, 12:44 PM
14 October 2010 21:29
New pipeline will cost motorists, taxpayers
JOHANNESBURG - Transnet's new multi-product petroleum pipeline is going to cost you either as a taxpayer, a motorist, or even a general consumer.
Transnet wants a fair return on the R15.5bn it is investing. It says that is permitted under the Petroleum Pipelines Act. The final cost of the project will determine that charge.
So Gauteng motorists can expect to pay a good deal more than the present 15c/litre, which is only 2% of the pump cost of fuel.
Neville Eves, Transnet Pipeline's chief engineer on the project, told Moneyweb that the capital cost will be amortised over the expected life of the pipeline (75 years) and the National Energy Regulator will have the last say.
"The last time we went to the regulator for an increase he cut the tariff by 10%."
Nersa has been tough with a number of state-owned enterprises including Eskom and Sanral. If it refuses to fully compensate Transnet, you, the taxpayer, will pick up quite a big part of the total bill.
Because government insisted on a 24-inch pipe instead of the 16-inch pipe that Transnet thought would be adequate, the capital cost rose by R4bn. That amount will be repaid to Transnet by government over several years.
Government will also pay to fill the pipeline, which at any given moment will contain some 170m litres of fuel worth R609m, based on the point that only 49% of the Gauteng pump price of R7.96/l is the basic fuel price.
There is also not much hope that increased competition from the coastal oil companies will help to reduce fuel prices in the long run.
The big hope was that the increased availability of fuel might induce competition between Sasol (JSE:SOL), the major inland supplier, and the coastal refineries.
SA Petroleum Industry Association executive director Fani Tshifularo said even now the coastal marketers were not compelled to uplift Sasol product but each of them has a commercial contract ensuring that Sasol's entire synfuel production is taken up. Simultaneously, Sasol has a contract to buy fuel from the coastal refineries for its service stations.
He said crude imports remain restricted. The balance of payments prevents wholesale importation.
Muzi Mkhize of the Department of Energy doubted the new pipeline would change the competitive position. He said Sasol had a number of advantages - its location, its up and downstream products and that its plants were fully paid for. Sasol has hesitated about going ahead with its Mafuta (Sasol 4) project partly because of water shortages but mainly because present economics remain doubtful.
Sasol Oil general manager, supply chain and marketing Pieter Basson said only after 2013, when accumulator tanks were built in Durban, would the inland fuel supply shortage be alleviated. He said there was no extra refining capacity at the coast to really increase inland product supplies. The 200 000 cubic metre tank farms in Durban and at Heidelberg are part of the Transnet project and are part of the R15.5bn total investment.
The non-Sasol fuel marketers can decide whether to continue buying from Sasol - or increasing their investments in infrastructure.
The Department of Energy says deregulation of the industry is not on the cards, though some liberalisation might occur. Already diesel is not controlled and various service stations have broken away from the stipulated prices.
The deparment's major concern is the 45 000-50 000 jobs of the petrol attendants. Already regulations ban self service. The unanswered question is whether further liberalisation is possible while this clause remains in place.
Sasol remains comfortable against competition from the crude refiners because its cash cost of production of synfuel is equivalent to $40/bbl.
October 15th, 2010, 01:47 PM
This is not the first one......there is already one going via Vryheid (Scheepersnek).
Very interesting to watch when they change product....
December 9th, 2010, 03:48 PM
Cost estimate ‘optimistic’, says Transnet
The bill for the pipeline from Durban to Gauteng more than doubles to R23,4bn
Published: 2010/12/09 06:32:42 AM
TRANSNET said yesterday that the cost of its multiproduct pipeline from Durban to Gauteng had more than doubled, from the initial R11,1bn to R23,4bn.
That increase is likely to be reflected when Transnet applies for what are expected to be hefty tariff increases in its application next year to the National Energy Regulator of SA (Nersa) for the 2012-13 financial year.
Transnet has had difficulty sticking to the original cost and time line schedules of the project. It was initially scheduled for completion by the third quarter of this year. Transnet said yesterday that the initial timelines were "aggressive" and "optimistic".
Charl Möller, CE of Transnet Pipelines, a subsidiary of Transnet, said yesterday that the company would not change its application to Nersa because of the revised costs of the project, and Transnet had submitted its tariff application for the 2011-12 financial year in October.
The company has applied for a R2bn total allowable revenue, which represents a 69% increase on the 2010-11 financial year’s allowable revenue of more than R1,2bn. Mr Möller said the higher costs could be considered in the company’s application for the next financial year. "Any changes as a result of the increases can be handled through Nersa’s clawback mechanism."
According to Transnet, the project will ensure security of petroleum products for SA’s inland market.
The existing pipeline from Durban to Johannesburg is old and does not have the capacity to meet future demands.
The project consists of three inland 16-inch pipelines, a 24-inch trunk line from Island View in the Port of Durban to Jameson Park in Gauteng, and accumulation facilities in Durban and Gauteng. Transnet said yesterday that the entire system would be completed and commissioned by the end of 2013.
Transnet acting CE Chris Wells said the company had submitted an application to Nersa to amend the construction schedule for the pipeline. Mr Wells said the R23,4bn cost estimate was the outcome of an "extensive" review of all aspects of the project. The review was meant to determine "the final changes to cost and schedule. We do not expect to go beyond R23,4bn."
He said the project, which was part of Transnet’s five-year capital investment plan, would be financed from the company’s balance sheet. According to Transnet, the pipeline is the single biggest project in the company’s R93,4bn five-year capital investment portfolio.
Transnet capital projects director Neville Eve yesterday attributed the increase in the project’s costs to, among others, higher steel prices and environmental impact assessment delays.
Mr Wells said the latest cost estimates were a fair reflection of the total costs "of an asset of this nature, complexity and magnitude". But Frost & Sullivan energy programme manager Cornelis van der Waal yesterday said the discrepancies between the original and the final costs were a clear reflection of poor planning.
December 9th, 2010, 04:02 PM
well then by logic petrol prices in Joburg should be higher than durban?
December 9th, 2010, 04:42 PM
December 10th, 2010, 10:08 AM
^^ hardly, about 10-15c more. They should in reality be 40-60c more
December 10th, 2010, 02:49 PM
December 12th, 2010, 11:46 PM
Apparently they are going to hike the petrol price up by 30c or more next year to cover the cost of the pipeline next year.. saw it on news24 today
December 13th, 2010, 09:47 AM
Yup its true, bit insane if you ask me. They should just add it to the guys up there. We Durban folk did nothing wrong.
February 8th, 2012, 11:07 PM
Has anyone bought propoerty - apartment at Sternon Magic kingdom??
Please share your views..we would like some views or expereince with them.. thank u
Really great piece of property - the large multi product pipeline through the kitchen saves a lot of trips to the grocery store
February 9th, 2012, 08:04 AM
Really great piece of property - the large multi product pipeline through the kitchen saves a lot of trips to the grocery store
December 1st, 2012, 04:01 PM
And now we must pick up the costs in the form of higher fuel costs...
Transnet pipeline review shows 'systemic failings'
30 Nov 2012 15:16
- Lynley Donnelly
A review of Transnet’s new multi-product pipeline from Durban to Johannesburg, found that “systemic failings” by all key role players contributed to cost overruns of R14-billion and a delay of three years on the project.
This is according to a statement released on Thursday on behalf of Public Enterprises Minister Malusi Gigaba, who announced an investigation into the new multi-product pipeline (NMPP) in December 2010.
The review was completed late last year, but until now no information on its outcome has been made available. But the cost overruns and delays have hurt ordinary South Africans, who faced rising fuel levy’s to pay for the pipeline.
The review found that the “systemic failings” occurred within Transnet, at the level of the main contractor, as well as at shareholder level, namely the department.
“The project management setup within Transnet Capital Projects lacked sufficient capacity and depth of experience for the client overview of a megaproject of this complexity,” the minister said.
“There was an inadequate analysis of risks and an over-reliance on the engineering, procurement and construction management (EPCM) contractor.”
The overall management of the project was also flawed, the review found. Transnet’s obligations on the project including securing authorisations, such as environmental impact assessments, land acquisition for right of way, as well as water and wetland permits, were not pursued “with sufficient foresight and vigour” and “outcomes were not adequately integrated into the forward planning of the project”, according to the statement.
Governance structures and “systems of control” failed, and the timing of the appointment of the main contractors was far too early in the life cycle of the project the review found.
Further problems included a decision to change to a new EPCM contractor 18 months into one of the earlier phases of the project - the front end engineering design (FEED) phase. This introduced unquantified risks into the project and “were detrimental to fast-tracking the completion schedule” the statement said.
The review also found that the “initial response” of the second appointed EPCM contractor was inadequate.
“Key roles should have been filled rapidly in line with proposal commitments,” it said.
“Furthermore tried and tested cost and project management systems expected of an experienced EPCM contractor were not implemented promptly or rigorously.
"Transnet should have imposed a design freeze at the earliest possible stages to limit the costs escalations associated with major design changes.”
It is not clear who the main contractors involved were.
Work on the NMPP began in 2008 and was initially budgeted at R9.5-billion.
It was meant to be complete by 2010, but has been delayed until 2013, while costs have risen to R23.4-billion.
The cost escalations and delays have cost ordinary South Africans an additional 7,5c/l, which was added to the fuel levy in 2010 to help pay for the ballooning costs of the pipeline. Transnet was also granted additional revenue allowances through its pipeline tarrifs, by the national energy regulator, in order for it to retain its investment grade credit rating. The tariff increases however have contributed to rising fuel costs for consumers.
The department had taken corrective steps to address the failings on the project it said.
A project management office was being established within the DPE to “exercise a more ‘hands on’ oversight function over major projects”.
Greater inter-departmental coordination, was taking place through oversight of major capital projects by the presidential infrastructure coordinating committee. The PICC would allow the state to improve its control and mitigate against any potential cost overruns according to the statement.
Internal measures were also being taken by Transent including the established of an NMPP governance steering committee - a subcommittee of Transnet's executive committee, chaired by the group’s chief executive, Brian Molefe.
It had also commissioned a “prudency review”, undertaken by an auditing firm to identify possible areas of improvement.
Molefe had also appointed a new executive in charge of Transnet Capital Projects, Charl Moller, with a mandate to deliver the project within board approved timelines and budget.
December 2nd, 2012, 08:59 AM
The best part is how we just have to sit back and take it. This kinda stuff has been happening for years and years