South Africa Seeks Fuel Terminal Proposals for Import Rise

  • Request is for 25-year concession by 51% black-owned bidder
  • State-owned Transnet sees shortage of petroleum products

South Africa issued a request for proposals to design, finance, build and operate a liquid-bulk terminal to handle petroleum products at the country’s biggest port as a shortage of refining capacity is expected to spur growth in imports.

Bidders must be at least 51 percent owned by black citizens to qualify to participate in the 25-year concession at the Durban port, Transnet SOC Ltd., the state-owned rail and ports operator, said in a document posted on a National Treasury’s website. Bids need to be submitted by Jan. 27.

The continent’s most-industrialized economy plans to build fuel terminals as demand for storage in Africa grows. Chevron Corp., which is selling South African assets, had objected to plans for more storage facilities to hold fuel imports. The country is also working toward being able to handle cleaner fuels that have lower sulfur content.

Estimates on the cost of upgrading terminals to work with the new specifications range from $2.7 billion to $7 billion and it’s unclear how this will be paid.

Demand Rising

“Based on the current growing demand for liquid fuels and the lack of investment in refining or alternative liquid-fuel manufacturing capacity, South Africa and the region will remain short of products in the foreseeable future,” Transnet said in the document. “This will result in growing import volumes of final product and components.”

Transnet expects Durban’s fuel imports to grow to 34.5 billion liters in 2044 from 5.2 billion this year.

“In this case, imports are complimenting refinery production and therefore are not viewed as a threat,” Avhapfani Tshifularo, executive director at the South African Petroleum Industry Association, said by e-mail. The group, whose members include BP Plc, Total SA and Royal Dutch Shell Plc units, “acknowledges that imports may have an impact on the refinery viability if unabated.”

Puma Energy, whose largest shareholder is commodity trader Trafigura Group Pte, is planning a fuel depot in the port of Richards Bay as it expands its operations, it said in February. The fuel retail and storage company expects the 46 million-liter oil-products terminal on the nation’s east coast to be operational by the end of September.

Burgan Cape Terminals Ltd., 70 percent owned by a Vitol Group-led venture VTTI BV, is building a fuel-storage facility in Cape Town, a venture Chevron initially opposed and which is due to be completed in early 2017.

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