Gigaba confirms fresh delay to R23bn pipeline project
Public Enterprises Minister Malusi Gigaba has confirmed that the second phase of the Transnet New Multi-Product Pipeline (NMPP) would miss its December 2013 completion date, putting the R23.4-billion project further behind schedule.
Gigaba says that the project schedule is being revised, after experiencing delays in the construction of the coastal terminal, or Terminal 1, at Island View, in Durban, owing to “intense and prolonged rain and wind”, classified as a “once in 30 year weather event”.
The second phase, which also includes the inland terminal, or Terminal 2, at Jameson Park, near Heidelberg, will now only be completed in 2014, the Minister says, despite having given his assurance last year that the second phase would be commissioned on time and within budget.
The first phase of the NMPP was completed in January 2012 with the commissioning of the 555 km trunk line between Durban and Jameson Park, and three pumpstations, situated at Tweni, in Durban, Hilltop, near Pietermartizburg, and Mnambithi, near Ladysmith. Three inland pipelines were commissioned in May 2011.
The NMPP project cost to date is R19.3-billion, with another R4-billion still expected to be incurred. “These costs are still forecast not to exceed the project’s budget of R23.4-billion,” Gigaba stresses.
The new pipeline replaces the 45-year-old Durban–Johannesburg pipeline, which is nearing the end of its design life and capacity. It was initially forecast to cost R12.7-billion, but the budget later rose to R15.4-billion and eventually R23.4-billion, prompting the National Energy Regulator of South Africa (Nersa) to launch an investigation into the cost overruns.
According to financial daily Business Day, Nersa had assigned an independent expert, Cresco Project Finance, to conduct a “prudency review” of the project’s first phase, which could have implications for future petroleum pipeline tariff hike requests from Transnet.
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