Cost of Transnet's pipeline rises by R2.75bn: report

JOHANNESBURG - The cost of Transnet's multiproduct petroleum pipeline has risen by R2.75 billion to R15.42 billion, Business Day reported on Wednesday.

"The R2.75 billion includes costs associated with construction, buying and expropriating land, steel and back-up power generation,"

the newspaper wrote.

It cited Neville Eve, Transnet GM for project development and execution, as saying that when the project started it was driven by demand for petroleum products in the inland market.

"It began before detailed engineering was completed."

The newspaper quoted Transnet acting CEO Chris Wells as saying

it was the government's decision to build following a fuel supply

crisis in 2005.

The Moerane commission, which investigated the crisis, concluded

that there was urgent need for an additional petroleum products

pipeline to supply the inland market, Business Day said.

It quoted Wells as saying that at the time, there was

uncertainty about the regulatory framework.

"There was no certainty of cash flow," he said.

While the pipeline would begin operation at the end of March

next year, it would be completed in December 2012, a year later

than initially thought.

Transnet Pipeline CEO Charl Moller was quoted as saying the

delay in the completion of the pipeline would not have an effect on

security of supply.

Until the completion of the new pipeline, Transnet would

continue to transport petrol and jet fuel using the existing

pipeline between Durban and Johannesburg, he said.

-Sapa