IF government does not move quickly to give the go-ahead on Project Mthombo, the mooted oil refinery, South Africa could soon be sitting with a fuel shortage similar to that of Eskom's energy crisis, PetroSA's group chief executive, Nosizwe Nokwe-Macamo, has warned.
She said the country's national oil company was still waiting for the mega-project to receive the green light from government.
Nokwe-Macamo said if a decision was not taken soon, the country could find itself sitting with a fuel shortage, similar to the energy crisis experienced during Eskom's load-shedding period in 2008.
"As PetroSA, we believe firmly that South Africa cannot afford to postpone a firm positive decision on when the construction will begin on Project Mthombo," she said.
Nokwe-Macamo was addressing a business breakfast in Nelson Mandela Bay where Eastern Cape business people and government leaders discussed opportunities presented by the proposed oil refinery at the Coega industrial development zone (IDZ).
On completion, Mthombo, the $10-billion (R82-billion), 360000 barrel-a-day oil refinery, would be the biggest crude oil refinery in Africa and could secure the country's future fuel requirements.
Nokwe-Macamo said the country was already importing vast amounts of liquid fuel annually to meet demand and she warned that this figure was set to increase exponentially as the country's current refineries would need to be upgraded to produce cleaner fuels as required by government.
She said government had proposed implementing cleaner fuel standards by 2017 and said refineries would need to spend billions to modify processes and would therefore not make this deadline.
"All the refineries in the country will have to do one or other modification which will enable them to produce petrol or diesel that is specified according to the Euro 5 specs, which means more environmentally friendly products. This means there will have to be a lot of capital expenditure on all these refineries," she said.
Nokwe-Macamo said there was massive interest from neighbouring countries as the project would have the capacity to alleviate fuel demands for the entire sub-Saharan Africa.
The refinery would be strategically located in the IDZ, at the heart of global trade flows, enabling it to market liquid fuel to countries around the world.
The refinery would be the first one on the continent to become operational already producing cleaner Euro 5 specification liquid fuel products that met the necessary requirements allowing it to contribute to the security of liquid fuel supply to the Southern African Development Community region.
"Even if Project Mthombo becomes operational by 2020, there will be a transition phase from 2017 to 2020 where the new product will have to be imported into the country. Therefore a lot of work will need to be done on the pipelines in preparation of this," she said.
Jörn Falbe, PetroSA's vice-president of new ventures – midstream, said the impact Project Mthombo would have on the province's economy should not be underestimated.
"This is described as a mega-project because it has the ability to change the industry's landscape. It will also change the landscape of the IDZ. Globally, mega projects such as these sometimes fail because they are so big and complex, so they need to be managed and planned accordingly," Falbe said.
He said the project would be similar to the combined construction of 100 stadiums and would also have the capacity to be expanded to meet the needs of the petro- chemical sector, including looking at opportunities presented by shale gas in the future.