OREANDA-NEWS. March 9, 2011. Energy group BP would invest USD 200-million in infrastructure development in South Africa over the next two years, CEO Sipho Maseko said at the opening ceremony of the company’s rail gantry expansion in Pretoria.“We will be spending this money on things that the country really needs such as its gantry’s, railways and pipelines.”

Maseko said that the investment in infrastructure was inline with the South African government’s New Growth Path, which aims to tackle the high unemployment rate through different strategies such as providing appropriate infrastructure. He stated that BP was in active conversation around possibilities in Durban, where the Sapref refinery is located.

BP and Shell, which coown what is currently South Africa’s largest refinery, reportedly approached the Department of Energy last year to take up a position in the refinery in Durban, rather than proceeding with a proposed investment into a greenfields refinery at Coega in the Eastern Cape.

Maseko commented that higher growth could only occur on the back of the “correct infrastructural development, like we are seeing here today”. The R140-million investment by BP in the expansion of its railway gantry in Pretoria was put in place to assist the company in easing the fuel supply challenges.

Currently, South Africa’s demand outstrips its supply, creating serious challenges in supplying the country’s busy inland area, especially owing to logistical constraints. BP project manager Ahe Molefi said that the expansion would enable the fuel company to decant 36 tankers at a time, instead of 20, which would increase offloading capacity by 80%.

The gantry is able to offload four block trains a day, which meant that it would now be able to decant 4,6-million litres of petroleum and diesel, instead of the previous 720 000 l. The facility would also play a major role in addressing the capacity deficit cased by pipeline constraints, as it provided the company with an alternative option to move its products from ports to inland areas.

It is estimated that South Africa’s pipelines would have a deficit of ten-million litres a week in 2011. “If our railway is correctly leveraged, it will be able to meet up to 60% of this shortfall,” said Molefi. The railway gantry expansion formed part of a bigger R232-million capital investment at the Pretoria-based fuel facility, of which the last R63-million would be spent in 2012.

Maseko said that the secure and consistent supply of energy was crucial for South Africa’s future, but added that a secure regulatory environment was needed to ensure increased investment into the country. He noted that BP head office was ready to invest above and beyond the USD 200-million that it would spent in the next two years in the right regulatory environment, saying that they considered South Africa as a key growth market.

However, owing to regulatory uncertainty, the international group was still “sitting with one foot on the accelerator and one foot on the brake”, Maseko added.