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New public-private partnership to deliver energy security

Today Africa’s largest open-access Liquefied Petroleum Gas (LPG) import and storage facility was unveiled in Saldanha Bay, Western Cape. The R1.02 billion Sunrise Energy terminal is a public-private sector partnership between Mining, Oil & Gas Services (MOGS) and the Industrial Development Corporation (IDC).

Built to advance the development of the oil and gas sector in the Western Cape and further afield, Sunrise Energy will enable the import of LPG in large quantities, boosting regional energy security and increasing downstream competition, to the benefit of consumers and the provincial and national economies.

MOGS executive chairperson, Albertinah Kekana, said: “Sunrise Energy is testament to how collaboration between the public and private sectors can deliver rapid, concrete results on a large scale. Sunrise Energy is a world-class facility that will drive the availability of much needed LPG on an open-access basis. The facility represents a step change towards the creation of a broad-based gas economy by making affordable, efficient energy widely accessible so that our people, our entrepreneurs and our investors can use it to create jobs and prosperity.”

Sunrise Energy is 60% owned by MOGS with the IDC holding a 31% stake. Royal Bafokeng Holdings owns 51% of MOGS, the balance being held by the Public Investment Corporation.

With a throughput capacity of 200 000 metric tonnes of LPG per annum, the import and storage facility will provide alternative, safer energy, allowing for cheaper, cleaner alternatives for domestic and commercial use. In recent years the Western Cape has experienced shortages amounting to half of its monthly 11 000 metric-tonne peak demand for LPG; the new terminal’s import capacity will substantially address this shortfall.

Sunrise Energy operates on an open-access model, thereby enabling the entry of new participants in the LPG industry and increasing competition. The facility will not own or trade LPG products but will be accessible to all third-party LPG importers, distributors or bulk consumers while facilitating the provision of LPG to the market at competitive pricing (with maximum tariffs set and regulated by NERSA).

In April this year South Africa’s Competition Commission released a report based on its market inquiry into the domestic LPG sector. In the report the commission stressed the need for more LPG import capacity to enable greater competition in the LPG industry.

Public Investment Corporation (PIC) Head of Corporate Affairs, Deon Botha, said: “This investment in Sunrise Energy is a significant PIC contribution to energy security and inclusive economic growth. It is part of our impact investing programme, specifically developmental investments. Energy ranks top on our Economic Infrastructure investment programme. We believe that meaningful economic growth can only be achieved when there is enough energy to keep it going. We are thankful to our clients – the Government Employees Pension Fund and the Unemployment Insurance Fund – for their commitment to impact investing. We are also pleased that, through the Sunrise Energy investment, we will contribute to the diversification of South Africa’s energy mix.”

Impact through public-private partnerships

Further advancing the creation of broad-based LPG consumption, Sunrise Energy, in partnership with stakeholders, has committed to invest in the creation of small LPG distributors in the Western Cape and other regions. In addition to advancing industrialisation efforts in the sector, Sunrise Energy has invested in an on-site black -owned LPG bottling facility, Kusile Gas, which will create local employment and small-business opportunities in under-served areas.

Sunrise Energy aims to strengthen the country’s broad-based transformation objectives through sound partnerships. Together with TransnetSunrise Energy is planning a rail link which will facilitate the inland distribution of LPG – as far as the Free State by 2018.

IDC CEO Geoffrey Qhena noted that Sunrise Energy was a strategic integrated project as envisaged by the Presidential Infrastructure Coordinating Commission. “The terminal will promote gas usage and support the country’s economic growth plans,” said Qhena, adding: “The project is firmly in line with the IDC’s strategy to promote infrastructure development and local manufacturing capacity.”

Sunrise Energy CEO Pieter Coetzee said: “With the IDC, Sunrise Energy is about to start distributing 1 500 LPG cylinders to deserving households here in Saldanha. In partnership with the DTI, we will work hard to create an LPG culture, to demonstrate the benefits of switching from electricity and less safe energy sources to clean, dependable LPG.”

Sunrise Energy created almost 500 jobs during fabrication and construction. More than 70% of the permanent jobs created by the terminal are held by locals from the Saldanha Bay area. The facility alone has the ability to create up to 5 000 jobs in the Western Cape’s downstream LPG market when operating at full capacity.