Johannesburg - The Hendrina power station has become the first of Eskom’s plants to run on recycled fuel.
Yesterday Public Enterprises Minister Malusi Gigaba officially launched a new blending plant, which blends fuel oil with waste oil from refineries and started supplying the fuel to Hendrina last month.
The plant in Marble Hall, Limpopo is owned by Econ Oil & Energy, a black woman-owned company specialising in the distribution of fuel oil.
Eskom recently awarded a five-year contract to Econ Oil estimated at R5.29 billion in terms of which the company had to invest in the blending plant to reduce the power utility’s dependence on major fuel oil suppliers.
Nothemba Mlonzi, the managing director of Econ Oil, said the blended oil would cut Eskom’s fuel costs by between 15 percent and 20 percent. The utility will use the oil to burn up the coal in its power station.
To produce 2 million litres of the blended oil for the Hendrina power station, the plant would only use 1 percent of its capacity, leaving scope to produce more for other industries, Mlonzi said. “We will be supplying the fuel to the manufacturing industries in Gauteng, Mpumalanga and Limpopo.”
Econ Oil supplied 18 percent of Eskom’s fuel oil needs between 2003 and 2006. Between 2006 and 2009, it secured a contract to supply 60 percent of Eskom’s fuel oil and began supplying grade three oil.
The latest contract was used as a springboard to establish the blending plant as the government was concerned that Econ Oil was not involved in the entire petroleum value chain and was operating as an agent.
“We’ve been a buyer and seller but this operation gives us a footing in the upstream industry as well. It becomes uncompetitive to remain a buyer and seller operation because you can’t be sensitive to the needs of your customers,” Mlonzi said.
“If a supplier can’t give you the amount of oil you want, Eskom is in trouble and Eskom is a very sensitive customer.”
Opening the plant yesterday, Gigaba said that through procurement by state-owned enterprises, the government wanted to ensure that many black-owned petroleum firms were included in the mainstream industry.
“The downstream petroleum industry was in the hands of whites and multinational oil companies during the apartheid era and is still a highly concentrated industry. There is still little entry into the industry by black oil companies; these companies continue to struggle to increase their market share,” Gigaba said.
There are a number of blending plants around the country but all are aligned to specific petroleum companies. Mlonzi said Econ Oil’s facility would cater to all sectors.
The launch of the plant comes at a time when the Department of Energy is finalising mandatory fuel blending regulations to ensure that petroleum companies incorporate biofuels in their liquid fuel products.
The blending regulations are expected to come into effect on October 1, 2015, as the department still has to finalise the biofuels pricing framework before the end of this year. - Business Report