One of the storage tanks for the LPG terminal shown arriving from the port.

JOHANNESBURG - Sunrise Energy has hauled its competitor Avedia Energy to court over what it has termed as an “unfair advantage” as the latter offloads liquefied petroleum gas (LPG) at “substantially lower prices.” 

In its application, Sunrise said it stood to suffer enormous irrecoverable financial losses should Avedia be permitted to continue to offload LPG at the Saldanha quayside and wants the court to block “further authorisations for it to offload LPG” at the quayside.

In the founding affidavit Pieter Coetzee, the chief executive of Sunrise Energy, said: “Avedia’s offloading of LPG at the quayside threatens the economic viability of the Sunrise facility.”

Sunrise, Africa’s largest open-access LPG import and storage facility, runs a R1.02 billion terminal in Saldanha, which is a public-private sector partnership between Mining, Oil and Gas Services (Mogs) and the Industrial Development Corporation (IDC).

Avedia on the other hand is privately-owned by its managing director Atose Aguele. Sunrise said it would not have undertaken the construction that it had undertaken had it known that the Transnet National Port Authority (TNPA) would allow Avedia or anybody else to import LPG over the berth. 

The company also cited Saldanha’s Harbour Master, TNPA and the National Energy Regulator of SA (Nersa) as respondents. 

Sunrise raised concerns about “decisions taken by TNPA and the harbour master that have authorised Avedia to offload LPG from ships at the quayside for transfer to road tankers and subsequent delivery to its storage facility; actions by Avedia in offloading LPG from ships to tankers at the quayside port; the licence granted by Nersa to Avedia to operate its storage facility; and the licences granted by Nersa to Avedia for the construction of its storage facility and its related pipeline”.

It now wants the court to declare the storage facility operating licence granted to Avedia by Nersa invalid, operations at its storage facility is unlawful, as well as an interdict prohibiting Avedia from operating its LPG storage facility unless it has a valid operating licence from Nersa.

Sunrise also seeks an interdict prohibiting the TNPA and the harbour master from granting any further authorisations to offload LPG at the quayside and prohibiting Avedia from offloading LPG over the quayside port.

Coetzee said: “The fact that Avedia has offered LPG at a substantially lower throughput fee than Sunrise Energy is able to offer – as a result of Avedia’s ability to offload over the berth – has already resulted in the diversion of business from the Sunrise Energy terminal”.

He said Southern Energy Trading (SET), which had an exclusive supply agreement in place with Sunrise, had breached that agreement and bought LPG from Avedia. “Sunrise Energy had also been in discussions with SET to enter into a long-term supply agreement. SET has recently signalled that it is reluctant to enter into such an agreement, given that it can obtain LPG more cheaply from Avedia.”

Sunrise claimed that Avedia – which has offloaded about three consignments of LPG over the berth – did not need to recover substantial capital costs associated with constructing an offshore offloading facility because it used portable, relatively inexpensive offloading equipment. 

“It is able to offload LPG at a far cheaper throughput fee than Sunrise Energy is able to and can, therefore, offload its LPG at substantially lower prices. It gives Avedia an unfair advantage.” Sunrise said its fees were determined by the tariffs approved by Nersa. 

According to Sunrise’s affidavit, Nersa has approved separate tariffs for Sunrise’s loading facility and storage facility, which were structured to enable Sunrise Energy, over time, to realise a return on its investment.

In an interview earlier this year, Avedia director Susan Anne Dean said since the company had no pipeline of its own it would have to use the Sunrise pipeline. However, Dean said despite the more efficient pipeline being known to be a cheaper option the rates charged by Sunrise outweighed the ship-to-truck option.

Avedia’s Aguele expressed hope that the tariffs charged by Sunrise for use of its pipeline would be revised in the near future to make the supply of LPG cheaper, which would result in lower prices for consumers.

In South Africa, some LPG is produced from local refineries, and additional product is imported and received via sea. The prices paid by consumers for imported LPG are dependent on the cost of the product, the sea freight, cost of storage and handling plus final distribution.

- BUSINESS REPORT