Sunrise begins building LPG facility in Saldanha Bay

By Dineo Faku Time of article published Oct 4, 2013

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Johannesburg - The increasing demand for liquefied petroleum gas (LPG) has prompted Sunrise Energy, a local logistics company, to construct an R800 million import and storage terminal at the Western Cape port of Saldanha Bay.

The facility in Saldanha Bay’s planned industrial development zone is expected to create about 350 jobs during the construction phase, which was launched yesterday.

The stored gas will provide affordable thermal energy to 1.2 million low-income households as a buffer against steep electricity price increases.

Barthlo Harmse, the managing director at Sunrise, said yesterday that in the next five years energy from LPG would be 40 percent cheaper than Eskom’s electricity for low-income households, and 30 percent lower for higher-income homes.

Harmse said the benefits would reach junior distribution companies, which would be able to enter an industry that had been dominated by major players. “This will be an opportunity for new and small entrants that have not been able to get into the industry to do so.”

Sunrise is 49 percent owned by the Industrial Development Corporation (IDC), the state-funded development financing institution. Black empowerment company Ilitha Group owns the remainder.

Sunrise had been awarded a 30-year licence to operate the facility after beating 19 bidders that had tendered for the project, Harmse said.

The first phase of the facility, which is to be commissioned in the second half of 2015, will have planned capacity to store 5 500 tons in five storage bullets. The total available capacity will be 52 000 tons as storage will be expanded in the future to meet market growth.

Harmse said the facility would change the energy mix. “In phase three the facility will dispose of 1 200 megawatts of power. It will be a bit smaller than Coega, which will dispose of 1 900 megawatts.”

The LPG would be shipped from Mozambique and from Angola when the LPG resources in that country were brought on line , Harmse said.

Three and a half 20 000-ton ships a month were expected to import the LPG.

Harmse said South Africa had yet to exploit the benefits of LPG. Local LPG usage was far below the world average at only 2.63kg per capita a year. He said the target was to bring this up to the world average of an annual 40kg per capita.

Speaking on the sidelines of the launch event, Ebrahim Takolia, the chief executive of the SA Oil and Gas Alliance, said he welcomed the construction of the terminal.

“Energy is going to be a key question for developing economies in the next 20 years.”

Takolia said similar facilities were on the cards in Richards Bay and Coega. - Business Report

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