Burgan welcomes NERSA licence approval for its independent fuel storage facility – NERSA’s decision a vote in favour of security of fuel supply in the Western Cape

On Tuesday, the 9th December the National Energy Regulator of South Africa (NERSA) approved Burgan Cape Terminals’ licence application for the development and construction of an independent fuel storage and distribution facility at the Eastern Mole in the Port of Cape Town.

Muziwandile Mseleku, CEO Burgan Cape Terminals, says, “We are very pleased with the decision and would like to thank NERSA for conducting a considered, thorough and professional application process. NERSA’s decision is a vote in favour of security of fuel supply in the Western Cape.”
Transnet National Port Authority (TNPA) awarded Burgan the tender for the development to address the ongoing fuel shortages in the Western Cape.

“The development of additional storage and distribution facilities is intended to improve the challenges of security of fuel supply and associated flexibility in the region. The development not only addresses the country’s need to increase fuel infrastructure and capacity but it will also have a positive effect on the economy, on global skills transfer and on the transformation of the local energy sector.”

The NERSA licence application was opposed by energy major, Chevron, which controls the fuel supply in the Western Cape. It owns and operates the Chevref refinery as well as the single pipeline that connects the port of Cape Town with the refinery.
Mseleku says, “Oil companies in the Western Cape will and intend to continue to support Chevref’s supplies in preference to imports and coastal supplies even if the Burgan Terminal is installed.

“This is because the supply of domestic fuel in the market is not only cheaper than imports and coastal supplies, but local refineries, including Chevref, are protected by legislation which effectively ensures that domestic fuel supplies are exhausted before imports are approved.”

“Competition is healthy. It’s good for the consumers’ pocket, for emerging South African companies previously unable to enter a tightly controlled fuel market and ultimately, for the country.”

Burgan is now awaiting a decision by the Western Cape Department of Environment and Development Planning on its Environmental Impact Assessment (EIA). Chevron is also opposing the EIA, on similar grounds as the Nersa objection; specifically that the economic impact of the development will result in the closure of its refinery. Analysis from some of the country’s leading experts indicates that the project will not jeopardize Chevron’s existence and that at worst the introduction of an alternative supply of fuel may reduce Chevron’s profits at its Western Cape refinery.

Burgan has laid a complaint of anti-competitive conduct against Chevron. It believes that Chevron, the dominant player in the Western Cape fuel market, is engaged in exclusionary conduct and consequently is in breach of section 8 of the Competition Act.
Mseleku says Chevron’s argument that the refinery will have to close is a red herring to hide its exclusionary conduct and block competition.

About Burgan Cape Terminals
Burgan Cape Terminals is a black empowered and independent South African oil storage company. Its shareholders are Thebe Investment Corporation (15%) with experience in the downstream petroleum market, Jicaro, a newly established 100% black owned BBBEE company and global storage terminal operator VTTI (70%). VTTI B.V is owned 50-50 by MISC Berhad, a Malaysian based shipping company, and Vitol, a multinational which is primarily engaged in the exploration and production of oil, as well as refining, shipping and distribution.