PetroSA equity partners in Port Elizabeth oil refinery

Nelson Mandela Bay-based black empowerment group Beneficiation Development Corporation (Bedevco) has announced its plans to play a greater role in ensuring that the crude oil refinery, PetroSA’s major project in the province, at the Coega Industrial Development Zone (IDZ), becomes a reality.

The PE-based consortium with strong links to the ruling party is among several business lobby groups that are fighting tooth and nail for the province to finally have its own oil refinery in Ngqura IDZ .

Bedevco group CEO Mandla Madwara confirmed his company wanted to become the major player in the massive oil refinery operations and a future supplier of crude fuel, technology and fuel retail industry.

It is already involved in information technology and energy and has forged strategic partnerships with Brazilian firm Interoil, which specialises in building oil rigs for exploration, as well as with the Spanish company, Technicas Reunidas (TR) in preparation to cement a strong partnership with PetroSA.

Madwara was unfazed by widespread reports that the project, which is set to create more than 23000 jobs during its construction phase and about 3000 when fully running, was to be relocated to Richards Bay in KwaZulu-Natal.

He was adamant that the R39bn project known as Project Mthombo would go ahead although some business people from KZN were keen to have it in Richards Bay. wInternational oil companies Shell and BP were engaged in moves to persuade the government not to give the project a go-ahead but to have a stake in their own oil refinery.

“Those moves to have the project in KZN died down after president Jacob Zuma, during his visit to Mossel Bay last year, gave it the go-ahead. We haven’t heard any change in the government stance since.”

This consortium of black business in the Nelson Mandela Bay, including established business figures in the IT and energy sectors, has for the past five years been lobbying the government and other stakeholders in the energy industry for it to stay in Port Elizabeth.

Madwara has been one of the most powerful business figures, who moved from politics as ANC leader and councillor, to aggressively champion the cause of local development for the region, which is probably one of the most underdeveloped in the country.

He is a member of the Port Elizabeth Regional Chamber of Commerce and Industry (Percci).

His directorships include Triangle Events, which organises the spectacular annual Iron Man event, and the Freedom Enterprises group, which seeks to erect the proposed Mandela statue in Port Elizabeth.

Some of his struggle comrades who led the United Democratic Front (UDF) in the 1980s and went into business soon after the establishment of the new government under Mandela, include Mkhuseli Jack, Mike Xego, Mthiwabo Ndube, Mike Nzotoyi and Elvis Bana.

All have been most vocal in championing the cause of the Nelson Mandela Bay and Eastern Cape in their bid to attract more investments to the region, especially in Coega.

One of his major projects, the erection of former president Nelson Mandela’s 65m statue, is being awaited with enthusiasm.

The group has had a series of engagements with PetroSA and sees itself as equity partners in the oil refinery.

“Ours is to take the risk and raise the necessary funding. We also need crude oil suppliers.”

The company has set its eyes on exploiting Tanzania’s sugar cane to produce ethanol with the use of the Brazilian technology.

“To get involved meaningfully in this oil refinery, we have to stand on the shoulders of these giant companies. Part of increasing our expertise was to attend the government energy indaba, acquaint ourselves with government’s position on transforming the energy industry and to work together with the Nelson Mandela Metropolitan University on developing skills.”

Madwara and his team spent three days in Spain last year to learn about the industry, management and economics involved.

The PetroSA refinery, which will cost about R39bn, is likely to receive investment from state-owned Petroleos de Venezuela, while according to Madwara the parties to the Bidevco project are discussing financing options with South African, Asian and Brazilian financial institutions.

But the main worry was to secure an adequate skills base from local residents in places like Motherwell, New Brighton, Kwazakhele, Uitenhage and Despatch.

Between 500 and 1000 apprentices are to be trained in Brazil universities in stainless steel welding.

“Such people would be sought after for their specialised skills in any part of the world.”

“Part of increasing our expertise was to attend the government energy indaba, acquaint ourselves with the government’s position on transforming the energy industry and to work together with the Nelson Mandela Metropolitan University on developing skills.”

They had met with an export credit agency from Europe with a lot of experience in funding projects of this nature, he said. They were also looking at securing other sources of funding.

Popularity: 18% [?]