NMPP will be an investment for generations to come

Thursday, November 29, 2012

Pretoria - Although Transnet's New Multi-Product Pipeline (NMPP) has faced some challenges in its early stages, the project will be a uniquely South African infrastructure investment for years to come, says Public Enterprises Minister Malusi Gigaba.

Gigaba on Thursday marked the last stage of phase 1 in the development of the NMPP project - the construction of the coastal terminal - TM1 - at Island View in the Port of Durban.

Some of the challenges faced in the project's early stages included a lack of capacity and in-house expertise that led to an over-reliance on contracts, and an underestimated budget.

Scheduled for completion in December 2013, TM1 together with TM2 in Jameson Park, near Heidelberg, Gauteng, will enable the pipeline to carry all grades of petrol, diesel and jet fuel, making it a full multi-product facility.

Additionally, the minister announced that he had concluded the special review of the cost and schedule variation that had dogged the project in its early stages.

The findings included several factors that had a detrimental impact such as the decision to terminate the main Engineering Procurement and Construction Management (EPCM) contractor at the end of the Front End Engineering Design (FEED) stage; the reassignment of the scope of work to a new EPCM contractor and the length of time it took to capture and validate the FEED introduced significant delays to the execution schedule among others.

The main pipeline contractor performance, in terms of its ability to execute, fell short on critical issues like insufficient quality controls and poor environmental compliance.

Commenting on the findings, Gigaba said there were significant lessons learnt through the exercise. These lessons would be documented and shared across all projects of similar size and complexity in the country.

He said the shareholder was confident in Transnet's ability to address the shortcomings.

Some of the measures taken by Transnet include the establishing of the NMPP Governance Steering Committee. Its mandate is to oversee all aspects of the project and enhance accountability through regular reporting to the board of directors and shareholder.

The NMPP is a key strategic investment for South Africa that will ensure the security of supply of petroleum products to the inland region - the country's economic hub. Once complete, the NMPP will have capacity to carry five products: 95 and 93 unleaded petrol, 500 and 50 PPM diesel, and jet fuel.

"This will be done safely; cost effectively, and in an environmentally friendly manner," said Gigaba.-SAnews.gov.za