Empowered oil company Afric Oil plans to increase its market share and business volumes this year, finance director Mangadi Dikotla tells Engineering News.
It was allocated capacity to transport about 1.5-million litres a week of mainly diesel through State-owned freight logistics group Transnet’s Durban–Johannesburg pipeline in February last year. This has now increased to 2.5-million litres a week.
Dikotla boasts that Afric Oil was the first independent black-owned company to receive such an allocation, adding that it will soon make use of the State-owned group’s new multiproduct pipeline (NMPP) to transport its diesel and petrol inland.
In January, Transnet took delivery of the R23.4-billion NMPP, which runs between Durban and Heidelberg, in Gauteng. The 555 km pipeline would ramp up to full capacity over the next 17 months.
At the time, Engineering News reported that the pipeline would transport refined fuel products such as unleaded 93 and 95 octane petrol, low sulphur and ultralow sulphur diesel and jet fuel at a rate of about three-million litres an hour. The capacity of the pipeline would be 26.7-billion litres of fuel a year once at full capacity.
Dikotla believes that the allocation on the NMPP will assist the company in increasing its business volumes and enable it to deliver diesel and fuel to more customers.
The company’s volumes have steadily increased from about six-million litres a month to about 20-million litres a month in recent years.
The Gauteng market is the largest for Afric Oil and with access to only one storage facility in the province, in Tarlton, near Krugersdorp, the company has limited inland storage capacity. It does, however, have access to storage facilities in Cape Town, Durban and East London.
“We have a lot of customers wanting to load from Tarlton, and the 2.5-million litres of fuel lasts only a week before it has all gone,” says Dikotla.
“The infrastructure constraints are a national challenge, especially in terms of logistics and storage, because we don’t own any storage space or transport companies. I believe that the NMPP allocation will help to alleviate the problems with regard to transport,” she adds.
In the short term, however, the company has set up additional storage tanks and implemented fuel management systems at some customer sites to mitigate the transport challenges.
This enables its customers to keep track of their fuel consumption while concentrating on their core business.
Meanwhile, Afric Oil also hopes to start importing fuel products to tackle fuel supply shortages in the country.
“We have applied for an import licence and are continuously meeting and commu- nicating with government regarding the matter, which is a process on its own,” says Dikotla.
If it is successful in acquiring the licence, the company will transport the imported product by road from Mozambique or possibly acquire a storage facility in Durban as another possible option. The storage facility will be used specifically for the importation of product, which will then be transported through the Transnet pipeline.
Meanwhile, Dikotla notes that oil company Engen has, this year, pulled out as the company’s major shareholder, giving the company an opportunity to diversify its supply base.
“We still have a good relationship with Engen but now we are looking at approaching other major companies like Total and Sasol,” she says.
Further, Afric Oil CEO Tseke Nkadimeng believes that black economic-empowerment (BEE) entities in the country should come together to find solutions to challenges in the industry. The biggest of these challenges are supply constraints.
“As one of the first BEE companies in South Africa, we intend on taking up the role of BEE advocacy in the industry. It has been ten years since the charter was signed by the petrochemicals industry and we have noted some of the challenges and hope that other BEE entities will join us in forging a way forward,” he states.
Afric Oil, which was established in 1995 by investment holding company Pembani, is a Level 3 BEE company.