Insufficient customer commitment stalls liquid bulk terminal project

27th February 2020

By: Irma Venter

Creamer Media Senior Deputy Editor


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The development of the liquid bulk terminal in the Port of Ngqura, in the Eastern Cape, has been “stalled”, says Oiltanking Grindrod Calulo (OTGC).

“Stalled means it has been temporarily halted while the investor engages with stakeholders,” explains OTGC MD Nico Smit.

OTGC is a joint venture (JV) between operating partner Oiltanking, a German multinational that is one of the largest independent operators of tank terminals for oils, gases and chemicals worldwide, and local partners Grindrod, a JSE-listed freight and financial services company, Calulo Investments, a diversified empowered investor in the petrochemicals industry, and the Adopt-a-School Foundation, a nonprofit organisation which supports education in disadvantaged schools.

Transnet National Ports Authority (TNPA) in 2011 awarded OTGC preferred bidder status to develop a liquid bulk storage terminal in the Port of Ngqura, with the aim of servicing fuel importers in the Nelson Mandela Bay region.

The facility was intended to replace the existing terminal in Port Elizabeth.

The terminal was also to serve as a strategic alternative to the Port of Durban, in KwaZulu-Natal, and, to some extent, Cape Town, in the Western Cape, while also relieving pressure on these ports.

Since the date of award, OTGC has been engaged in a variety of activities related to the project, including negotiating a build, own, operate and transfer agreement, executing the engineering design of the terminal, obtaining commercial commitments from customers, negotiating funding with lenders, and obtaining the required regulatory permits for the construction of the project.

Construction of the terminal started in 2019, with the earthworks already complete.

However, warns OTGC, the JV has not been able to secure sufficient customer commitment for the project.

“There is considerable interest, but some potential customers, although interested, are not in a position to make a firm commitment at this time, which impacts on the viability of the project,” explains Smit.

“OTGC is, therefore, in a regrettable position that it is unable to execute on the project and is liaising with TNPA on the way forward.”

Smit says the contracts awarded to date (mainly bulk earthworks) have been executed and paid in full.


Edited by Creamer Media Reporter




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