Rompco expects delay in Nersa approval of gas tariff
Disruption of Mozambique pipeline project to be costly
GAS transmission pipeline firm, Rompco, said yesterday that it was concerned about a possible delay in the National Energy Regulator of SA’s (Nersa) approval of a gas transmission tariff for its gas pipeline expansion project being built in Mozambique before January.
Rompco, a joint venture between the SA Gas Development Company (25 percent), Companhia Mocambiçana de Gasoduto (25 percent) and Sasol Gas (50 percent), wants Nersa to approve its application for a baseline tariff of R49.87 per gigajoule (GJ) for the 2017 financial year. The tariff is supposed to apply from January 1, according to Rompco.
Rompco is building a pipeline called Loopline 2, which expands the capacity of the existing 865km of gas pipeline from the Central Processing Facility (CPF) at Temane in Mozambique to Secunda in South Africa. Loopline 2 is going to be operational by January. Construction of the R2.7 billion Loopline 2, a 127km pipeline, began in November last year.
But Rompco managing director Louis Bosch said yesterday that Nersa had informed the company it had postponed public hearings into Rompco’s tariff application. The hearing was scheduled for Friday.
Bosch expressed concerns about the possible delay in the approval of the tariff. “It is a big concern,” he said.
The company had been dealing with the application for a long time, Bosch said. Failure to approve the tariffs by January would be costly to Rompco, he added.
Sharing risks But he has ruled out a legal challenge, saying that was not the best option.
“We believe we would rather go the route of alternatives. What we have done is to show that Rompco is prepared to share risks,” Bosch said.
He said, before building Loopline 2, Rompco had considered different options to expand the Mozambique to Secunda Pipeline capacity.
“If we did not build this loopline, gas supply to South Africa would be constrained at 153 gigajoules. You have to look at what is the value of the gas we are bringing in. What is the value to the economy?” Bosch said.
Commenting on Rompco’s dealings with Nersa, Bosch said: “We try hard to get an understanding of what Nersa’s issues are. Nersa obviously has public interest at heart. We look at what the Gas Act tries to achieve and we believe that we are supportive of that. We also believe that Nersa should enable and recognise that Rompco, as an infrastructure company, we provide capacity in chunks. You cannot just add capacity in little sizes.
“We believe that Nersa should provide our tariff. We have done two tariff applications now and I think we have tried to address all the concerns of Nersa. We have gone a long way in even addressing issues about whether Nersa has jurisdiction and matters like that.”
Asked if Rompco was open to the introduction of additional shareholders, he said it was an ideal company to be listed on the JSE, “but that is a shareholder decision. It is a company that would attract interest from pension funds.”
He said the introduction of additional shareholders was up to the shareholders.
The development of transmission pipelines within South Africa was “certainly” part of Rompco’s scope in South Africa. “If there were to be developments around shale gas and pipelines required…(that) is something that Rompco would be interested in,” Bosch said.