Ave­dia En­ergy is open for busi­ness

The Star Early Edition - - COMPANIES & NEWS - Adri Senekal de Wet and Sizwe Dlamini

LIQ­UE­FIED petroleum gas (LPG) com­pany Ave­dia En­ergy is set to com­mis­sion its R240 mil­lion Sal­danha Bay plant.

The fa­cil­ity was now open for busi­ness, said the com­pany’s manag­ing direc­tor Atose Aguele in an exclusive in­ter­view at the com­pany’s LPG-han­dling fa­cil­ity.

Busi­ness Re­port vis­ited the fa­cil­ity re­cently.

In South Africa, some LPG is pro­duced from lo­cal re­finer­ies, and ad­di­tional prod­uct is im­ported into the coun­try and re­ceived via sea.

Aguele said the com­pany, which was es­tab­lished in 2007, would ini­tially use a ship-totruck and truck-to-plant method when im­port­ing gas to its stor­age fa­cil­ity, which was at this point the most cost-ef­fec­tive method.

Asked why they opted for this method in­stead of us­ing a pipe­line, which is gen­er­ally a much cheaper and more ef­fi­cient op­tion, Ave­dia direc­tor Su­san Anne Dean said the com­pany had no pipe­line of its own and they would have to use the Sunrise En­ergy pipe­line.

How­ever, Dean said de­spite the more ef­fi­cient pipe­line be­ing known to be a cheaper op­tion, the rates charged by Sunrise out­weighed the ship-to-truck op­tion.

“Us­ing a pipe­line, we would trans­port 500 tons of prod­uct per hour com­pared to the shipto-truck and truck-to-plant’s 22 tons per hour, and it is still more eco­nom­i­cal for us to use the truck,” she said.

Ad­dress­ing costs

Aguele said the com­pany was in the process of ad­dress­ing the pipe­line costs.

The prices paid by con­sumers for im­ported LPG are de­pen­dent on the cost of the prod­uct, the sea freight, cost of stor­age and han­dling, plus fi­nal dis­tri­bu­tion.

Seaborne LPG is traded glob­ally, and one of the ma­jor in­ter­na­tional pric­ing bench­marks is the Saudi con­tract price (CP). The CP is pub­lished monthly and the March 2017 CP prices for propane and bu­tane, the main com­po­nents of LPG, were $480 (R6 260) and $600 a ton, re­spec­tively.

Ave­dia’s R250m fa­cil­ity has a 4 000 ton ca­pac­ity. In the sub­Sa­ha­ran re­gion, the most re­cent sig­nif­i­cant terminal was opened in March 2014 in Mau­ri­tius. This 15 000 ton ca­pac­ity fa­cil­ity was built by Pe­tre­dec at an equiv­a­lent of about R600m.

When the prod­uct is han­dled through an im­port terminal, through­put charges are a com­mon means that terminal op­er­a­tors re­cover cap­i­tal costs.

In Oc­to­ber 2012, the Depart­ment of En­ergy (DoE) re­leased a dis­cus­sion doc­u­ment on the re­view of the max­i­mum re­fin­ery gate price. In that white pa­per, the DoE pro­posed a fee of R350 a ton for stor­age and han­dling at coastal ter­mi­nals.

Aguele said Ave­dia had pro­posed a stor­age tar­iff with an op­ti­mum through­put of R400 to R500 a ton.

Glob­ally, the cur­rent through­put tar­iffs vary from about $20 to $40 a ton.

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