Sunrise R1bn facility is ‘not compliant with offloading of LPG at Saldanha’
TRANSNET National Ports Authority (TNPA) and the Port of Saldanha have revealed that Sunrise Energy is operating its R1.02 billion open-access liquefied petroleum gas (LPG) import and storage facility in Saldanha Bay even though it is not compliant with the legislation.
This is stated in the Harbour Master and TNPA’s opposing affidavit to the legal action taken by Sunrise about “decisions taken by TNPA and the Harbour Master that have authorised Avedia Energy to offload LPG from ships at the quayside for transfer to road tankers and subsequent deliv- ery to its storage facility”.
The TNPA stated that Sunrise had not obtained classification from the SA Maritime Safety Authority for its offshore multi-buoy mooring (MBM), further that the National Energy Regulator of SA has refused to issue a written confirmation of compliance with its Petroleum Pipelines Act (PPA) licences for the Sunrise facility.
Operation of the storage facility and the MBM is said to have commenced in May and, according to the court papers, the Harbour Master was informed on October 10 that Samsa had inspected the offshore MBM and would be issuing the relevant classifi- cation shortly, but to date the certificate confirming the classification has not been issued.
The issuing of the classification is a mandatory requirement in terms of the Merchant Shipping Act.
The TNPA on November 15 made inquiries with Nersa and was informed that its board had refused to issue Sunrise with the written confirmation of its compliance with its PPA licences owing to the facility not being built in accordance with the documents that were submitted by Sunrise to Nersa.
Sunrise admitted in its own affidavit founding their litigation that at its meeting with the TNPA on September 7 the TNPA contended that it was not certain that the Sunrise facility had become fully operational and requested Sunrise to provide it with proof.
Sunrise’s R1.02bn facility is a public-private sector partnership between Mining, Oil and Gas Services and the Industrial Development Corporation.
Sunrise is taking Avedia Energy – which runs a R240 million private-owned facility funded almost entirely by its owner and managing director Atose Aguele – to court over what it termed as an “unfair advantage” as the latter offloads LPG at “substantially lower prices”.
In its application, Sunrise said it stood to suffer enormous irrecoverable financial losses should Avedia be permitted to continue to offload LPG at the Saldanha quayside and wanted the court to block “further authorisations for it to offload LPG” at the quayside.
Sunrise costs are indicated to have doubled through its construction phase and the TNPA indicated that it had not anticipated the overruns and “did not envisage a project cost of R1.02bn when the tender was awarded, and it was not anticipated that tariffs would be determined to recoup an investment of this order”.
Meanwhile, Nersa stated in its papers that Sunrise’s objection based on a notion that it had been given an exclusive concession by the TNPA to operate the Saldanha Bay area “promotes the concept of a monopoly, which is discouraged by Nersa, because of its objective to promote competition”.
The Harbour Master and the TNPA said Sunrise’s exclusive rights related to the operation of its infrastructure. “It has no exclusivity to handle all LPG imports at the Ports of Saldanha Bay.”
The TNPA previously accepted that, in general, importers must use Sunrise’s facilities and it had stated that it was opposed to having a multitude of different port access arrangements for off-loading at the Port of Saldanha.
However, the TNPA’s approach was found to be erroneous by Nersa and the TNPA had to reconsider its approach towards making alternative port access arrangements available. But the TNPA would be acting unlawfully to refuse the temporary authorisations to holders of PPA licences.
According to the court papers, there is every indication that, to date, the TNPA is still not satisfied that Sunrise was legitimately enabling the offloading of LPG through its facility. Nersa said in its papers: “It is clear that in the event that Sunrise’s facility is not fully operational and is not able to offload LPG through its facility, the TNPA will grant Avedia authorisation to continue to offload in the Port of Saldanha at the General Maintenance Quay Berth.”
In South Africa, some LPG is produced by local refineries, and additional product is imported and received via sea. The prices paid by consumers for imported LPG are dependent on the international cost of the product, the sea freight, cost of storage and handling plus final distribution costs.