Island View's renewed leases to empower new players in SA's fuel market

Image credit: Astron Energy

Transport Minister Barbara Creecy instructed the move in terms of Section 79 of the National Ports Act No. 12 of 2005.

Ensuring fuel supply

“In my view, renewing leases at the Port of Durban Island View will ensure fuel supply security for South Africa, provide certainty to tenants, and encourage long-term investment in the infrastructure.

“Bringing new players into the industry will not only expand participation but also ensure that all South Africans have a stake in the port operations,” Creecy said in a statement.

The directive is conditional upon the conclusion of new terminal operator agreements (TOA) with the entities.

The new agreements have conditions, including:

• Transfer of terminal infrastructure ownership to the authority at the end of the 25-year concession period, to ensure the terminal infrastructure, including but not limited to bulk fuel storage tanks, pipelines, and related infrastructure, is maintained in accordance with international best practices.
  
• That the entities make all necessary capital investments to ensure that the terminals are fully equipped and operate at all times in a highly efficient, reliable, and safe manner.
  
• The entities establish and implement training and incubation programmes aimed at transferring technical skills, to foster and empower historically disadvantaged people to participate in the operation of port facilities within port environments.
  
• The entities adopt a comprehensive transformation strategy to increase Broad-Based Economic Empowerment (B-BEEE) levels, Black ownership, and participation in port operations within a mutually agreed period with the authority and the relevant legislation requirements.

“This initiative attempts to achieve two important policy objectives: on the one hand, to ensure the transformation of the sector, dominated for decades by well-established players.

“On the other hand, the decision aims to ensure ongoing fuel security by ensuring that third-party access is managed in a well-regulated and incremental manner that ensures consistent usage of the Island View infrastructure,” Creecy noted.

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Access to CEF

According to the department, the TNPA will also give fixed access to the Central Energy Fund (CEF) at the precinct.

“The (CEF) will also be guaranteed access to the existing terminal Infrastructure within the port limits, including marine and landside infrastructure for landing, exporting, and evacuating cargo.

“The (CEF) is initially allocated 15% capacity, which can be increased up to 30% over time. The initial allocation will be reviewed periodically as significant milestones are reached and utilisation of existing allocated capacity reaches 90%.

“The…fund will also act as a third-party access point for emerging Black players who were previously limited by a lack of access to Island View infrastructure,” the department explained.

Furthermore, the CEF is granted permission to “build and operate a new Single Buoy Mooring” within the Durban Port.

“(This is) to further entrench access for the new South African National Petroleum Company (SANPC).

“The authority and the entities must establish a framework governing third-party access to storage capacity within the precinct.

“This framework must ensure transparency of excess storage capacity and facilitate the allocation of specific dedicated capacity to support the entry of new market participants, in compliance with the regulations of the National Energy Regulator of South Africa,” the department stated.

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25 years for Astron

The minister has also issued a Section 79 Directive to TNPA to renew a 25-year lease for Astron Energy on “loading arms for import and export through the Astron Energy-operated joint bunkering services at its existing sites and terminal at the Port of Cape Town.”

“National energy security is closely tied to the reliability of supply provided by Astron Energy’s fully integrated operation of the Astron Energy Refinery and its associated Port of Cape facilities.

"Astron Energy Refinery is one of only two operational crude oil refineries in SA capable of refining the strategic crude reserves.

“Between 2019 and 2024, Astron Energy has invested over R 463m in its port operations in Cape Town.

“Aston Energy has maintained a Broad-Based Black Economic Empowerment Level 1 status with Black ownership accounting for 48.79% of shareholder voting rights, 40.35% of economic interest and 50% of management control,” the department said.