BP today announced plans to invest in excess of R5 billion in South Africa and Mozambique over the next five years in new and on-going infrastructure upgrade projects to improve business efficiency and assist Government’s objectives to enhance energy security and enable the transition to cleaner fuels.
During a visit to South Africa today, Iain Conn, BP Group Managing Director and Chief Executive of Refining and Marketing, said that BP was committed to pursuing operations and investments across Africa. In Upstream, BP is pursuing opportunities in Angola, Algeria, Namibia, Libya and Egypt. In Downstream, beyond today’s announcement about South Africa, BP is also making investments to improve and upgrade the fuel import infrastructure in neighbouring Mozambique.
In South Africa, an investment of close to R5 billion will be spent on various projects across the BP Fuels Value Chain including refinery, terminal and retail network assets. This is a sign of BP’s growing confidence in the South African economy as an attractive investment destination especially after the adoption of the National Development Plan (NDP) as the road map for the country.
Mr Conn stated that around half the investment will be spent in upgrading and modernising the refinery infrastructure at Sapref, a joint venture with Shell. The infrastructure upgrade will primarily be to comply with South Africa’s proposed clean fuels requirements.
In February 2013, the South African Minister of Finance Pravin Gordhan undertook to announce the support mechanism for biofuels and upgrade of refineries to encourage South Africa to produce cleaner fuels which are environmentally friendly.
“We anticipate that the remuneration mechanism will be finalised shortly as we have already started to invest in the project and our intent is to be ready to produce clean fuels in 2017,” said Mr Conn.
Part of the R5 billion investment is aimed at building and upgrading terminals to world-class facilities that are leading the industry in terms of safety, operational integrity and technology. BP’s investment will also ensure greater security of supply. An example of this investment is the new and recently-commissioned facility built in partnership with Sasol at Alrode outside Johannesburg. Once completed, this terminal will be the most modern and technologically advanced in Africa with high safety management systems and standards.
BP’s retail network will benefit from the announced investment which will improve customer experience. The conversion to a “best in class” convenience retail offering, in partnership with Pick n Pay, will see 120 Pick n Pay Express stores opened in the next five years across South Africa. Coupled with improvements to the BP Express convenience offering, the fuel forecourts will be upgraded with a standardised look.
Iain Conn emphasised that BP’s commitment is not only about the capital and commercial investment, it is also about being part of a South African community and continuing to contribute to the improvement of people’s lives through a focused transformation programme aligned with Government’s goal to create jobs, develop skills and build entrepreneurs, as well as achieve sustainable economic growth.
“This is part of our on-going efforts to be a good corporate citizen as we pursue our business objectives in all the markets in which we operate”, said Mr Conn.
BP has been at the forefront of transformation over a number of years. In 2001, BP became one of the first companies to form an empowerment initiative and this has resulted in cash pay-outs to BEE shareholders to the tune of R300 million.
Subsequently, Masana, a joint venture between BP and its BEE partners, was formed in 2005. This has been one of South Africa’s empowerment success stories which has doubled its growth since inception.
BP continues on pioneering the transformation journey with the latest hydrocarbon (crude oil) procurement initiative which invited and encouraged local previously disadvantaged enterprises to participate in a tender process.
A long standing support for skills development and quality education continues to be at the cornerstone of BP’s involvement in high school enrichment programmes, artisan to PhD support programmes, and general industry skills development for the previously disadvantaged. To this end, BP, as part of the South African Petroleum Industry Association (SAPIA), is involved in an industry-wide skills development initiative that will culminate in a Petroleum Institute which will assist the Southern Africa region.
Mr Conn reiterated that “the investments we are making in South Africa are not only a sign of confidence in the policy direction the country is taking, but they are also our commitment to all South Africans through the successful development of the energy infrastructure, market and associated skills and opportunities.”