Project Mthombo, PetroSA's multi billion rand oil refinery which is expected to massively boost the Eastern Cape's economy and create thousands of jobs, will move a step closer to reality next month when government is expected to announce another milestone in the project.

The direction on the $10-billion (R80-billion) Project Mthombo will follow other massive infrastructure investments in the province's ports, rail network and the Coega industrial development zone announced by President Jacob Zuma in his State of the Nation address earlier this month.

In her State of the Province address on Friday, premier Noxolo Kiviet said an announcement on the refinery was "imminent".

An insider in the high level discussions on Mthombo yesterday said government and PetroSA would announce a milestone for the project within three to six weeks.

The insider, who spoke on condition of anonymity, also said while the announcement would propel the project, the actual construction of the refinery was estimated to begin in two years.

In an interview last week Eastern Cape economic development MEC Mcebisi Jonas said it was only a "matter of time" before Mthombo commenced.

The feasibility study had been done, and next was obviously the front end engineering design, Jonas said.
Five years after Mthombo was mooted by the energy department, the Eastern Cape government, business and civil society had been pushing for the refinery with the hope that it would boost the province's economy and drastically reduce its unemployment.

The project has been criticised by some industry players who have said its 360000 barrels a day capacity was not viable.

Although he would not confirm the announcement, PetroSA spokesman Thabo Mabaso said the company had been "working over the last couple of months to strengthen its business case and we hope to report back soon".

Jonas also moved to allay fears that the refinery could be set up elsewhere.

"We are no longer debating the location for this project, it only makes sense that it be at Coega," Jonas said.
Mabaso said the front end engineering design - the next step of the project - could take up to 18 months.

Last week the Department of Energy's chief director of international co-ordination, Elizabeth Marabwa, told parliament's energy committee that PetroSA and state-owned Chinese petroleum and petrochemical company Sinopec were discussing the possibility of Chinese financing.

The committee heard that a memorandum of understanding between the two companies was signed last September for them to explore the possibility of working together to develop the project.

Reacting to Kiviet's address, Nelson Mandela Bay Business Chamber CEO Kevin Hustler said: "We were also encouraged to hear of the 'imminent' announcement about PetroSA's Project Mthombo oil refinery, which holds significant potential to act as a catalyst for socio-economic transformation and industrial diversification of the Eastern Cape."

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(Originally published February 20, 2012, in Daily Dispatch.)