PetroSA's planned 400,000 barrels-per-day Coega oil refinery will save South Africa 18.5 billion rand ($1.77 billion) a year due to less imports of petroleum products, a government minister said on Tuesday.

Minerals and Energy Minister Buyelwa Sonjica said the refinery would also create capacity for South Africa to export the finished product.

State-owned PetroSA said in November that half of the refinery's output would be exported to the Sub-Saharan region.

"Developing this capacity (the refinery) will have a positive impact on our balance of payments ... it is said that we will be making savings of 18.5 billion (rand) per annum on product imports," she told reporters.

A large monthly trade deficit -- partly due to oil and petroleum imports -- has kept pressure on an ailing current account. The current account deficit was 7.9 percent of GDP in the third quarter of 2008.

South Africa imports about 60 percent of its crude oil requirements and became a net importer of finished petroleum products several years ago when demand outstripped supply.

Coega, which is expected to cost less than the $11 billion initially projected given the drop in material costs, will come on stream in 2014 and will be South Africa's largest oil refinery.

It is part of PetroSA's measures to meet the government's mandate in its energy master plan to have the oil company supply at least 30 percent of the country's fuel needs by 2020.

Sonjica said the cost necessary to build the pipeline to transport the products inland and abroad had not yet been calculated.

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