BP to invest $200 million in South African infrastructure

BP plans to make a substaintial investment in South Africa.

The African unit of oil major BP plans to invest $200 million in energy infrastructure in South Africa over the next two years and the amount could rise, the head of the unit said on Wednesday.

Sipho Maseko said the money would be spent on infrastructure such as tanks, pipes, storage and import facilities.

The company is willing to increase its investment further because it considers South Africa a key growth market, but needed a clearer regulatory framework to be assured a fair return on its investment.

“One foot is on the accelerator and one foot is on the breaks because we just don’t know,” Maseko said.

“The more certain and predictable the regulatory framework becomes, the more likely the amount will increase.”

Maseko said the government was making progress in that direction, and he expected that “in the next few months” the industry would be given more clarity.

He welcomed the government’s draft on clean fuel specifications released on Tuesday, which gave crude oil refineries in the country until 2017 to upgrade their plants.

“From the bits that I’ve seen, it’s sound, because it allows us to introduce clean fuels early so that we can keep pace with international trends, and it facilitates a phasing in of capital investment,” he said.

“Refineries will be given time to comply. So we just need to understand how that investment is going to be renumerated.”

BP and Royal Dutch Shell jointly operate Sapref, South Africa’s biggest refinery, which produces 180,000 barrels a day.

Maseko said BP also plans to invest $20 million per year in Mozambique over the next five years.

The company said last year it would sell its marketing businesses in Namibia, Malawi, Tanzania, Zambia and Botswana, saying Mozambique and South Africa offered better synergies with its supply portfolio.

South Africa has emerged as a major economic player not in just Africa but in the world as well.  This is more proof of South Africa’s growing importance in business-investment opportunities for foreign companies and brands.

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