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- Trafigura will provide LPG supply for the Western Cape for the next three months.
- This comes after Vita Gas, a Vitol subsidiary, suddenly pulled out of a contract to import the gas into the region.
- Sunrise Energy, the owner of the import terminal, will now evaluate proposals for the use of its facility beyond September.
- For more financial news, go to the News24 Business front page.
Supply of liquefied petroleum gas (LPG) into the Western Cape has been secured for the next three months through an interim agreement with commodities trading giant Trafigura.
Sunrise Energy, the owner of the LPG import and storage facility at Saldanha Bay, said on Thursday that the arrangement with Trafigura is effective from 1 July, noting that vessel imports have arrived and offloaded at the facility, with further imports expected over the next few weeks.
Trafigura is among the largest traders of commodities in the world, along with Vitol and Glencore.
Two weeks ago, Vitol's Vita Gas unexpectedly pulled out of a contract with Sunrise Energy, which resulted in LPG supply constraints in the Western Cape region.
The company said a complaint laid by Sunrise – which gave rise to a Competition Tribunal hearing due to be heard next month – had made it untenable to continue its activities. Sunrise, in which both the Public Investment Corporation (PIC) and the Industrial Development Corporation (IDC) have invested, said that while it sought to amend anticompetitive aspects of its contract with Vita, which prevented other suppliers from using the terminal, it never wanted to simply cease doing business with the company.
In the interim, EML Energy had stepped in to supply LPG to major gas customers via the Sunrise terminal urgently.
The company, on more than one occasion, came up at the Zondo Commission of Inquiry regarding reportedly questionable contracts for the supply of fuel to South African Airways and to SA Express. IDC officials also gave testimony at the commission about loans that the corporation had previously extended to EML.
Following Vita Gas' exit from Saldanha Bay, industry sources told News24 there was concern over EML as a supplier of LPG as well as the price it may charge (this despite the price being regulated). The National Energy Regulator of South Africa this week told News24 it was gathering factual information regarding "the issue" and that it would issue a statement in due course. Sunrise told News24 it understood the supplier to be under new management and that it had been cleared by its due diligence process. News24 was unable to obtain comment from EML Energy.
In announcing the new deal with Trafigura, Sunrise said it would like to reassure the market that the terminal remains fully operational and that plans are afoot to expand the terminal's capacity to further safeguard energy supply.
"In line with Sunrise Energy's long-term commitment to maintain security of supply, the company has signed a contract that will put in place floating storage of at least 15 000 metric tonnes to augment the existing 5 500 metric tonnes capacity of the terminal. This will ensure that the Western Cape and regions beyond enjoy security of supply and will also assist in containing prices during the peak winter demand," the company said in a statement.
Sunrise Energy said it would be embarking on a process to evaluate proposals from the market for the use of the terminal to supply LPG beyond September 2023.
"This process will prioritise improving security of supply and competitive pricing for LPG," it said.
