South Africa Needs Over $8 Billion to Revive Two Idle State Refineries
By Aboki Forex —
South Africa will need more than $8 billion to bring two mothballed state-owned refineries back into production, officials told lawmakers. The plan is aimed at strengthening energy security and cutting the country's dependence on imported fuels.
The Central Energy Fund, the state oil and gas company, is driving both projects. It has not yet said how either will be funded.
Sapref: Bought for 1 Rand, Upgrades to Cost Billions
The CEF acquired the flood-damaged Sapref refinery in 2024 from BP and Shell for a token 1 rand ($0.0617). The plant has a capacity of 180,000 barrels per day.
CEF said it plans to revive the refinery's liquefied petroleum gas import and distribution business and lease out existing storage tanks to generate early revenue while the bigger work is planned.
The long-term plan is to upgrade Sapref to a 400,000 to 650,000 barrel per day plant. That requires National Treasury approval, with a final investment decision targeted for 2027/28.
The total refinery investment is expected to cost around $7.15 billion, CEF said in a statement late on Monday. It did not provide funding details.
Mossel Bay Restart in Two Phases
CEF is also weighing plans to revive its Mossel Bay gas-to-liquids refinery, which has been idle since 2020 due to a shortage of domestic gas feedstock.
The Mossel Bay GTL refinery is operated by PetroSA and now sits under the South African National Petroleum Company. It will be restarted in phases.
Phase 1 targets around 18,000 barrels per day at an estimated investment of 5.8 billion rand. Phase 2, targeting production of 46,000 barrels per day, will require an extra 8.5 billion rand ($525.35 million).
Financing Talks Under Way
One banking source and one government source said potential financing from the pan-African Afreximbank is under discussion, among other options. No agreement has been announced.
The figures put the combined bill for both refineries above $8 billion, a heavy commitment for a state balance sheet that is already stretched.