Botswana Oil is set to establish fuel storage facilities at Mozambican and Namibian ports next month, which will double the country’s strategic oil reserves and provide a buffer against declining refining capacity in South Africa.
According to the Botswana deputy permanent secretary in the Minerals and Energy ministry, Nchena Mothebe, while the country’s existing strategic facilities can carry the national demand for 15 days without additional supply, the facilities due in Mozambique and Namibia would collectively hold 30-day stock.
Botswana consumes approximately 100 million litres of various fuels each month and receives nearly all of its supplies from South Africa.
The government maintains strategic reserves as a buffer for emergencies, which have occurred in the past when supplies from South Africa have been disrupted by strikes and protests along the supply routes.
“We will be leasing out the storage facilities, not building and we expect agreements in place by the end of next month,” Mothebe told BusinessWeek. “The loss of refinery capacity from South Africa is the main reason behind these developments, we are also catering for possible shortages which we expect due to the loss of supply from Russia.”
State-owned oil company, Botswana Oil, has said South Africa is suffering a rapid loss in refining capacity with several major plants suspended or ageing out of use.
The company’s senior manager, Gamu Mpofu told the May infrastructure conference in Gaborone that from a refining capacity of 703,000 barrels of oil per day in March 2020, South Africa by March this year was down to 303,000 barrels per day.
“We are relying on a country that is now also importing and we have to do something so that we don’t put the burden on them,” Mpofu said. “There is no investment in refining capacity taking place in the region. “There are some developments in Angola due to come on stream, but those alone are not enough for us to rely on.”
The plan to establish oil storage facilities outside the country comes as the planned expansion of domestic strategic reserves has dragged on for several years. The 171 million-litres Tshele Hills storage project, which aims to increase the country’s strategic oil reserves to 60 days of supply, has been in the works since 2010.
The project has since been rolled into the Public Private Partnership initiatives government is intending to market to private investors.-Businessweek
