Burgan breaks ground on independent CT fuel storage facility

– R650 million development welcomed by Dutch Minister of Agriculture
– Facility to increase security of fuel supply
– First Operation Phakisa project to be implemented

Burgan Cape Terminals officially broke ground for the construction of a new independent fuel storage and distribution facility in the port of Cape Town at a ceremony last night.

The development, which will see a R650 million investment in the first two years, is a joint venture between Thebe Investment Corporation, broad-based BEE company Jicaro and Rotterdam-based international terminal operator VTTI.

It has been designated a strategic project under the South African Government’s Operation Phakisa, and is the first project under this programme to be implemented.

The State Secretary for Economic Affairs and Minister of Agriculture of the Netherlands, the Honourable Mr Martijn van Dam presided over the ceremony.

Muziwandile Mseleku, CEO of Burgan Cape Terminals, says: “The facility will ensure security of fuel supply by adding greater flexibility and choice to a strained provincial storage market. It will also play an important role in opening up a previously closed market for emerging black owned independent fuel suppliers.

“All of this is good news for the country and for the economy, and most especially for all fuel consumers,” says Mseleku.

The State Secretary for Economic Affairs and Minister of Agriculture of the Netherlands, the Honourable Mr Martijn van Dam, says: “This is an important initiative that will further entrench cooperation and partnership between the Netherlands and South Africa. We strongly believe that together we can create opportunities that will benefit both countries and their people.”

Rubel Yilmaz, Global Head of Strategy and Business Development of VTTI, says: “The ready uptake of the facility by customers makes it clear that there is growing local demand for refined petroleum products in the region. We are very pleased to be able to share our extensive global experience with our local partners and look forward to working together.”

Vusi Khanyile, Executive Chairman of Thebe Investment Corporation says: “South Africa is likely to be energy constrained for many years to come, so the more contingencies we put in place to address this energy challenge the better. Secure and plentiful energy means a growing economy and much-needed jobs. We are proud to be part of this exciting development.”

Burgan Cape Terminals was awarded a 20-year lease by Transnet for the development of the fuel storage facility.

Siyabonga Gama, Acting Group Chief Executive of Transnet says: “We are tremendously excited to welcome Burgan Cape Terminals to the Port of Cape Town. This is an important innovation and addition to our port infrastructure programme and will contribute greatly to the country’s overall competitiveness, access to energy and commitment to transformation.”
The terminal is due to be completed in 18 months.

Economic impact

The terminal will bring additional competition, supply security, improved oil infrastructure, and flexibility in oil supply. The resulting cost optimisation will have a structural net economic benefit to the province.

It is anticipated that the construction phase of the project will create approximately 130 contract jobs, with an average duration of 22 months. Approximately 20 operational jobs would be created once the facility is operational. Operational expenditure in the first few years of production has been estimated at between R40 million and will increase in line with throughput.

About the fuel storage terminal

The fuel storage facility in Cape Town Harbour will be multi-purpose and be used for the storage and distribution of both locally produced and imported fuels.

Companies will ‘rent’ space from Burgan for storage of their fuel product. Burgan has already signed long-term (10 year) contracts with oil companies, who jointly aim to throughput up to 805,000 m3/year. This includes a contract with 100% black women-owned Gulfstream Energy, which signed a 3-year throughput agreement to store 120 million litres per annum with Burgan Cape Terminals. Shell will also be an anchor tenant, extending the energy major’s global relationship with VTTI and longstanding partnership with Thebe.

Burgan’s state of the art truck loading facility will allow for efficient and swift distribution to end-users with limited impact on the surroundings.

About Burgan Cape Terminals
For some time, South Africa has been faced with a severe shortage of fuel storage capacity. Burgan Cape Terminals has been formed in response to the Government’s drive to increase this resource, and has signed a 20-year lease agreement with the Port of Cape Town.

Our vision is to create a major new storage and distribution facility, offering capacity of 118,000 m3, at the Eastern Mole of the Port of Cape Town.

Once complete, this new infrastructure will play a vital role in strengthening the country’s security of fuel supply. It will receive and distribute much-needed fuel, enhancing the country’s energy flexibility and delivering against a vital policy goal for South Africa.

About Thebe Investment Corporation

Thebe Investment Corporation is an African investment management firm which was founded in 1992 as a wholly-owned entity of the Batho-Batho Trust established by anti-apartheid stalwarts, Nelson Mandela, Walter Sisulu, Enos Mabuza, and Beyers Naudé.

Thebe’s founders established the company to promote socio-economic transformation through the economic participation of the previously marginalized South Africans. In this regard, Thebe is unique in the sense that it does not exist only to make a profit, but to drive community development through assisting communities to be actively involved in sustainable wealth creation.

Thebe has a proud history of being an entrepreneurial wealth creator. Under the guidance of founding CEO and executive chairman, Vusi Khanyile, Thebe has grown an initial capital investment of R100,000 into an investment portfolio of assets worth over R6 billion. Thebe has grown its portfolio through either starting greenfield businesses and acquiring controlling or minority stakes in operating companies.

Thebe successfully established South Africa’s first regional airline SA Express, fuel retailer Tepco Petroleum, and commercial radio station Kaya FM. Tepco was later merged into Shell SA when Thebe bought a 25% stake in the petroleum company in 2002. To date, Thebe has made large acquisitions in blue-chip companies (both global and South African) such as Shell, Vodacom, Compass Group, Combined Motor Holdings, Altech Netstar, and Safripol.

Thebe has a skilled team of investment professionals, which originates and executes transactions. Post transaction conclusion, the team actively partners with the investee companies to grow their market share in the industries they operate in. Thebe’s community development initiatives are driven by the Thebe Foundation, an independent trust, whose focus areas are education and the promotion of enterprise development in previously disadvantaged communities.

About Jicaro

Established in 2014, Jicaro is a 100% Broad-Based Black Economic Empowerment investment company, which counts amongst its empowerment members women, youth and representatives from rural communities. The company has vast technical and commercial oil and gas experience.

About VTTI

VTTI B.V. is a major player in the storage and terminal business. Created in 2006 by the Vitol Group, one of the world’s largest energy traders, VTTI owns and operates 11 terminals, offering a total capacity of 8 million cubic meters, across five continents.

In 2014, VTTI B.V. formed VTTI Energy Partners LP (listed at the New York Stock Exchange, ticker “VTTI”). VTTI Energy Partners LP is a fee-based, growth-oriented limited partnership, created to own, operate, develop and acquire refined petroleum product and crude oil terminals, and related energy infrastructure. Initial assets comprise a broad-based portfolio consisting of six terminals from the VTTI portfolio that are strategically located in key energy hubs around the world. The investment in Burgan Cape Terminals announced today is not part of VTTI Energy Partners LP.

VTTI operates according to the highest international Health, Safety and Environmental standards in the industry.