Plans for one of the biggest post-2010 investments in South Africa are on track, following the announcement that PetroSA is to build an oil refinery at the Coega industrial development zone, 15 kilometres outside Port Elizabeth.

The national oil company, PetroSA was named the preferred investor for earmarked land and the development of the refinery has been said to be dependent on the meeting of the two parties.

Dubbed Project Mthombo, the proposed crude oil refinery is expected to produce about 250 000 barrels of fuel per day and is set to be operational by 2014.

"The refinery is part of a holistic strategy to ensure that the current unsustainable and urgent national fuels supply scenario is reversed and secured," said PetroSA chief executive Sipho Mkhize.

The project's name symbolises the "fountain from which South Africa is to grow" and foreign investors have expressed a keen interest in the project.

The official announcement of the partnership was made on Monday, February 18 2008, although plans had been in the pipeline for a while before.

"Project Mthombo will be one of the biggest post-2010 investments in South Africa," said Mkhize. "Design is well-advanced and we are in talks with several local and international parties who have expressed interest in possible financial and operating partnerships."

In addition to the project significantly improving the country's fuels import bill, Mkhize estimates that the project will generate about 5000 direct jobs during operations and 20 000 indirect jobs.

Coega was chosen out of five potential locations around South Africa.

The site boasts world-class infrastructure and is ideally located near growing demand centres in the Eastern and Western Cape.

The area also has sufficient land available for secondary industries to develop around the refinery.

Mkhize said the decision to locate the refinery at Coega was not solely based on commercial criteria.

 "This location also considers national interests such as alternate strategic access, port decongestion, wealth-generation, equalisation and potential environmental impact."

Coega's mission to provide a "competitive investment location and a total business solution for customers and ensure sustainable economic development" is evident in the host of investment sectors within its fold.

These include metals, textiles, automotive, chemicals and alternative energy sources.

Providing rezoned land and serviced sights, the zone covers 11 000 hectares of land and offers a platform for global exports by attracting foreign and local investment in manufacturing industries.

The corporation's offerings are exactly what project Mthombo needs to succeed and meets the expectations of PetroSA, which owns, operates and manages South Africa's commercial assets in the petroleum industry.

The Energy Security Master Plan - Liquid Fuels, gazetted by the Department of Minerals and Energy recently, recommends that PetroSA procure at least 30% of all crude oil consumed in South Africa.

"The initiative by PetroSA to build a new crude refinery is in part response to this mandate," said Mkhize.

To support the planned refinery and national supply network, PetroSA plans to provide new oil terminals and upgrades at Cape Town, Mossel Bay, Port Elizabeth, Durban and Gauteng.

Mkhize believes that the project will redefine South Africa's energy landscape and said that based on the current growth rate of demand for fuel the building of a new crude oil refinery within the next five to seven years would be "fully justified".

"The demand for automotive fuels in Southern Africa already exceeds the local production capacity and South Africa is becoming increasingly dependent on the import of refined automotive products," he said.

The industrial zone is expected to provide strategic flexibility to mitigate the risk to South Africa's security of supply by reducing the reliance on the traditional refinery and import centres.

Investment opportunities are still available - the final investment decision is expected to be made around 2010, once the technical specifications and commercial aspects of the project have been clarified.

 "PetroSA believes that strong and complementary partnerships will be required to realise a project of this size and nature, to mitigate any project related risk and to enhance the commercial and financial viability of the project," said Mkhize.

The organisation's approach to the project is in line with its mandate to competitively operate within a sustainable commercial manner.

"These partnerships will be established across the crude refining value chain, from the supply of crude oil, through the erection and operation of the refinery to the distribution and marketing of the automotive products. PetroSA is already in discussion with potential partners to help bring Project Mthombo to fruition," says Mkhize.

Mkhize believes that project Mthombo and other projects that PetroSA has identified and is pursuing, will go a long way to improve South Africa's security of energy supply and reduce South Africa's dependency on imported automotive fuels.

"South Africa's economic growth will be promoted and enhanced by the sustainable and competitive supply of automotive fuels," he said.

Projects like the Coega refinery ensure the sustainability of foreign investment long after the 2010 Fifa Football World Cup and will see the country score positively for years to come.