South African Business 2018 edition

TRANSNET PIPELINES MULTI-PRODUCT
PIPELINE: Enabling South Africa's Future
Transnet Pipelines owns, operates and maintains a 3 800km network of high pressure underground petroleum
and gas pipelines. Established in 1965, the company plays a strategic role in the supply of petroleum products to
South Africa's economic hub in Gouteng. To ensure security of supply, a new 24-inch Multi-Product Pipeline (MPP)
was constructed and commissioned in 2012. Lennie Moodley, Chief Executive ofTransnet Pipelines, discusses the
latest milestone in the MPP project.
Is the Multi-Product Pipeline working to
expectations? Yes, since it was brought into operation
in January 2012 it has transported over 18 billion litres
of diesel. We have now successfully brought it into
multi-product operation. In addition to transporting
two grades of diesel (D50 and D500) we are now
transporting 93 and 95 unleaded petrol as well as
jet fuel.
Can you put a figure on the number of road trips (or
number of tankers) that have been reduced because
of the introduction of the Multi-Product Pipeline?
Not directly as all modes of transport are required
to service the market, pipelines are ideal for large
volumes and long distance, whilst road and rail service
other areas. We can however say that if we did not have
the Multi-Product Pipeline you would need an
additional 1 ODO road tankers per day between Durban
and Gauteng.
What are current volumes of throughput in the
various categories? The capacity of the line is 1 080
cubic metres per hour and the average throughput is
approximately 115 million litres per week. The volume
split per product depends on weekly market demand
and varies from week to week.
Is TPL on target with regard to these volumes? The
volumes are slightly behind target, but this is reflective
of the lower demand in the market due to the slowdown
of the economy. From a capacity and operational point
of view TPL is able to meet the demand required by its
customers.
And the balance sheet? Pipelines is currently forecast
to exceed financial targets in the 2017 /18 year:
• Revenue of R4.2bn
• EBITDA margin of 74%
• Return on assets of 6.7%
• Asset base of R36bn excluding capital work in
progress
• Cash generated from operations of R3.l bn
Please tell us about your journey to the CEO's desk?
What was your first job at TPL? Was there a moment/
event where you thought, "Yes, pipelines is where I
want to be"? My journey started in Transnet Pipelines
in 2002 as an Executive Business Manager in charge
of operations and has evolved through various roles
since then. From the onset I knew this is where I want
to be and approached each day with enthusiasm and
determination. Pipelines is a fascinating. complex and
challenging environment. In 2002, Transnet Pipelines,
then known as Petronet, transmitted 334 million m 3
of gas and 13.8 billion litres of fuel and our revenue
was R719 million. In comparison to the previous year.
we have transported 17 billion litres of fuel and our
revenue was R4 285 million. I have aspirations of
growing the company even further, with specific focus
on diversification into the liquefied natural gas (LNG)
market and expanding our footprint into Africa.
Do you feel that your stint in Operations gives you
an especially good perspective on the complexities
of the business? Yes, it provides good insight into
the operational and technical aspects of
the business. It also provided great
understanding into the various roleplayers
in the market segment and
the number of challenges faced
by the industry. Furthermore, it
empowers me to challenge views
and make informed decisions.
How much success is TPL
having in terms of applying
the relatively new policy
of diversifying revenue
streams? Please expand on
which are working best, and give
examples (eg, training
in Africa). Our initiatives to
diversify our revenue streams
are at an infancy. However
we are confident that we will
achieve our aspirations in
the medium term. In addition
to becoming a key player in
the LNG market, Pipelines is
also committed to operate and
maintain pipelines, operate and
maintain terminals in other
African countries and provide
pipeline-specific training to the
oil and gas Industry.