The government will soon be consulting major roleplayers in the petroleum sector on the construction of a new refinery in SA, Energy Minister Jeff Radebe said on Wednesday.

He said a detailed plan should be finalised by the end of November. A regulatory framework to provide policy certainty to the industry would be completed by the end of 2018.

Construction of a new refinery will require significant investment and a long lead time.

“A refinery is a significant contributor to the economy and the issue of the sustainability of the current refineries is of utmost concern,” the minister said in his budget vote speech in Parliament.

“The refining sector is facing major challenges, which include the provision of cleaner fuels, adhering to minimum emission standards and meeting the bunker fuel oil sulphur cap of 2020. Our refineries are not equipped to produce the latest fuels required by modern vehicles to reduce vehicle emissions and improve efficiency.”

Radebe also emphasised the role of gas in SA’s future energy mix. He said gas finds in the Rovuma basin in Mozambique provided an opportunity for SA and the Southern African Development Community to benefit from gas resources.

“We are firmly of the view that together with our Mozambican counterpart we need to develop an infrastructure programme which will allow the gas to be beneficiated through projects such as a gas-to-liquids plant and other petrochemical facilities in Mozambique as well as a pipeline from Rovuma to the south of Mozambique.”

He said this would enable the construction of gas-to-power projects in both countries.

Radebe said he would meet his Mozambican counterpart to seek further collaboration.

He stressed that natural gas, whether imported via regional pipelines or liquified natural gas terminals, should be prioritised as it could play an important role in SA’s transition to a low- carbon economy. “This direction will establish a game-changing demand platform for the future exploration and utilisation of SA’s latent shale gas resources,” the minister said.

He told MPs he wanted at least a quarter — or $25bn — of the $100bn target for investment set by President Cyril Ramaphosa to come from the energy sector. The president set the investment target recently ahead of leading an investment roadshow to the UK.

Radebe noted that between 2014 and 2016 $10.9bn was invested in the Renewable Energy Independent Power Producer Programme, more than any other African country. This was not included in his $25bn investment target.

A further R56bn will be invested over the next few years as a result of the recent signature of 27 independent power producer projects.

Helping to achieve the $25bn target would be the new bid windows for the independent power producer programme; investment in fuel tanks and infrastructure required for SA to become a major shale gas producer; promoting natural gas by designing and building of infrastructure required to transport natural gas and liquified natural gas; and investment in improving refinery assets to meet higher global emission standards.