It has been confirmed that a shutdown lasting longer than expected, and an accident at PetroSA's Mossel Bay plant, has cost the company more than R1 billion in profit losses.

It has been confirmed that a shutdown lasting longer than expected, and an accident at PetroSA's Mossel Bay plant has cost the company more than R1 billion in profit losses.

Nkosemntu Nika, PetroSA's chief financial officer, has said that with the insurance underwriters agreeing to pay R820 million, the direct cost resulting from the shutdown would only be about R231 million. This would push future insurance premiums and excesses on claims up to "between 15 and 20 per cent" and would also mean that PetroSA would have to implement new management and process systems as stipulated by its insurance assessors, reported.

PetroSA said it was taking the opportunity of the shutdown to refurbish the entire plant, which had been severely damaged earlier this year.

CARtoday.com reported that the plant had apparently broken down shortly after a maintenance shutdown in June. At the time, PetroSA said the breakdown was due to a combination of technical problems involving corrosion caused by the use of contaminated water to generate steam and that the problem would be repaired later this year.

This was after it emerged that a breakdown at the Mossel Bay plant was costing the state-run PetroSA millions a day. But more worrying was that the Mossel Bay facility, which converts liquid fuels into petrol, diesel, kerosene and liquefied petroleum gas, had been operating below capacity for at least three months before the incident.

Responding to the latest breakdown, general manager of manufacturing Olav Birkeland said additional costs to PetroSA caused by the production problems amounted to R80,5 million. These included costs incurred during labour disputes and additional labour costs, and overtime payments which had not been budgeted for, during the shutdown.

He also said that there had been insufficient preparation for the plant shutdown and delays resulting from a strike and inclement weather had led to additional labour having to be provided, and stretched the refurbishment to 25 days.

Original article from Car