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Petrochemicals Industry Threatened By A Vicious Circle

18 August 2021 – Historically, the petrochemicals sector has been a great source of economic opportunity for South Africa. In its heyday, it was a thriving sector of the economy but today it is hindered by poor cashflow, increasing retrenchments, and an ever-widening skills gap. These elements work together to create a vicious cycle which is gaining momentum, threating the industry’s ability to innovate and explore new economic opportunities.

“While oil prices are bouncing back after the negative impact of the pandemic and international trade wars, there are several challenges facing our petrochemicals industry,” explains Yershen Pillay, CEO of the Chemical Industries Education and Training Authority (CHIETA). “The industry is suffering, largely due to a shortage of chemical engineers, mechanical engineers, and data scientists. At the same time, investment in training and education is the first casualty when cashflow is under threat – this means there are fewer resources available to unlock the talent pipeline and invest in the engineers we need,” he explains.

CHIETA is the sector education training authority for the chemicals sector, which covers nine sub-sectors including petrochemicals. They facilitate skills development in the sector and ensure that skills needs are identified and addressed through several initiatives in partnership with higher education institutes, public entities, training providers, and private organisations. These initiatives are funded by levies collected from the nine industries, although the petrochemicals sector is the biggest contributor to these funds for the chemicals sector, with 37%.

“Levies are calculated based on salary spend. When the petrochemicals sector suffers, retrenchments increase, the salary spend decreases, and fewer funds are made available for skills development initiatives,” explains Pillay. CHIETA’s research into scarce skills has identified a shortage of chemical engineers.

Why is this a problem? As the world moves towards cleaner, greener fuels, some may question the need to support the petrochemicals sector which is traditionally associated with heavy carbon emissions. The answer lies in our ability to innovate, according to Pillay. “A good example now is South Africa’s drive towards creating a thriving hydrogen economy. Hydrogen is one of the most important products and intermediates of the modern petrochemical industry, and recent news points to many new opportunities in this sector.”

In July, Sasol and the Industrial Development Corporation of South Africa (IDC) announced their plans to cooperatively shape the advancement of South Africa’s hydrogen economy. Amongst others, they aim to develop pilot and commercial scale hydrogen projects to pioneer viable and sustainable solutions, access local and international financing options, and pursue strategic projects that benefit the country’s energy transition and economic development goals.

Without well-trained and world-class chemical engineers, mechanical engineers, and data scientists, South Africa will struggle to take advantage of these new opportunities. Pillay encourages companies in the petrochemicals sector to not lose sight of longer-term gains, urging them to consistently invest in education and training initiatives. Source (Cape Business News)