Kubayi hails gas as SA and globe’s energy future


Cape Town – Government is reviewing all legislation to speed up the development of a gas industry in South Africa, said Energy Minister Mmamoloko Kubayi on Monday.

Speaking at the international gas summit held in Durban until tomorrow, Kubayi said South Africa’s Gas Act of 2004 in particular is in the process of being changed and will soon be tabled in Cabinet so as to create a better framework for licencing for gas infrastructure.

“Policy makers across the globe agree that gas will be an engine of their countries’ economic growth and development in the next decades,” Kubayi said.  “Brics countries like China and India have given priority to move towards gas-based economies and investing in import infrastructure to meet the growing domestic demand.”

The Energy Minister noted that combined-cycle gas turbine (CCGT) plants are cheaper to build and operate than conventional coal-fired power plants and there’s a shorter construction lead time thanks to their simplicity.

This can cause traditional forms of power generation, such as coal-fired power stations to lose relevance quickly, she added.

“South Africa has recognised this global shift and has set itself the vision to enter the global gas market and promote the development of a gas market, not only locally here, but also in the Southern Africa Region.

“For emerging economies, switching to gas as a competitive, cleaner and more flexible source for power production is a game changer,” Kubayi said.

South Africa’s introduction of gas into its energy mix holds a plethora of benefits and a small-scale liquefied natural gas (LNG) industry could bring about opportunities for off-grid power generation for mining and other industrial needs in remote locations.

Significant investment in LNG import terminals, storage and regasification facilities, primary high-pressure gas transmission pipelines and secondary distribution pipeline networks are underway in South Africa, Kubayi said. 

The Minister emphasised that government will have to rely on private sector financing for support of its gas infrastructure strategies and plans due to “limited fiscal space”.

“We acknowledge that the private sector will respond positively only in the case of policy and regulatory certainty.”

Kubayi hailed the “successful resolution” of the recent impasse with Eskom regarding the renewable energy independent power producer (IPP) power purchase agreements which will demonstrate to the market that there has been no reversal of policies and regulations, particularly with regard to private sector involvement in the energy space. 

Fin24 earlier reported that Kubayi had announced that Eskom must sign the IPP power purchase agreements by the end of October.

This followed a stakeholder engagement between the Department of Energy and the Department of Public Enterprises. Eskom refused to sign the agreements in 2016, because it said it had an over-supply of electricity and would be paying for more electricity it did not need.

Kubayi stated that the tariffs charged by the IPP agreements had to be renegotiated and can’t be more than 77 cents per KWh, as they were not affordable for Eskom.

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