R500 billion ‘day zero’ for South Africa is coming

South Africa is heading for an R500 billion-a-year cliff, with the government accused of not acting quickly enough to prevent a gas crisis in 2026.

The Minister of Mineral Resources and Energy Minister, Gwede Mantashe, recently published a new “Gas Master Plan” for South Africa for public comment.

The plan sees gas as a critical part of South Africa’s energy mix and presents various ways to introduce and grow supply based on various demand scenarios. These include new gas builds across the country and the conversion of Eskom’s returning stations.

Broadly, the plan:

• Outlines the role of natural gas in the context of South Africa’s energy mix
• Gives policy direction to the industry
• Considers gas supply options (locally and internationally)
• Facilitates an infrastructure network, including options and contingencies for demand uncertainties and moves to cleaner technologies
• Identifies partners in the Southern African Development Community and
• Protects natural resources and environmental assets

Public comments on the plan must be submitted before 15 June 2024.

Business Leadership CEO Busisiwe Mavuso said that South Africa is facing a “gas cliff” with the supply of gas to industrial users ceasing in 2026.

Sasol is cutting its natural gas production in 2026, and Mavuso said that a potential gas crisis could spell trouble for 70,000 employers in South Africa and cost the economy R500 billion a year.

“So, you might have thought that last week’s draft Gas Master Plan, gazetted by the Department of Mineral Resources and Energy, would clearly address the looming crisis and table a credible strategy to avoid it,” said Mavuso.

“But, while it contains many laudable principles and objectives, it simply does not address the major issue facing the economy. The plan has security of supply as a core objective and models the impending day zero in its analysis of existing gas sources, but then does not set out a clear plan to deal with it.”

“It notes it is ‘quite urgent’ to engage with regional gas producers to unlock additional supply but does not seriously engage with whether there is enough that can be tapped in time to avoid day zero, nor with how it could be accessed and brought to the sites that need it.”

Despite acknowledging that the long-term vision of the master plan is solid, Mavuso said that a vision for gas supply and development for the country needs to focus on the country’s most urgent needs

She said that industrial gas users have been engaging with the government to avoid a possible “day zero” and the masterplan could have set out a clear plan for the government and industry to coordinate on efforts.

“The fact that it does not, leaves one feeling that the DMRE is simply not taking the looming crisis seriously enough,” she said.

When also considering the draft Integrated Resource Plan (IRP), Mauvso said that the DMRE has seemingly ignored considerable public input already, with a lack of responsive to input becoming an increasing feature of the government.

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