70,000 jobs on the line as South Africa heads towards another disaster

South Africa’s looming gas crisis threatens around 70,000 jobs and an estimated 5% of the country’s GDP. 

However, in response to this potentially catastrophic situation, the African Energy Leadership Centre at Wits Business School, in collaboration with IGUA-SA, is convening a symposium on Wednesday (7 May). 

This symposium aims to assess the current situation and explore possible solutions for the long-term security of natural gas supply in South Africa.

The core of the problem lies in dwindling gas supplies from neighbouring Mozambique that are vital to South Africa’s supply.

Currently, Sasol operates gas fields in Mozambique and supplies natural gas to South African industries via pipeline.

However, production from these fields is expected to decline sharply by as early as 2026, leaving a critical gap in the nation’s energy supply chain.

This is particularly alarming for South Africa’s industrial sector, where natural gas is essential for operations that contribute substantially to economic output and employment.

Professor David Phaho, Director of the African Energy Leadership Centre at Wits Business School, has warned of the dire consequences of the looming “gas cliff.” 

The gas cliff refers to the depletion of gas from Mozambique’s Pande and Temane fields, which currently supply the bulk of South Africa’s natural gas via an 850km pipeline.

Speaking ahead of the high-level symposium, Phaho warned that if South Africa doesn’t find an alternative for natural gas in its energy mix, there will be serious consequences for the economy.

One of the most pressing concerns, according to Phaho, is the potential loss of over 70,000 direct and indirect jobs. 

The industries that employ these workers also contribute between R300 billion and R500 billion annually to the South African economy, undermining up to 5% of the nation’s GDP.

This estimate comes from IGUA-SA and underscores how important natural gas is to the country’s industrial economy.

Phaho pointed out that the manufacturing sector will be most impacted, noting that both large industries and small to medium enterprises rely on natural gas.

He added that these enterprises rely on gas as an energy source and feedstock, or fuel to operate critical machinery. 

He said that sectors such as steel, petrochemicals, and long-haul transportation industries, which are difficult to decarbonise, are also vulnerable.

What needs to happen to avoid the cliff 

Considering the serious consequences, Phaho outlined realistic alternatives South Africa could pursue to mitigate this looming crisis.

In the short term, importing liquefied natural gas (LNG) is the most viable option. 

Potential entry points include the Richards Bay, Durban, and Maputo ports in Mozambique, where gas could be fed into the existing pipeline infrastructure. 

“In the longer term, we must look at regional exploration opportunities,” he said, referencing significant hydrocarbon finds in Namibia’s Orange Basin, which South Africa shares.

Although these projects are years away from maturity, they represent a critical part of the long-term energy security strategy.

Despite the urgency, Phaho remains optimistic that this crisis could also be an opportunity for regional collaboration and policy reform. 

“There’s an opportunity for us to collaborate with our neighbouring countries to ensure natural gas security in the southern part of the continent,” he said. 

He added that Mozambique still holds the third-largest gas reserves in Africa, and increased engagement there could be mutually beneficial. 

At the same time, the government has taken steps toward preparedness, developing a Natural Gas Master Plan and engaging various stakeholders to ensure a stable and enabling policy environment.

The upcoming symposium will bring together players from government, academia, and the private sector—including entities like Transnet Pipelines, Sasol, the IDC, and Eskom—to craft a “gas pact” for the next 25 years. 

“It’s one thing to admire the problem, but we thought: let’s bring in all the relevant stakeholders to formulate solutions,” said Phaho.

At the beginning of the year, Sasol said it would extend its operations to buy more time to around mid-2027.

The company added that it also made a pact with the government and Eskom to work together to avoid the looming ‘gas cliff’ in South Africa.

However, business leaders remain concerned. Avoiding the ‘gas cliff’ requires facilitating, expediting and aggregating the demand for imported liquified natural gas.