{"id":875744,"date":"2026-09-16T11:00:00","date_gmt":"2026-09-16T09:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=875744"},"modified":"2026-09-16T10:41:47","modified_gmt":"2026-09-16T08:41:47","slug":"south-africa-heading-for-disaster-3","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/875744\/south-africa-heading-for-disaster-3\/","title":{"rendered":"South Africa heading for disaster"},"content":{"rendered":"\n

South Africa\u2019s government has resolved the country\u2019s recurring power outages and is racing to fix its crumbling water infrastructure. <\/p>\n\n\n\n

But, business leaders warn, it\u2019s sleepwalking into another crisis: a \u201cgas cliff.\u201d<\/p>\n\n\n\n

Combined, glassmakers, tile manufacturers, food processors and other industries that rely on gas account for 8% of the economy and R700 billion in annual economic output, and provide 75,000 jobs. <\/p>\n\n\n\n

Almost all of their needs are currently supplied by Sasol, the country\u2019s biggest petrochemicals company, from its fields in central Mozambique.<\/p>\n\n\n\n

Sasol warns that in two years’ time there will only be enough gas coming from those fields for its own needs, leaving industries holding back their investments and clamouring for the government to find solutions.<\/p>\n\n\n\n

\u201cSouth Africa doesn\u2019t do anything until it\u2019s an absolute crisis. And this is one crisis that\u2019s still too far away\u201d for the government to take seriously, said Thomas Shaw, chief commercial officer of Ardagh Glass Packaging-Africa, the continent\u2019s biggest glassmaker. <\/p>\n\n\n\n

\u201cIt\u2019s frightening how much investment has been put on hold because nobody knows if there is going to be gas beyond 2030 and at what price.\u201d<\/p>\n\n\n\n

Attempts to get the private sector to build gas import infrastructure that would bridge the gap have been frustrated because there\u2019s not enough demand from industrial users alone to justify the investment.<\/p>\n\n\n\n

TotalEnergies, together with South Africa\u2019s Gigajoule Group, has been planning a gas import terminal in Matola, but has been struggling to secure the demand needed to justify it since at least 2025. <\/p>\n\n\n\n

That terminal could link to existing pipeline infrastructure that runs to South Africa\u2019s industrial hub of Gauteng, where the cities of Johannesburg and Pretoria lie.<\/p>\n\n\n\n

\u201cWe need at least three years to develop a project like that,\u201d said Magali Pailh\u00e9, head of Total\u2019s exploration and production business in South Africa.<\/p>\n\n\n\n

Pailh\u00e9 added that the company needs \u201cthe uptake to be able to secure the cash flow over a period of time and the reimbursement of the investment.\u201d<\/p>\n\n\n\n

Investing in gas-fired power generation would help make the economics of liquefied natural gas terminal projects stack up. <\/p>\n\n\n\n

The country has a few small plants, and while its long-term strategy is to encourage the construction of more renewable power plants, its national energy plan also envisages using gas as a transition fuel, with 16 gigawatts of gas-fired power generation by 2039.<\/p>\n\n\n\n

The government is currently considering bids from private investors for 2 gigawatts of gas-fired power plants, but there\u2019s no certainty about when they will be built.<\/p>\n\n\n\n

National power utility Eskom is considering a 3-gigawatt plant in the eastern port of Richards Bay, which would require the construction of an LNG terminal; there\u2019s no pipeline to Gauteng from there.<\/p>\n\n\n\n

Offshore options<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

South Africa also has reserves of gas onshore and offshore, but ocean exploration has been held up by legal challenges and disputes with environmental groups.<\/p>\n\n\n\n

In August, Shell was told by the country\u2019s highest court that it wouldn\u2019t be allowed to renew an exploration right off the country\u2019s Wild Coast region.<\/p>\n\n\n\n

This was the culmination of a five-year legal fight with activists \u2014 just one of a number of courtroom battles that have been fought over hydrocarbon exploration off South Africa over the past decade.<\/p>\n\n\n\n

Requests by industry associations to have specialist courts set up to adjudicate on oil and gas matters to speed up the process have not been acted on by the government.<\/p>\n\n\n\n

\u201cThe potential in terms of domestic resources is huge,\u201d said Pailh\u00e9, who is also chairwoman of the Offshore Petroleum Association of South Africa. <\/p>\n\n\n\n

\u201cBut today the industry is basically stuck and cannot progress. We cannot even say if the resources are there or not, as we cannot explore.\u201d<\/p>\n\n\n\n

Sasol has offered a stopgap option, but it comes with an environmental cost. The company has applied to the energy regulator to set pricing for methane-rich gas produced from coal. <\/p>\n\n\n\n

Methane is a significantly more powerful climate-warming gas than carbon dioxide.<\/p>\n\n\n\n

Sasol\u2019s chief executive officer, Simon Baloyi, acknowledged the environmental concerns, but said they need to be weighed against economic and social considerations.<\/p>\n\n\n\n

\u201cIt\u2019s a country decision where we have to say: \u2018Do you prefer to push 700,000 people out of a job?\u2019\u201d he said. \u201cBecause it\u2019s purely going to boil down to that.\u201d<\/p>\n\n\n\n

Some industrial users aren\u2019t convinced.<\/p>\n\n\n\n

\u201cIt\u2019s not a sustainable long-term solution from a security-of-supply, economic or environmental perspective,\u201d Julian Singonzo, managing executive for sustainability at Premier, South Africa\u2019s biggest bread producer, said. <\/p>\n\n\n\n

\u201cSasol has indicated future MRG pricing at levels that are very expensive and potentially above imported LNG.\u201d<\/p>\n\n\n\n

Even so, Singonzo said, something has to be done. \u201cAny disruption to gas supply would impact our ability to operate ovens efficiently and keep bread affordable and available,\u201d he said.<\/p>\n\n\n\n

Brandon Wood, CEO of South Africa\u2019s biggest tile producer, Italtile, said the fuel is \u201ccritical\u201d to its manufacturing processes and expressed concern about future supply.<\/p>\n\n\n\n

The Industrial Gas Users Association Southern Africa, or IGUA-SA, a lobby group, has called for the office of President Cyril Ramaphosa to set up a task team to resolve the impending gas shortage, much as it did to resolve the electricity outages. <\/p>\n\n\n\n

\u201cSouth Africa has no practical plan to replace declining gas supply,\u201d the group said in a recent report.<\/p>\n\n\n\n

There is a \u201cbig void in terms of state coordination, policy positions and practical ways to tackle this issue,\u201d said Jaco Human, IGUA-SA\u2019s executive officer. <\/p>\n\n\n\n

\u201cThe government is simply not engaging.\u201d<\/p>\n\n\n\n

Vincent Magwenya, Ramaphosa\u2019s spokesman, referred queries to the Department of Electricity and Energy. <\/p>\n\n\n\n

That department, and the Department of Trade, Industry and Competition, acknowledged questions from Bloomberg but didn\u2019t respond.<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa is heading towards a gas crisis, with many businesses sounding the alarm about potential shortages.<\/p>\n","protected":false},"author":59,"featured_media":875750,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2100147943810429301","_sma_facebook_post_id":"191437357620492_2207048156782250","_sma_instagram_post_id":"18095206667435093","_sma_x_attempts":1,"footnotes":""},"categories":[9872],"tags":[255,2240,2239],"class_list":["post-875744","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-energy","tag-sasol","tag-shell"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/875744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=875744"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/875744\/revisions"}],"predecessor-version":[{"id":875751,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/875744\/revisions\/875751"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/875750"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=875744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=875744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=875744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}