The gas sector has become important as a "transitional" energy source, and the state is looking to benefit from its expansion as treaties restrict CO2 emissions
South Africa's Department of Mineral Resources and Energy has introduced the Gas Amendment Bill, seeking to modernize legislation and align it with current government policies and evolving trends in the gas sector.
The bill, now open for public commentary, aims to expand the country's gas industry by empowering the state to issue private monopoly contracts to BEE companies, and getting rid of competitive tender bidding.
The removal of a section from the Gas Act concerning the sale of state assets is notable. New provisions include allowing licensees to seek exclusivity in gas sales within specific areas and empowering regulators to set minimum gas prices.
This set-up will empower the government to set up monopoly contracts with favoured providers, most likely those connected to the ruling party.
The amendment bill proposes new regulations to fortify the regulatory framework of South Africa's gas sector. It emphasizes skills development, employment equity, and updates definitions within the Gas Act of 2001.
Aligned with the recently announced IRP 2023, which prioritizes natural gas development, the bill anticipates 7,220 MW of new gas-to-power capacity by 2030, a significant increase from the 2019 IRP.
Eskom, the national electricity utility, is expected to develop 3,000 MW, while independent producers will contribute an additional 3,000 MW. Offshore power ship projects are forecasted to provide the remaining 1,220 MW.
The amendment bill is being sold on the basis of "promoting the orderly growth" of South Africa's gas industry, broad-based Black economic empowerment, new technological development, and collaboration between the private and public sectors.
As a "transition" energy source, natural gas is not considered as egregious a greenhouse gas source under international treaty obligations, giving room for the government to pursue the fuel medium as a viable source of power generation.
However, the structure of the Bill's new public-private partnership regulations suggest that they are setting up the sector for capture by a party-aligned corporation.
