Photographer: Dean Hutton/Bloomberg

South Africa Sees Natural Gas as `Cornerstone' to Baseload Power

  • Government plans to curb dependence on coal for electricity
  • Country needs infrastructure to import, transport and burn gas

South Africa, the most industrialized nation in Africa, said natural gas will become a key source of electricity in its plan to reduce dependence on coal.

“Gas will be a cornerstone of baseload” power, Energy Minister Tina Joemat-Pettersson said Tuesday, referring to round-the-clock generation. “Our vision is that gas will play a significant role in delivering timely, reliable and affordable electricity.”

The government is pushing to add gas to South Africa’s energy mix as coal-fired electricity -- accounting for more than three-quarters of total output -- falls short of demand, causing power cuts nationwide. With scant proven gas reserves of its own and virtually no gas-fired generation, the country will need to build infrastructure to import, transport and burn the fuel.

“Our key challenge is how to bring the benefits of natural gas as an energy source as early as possible,” Joemat-Pettersson said at a conference in Cape Town.

Private Funds

Government measures to tackle the power crisis that has curbed economic growth to the slowest pace since 2009 include an invitation to private companies to supply 3,126 megawatts of gas-fired generation.

There’ll probably be a series of bidding rounds and a subsequent expansion of the program, Ompi Aphane, deputy director-general of electricity policy, planning and clean energy at the Department of Energy, told the conference. That will ensure “anchor demand” for gas, which will be used by industry as well as by power plants, he said.

Sasol Ltd. is among firms to show an interest in the program. The fuel maker’s involvement could include sourcing liquefied natural gas or constructing import facilities, David Constable, chief executive officer of the Johannesburg-based company, said in a Sept. 7 interview.

“In the case of South Africa, there is no natural-gas infrastructure, so you need to build it” along with the power plants that run on the fuel, Gonzalo Ramirez, director of business development for LNG provider Excelerate Energy LLC, said Monday. The company could have a floating regasification vessel ready for South Africa within two years, he said.

Port Plans

Basic engineering assessments have been carried out at three possible import terminals, according to state-owned ports and rail operator Transnet SOC Ltd. With global LNG supplies booming and a raft of new export projects preparing to start, it’s a good time to be buying. 

“The foreseen LNG glut is catching the attention of a lot of new markets,” Ramirez said. “One of the markets that we are seeing -- and it’s very interesting because of the power-demand potential -- is Africa.”

While the South African rand’s weakness against the dollar could diminish its buying power when sourcing LNG, it shouldn’t be a “big stumbling block,” said Karen Breytenbach, head of the Independent Power Producer office, a group established by the government to procure energy from private sources.

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