Gas crisis ahead: Government’s Master Plan offers no real solution

The Gas Master Plan that Minister of Mineral Resources and Energy Gwede Mantashe published last week, offers no solution for the impending gas shortage that is expected to hit the country in 2026.

It seems that the department does not think the crisis is serious enough.

The plan considers the complete gas topology ranging from demand, supply, importation, infrastructure and distribution networks.

It recognises the critical role of natural gas in the country’s economy and anticipates the infrastructure required for the delivery of gas at a point of consumption based on a least-cost model.

South Africa currently gets its natural gas flow from Sasol, which produces it from the Pande and Temane fields in southern Mozambique. But these fields have now reached the end of their life and alternative supply of gas will only be available around the second half of 2027.

Busiswe Mavuso, CEO of Business Leadership South Africa (BLSA), says she has warned before about the “gas cliff” the country will face when the supply of gas to industrial users ceases in 2026.

“This is a crisis for businesses that collectively employ 70 000 people and generate R500 billion a year for the economy.”

She says it is a crisis that can only be avoided with a coordinated and rapid plan between business and government. Therefore you might have thought that the draft Gas Master Plan would clearly address the looming crisis and table a credible strategy to avoid it.

ALSO READ: Mantashe allays fears about looming gas crisis in SA

Gas Master Plan simply does not tackle major issue of shortage

“However, while it contains many laudable principles and objectives, it simply does not address the major issue facing the economy,” she points out.

“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.”

Mavuso says this is a major missed opportunity.

“A vision for gas supply and development for the country must start with the most urgent needs and then plan out how the system should evolve from there.

“Of course, it should not be entirely short-term in focus. It must set out a comprehensive vision.

“In some respects, the plan’s long-term vision is solid, but on the most urgent priorities, it simply sidesteps them.”

She says industrial gas users and government have been engaging on what can be done to avoid day zero and the masterplan would have been a good opportunity to set out a clear plan to coordinate the efforts of government and industry.

Mavuso says the fact that it does not, leave one feeling that the department is simply not taking the looming crisis seriously enough.

“It is a draft and perhaps it can be amended to address this weakness, but the gas cliff is just 24 months away, leaving barely any time to develop the kind of projects that will be needed to avoid it.”

ALSO READ: Energy experts shred Mantashe’s Integrated Resource Plan

Gas Master Plan hot on heels of Integrated Resource Plan

The Gas Master Plan follows the draft Integrated Resources Plan (IRP) published early this year, a key document to plan the future energy system, which was also wide off the mark.

Mavuso says that plan failed to apply the least-cost principle, spuriously elevating the price of renewable energy relative to fossil fuels.

“Business commented extensively on that draft by the deadline in March and we are waiting to see how the department will respond in the next version.”

She says it is very important that the department takes the public comments received seriously.

“Given how significant the Gas Master Plan and the IRP are for the economy, business’s voice is important. Because these two key draft documents seem to ignore considerable input already given, we are naturally all concerned that the next iterations will similarly fail to deliver to the needs of the economy.”

Mavuso warns that this lack of responsiveness to input is unfortunately an increasing feature of how government is delivering on the constitutional requirement to consult in the process of policy development.

“The department must demonstrate it is committed to getting policy right and willing to engage with those affected and take their input seriously. The Gas Master Plan is an opportunity to do so.”

ALSO READ: IRP 2023 is sloppy, inaccurate and out of date – tear it up, says Outa

Gas Master Plan only addressed 15% of the problem

Jaco Human, CEO of the Industrial Gas Users Association of Southern Africa, told EWN that the association relayed the importance of the master plan addressing the critical issues around the ‘Day Zero’ for gas. But the published draft does not address these, which renders the rest of the document of basically just of ‘academic importance’.

“The master plan references the short-term situation and the shortfall in gas supply, basically from the perspective of Richard’s Bay and the developments aligned with all the solutions the plan put forward around the Karpowerships again.”

However, he warned, that only addresses 15% of the issue.

“For the other 85%, it seemingly refers to gas imports or regional gas imports which we do not understand as we are not sure where that gas is going to come from to solve the industrial issues inland.”

Sasol will have to cease gas supply from June 2026, which is literally 24 months away, which clearly leaves a gap of 12 to 18 months.

Human says the industry is reviewing all its options and will consider its decisions in terms of ‘rowing its own boat’ in the absence of government support.

The draft Gas Master Plan is accessible here.

Mail written comments to the Director-General of the Department of Mineral Resources & Energy to Private Bag X 59, Arcadia, 0007 or deliver it by hand to Travenna Campus, 71 Meintjies Street, Sunnyside, Pretoria,0002.

You can also comment by email: GMP.Comments@dmre.gov.za. You must comment by 15 June 2024.