Draft gas amendment bill to be tabled in Cabinet

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Delivering her opening address at the International Gas Cooperation Summit in Durban on Tuesday, Minister Kubayi said gas is the fastest growing fossil fuel, adding that it is estimated that liquefied natural gas (LNG) supply will increase by 50% over the next five years.

She told those attending the three-day summit that South Africa has recoginised the global shift and has set itself the vision of entering the global gas market, as well as to promote the development of a gas market not only locally in South Africa but in the Southern Africa region also.

“The process of amending the Gas Act of 2004 has commenced, to the stage that this year a draft Gas Amendment Bill will be tabled in Cabinet. The amendments largely relate to a licensing framework for gas infrastructure and mandating the Minister of Energy to make determinations regarding the required infrastructure,” said Minister Kubayi.

She added that the country recognises the need to build infrastructure that’s sustainable for the long term.

Minister Kubayi said Combined Cycle Gas Turbine (CCGT) plants are cheaper to build and operate than conventional coal-fired plants and that there’s a shorter construction lead time for CCGT due to its modular nature of construction and relative simplicity.

Benefits of gas

The benefits of gas are that it contributes to the lowering of CO2 emissions and supports renewable energy growth by compensating for its inherent intermittency.

“Most importantly, the establishment of a gas market helps mitigate the decrease in coal production and use (e.g. power plant decommissioning) and fosters the creation of new job profiles and skills to develop, construct and manage new import, transport and consumption infrastructures and tertiary sectors, such as services.”

In addition, South Africa’s power, industrial and transportation sectors show great potential to contribute to a gas market development. The country has done a substantial gas demand analysis that indicates that the industrial and transport sectors represent four times the gas demand for power.

South Africa’s introduction of gas into the energy mix, could also play a major role in regional development. The sourcing of gas from neighbouring countries such as Mozambique can result in a win-win situation, where piped gas will stimulate economic activity along the routing areas in both Mozambique and South Africa.

She said the country’s National Development Plan (NDP) recognises the important role of gas in the energy mix, representing government wide commitment to a gas economy.

“The LNG-to-Power Programme will be the main vehicle through which to stimulate this envisioned gas market in South Africa. It requires an all-inclusive effort by the general government and other stakeholders in South Africa.”

Enabling framework

Minister Kubayi said over the past two years South Africa has been putting in place the enabling framework for private sector participation in the energy sector to enable gas industry development and growth.

The Department of Energy is working together with key stakeholders.

These stakeholders include national and provincial departments, state owned entities (SOEs), among others, on relevant legal, regulatory, infrastructure, environmental, societal, industrial, water and energy related aspects of a comprehensive gas industrialisation policy for South Africa.

“With regard to infrastructure, we are planning for investment in LNG import terminals, storage and regasification facilities, primary high-pressure gas transmission pipelines and secondary distribution pipeline networks.

“We have undertaken an extensive review of all legislation and regulation impacting on and required for the effective development of a gas industry in the country. Legislative and Regulatory amendments will ensure coordinated planning in respect of gas, ports and transport planning, coordinated regulation between regulators and exclude exclusivity in the infrastructure to be established.”

Gas to revive economic growth

Minister Kubayi said the country views the gas industry as a major contributor towards reviving growth, protecting living standards and facilitating economic transformation.

She added that fiscal space is limited for investment and programme development.

“We have to turn to the private sector and innovative private financing options to support our strategies and plans. We acknowledge that the private sector will respond positively only in the case of policy and regulatory certainty,” she said.