Ramokgopa: Gas master plan needs 'substantive reworking'
The draft gas master plan needs reworking, given "major deficits," electricity and energy minister Kgosientsho Ramokgopa has said.
On Monday, the minister provided an update on matters concerning his portfolio, among these being the draft of the gas master plan, which was issued earlier this year for public comment.
Ramokgopa said that based on the submissions made, the plan needs "substantive reworking."
This doesn't mean redrafting it from a clean slate, but incorporating the points raised in the public comment process.
Issues with the plan previously raised by business include that it does not clearly address a looming gas supply cliff. The gas supply crisis would impact businesses that employ 70 000 people and generate R500 billion for the economy each year, Business Leadership South Africa's (BLSA) CEO Busisiwe Mavuso wrote in May.
Prashaen Reddy, a partner at management consulting firm Kearney, points out that there are few substitutes readily and economically available for gas in energy-intensive industries. "... Hence industrialisation may further decline should no gas solution be found in the years ahead," Reddy warned.
Ramokgopa acknowledged the crisis.
"We have gone to Cabinet. We have noted the steps that we are taking. We are now proceeding and looking at LNG [liquefied natural gas] solutions," said Ramokgopa.
The quickest solution is to use the existing Rompco pipeline to get supply from Mozambique.
The minister emphasised that work was under way and more would be revealed at a later stage.
He added that government has engaged with industry players, indicating the matter is being resolved with urgency. Ramokgopa said industry had let government know that the matter should have been resolved as soon as "yesterday."
He said: "We accept that. But we will do everything possible to address this. As soon as we have found that solution, I am confident we will find that interim solution soon..."
Supply security
Industrial gas users, in the meantime, are working to establish a gas aggregation company to ensure security of supply, News24 previously reported.
One of the other matters to address is the volume of offtake - which must be significant enough to underpin a gas-to-power programme.
Government believes South Africa could opt for an offtake greater than 180 petajoules per annum. "We think we can go to about 300 petajoules," said Ramokgopa.
"We know that there is a relationship between volume and the cost of the molecule, and that is the number we want to resolve," he said.
As for costs, among the considerations is whether it will be rand-dominated, as currency risks would be posed to pricing.
Ramokgopa added that the conversations about costs – which is a government-to-government arrangement – must consider these risks. Ultimately, the costs must not be passed on to consumers.
Breakdowns
He said that opting for LNG imports would be three times more expensive than natural gas.
As for electricity supply, Ramokgopa noted the improving trend in plant performance, which has seen 138 load-shedding-free days in the country, the majority of which occurred in winter. Eskom will, in a few weeks, release the summer outlook, Ramokgopa said.
In the past seven days, unplanned breakdowns averaged 10 508 MW, compared to 15 605 MW for the corresponding period last year. Eskom has managed to do better than its winter target of keeping breakdowns at 14 000 MW to avoid load shedding.
Unplanned outages between 1 April 2023 and 8 August 2023 were at 34.88%. For the same period this year, the trend improved 8.8 percentage points to 25.99%, Ramokgopa said.
Problematic power stations – in particular, Tutuka, Kendal and Kriel – have made a turnaround in reducing breakdowns since March.
The Energy Availability Factor, a measure of plant performance, for the year-to-date is at 63.22%, compared to 55.32% for the same period last year.
"We are on the right path," Ramokgopa said.
He avoided an early declaration of the end of load shedding, but noted that numbers indicate the country is "within touching distance," especially with about 2 500 MW to be added to the grid this year. This includes 800 MW from Medupi Unit 4; 800 MW from Kusile's Unit 6; and 980 MW from Koeberg Unit 2.
Eskom is also relying less on open-cycle gas turbines (OCGT) that run on diesel, with Ramokgopa remarking that these plants are being used as intended, during periods of peak demand. This resulted in a considerable saving on diesel expenditure – nearly R10 billion during the period in question.
"Expenditure on OCGTs between 1 April and 7 August 2024 was R3.48 billion ... less than the R13.07 billion spent last year over the same period...", a presentation from the department read.
Energy transition
Ramokgopa also took the opportunity to reaffirm the country's commitment to a just transition to a low-carbon economy based on the Just Energy Transition Investment Plan (JET-IP), which applies to the period between 2023 and 2027.
The grant and concession funding available through the JET Pact with rich nations has not yet been "fully exploited," said Ramokgopa.
The country needs an investment of R1.5 trillion to meet climate commitments while protecting workers and communities. "It is a huge ticket, we know the fiscus won't be able to carry that, so it is important that we look at bespoke financing instruments to support this," he said.
He emphasised that South Africa would determine the agenda for the just transition and it wouldn't be imposed on the country by funders.
On Monday, the minister provided an update on matters concerning his portfolio, among these being the draft of the gas master plan, which was issued earlier this year for public comment.
Ramokgopa said that based on the submissions made, the plan needs "substantive reworking."
This doesn't mean redrafting it from a clean slate, but incorporating the points raised in the public comment process.
Issues with the plan previously raised by business include that it does not clearly address a looming gas supply cliff. The gas supply crisis would impact businesses that employ 70 000 people and generate R500 billion for the economy each year, Business Leadership South Africa's (BLSA) CEO Busisiwe Mavuso wrote in May.
Prashaen Reddy, a partner at management consulting firm Kearney, points out that there are few substitutes readily and economically available for gas in energy-intensive industries. "... Hence industrialisation may further decline should no gas solution be found in the years ahead," Reddy warned.
Ramokgopa acknowledged the crisis.
"We have gone to Cabinet. We have noted the steps that we are taking. We are now proceeding and looking at LNG [liquefied natural gas] solutions," said Ramokgopa.
The quickest solution is to use the existing Rompco pipeline to get supply from Mozambique.
The minister emphasised that work was under way and more would be revealed at a later stage.
He added that government has engaged with industry players, indicating the matter is being resolved with urgency. Ramokgopa said industry had let government know that the matter should have been resolved as soon as "yesterday."
He said: "We accept that. But we will do everything possible to address this. As soon as we have found that solution, I am confident we will find that interim solution soon..."
Supply security
Industrial gas users, in the meantime, are working to establish a gas aggregation company to ensure security of supply, News24 previously reported.
One of the other matters to address is the volume of offtake - which must be significant enough to underpin a gas-to-power programme.
Government believes South Africa could opt for an offtake greater than 180 petajoules per annum. "We think we can go to about 300 petajoules," said Ramokgopa.
"We know that there is a relationship between volume and the cost of the molecule, and that is the number we want to resolve," he said.
As for costs, among the considerations is whether it will be rand-dominated, as currency risks would be posed to pricing.
Ramokgopa added that the conversations about costs – which is a government-to-government arrangement – must consider these risks. Ultimately, the costs must not be passed on to consumers.
Breakdowns
He said that opting for LNG imports would be three times more expensive than natural gas.
As for electricity supply, Ramokgopa noted the improving trend in plant performance, which has seen 138 load-shedding-free days in the country, the majority of which occurred in winter. Eskom will, in a few weeks, release the summer outlook, Ramokgopa said.
In the past seven days, unplanned breakdowns averaged 10 508 MW, compared to 15 605 MW for the corresponding period last year. Eskom has managed to do better than its winter target of keeping breakdowns at 14 000 MW to avoid load shedding.
Unplanned outages between 1 April 2023 and 8 August 2023 were at 34.88%. For the same period this year, the trend improved 8.8 percentage points to 25.99%, Ramokgopa said.
Problematic power stations – in particular, Tutuka, Kendal and Kriel – have made a turnaround in reducing breakdowns since March.
The Energy Availability Factor, a measure of plant performance, for the year-to-date is at 63.22%, compared to 55.32% for the same period last year.
"We are on the right path," Ramokgopa said.
He avoided an early declaration of the end of load shedding, but noted that numbers indicate the country is "within touching distance," especially with about 2 500 MW to be added to the grid this year. This includes 800 MW from Medupi Unit 4; 800 MW from Kusile's Unit 6; and 980 MW from Koeberg Unit 2.
Eskom is also relying less on open-cycle gas turbines (OCGT) that run on diesel, with Ramokgopa remarking that these plants are being used as intended, during periods of peak demand. This resulted in a considerable saving on diesel expenditure – nearly R10 billion during the period in question.
"Expenditure on OCGTs between 1 April and 7 August 2024 was R3.48 billion ... less than the R13.07 billion spent last year over the same period...", a presentation from the department read.
Energy transition
Ramokgopa also took the opportunity to reaffirm the country's commitment to a just transition to a low-carbon economy based on the Just Energy Transition Investment Plan (JET-IP), which applies to the period between 2023 and 2027.
The grant and concession funding available through the JET Pact with rich nations has not yet been "fully exploited," said Ramokgopa.
The country needs an investment of R1.5 trillion to meet climate commitments while protecting workers and communities. "It is a huge ticket, we know the fiscus won't be able to carry that, so it is important that we look at bespoke financing instruments to support this," he said.
He emphasised that South Africa would determine the agenda for the just transition and it wouldn't be imposed on the country by funders.
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