Gas master plan fails to tackle gas supply crisis

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I have written before about how we face a “gas cliff” 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 R500bn a year for the economy. It is a crisis that can only be avoided with a coordinated and rapid plan between business and government.

Related news: Mantashe releases Gas Master Plan for public commment 

So, you might have thought that last week’s draft Gas Master Plan, gazetted by the Department of Mineral Resources and Energy, would clearly address the looming crisis and table a credible strategy to avoid it. But, while it contains many laudable principles and objectives, it simply does not address the major issue facing the economy. 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.

This is a major missed opportunity.

A vision for gas supply and development for the country needs to 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.

Industrial gas users and government have been engaging on just 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. The fact that it does not, leaves one feeling that the DMRE 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 kinds of projects that will be needed to avoid it. It comes after the draft Integrated Resources Plan that was published early this year, a key document to plan out the future energy system, that was also wide off the mark. 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 DMRE will respond in the next version.

It is very important that the DMRE takes seriously the public comments received. Given how significant both 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. 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, as I wrote last month. The DMRE must demonstrate it is committed to getting policy right and willing to engage with those who are affected and take seriously their input. The Gas Master Plan is an opportunity to do so.

Author: Busisiwe Mavuso

Busi is CEO of Business Leadership South Africa (BLSA).

BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. BLSA is committed to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.

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