Stalled gas IPP programme comes alive

An oil refinery in South Africa. Please add relevant bits from story. 
File Photo: by Timothy Bernard

JOHANNESBURG – The SA Oil and Gas Alliance (Saoga) has welcomed steps by Energy Affairs Minister Jeff Radebe to unlock stalled Independent Power Producer (IPP) investments as encouraging.

“It is a clear signal of coming action,” said Saoga chief executive Niall Kramer on Friday.

Radebe’s announcement this week also brought to life the stalled gas IPP programme.

The gas-to-power programme has been on the cards since 2015 when the Department of Energy released a “request for information” document in respect of the design of a gas programme.

At the time the department said it would procure at least 3000MW through the IPP Procurement programme.

But the programme took a back seat as attention was given to the controversial nuclear programme as well as the renewable energy programme.

But Radebe, who took over the reins last month, said various steps in the implementation of IPP programmes would be taken. These included the conclusion of power purchase agreements between Eskom and 27 IPPs.

He also announced steps towards the implementation of a gas IPP programme. He said he had asked the department and the IPP Office to facilitate the initiatives towards the development of a gas market, “while exploring both indigenous and imported resources, as well as the related investment in infrastructure, particularly in collaboration with our neighbouring countries in eastern and southern Africa”.

Kramer said collaboration with neighbouring countries such as Mozambique – which has synergies with South Africa – made complete sense. He said gas was an excellent enabler of renewable energy.

“It certainly looks like the economy is in focus again with growth strategies. We have been motivating and agitating for this for years and it is arriving,” he said.

Gas sources for the gas IPP programme imports from international markets, coming to South Africa as liquids as well as domestic gas resources, said Kramer.

The department announced the gas-to-power programme in 2015 as the initial step towards the stimulation of a South Africa gas industry. This was also part of a broader plan to reduce the country’s over-reliance on coal. The IPP programme was identified as the best mechanism through which the country would create significant “anchor” gas demand.

According to the department, the IPP programme would provide a market for a potential supply of gas.

Kramer said that from the conclusion of the contracts, the gas projects could start producing power in between four to eight years. That would allow for terminal building, pipeline construction and power plant development.

“These can all happen simultaneously,” he said. “I will lead a delegation to meet these countries to enhance the relationships for the mutual benefit of the people of the regions.

“I have tasked the IPP Office to take a lead in facilitating these initiatives, as matter of urgency, to ensure that South Africa speaks with one voice and to prevent confusion in the market and the region.”

– BUSINESS REPORT