South Africa faces a serious gas problem

There are very few concrete plans in place to address South Africa’s looming gas shortage, with the country set to hit a gas cliff in 2027.

A gas supply cliff would have significant socio-economic and job-loss implications in South Africa and threaten key industrial sectors.

PwC explained in its South Africa Economic Outlook for February/March 2025 that South Africa’s looming gas shortage has been known for several years.

The firm explained that this is primarily due to an expected decline in gas supply from Mozambique’s Pande-Temane fields.

“Owned and operated by Sasol, these fields are anticipated to reach the end of their life cycle in the short term,” the firm said. 

Sasol announced in August 2023 that, from mid-2026, it would no longer supply natural and methane-rich gas to industrial users and traders in Mpumalanga, Gauteng, and KwaZulu-Natal. 

However, the company has since extended this end date to mid-2027 and also made a pact with the government and Eskom to work together to avoid the looming ‘gas cliff’ in South Africa.

“However, business leaders remain concerned. Avoiding the ‘gas cliff’ requires facilitating, expediting and aggregating the demand for imported liquified natural gas,” PwC said. 

To this end, the Industrial Gas Users Association Southern Africa (IGUA-SA) has created the non-profit gas aggregator GasCo.

The organisation aims to help the country transition from a fragmented liquified natural gas market to a consolidated and structured market. This will enable secure, long-term gas supply and infrastructure development in South Africa.

Energy expert and EE Business Intelligence managing director Chris Yelland previously warned that a gas supply cliff would have significant socio-economic and job-loss implications.

This is because it would threaten key industrial sectors relying on natural and methane-rich gas, including steel, glass, ceramics, automotive, food, beverage, pulp, and paper.

According to IGUA-SA, a gas supply cliff would put approximately 60,000 direct jobs at risk, as many industries that depend on gas could face operational shutdown.

Yelland said there are also indirect impacts on other small, medium and large businesses, such as logistics, agriculture and construction. 

IGUA-SA said South Africa would risk a significant decline in its industrial competitiveness, both regionally and internationally. 

“Higher operational costs and fuel-switching to more expensive and environmentally damaging alternatives would increase consumer prices and strain the broader economy,” Yelland warned.

“Without swift action, the manufacturing sector may suffer irreversible damage from a gas supply cliff, posing a serious threat to South Africa’s economic stability.”

Companies should prepare

PwC said South Africa’s looming gas shortage and the country’s generally unstable energy supply, with Eskom still not out of the woods, means companies need an energy action plan. 

“Since load-shedding began, many have reduced dependence on public power and imported hydrocarbons,” the firm said. 

However, a comprehensive energy strategy is needed to effectively reduce the adverse impact of these energy challenges on an organisation.

This strategy must include energy efficiency measures, renewable energy investments, and alternative fuel generators. 

PwC outlined how such a plan could include the following elements –

• Implement energy efficiency measures: Replacing old, energy-intensive machinery with more efficient models will reduce real-world consumption needs of both electricity and gas. This includes energy-saving measures such as LED lighting and smart thermostats.
• Invest in renewable energy solutions: Installing solar panels to generate electricity independently from the grid can significantly reduce reliance on Eskom and other providers for energy products. 
• Power generators using alternative fuel sources: Invest in power generators that use, for example, hydrogen, biomass fuel, or landfill gas to ensure continuous operations during power outages and gas shortages. 

“Building an energy action plan requires an energy audit: a critical tool for businesses to identify opportunities for energy efficiency and cost savings,” the firm said. 

“This kind of audit looks at current energy usage and identifies opportunities for implementing changes that reduce reliance on and costs associated with the company’s energy portfolio.”