Government wants to expropriate land for new gas plan

The Department of Electricity and Energy has unveiled its plans for South Africa’s new Gas Bill, which includes a proposal allowing the minister to expropriate land for gas facilities.

Any expropriation must be done for a public purpose or in the interest of the public and in consultation with the minister responsible for the administration of the Expropriation Act.

In a presentation to the Portfolio Committee on Electricity and Energy on 6 May, the chief director of South Africa’s nuclear, energy, and gas policy, Gift Nhlapo, outlined the proposed Gas Bill.

The Gas Bill is set to repeal the existing Gas Act of 2001, and provides for the promotion of the orderly development of South Africa’s gas industry.

It covers new developments and changing technologies in the local gas sector, with a focus on socio-economic and environmentally sustainable development.

The Bill also contains provisions providing for cooperation between the private and public sectors, with the goal of facilitating gas infrastructure development and investment.

This proposed legislation comes at a time when natural gas is becoming an increasingly important source of fuel in South Africa.

The industry is undergoing rapid expansion, both locally and in neighbouring countries like Mozambique and Namibia.

This is crucial, as South Africa currently has no significant proven oil and gas reserves, which is partly why the country mainly produces oil and gas from coal and imports crude oil.

According to the South African Oil & Gas Alliance (SAOGA), the country’s relative underutilisation of gas is due to its abundant coal resources, which have enabled South Africa to produce petroleum and by-products, as well as electricity, cheaply from coal.

However, the country now faces a significant problem, as its coal resources continue to decline and electricity prices are reaching unsustainable levels.

In addition, Eskom plans to shut down some of its ageing coal-fired power plants, with the goal of reducing coal capacity from 39 GW to 18 GW by 2040.

This will require South Africa to diversify its energy mix in the coming years, with a particular focus on renewables and gas.

SAOGA explained that gas could become a critical player in South Africa’s new energy mix, should offshore and onshore shale gas exploration prove successful.

However, at the same time, the country now faces a critical gas supply crisis, as Mozambique’s gas fields, which supply about 90% of South Africa’s industrial gas demand, are running dry.

Stellenbosch University’s Craig McGregor has warned that if no replacement gas supply is found, 70,000 people directly employed in gas-dependent industries could lose their jobs.

The Gas Bill

In light of the critical role gas could play in the country’s energy mix in the years to come, the government has moved to improve the framework regulating the industry through the Gas Bill.

Nhlapo’s presentation explained that this legislation will promote the efficient, effective, sustainable, and orderly development and operation of gas facilities and gas services.

It will also enable competitive, sustainable trade in gas, skills development, and employment equity in the gas industry.

To do so, the Bill is set to contain several provisions that, among others, give the relevant government officials and regulators expanded powers.

For example, Section 3 of the legislation will expand the regulator’s scope and responsibilities, while Section 4 empowers them to regulate tariffs and maximum prices which may be charged where there is inadequate competition.

Inspectors will also be given expanded powers under the Bill, with Section 5 providing for their appointment and Section 6 giving them the power to enter and search premises, as well as to remove items.

Further licence requirements will also be introduced, with Section 10 of the Gas Bill prohibiting the construction and operation of gas facilities and trading without a licence.

Distribution facility applicants will also be able to apply for exclusive rights under the new legislation.

The Minister of Electricity and Energy, a position currently held by Kgosientsho Ramokgopa, will also be given expanded powers under the new legislation.

For example, Section 11 will empower the minister to exempt certain companies or parties from the licensing requirements in Section 10.

The Gas Bill will also oblige the minister to develop a Gas Master Plan, which must be revised every five years.

In addition, Section 33 will empower the minister to expropriate land for any gas facilities for a public purpose or in the interest of the public, in consultation with the minister responsible for the administration of the Expropriation Act.

In line with this, the Gas Bill will allow the minister to make determinations that new gas facilities, services, or gas supply are required or must be established or acquired, “to ensure the optimal availability and supply of gas”.

“Determinations may be made for purposes of ensuring security of energy supply in the national interest or in the event of an emergency,” Nhlapo’s presentation stated.