If South Africa is looking to incorporate more gas into its energy mix, assisting it to move away from carbon-intensive coal, hurdles such as policy uncertainty and legislation need to be resolved in the short-term, according to multidisciplinary engineering consultancy Gibb.

This includes government’s Gas Utilisation Master Plan, or Gump, which has been in the planning phase since 2012.

Speaking at a Gibb and Frost & Sullivan-hosted roundtable on gas, Gibb environmental GM and director Dr Urishanie Govender said that “very little” was being communicated about the changes in the country’s energy mix and decisions around the Gas-to-Power Programme associated with Gump.

She highlighted that industry needed “clear signals” and that the energy mix plan for the country needed to be updated yearly. “Everything else will then follow – investors, developers and stakeholders will have a lot more confidence in the direction of the country’s energy policy.”

Govender highlighted bringing gas demand and supply on stream at the same time, as well as spreading it geographically to stimulate broader localised demand through South Africa, as key challenges in terms of developing the gas sector.

She noted that, without localised gas demand, it was difficult to develop distributed gas supply and, without distributed gas supply, it was difficult to develop localised gas demand.

“Certainly there is a need for access to electricity. With the increasing commitment towards a green economy . . . low-carbon energy footprints, [and] diversifying the energy mix, gas is a key player,” said Govender.

She added that strong projected economic growth in sub-Saharan Africa would need to be matched by energy investment, as gas was key to plugging the continent’s energy deficit. This investment would result in a gas infrastructure opportunity of $174-billion over the next 20 years.

Govender stated that urbanisation would further drive the need for increased power, with cities such as Lagos, Johannesburg, Dar es Salaam and Nairobi driving the use of domestic gas.

Meanwhile, she pointed out that South Africa was not the only country struggling with policy hurdles, citing Angola and Cameroon as countries that lacked legislative certainty.

“Looking at gas legislation and factors such as master plans, loyalties and taxes, certainties around local content, as well as the percentage of required free carry, we found that Mozambique, Ghana and Cote d’Ivoire were the green areas where there is a high level of certainty about developing gas infrastructure, making these countries more attractive to investors,” said Govender, adding that, often, project developers and the private sector were not concerned about the cost of the project or the timelines, but the certainty of the project.

“In South Africa, the concern is about the finalisation of the master plan. Those are the critical areas we look at when considering project attractiveness in these countries,” she concluded.