Spring Lights Gas (SLG), one of the two largest piped gas suppliers to KwaZulu-Natal industry, will commission a new compressed natural gas (CNG) plant in the south of Durban by year-end.

Newly appointed CEO Nkosinathi Solomon on Thursday revealed that construction of the plant was about to begin.

He declined to provide a precise cost for developing the plant, but indicated that it would be “somewhere between R50-million and R100-million”.

The new facility, which would use German technology and equipment manufactured in China, would provide 250 000 GJ/y to 550 000 GJ/y of energy once operational.

Owing to its capital rather than labour intensive nature, the facility would create only ten permanent jobs, although there would be multipliers, with logistics companies tasked with trucking the CNG to customers likely to be the main beneficiaries.

Solomon explained that SLG had taken a strategic decision to invest in CNG to develop the stranded gas market, while different sources of gas were sourced and solutions to challenges within the gas sector in South Africa were dealt with.

These challenges included a shortage of additional gas molecules, as well as capacity constraints owing to limited pipeline infrastructure. More gas supply options were required to grow the piped-gas industry in line with the objects of the Energy White Paper and the Gas Utilisation Master Plan, he added.

By 2020, additional gas could become available in large quantities from the Rovuma basin, in Mozambique. The current upgrade of the Rompco pipeline would also play a vital role in bringing additional gas molecules to South Africa.

However, for the South African piped-gas industry to benefit from these and other new liquefied natural gas (LNG) sources, the country needed to invest substantial sums in infrastructure, storage and regasification facilities, Solomon suggested.

A large anchor customer, such as an Eskom gas-fired power station, would also be required to provide the economies of scale needed to warrant this level of investment.

Meanwhile, Solomon noted that the company was looking to extend its footprint by supplying CNG to customers within a radius of 150 km of Durban.

“We are excited to help develop the market for gas. This means that customers who would not have considered gas will now [have access to this energy source],” he said.

Although the new facility was targeted at the industrial sector, there was also potential to leverage the market for natural gas-powered vehicles.

A R4-million project in partnership with Toyota had seen the conversion of its fleet of 95 forklifts to gas. SLG saw this as an important opportunity to experiment and contributed 30% of the capital for the project. “We’ve proven the technology does work. We can now expand this to other clients,” Solomon said.

He added that SLG was being inundated with calls from clients wishing to use gas as an alternative power source, as well as from clients wanting to invest in power generation to take advantage of Eskom’s independent power producer (IPP) programme.

Although the majority were small players capable of generating just 10 MW to 50 MW of power, this was nevertheless a vibrant market.

“We are seeing a lot of interest because of load-shedding. Customers are interested in producing power from gas and we want to play in that space,” he said.

At present, SLG supplied methane-rich gas directly from Sasol Synfuels in Secunda to blue-chip companies, such as Toyota, Sapref, Engen and IPP Newcogen, in Newcastle. SLG currently had a 43% share of the KwaZulu-Natal market.

Although it was initially created as an empowerment entity by Sasol, its former parent is now its main competitor. The company began trading in Durban South in 2002, expanding to target the whole of the province in 2006.

In 2012, Kwande Capital and Zungu Investments acquired a 51% shareholding in SLG, buying out the balance of the shares a year later.