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Coordinated, rapid plan needed to avoid ‘gas cliff’ – Mavuso

Business Leadership South Africa CEO Busisiwe Mavuso

Business Leadership South Africa CEO Busisiwe Mavuso

6th May 2024

By: Sabrina Jardim

Creamer Media Online Writer

     

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In her latest weekly newsletter, Business Leadership South Africa CEO Busisiwe Mavuso warns that South Africa could face a “gas cliff” when the supply of gas to industrial users ceases in 2026.

In the May 6 newsletter, she says this is a crisis for businesses that collectively employ 70 000 people and generate R500-billion a year for the economy and argues that this crisis can only be avoided with a coordinated and rapid plan between business and government.

Mauvso states that, while the draft Gas Master Plan, gazetted by the Department of Mineral Resources and Energy (DMRE) last week, contains many laudable principles and objectives, it does not address the major issue facing the economy.

“The plan has security of supply as a core objective and models the impending day zero in its analysis of existing gas sources, but then does not set out a clear plan to deal with it.

“It notes it is ‘quite urgent’ to engage with regional gas producers to unlock additional supply but does not seriously engage with whether there is enough that can be tapped in time to avoid day zero, nor with how it could be accessed and brought to the sites that need it. This is a major missed opportunity,” she says.

Hence, Mavuso posits that a vision for gas supply and development for the country needs to start with the most urgent needs, and then plan out how the system should evolve from there.

“Of course, it should not be entirely short term in focus – it must set out a comprehensive vision. In some respects, the plan’s long-term vision is solid, but on the most urgent priorities, it simply sidesteps them.”

Moreover, she notes that industrial gas users and government have been engaging on what can be done to avoid day zero, expressing that the masterplan would have been a good opportunity to set out a clear plan to coordinate the efforts of government and industry.

“The fact that it does not leaves one feeling that the DMRE is simply not taking the looming crisis seriously enough.

“It is a draft, and perhaps it can be amended to address this weakness, but the gas cliff is just 24 months away, leaving barely any time to develop the kinds of projects that will be needed to avoid it.”

Moreover, Mavuso notes that the masterplan was published not long after the publication of the draft Integrated Resources Plan (IRP) 2023 that was also “wide off the mark.”

She argues that the draft IRP 2023 failed to apply the least-cost principle, “spuriously” elevating the price of renewable energy relative to fossil fuels.

“Business commented extensively on that draft by the deadline in March, and we are waiting to see how the DMRE will respond in the next version.”

To this end, she argues that it is important that the DMRE takes seriously the public comments received. Given how significant both the Gas Master Plan and the IRP 2023 are for the economy, she notes that the voice of business is important.

“Because these two key draft documents seem to ignore considerable input already given, we are naturally all concerned that the next iterations will similarly fail to deliver to the needs of the economy. This lack of responsiveness to input is unfortunately an increasing feature of how government is delivering on the constitutional requirement to consult in the process of policy development, as I wrote last month.

“The DMRE must demonstrate it is committed to getting policy right and willing to engage with those who are affected and take seriously their input. The Gas Master Plan is an opportunity to do so,” Mavuso states.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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