Southern African bloc backs $17bn gas infrastructure plan

22nd August 2023

By: Bloomberg


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A southern African bloc of nations backed a $17-billion natural gas infrastructure plan to bolster energy supplies on a continent where almost half of the population lacks access to power.

The 16-member Southern African Development Community approved the blueprint to invest in infrastructure such as pipelines and terminals for local and imported supplies. While not yet a major source of gas, the bloc is home to some significant discoveries with projects in various stages in Mozambique, Tanzania and South Africa.

The SADC endorsed the 15-year plan to coordinate resources, it said last week after a meeting between heads of state in Luanda, Angola’s capital. It focuses on the use of gas from northern Mozambique and southern Namibia, as well as import terminals in southern Mozambique and South Africa.

With new coal projects unlikely, nuclear power considered costly and climate change threatening hydroelectric generation, “this leaves few options,” according to the plan.

The plan still requires funding, at a time when the financing of fossil-fuel supplies grows increasingly challenging due to environmental concerns and a global shift to cleaner sources of energy.

Project delays could also present an obstacle, as demonstrated by liquefied natural gas projects by TotalEnergies and Shell in the region that have fallen years behind their initial target to start production.

“SADC member states have growing populations and an urgent need to drive inclusive economic growth, reduce poverty and income inequality, and create prosperity and wellbeing for all,” the group said. Gas can provide a complementary source of energy, “expediting the development of the power grid in renewable resource rich areas,” it said.

The plan allocates more than $9-billion of investment in Mozambique that’s needed to build power projects and infrastructure, leveraging discoveries offshore the north of the country.

Much of the blueprint relies on South Africa drafting a new energy road map, known locally as the Integrated Resource Plan, which includes regional gas supply. The nation, by far the biggest power consumer in the bloc, published its last IRP in 2019.

Edited by Bloomberg




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