LNG Market in Limbo as SA Awaits Preferred Bidders
South Africa's liquified natural gas (LNG) import market hangs in the balance as the government prepares to select preferred bidders for its gas-to-power procurement programme. Paul Eardley-Taylor, Standard Bank's gas sector lead, says this decision is the 'tipping point' for the sector.
The programme aims to procure 2,000MW of new gas-fired electricity generation from independent power producers (IPPs). The request for proposals was issued in December 2023 and has attracted four bids representing about 2.800MW of proposed capacity, exceeding the government's target. Eardley-Taylor believes the programme will provide anchor demand needed to make LNG import infrastructure commercially viable.
Appointing preferred bidders is a critical milestone before projects can move to their next commercial phase. Assuming this happens, financing for LNG terminals, associated pipeline infrastructure, and related projects could begin progressing in 2027 as developers work towards final investment decisions. Eardley-Taylor estimates the initial wave of gas-to-power projects and associated infrastructure will require an investment of about $7.5bn.