Sasol Warns of South Africa's Looming Gas Crisis
South Africa is on the verge of a gas crisis, according to business leaders who warn that the country's industries are sleepwalking into a 'gas cliff'. The government has made progress in resolving power outages and water infrastructure issues, but this new challenge threatens the economy.
The 8% of the economy and $43 billion in annual economic output generated by glassmakers, tile manufacturers, food processors, and other gas-reliant industries are holding back investments due to uncertainty over future gas supply. Sasol, the country's biggest petrochemicals company, will soon only have enough gas for its own needs, leaving these industries without a reliable supplier.
Efforts to build gas import infrastructure have been hindered by lack of demand from industrial users alone. However, investing in gas-fired power generation could make the economics of liquefied natural gas terminal projects more viable. The government is considering bids for 2 GW of gas-fired power plants, but progress is slow.
Industry associations are calling for the government to establish a task team to resolve the impending gas shortage, but so far, there has been no response. Sasol has offered a stopgap solution by setting prices for methane-rich gas produced from coal, which comes with environmental concerns.