Radebe: Stagnant SA economy needs policy certainty

Jeff Radebe. (Photo: GCIS)
Jeff Radebe. (Photo: GCIS)

Cape Town - South Africa’s economy has stagnated and if it is to grow and attract significant infrastructure investments, it needs to have policy certainty - especially on energy policy.

This was the message from Minister of Energy Jeff Radebe for delegates at the Gas-to-Power Africa Congress taking place in conjunction with African Utility Week (AUW) at the Cape Town International Convention Centre this week. Radebe was also one of the speakers at the AUW opening on Tuesday morning.

Radebe said he has committed to concluding the review of the Integrated Resource Plan (IRP) by mid-August this year. The Integrated Energy Plan (IEP) and its associated sector plans could be concluded by the end of the 2018/19 financial year.

"This achievement is one important milestone necessary to providing policy certainty geared towards stimulating the much-needed investment in our economy," he said.

Natural gas

In Radebe's view, natural gas represents a very important and growing part of the global energy system. Currently natural gas accounts for 4% of energy consumption in SA.

"Recent discoveries of new supplies of gas, the remarkable speed and scale of shale gas development globally and decreasing gas prices have heightened the awareness of natural gas as a key component of energy supply mix in a carbon constrained world economy," said Radebe.

"There are abundant supplies of natural gas in the world and more recently in our neighbouring country, Mozambique. Many of these supplies can be developed and produced at relatively low cost."

Radebe believes the relative importance of natural gas within the Southern African Development Community (SADC) is likely to increase further as greenhouse gas emissions are contained.

South Africa has a 25-year gas trade cooperation agreement with Mozambique in the energy sector and going forward, the government intends to expand this relationship for mutual benefit, according to Radebe.

"The realisation of potential natural gas reserves within (the) SADC region, and especially the potential held with South Africa for indigenous gas (shale gas and coal bed methane), represents a significant opportunity to boost economic growth, employment and investment," said Radebe.

"Regional gas markets, together with shale gas, are a potentially commercially viable option. The environmental challenges of shale gas exploitation, research and regulation certainty will also contribute to the curved path of gas in South Africa."

The Department of Energy has started developing a Gas-to-Power IPP procurement programme through its Independent Power Producer Office. This programme will serve as an anchor for gas market and infrastructure development in SA.

Radebe expects the introduction of large-scale gas in the economy will lower the country’s carbon emissions not just from electricity generation, but also from the energy sector as a whole, including the transport sector.

The department is in the process of reviewing the gas regulatory framework.

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