Interest pours in for Transnet’s liquified gas project at Richards Bay

Transnet National Ports Authority (TNPA) says about 19 companies – including major developers and operators – from South Africa, Europe, Asia, America and the Middle East have expressed interest in the development of a liquified natural gas (LNG) terminal at the Port of Richards Bay.

According to the ports authority, the request for information it issued in February received a positive response from companies aligned to different industries such as design, development, construction, finance and operations.

It is hoped that the development, which is scheduled to be completed by 2026, will provide the country with much-needed respite from its costly energy supply crisis.

Read: Transnet eyes Richards Bay port for new liquified gas hub [Jul 2019]

Alternative source of energy

According to TNPA, the successful development of the LNG terminal will not only aid the country’s Integrated Resource Plan (IRP), but will also help meet the target of generating 3 000 megawatts (MW) of gas power by 2027.

TNPA Richards Bay Port manager Captain Dennis Mqadi says the need to combat the country’s energy supply problem is one of the factors motivating Transnet to accelerate the project.

“TNPA is accelerating the implementation of this project to assist with the country’s energy needs and ensure that it provides the transition energy required towards SA’s decarbonisation,” Mqadi says in a statement.

Energy expert Roger Lilley tells Moneyweb the success of the project will provide much-needed relief to power utility Eskom, which has been operating at a shortfall of about 4 000MW of power. He adds that using gas will be a positive move towards cleaner energy sources.

“I think gas is a sensible solution because ultimately, although gas is still a fossil fuel, it is a far cleaner-burning fossil fuel than coal – and also you don’t have the added environmental problems related to mining because the gas comes from somewhere else, so the problem is very different,” he says.

Lilley adds that should SA continue to diversify its energy generation efforts, it will be on track to achieve a coal-free power generation model by 2050.

However, with Transnet planning to approach the market and begin the bidding process soon, Lilley says it will be crucial that stringent and transparent vetting processes are followed, to not only avoid corruption but delays to the development as well.

Read: Load shedding crisis as Eskom breakdowns hit record levels

Not a solution for load shedding

Although the development of the LNG Terminal will provide much-needed relief to Eskom’s energy supply woes, Lilley says it will not solve the country’s load shedding problem.

He tells Moneyweb that because the current energy supply crisis goes beyond generation shortages, adding generation capacity to the system will not solve the problem of rolling blackouts.

“Eskom talks about the fact that we have a generation shortfall – and we do in general – but we also have big problems with our transmission and distribution networks and so we see transformers failing, we see power lines failing, we see all sorts of problems in the infrastructure that is adding to the problem,” he says.

“So just increasing generation on its own is not a guarantor of no more load shedding because if the transformers that distribute the electricity from one place to another fail, or the substation catches fire, you’re still not going to have electricity on the other side of that substation or transformer.”

Instead, Lilley calls on government to resolve various infrastructure problems along the power supply network or run the risk of the LNG terminal project not reaching its full potential.

Read: Eskom warns of a dark winter ahead