rig
(ISSOUF SANOGO/AFP via Getty Images)
  • The Gas Amendment Bill, which has been nearly a decade in the making, is going back before Parliament again if minerals and energy minister Gwede Mantashe has his way.
  • South Africa is expecting a natural gas bonanza from huge offshore gas fields recently discovered, while an inland producer says it is also hitting large deposits.
  • The draft law drops a firm requirement for open and transparent bidding before the state sells anything to do with gas.
  • It also opens the door to geographic monopolies in the sale of any kind of gas.
  • For more stories go to www.BusinessInsider.co.za.

The state will be freed from an obligation to use only open and transparent bidding to sell gas-related assets, under a newly-revived draft law, while gaining the power to grant geographic gas monopolies to private companies.

Minerals and energy minister Gwede Mantashe this week formally resuscitated the Gas Amendment Bill, with a notice that he intends to put it before the National Assembly "shortly". If passed, it will update the 20-year-old Gas Act.

A version of the draft Bill was put before cabinet in 2012, and went through an extensive public consultation process, before getting bogged down during changes in government policy.

In the meanwhile, the prospects for the gas industry in South Africa have changed dramatically. In 2019 Total announced a gigantic gas find the Brulpadda offshore exploration block, and a 2020 find in the adjacent Luiperd block increased the potential gas output off Mossel Bay, which is now considered one of the most exciting areas for gas exploration in the world.

At the same time on-shore helium and natural gas producer Renegen has reported "spectacular" finds in the Free State.

The Gas Amendment Bill is intended to help with the "orderly development of the gas industry", and to promote black economic empowerment in the field, Mantashe said.

It will also grant the government some new powers.

Under the 2001 law, the minister in Mantashe's portfolio can set national-interest rules when it comes to new gas licences. If that includes an equity stake for the state, that law says, the government may not sell off any shares or assets without "an open and transparent bidding procedure".

The draft Bill scraps that provision entirely.

Other parts of the draft law combine to give the government and regulators the ability to grant broad commercial monopolies where they see fit.

The existing 2001 law provides for gas distributors to have geographical exclusive areas assigned to them – for piped gas, the only kind covered by the law.

The draft Bill seeks to extend the scope of the law beyond that, so that gas canisters would also be covered, and to change the definition of a distributor so that it does not only include bulk suppliers. It then provides for geographic exclusivity for any sellers of gas, not just distributors.

Once a seller has been granted a geographic monopoly, everyone in that area would be required to buy their gas from that company.

Only consumers who fall into an "eligible" group are excluded from requirement, with the energy minister setting the qualifying criteria for eligibility. 

(Compiled by Phillip de Wet)

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