Eskom
Image: SA Government News Agency
Billions of rand in investments are set to flow into the Richards Bay region following the announcement that a liquefied natural gas facility will be constructed in the area. It is estimated that more than R80 billion could be invested in the coming years. Two energy projects are earmarked for the area.
Plans to build a liquefied natural gas facility were unveiled on Friday, and there are also plans to build a power plant that will work in tandem with the LNG facility. The estimated R80 billion will be for the plant alone. This follows the signing of a Heads of Agreement (HOA) between Eskom and Zululand Energy Terminal (ZET), establishing the framework for a long-term strategic partnership to support South Africa’s gas-to-power programme. Eskom will be the anchor customer.
ZET is a joint venture between Vopak Terminal Durban, owned by Royal Vopak (a company with its head office in the Netherlands), and Reatile Group Proprietary Limited, a South African company, and Transnet Pipelines (a division of Transnet SOC Ltd). It was awarded a concession by Transnet National Ports Authority (TNPA) to develop, construct, operate, and maintain the LNG terminal.
The proposed project will provide open access to liquefied natural gas (LNG) import, storage, and regasification infrastructure and, later, a plant that will be designed by Eskom. The project will be developed through a Private Sector Participation (PSP) model, leveraging strategic partners, project finance, and long-term power off-take arrangements.
The downstream power plant represents a large-scale capital investment, attracting international capital and accelerating industrial development within Richards Bay.
Key role players in the project have stated that it makes Richards Bay uniquely positioned to be South Africa’s LNG gateway. Umhlathuze (Richards Bay) Mayor Xolani Ngwezi said, “We are very much excited about this project that is coming here. It is going to be a game changer and assist the whole of KZN with electricity reliability. This project is taking place in the city of uMhlathuze. There are not many projects of this nature; we need to protect this infrastructure and the economic opportunities that are going to come with this project.”
Mafika Mndebele, chairperson of the Economic Development Portfolio Committee, said, “The committee believes investments aimed at strengthening energy infrastructure are important for restoring investor confidence, supporting industry, and creating employment opportunities.
“However, the Committee will await a formal presentation and detailed engagement before expressing a definitive position on the project.”
In a joint statement by Eskom and ZET, they said this partnership represents a significant step in advancing South Africa’s gas infrastructure ecosystem and supports national efforts to diversify energy supply, strengthen energy security, and enable economic growth. It said the lifecycle of the power plant is expected to be 25 years.
Transnet CEO, Advocate Michelle Phillips, said this project means Richards Bay is uniquely positioned to be South Africa's LNG gateway, adding that the infrastructure around the area provides an ideal platform for developing a national gas economy.
Eskom’s Group Chief Executive, Dan Marokane, stated that the agreement places the country in a position where the reality of gas-to-power is possible for the first time. “We are undertaking the programme as part of supporting the growth in renewable energy.”
Eskom chairperson, Dr Mteto Nyati, described the project as a huge step towards the reindustrialisation of the country.
“Let me be clear about what this project means; it means long-term energy security for South Africa, skills development in gas, thousands in construction and supply chain. We are expecting R70-80 billion for the power plant alone flowing into the Richards Bay Industrial Development Zone.”
For more stories from The Mercury, click the link THE MERCURY