The heat has just been turned up in South Africa’s battle for gas. Publishing a Gas Master Plan base-case report for public comment two days before most of South Africa shut down for the holidays is sure to raise eyebrows. Even more so because the report carrying the name of the Department of Mineral Resources and Energy (DMRE) has been found by the amaBhungane Centre for Investigative Journalism to have been largely written by consulting firm EPCM Holdings, who was commissioned by the state-owned gas development company iGas to produce it – starting in 2019 already.
AmaBhungane reports the 100-page report, which reads like a pitch from the gas industry, paints a shiny picture of a gas-powered future reliant on our supposed vast offshore and onshore gas deposits, but is light on detail and barely touches on the risks. For one, gas, like oil, is priced in dollars and prices fluctuate wildly, driven by demand in China and Europe. Another is geopolitical tensions like the Russia-Ukraine standoff which could threaten gas supply.
The Guardian reports Russia is Europe’s largest supplier of gas and rising tensions on the Russia-Ukraine border have already raised fears that Europe’s gas supply crisis could worsen. “Gas market prices have already surpassed record highs and threaten to saddle European households with a cost of living crisis,” reads the report.
Other recommendations in the report come with their own sets of risks:
- Convert six of Eskom’s older coal power plants to run on gas
- Convert trucks and taxis to run off gas instead of diesel
- Build thousands of kilometres of new gas pipelines
Debt-laden Eskom is already struggling to find the money to uphold its current power plants , to protect its key sites and to keep the lights on. With our debt-to-GDP ratio already above 80%, who’s going to foot the hefty bill for auto conversions and laying gas pipelines?
To dive into the risks would be putting the cart before the horse, report compiler EPCM’s technical expert, Diaan Roode, told amaBhungane. “There is not enough detail yet.”
Instead, he said, the purpose of the report was to:
- notify stakeholders that this is something that the government is looking at
- to outline where the process is — government wants to compile a roadmap, but this is a very preliminary report
- obtain comment from stakeholders
The DMRE, in response to a question from amaBhungane about how it concluded that gas would lower electricity prices, said: “The Gas Master Plan is not intended to do an analysis of electricity prices. There is a lot of publicly available information on South Africa’s electricity prices.”
So shallow, yet the Gas Amendment Bill, currently being considered by Parliament, calls on Energy Minister Gwede Mantashe to develop a gas master plan, “an indicative, forward-looking plan for gas supply and demand”.
What’s worrying is that the cover letter to the reports reads: “The Gas Master Plan, once developed, will serve as a policy instrument, providing a roadmap for taking strategic, political and institutional decisions, which will guide industry investment planning and coordinated implementation.”
With Mantashe stepping on the gas and the to-hell-with-Shell seismic survey saga still making waves, the smell of rotten eggs is intensifying! The in-depth expose by amaBhungane is worth the read.
In the markets, the rand settled down after going “full-on rollercoaster mode” in a 30c range in yesterday’s session, comments TreasuryONE. “Yesterday’s big news was the MPC hiking rates by 25 basis points, which was expected. The rand touched R15.20 before the MPC meeting but then slid, breaching the R15.50 level in late evening trade last night. The cautious tone struck by the MPC regarding the balancing of rate hikes versus economic conditions caused the market to interpret it as a little more dovish than expected, and the rand lost a little bit of ground. However, the MPC meeting also coincided with a stronger US dollar which caused EMs to lose some ground,” explains the forex trading house.
“With sentiment on the safe-haven side, we expect the rand to trade within an R15.30-50 level, but if we see continued dollar strength, we could see a bias to the R15.50 level.”
On the commodities front, TreasuryONE says there has been a definite shift in the market from gold to the US dollar, and “we have seen the yellow metal losing over $20 per ounce once again”. Gold is trading at $1,797, platinum is trading flat at $1,025 and palladium is holding onto gains above $2,300/oz at $2,344. Brent Crude broke above $90 per barrel last night but has since retreated a little and is currently trading at $89.66.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
Net worth of Africa’s billionaires – including Strive Masiyiwa and Johann Rupert – surges – Fin24
Hundreds of Cape Town township residents swindled out of R800 each in jobs-for-cash scam – Daily Maverick
How much more tax you would have to pay to fund a basic income grant in South Africa – Business Tech
Global Business
The IMF is predicting more pain for global stocks as central banks tighten monetary policy – Business Insider
Any conflict between America and Russia over Ukraine will have a global impact, even on South Africa – Daily Maverick
Japan to help with Bill Gates’ next-gen nuclear power project – AFP
Markets
Asian markets mixed as torrid week draws to close – AFP
New cryptocurrency Grimacecoin surged 285,000% after a McDonald’s joke – Business Insider
Apple hits revenue record despite chip shortage – AFP
Opinion/In-depth
Rule of law in South Africa protects even those who scorn it – The Conversation
Soaring unemployment and limited places at universities leave post-matrics with some hard choices — but help is at hand – Daily Maverick
Where the billions pouring into the energy transition are going – Bloomberg
Video
This flying car could be the future of travel after regulators officially cleared it for flight – Euronews.next
Holiday cruise giant MSC using Cuban workers as ‘slaves’, says NGO – Euronews
Tesla sees supply chain issues after record earnings – Reuters
Image credit: Pixabay
