S.Africa’s Gas Bill Faces Calls for Investment Certainty, Competition

South Africa’s proposed Gas Bill is being tested against a growing challenge in the country’s energy sector: how to secure gas supplies as existing sources decline while creating a market capable of attracting billions of rand in new investment.

Stakeholders appearing before the Portfolio Committee on Electricity and Energy have broadly supported the legislation but are calling for changes they say are necessary to make the gas market more competitive, predictable and adaptable to future technologies.

The committee received 33 written submissions after inviting public comment, with 23 stakeholders requesting an opportunity to make oral presentations. The hearings are being held on 11 and 12 August, with the committee expected to begin deliberations on the Bill on 18 August after the Department of Electricity and Energy responds to the submissions.

At the centre of the discussion is the need to replace South Africa’s 2001 Gas Act with a framework that reflects the realities of a gas market facing both immediate supply pressures and longer-term changes in the energy system.

Investment and competition emerge as key tests

Sidney Mosoane, one of the first stakeholders to address the committee, said the current legislation no longer adequately reflects the challenges facing South Africa’s gas industry.

He pointed to the country’s dependence on gas from Mozambique and the expected decline in those supplies from around 2028. As production from existing fields falls, South Africa could need substantial investment in liquefied natural gas infrastructure and other supply options.

That investment will not come cheaply. Mosoane argued that private financiers would need confidence that the regulatory environment is transparent, predictable and fair before committing capital to large gas infrastructure projects.

He called for clearer rules governing ministerial determinations on gas infrastructure, including limits on discretion and opportunities for public participation.

He also warned against giving operators exclusive distribution rights for excessively long periods, arguing that this could entrench monopolies and make it harder for new entrants and black-owned businesses to compete.

The relationship between NERSA and the Competition Commission also needs greater clarity, he said, particularly on pricing and competition matters where overlapping responsibilities could create uncertainty for investors and operators.

The concerns extend beyond large infrastructure projects. Double U Gas, a black-owned LPG supplier serving households in townships and low-income communities, told the committee that smaller businesses face regulatory and commercial barriers that make it difficult to compete with established players.

Pike of Double U Gas said the LPG market remains concentrated among a small number of large wholesalers and called for a regulatory approach that better reflects the size and capacity of smaller operators.

He also raised the issue of gas-cylinder retention, which he said can leave small businesses without the equipment they need to serve customers while forcing them to absorb the high cost of replacement cylinders.

Double U Gas proposed giving NERSA greater powers to resolve cylinder disputes and introducing measures to help low-income households meet the costs of safe LPG installations.

The proposals point to a wider issue facing the Gas Bill: attracting investment will be important for expanding supply, but lawmakers must also ensure that the resulting market does not become concentrated in the hands of a few dominant players.

Hydrogen brings the energy transition into the debate

The hearings also spotlighted the need for the legislation to look beyond conventional natural gas.

Green Hydrogen Solutions urged lawmakers to ensure that the Gas Bill can accommodate hydrogen and other low-carbon gases as the energy market evolves.

Takolia of the company argued that provisions should allow hydrogen to be blended into existing gas networks and that the regulatory framework should provide room for renewable and low-carbon gases to develop.

The proposal comes as South Africa seeks to balance near-term energy security with its longer-term transition towards lower-carbon energy.

Although green hydrogen is not yet cost-competitive with conventional fossil fuels across many applications, South Africa has identified hydrogen as an important part of its future industrial and energy strategy. A regulatory framework that anticipates its development could therefore reduce the need for another major overhaul of gas legislation as the technology matures.

Committee members also questioned stakeholders on gas affordability, market competition, cylinder retention and hydrogen’s potential contribution to the country's future energy mix.

The submissions have consequently widened the debate around the Gas Bill. The legislation is not simply about regulating today's gas industry; it is also about creating the conditions for new infrastructure, investment and technologies that could shape South Africa's energy security over the next decade.

The committee will consider the submissions as it moves towards detailed deliberations on the Bill, with the final legislation expected to determine how effectively South Africa can attract new gas investment, broaden participation in the market and prepare its energy system for a changing supply and technology landscape.