South Africa has taken a significant step toward diversifying its energy mix beyond coal, with Electricity and Energy Minister Kgosientsho Ramokgopa overseeing the signing of a heads of agreement between Eskom and the Zululand Energy Terminal. The agreement paves the way for a major liquefied natural gas (LNG) import and power generation project in Richards Bay, KwaZulu-Natal.
Under the terms of the agreement, Eskom is positioned as a long-term customer of the proposed LNG terminal, securing access to imported gas required for future power generation. Eskom board chair Mteto Nyati emphasized that the initiative extends beyond immediate electricity supply. “While the deal has not reached a full commercial scale quite yet, it does lay the groundwork for the country to generate up to six gigawatts of energy from gas, a key electricity source for the government’s integrated resource plan,” Nyati stated. He added that the project promises long-term energy security, thousands of new jobs across construction, operations, and supply chains, skills development in gas engineering and energy infrastructure, and the attraction of billions in private sector investment.
Chief Executive Dan Marokane of the Zululand Energy Terminal noted that gas-to-power remains a critical component of South Africa’s future energy system, with developers aiming to bring the project online by the start of the next decade. “We are racing that there’s time to get through to that point. Uh so 2030, 2031 is what we realistically trying to get to,” Marokane said. He acknowledged that environmental approvals and final investment decisions represent the next major hurdles. Phase two of the project is expected to introduce an onshore LNG storage tank of approximately 220,000 cubic meters and additional regasification capacity, increasing total capacity to approximately 4 million tons per annum, or around 600 million standard cubic feet per day.
Transnet, which is supporting the terminal’s development in Richards Bay, highlighted the agreement’s broader economic implications. A Transnet representative stated, “This agreement sends a strong commercial signal to the market. It demonstrates confidence in the project, strengthens its bankability and brings South Africa closer to establishing its first LNG import terminal.” The project is anticipated to unlock industrial growth within the Richards Bay Industrial Development Zone, with an estimated 70 to 88 billion Rand in power plant investment flowing into the region.
Minister Ramokgopa underscored the urgency of advancing new generation capacity. “South Africa cannot afford to delay investments in new generation capacity and energy infrastructure,” he said. He described South Africa as “a battery of the region” that will help neighboring countries meet their electricity demands through this beneficiation. The government views gas as a complement to renewable energy, helping to address future supply risks as regional gas reserves come under pressure. Additionally, the project forms part of efforts to modernize state-owned enterprises and reduce over-reliance on Mozambique for LNG imports.
The success of the Richards Bay project could ultimately determine the pace at which South Africa builds the next chapter of its energy system, balancing energy security, economic growth, and a diversified power portfolio.
