SOUTH AFRICA — The South Africa gas-to-power program remains a strategic priority for the national grid, with the government confirming it will not abandon its energy diversification goals despite a recent procurement setback.
The Department of Electricity and Energy (DEE) recently concluded Bid Window 1 (BW1) of the Gas Independent Power Producer Procurement Programme (GASIPPPP) without appointing any preferred bidders. The outcome marks a temporary pause in the initiative, as all four submitted proposals failed to meet the tender’s mandatory functional criteria.
Addressing the outcome, Department of Electricity and Energy Minister Dr. Kgosientsho Ramokgopa reassured the public and industry stakeholders that the government is “not retreating” from its gas-to-power objectives.
“As the first in Africa to take on this ambition, we are further enabled by this first procurement process to strengthen the conditions necessary to achieve them,” Dr. Ramokgopa stated. He emphasized that the immediate responsibility of the department is now to address the underlying infrastructure, commercial, and institutional conditions required to translate current market interest into viable, deliverable projects.
Infrastructure and Supply Chain Hurdles
The BW1 procurement process was initially designed to secure approximately 2,000 MW of generation capacity, aligning with the targets set out in the Integrated Resource Plans (IRP2019 and IRP2025). Following extensive stakeholder consultations, a revised Request for Proposals (RFP) was issued on October 20, 2025.
By the closing date on May 29, 2026, the department had received four bids offering a combined total of 2,830 MW. However, the RFP strictly required bidders to provide concrete assurances of gas supply.
The DEE noted that while South Africa has potential natural gas endowments, the country currently imports the majority of its gas requirements from Mozambique and lacks a Liquefied Natural Gas (LNG) receiving terminal. Consequently, the bidders were unable to provide gas supply assurances to the level mandated by the RFP. This shortfall was cited as the primary reason none of the bids satisfied the mandatory functional criteria, resulting in zero awarded generation capacity.
Lessons Learned and Future Strategy
Rather than viewing the unawarded bid window as a failure, the DEE framed the process as a vital stress test that provided practical insights into the complex realities of the energy sector.
According to the department, the process highlighted the critical interdependencies between procurement requirements, technical feasibility, fuel-supply arrangements, enabling infrastructure, affordability, environmental obligations, and project implementation readiness. These insights will now be used to restructure and better support future iterations of the program.
Moving forward, the DEE indicated that it will prioritize consultations with relevant market participants to determine the future direction of the initiative.
The department clarified that any subsequent procurement process, including its specific requirements and timelines, will be subject to necessary statutory, governance, and procurement approvals. The DEE and the Independent Power Producer (IPP) Office reaffirmed their commitment to procurement integrity and constructive stakeholder engagement.
Further official communications regarding the next steps for the gas-to-power initiative are expected to be released through appropriate government channels before the end of the 2026 calendar year.
