The proposed Gas Amendment Bill addressed the serious regulatory gaps that limit the powers of the National Energy Regulator of SA (Nersa) to regulate maximum prices and tariffs for the different parts of the gas industry, MPs were told on Tuesday.
Parliament’s mineral resources & energy committee held public hearings on the bill, which seeks to amend the Gas Act of 2001, to provide for the promotion of the orderly development of the gas industry, promote broad-based BEE, provide for new developments and changing technologies, as well as facilitate gas infrastructure development and investment.
Nersa regulator for piped gas Nomfundo Maseti said in her presentation that Nersa had not been consulted about the revised bill before it went to the cabinet. She said the bill had been in the pipeline for more than eight years.
Nersa is responsible for issuing licences for various parts of the gas industry including gas infrastructure, regasification, transmission, distribution pipelines and downstream trading activities. It approves and monitors the tariffs charged.
Maseti said the current act was weak as Nersa does not have the power to set tariffs, only to approve maximum prices, and it does not even have this power with regard to distribution pipelines, which she said gave monopolists the opportunity to charge exploitive prices.
She stressed the importance of third parties having access to network infrastructure such as pipelines. At present the act does not allow this. This gap needed to be addressed to promote transformation and inclusion.
Maseti also supported the bill’s provision to enhance Nersa’s ability to enforce compliance, which is now difficult and takes a long time.
Submissions were also made on behalf of emerging gas producer Tetra4 — a subsidiary JSE-listed Renergen — which has a liquefied natural gas project in Virginia, the Free State. It has the first and only onshore petroleum production licence issued by the department of mineral resources & energy. It urged that the bill be amended so that Nersa can only set the maximum tariffs that can be charged only if agreed in concurrence with licensees whose profitability will depend on the tariffs set.
Tetra4 also pointed out that the amended definitions in the bill could create an ambiguous licensing and regulatory regime for domestic gas, which was already produced and regulated under the Mineral and Petroleum Resources Development Act. The same activities were covered by a multiple of statutory instruments.
Environmental lobby groups expressed strong opposition to the development of the gas industry because of its emission of greenhouse gases in the context of SA’s nationally determined contribution to combat global warming and climate change. They pointed out the global trend was to reduce reliance on fossil fuels such as oil and gas for energy generation and move towards renewable energy such as solar and wind.
SA’s integrated resource plan, which sets out the country’s energy needs and different energy sources, has allocated 3,000MW to gas — seen as a bridging energy source as SA moves away from coal-based electricity generation in a just transition.
Climate Justice Charter Movement’s Charles Simane noted that the International Energy Agency had recommended that there be no new development of oil and gas if the world is to achieve the goal of net-zero emissions by 2050. He said pursuing legislation that facilitates the development of fossil fuels was the wrong way to go.
Representing business organisation Sakeliga, Martin van Staden objected to what he said were the “racial” aspects of the bill related to the obligation to promote BEE, noting that the bill provided that the regulator could suspend a licence if there was non-compliance with BEE requirements. He believed this was a disincentive to enterprise development, and asked for the bill to exclude any reference to racial considerations.
South Durban Community Environment Alliance’s Cassandra Schnoor emphasised the need for public participation and bemoaned the lack of consultation on the bill.
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