The South African and Mozambican governments are discussing three projects in Mozambique in a bid to avoid a critical shortage that could lead to a “gas cliff” as South African industries are stranded without additional supply.
South Africa is expected to experience acute shortages of natural gas from 2028 as production from the Sasol-owned Temane and Pande gas fields declines. The gas is fed via the Rompco pipeline — jointly owned by Sasol and the Mozambican and South African governments — to Sasol’s petrochemical plant in Secunda and the steel and petrochemical complex in Sasolburg.
The two governments are in negotiations over the Central Termica de Maputo, Central Termica de Beluluane and the $6bn Mphanda Nkuwa Hydroelectric project on the Zambezi River, which together could offer as much as 2000MW of power to South Africa.
Mozambique has stressed its wish to retain control of its key gas projects.
A draft memorandum of understanding for the three projects has been developed under the leadership of the department of energy & electricity with the participation of Eskom Generation and the National Transmission Company of South Africa.
“There is a need to find interim options to secure security of supply,” Tebogo Seokolo, deputy director-general for Africa in the department of international relations & co-operation, told parliament’s related portfolio committee on Wednesday.
The memorandum was signed at the fourth session of the bi-national commission (BNC) between South Africa and Mozambique in Maputo in December, which was attended by President Cyril Ramaphosa and 14 ministers and senior officials.
A business forum was held on the sidelines of the summit.
Rompco pipeline secured
Also signed was an agreement to extend the Rompco pipeline joint venture beyond its 2030 expiry date. Six further agreements at the BNC has brought the total to 78, and a joint trade and investment commission was established as a mechanism for resolving market access issues, sharing information on trade and investment opportunities and co-ordinating cross-border, value-chain projects.
A memorandum of understanding was also signed on transport-related matters to facilitate collaboration on investments in the Port of Maputo and terminal operations, improve rail infrastructure in Mozambique and co-operate on the supply and maintenance of rolling stock and the maintenance of gas pipelines.
Mozambique has huge natural gas reserves, including the Rovuma Basin offshore Cabo Delgado province in the north of the country with estimated reserves of more than 85-trillion cubic feet.
Eskom has for decades also relied on the electricity generated by the Cahora Bassa dam and is Mozambique’s biggest energy customer.
‘Vital partner’
“Mozambique is a cornerstone of South Africa’s regional energy security, industrial competitiveness and low-carbon transition agenda,” Seokolo said. “Its abundant hydropower, natural gas and renewable energy resources make it a vital partner in advancing South Africa’s Integrated Resource Plan, just energy transition and regional economic goals.”
Seokolo told MPs that more than 300 South African companies operate in various sectors in Mozambique, with a total investment of about R156bn and providing an estimated 500,000 jobs.
Mozambique is South Africa’s biggest trading partner in Africa and the fourth-largest export market after China, the US and Germany. Shipments in 2024 amounted to R119.4bn and imports to R19.4bn, Seokolo said.
South Africa, in particular Gauteng, Limpopo and Mpumalanga, relies heavily on exports via Maputo, especially since the logistics blockages at Durban and congestion at Richards Bay.
Seokolo said South Africa’s development finance institutions — the Development Bank of Southern Africa (about R70bn), the Industrial Development Corporation (about R40bn) and the Export Credit Insurance Corporation — had extended a combined R153bn to Mozambique.
MPs expressed concern about the insecurity arising from the insurgency by Islamic militants in the Cabo Delgado district and political instability in Mozambique, and the implications for South Africa.
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