Power
South Africa's first gas-to-power tender fails due to fuel supply worries
South Africa has cancelled its debut 2,000-megawatt gas tender after private bidders failed to provide reliable fuel supply assurances.
Key points
- The Independent Power Producer Office received four bids totalling 2,830 MW in May.
- Bidders could not meet strict requirements to secure long-term gas supplies.
- South Africa relies heavily on gas imports from Mozambique, where reserves are declining.
What happened
South Africa's inaugural gas-to-power procurement process has closed without selecting a preferred bidder, according to the country's ministry of energy and electricity. The tender, designed to secure 2,000 megawatts of generation capacity, faltered because applicants were unable to guarantee adequate fuel supplies.
Electricity and Energy Minister Kgosientsho Ramokgopa stated that the request for proposals strictly required proof of gas availability. Despite receiving four submissions totalling 2,830 megawatts in May following multiple delays, none of the consortia met this threshold, as reported by Business Day and the Johannesburg Sunday World.
The setback highlights vulnerabilities in the region's energy supply chain. South Africa imports the majority of its gas from Mozambique. However, falling production volumes in neighbouring Mozambique threaten industrial users, with domestic supplies projected to deplete significantly before the end of the decade.
Industry reaction
The Industrial Gas Users Association of Southern Africa described the tender's collapse as a disaster. The organisation warned that industrial gas consumers face looming deadlines in 2028 and 2030 to secure alternative arrangements, putting approximately 75,000 direct jobs and R700bn in annual economic activity at risk. Business Day reported that the association called for immediate presidential intervention.
Despite the setback, Africa's most advanced economy remains tied to its broader strategy of transitioning away from heavy coal reliance through gas utilisation. Plans are underway to develop a liquefied natural gas import terminal in partnership with major stakeholders, though authorities have not yet announced when a subsequent procurement round might commence.
Why it matters
This development serves as a cautionary tale for emerging economies across the continent attempting to transition their power grids from coal to gas without securing upstream fuel security first. For energy investors, the failure underscores the critical interdependence between power generation infrastructure and upstream gas development. While South Africa boasts an electricity access rate of 90.2 percent according to 2024 World Bank figures, grid stability remains heavily constrained. Policymakers and regulators across sub-Saharan Africa must ensure that integrated resource plans account for fuel supply realities, particularly as regional gas exporters face declining domestic reserves.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
- Johannesburg Sunday WorldSouth Africa’s first gas-to-power tender fails on supply concerns
- ReutersSouth Africa’s debut gas-to-power tender fails on supply concerns
- Business DaySouth Africa’s debut gas-to-power tender fails on supply worries
- BizcommunitySouth Africa’s first gas-to-power tender falls through
Context from CEII
Grids decide whether generation becomes power that homes and businesses can rely on. Generation mix, transmission and distribution losses, and tariffs together shape reliability and the case for investment.
90.2% of people in South Africa had electricity in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
