South Africa’s proposed Gas Bill risks discouraging investment in liquefied natural gas (LNG) infrastructure just as the country needs to secure its next source of gas supply, industry participants warned during the first day of Parliament’s public hearings on August 11.
The Gas Bill [B6–2026] proposes replacing the Gas Act of 2001 with an updated regulatory framework for gas transmission, storage, distribution, liquefaction, regasification and trading. It intends to address gaps in the existing Act and accommodate LNG and low-carbon and renewable gases.
While industry participants support the Bill’s objective of modernising the regulatory framework, they argue that several provisions need further refinement to accommodate the emerging gas market and provide investment certainty.
The legislation needs clearer rules for a market involving multiple suppliers, LNG terminals, capacity bookings and third-party infrastructure access, Sasol Senior Manager: Stakeholder Relations, Policy and Advocacy Jak Koseff told the Portfolio Committee on Electricity and Energy.
“If concerns are not addressed, the risk could be reduced investment in LNG and gas infrastructure at exactly the time when we need to be increasing it,” he said.
Sasol plans to provide methane-rich gas from 2028 to 2030 as a bridge to imported LNG, Koseff said. LNG supply after 2030 will require new import and regasification capacity. The Bill also needs to address how imports through South African terminals will function.
“The Bill enables and allows for multiple market participants but doesn’t establish the rules that are required to govern things like capacity booking and terminals. Without these principles, open access exists theoretically but not in practical terms.”
Sasol also called for mandatory, transparent and time-bound licensing requirements, deadlines and accountability mechanisms for the Gas Master Plan, coordination between the National Energy Regulator of South Africa (NERSA) and the Competition Commission, proportionate administrative penalties and an independent review or appeals mechanism.
Vilgro Energy raised a similar concern, saying the Bill remains rooted in South Africa’s historic single-source market built around gas imported from Mozambique through the ROMPCO pipeline and Sasol’s network.
“The core misalignment is regulating, in our view, the past versus enabling the future,” said Vilgro Energy Chief Operating Officer John Sichinga. The future market is expected to involve multiple international suppliers, LNG terminals, globally linked prices and gas transported by road as well as through pipelines, he pointed out.
Price regulation
Industry differs about the extent of gas price regulation but agrees that the framework must recognise the costs and risks of developing new LNG supply infrastructure.
Sasol welcomed the Bill’s framework for regulating tariffs and maximum gas prices but said its tariff-setting methodology remains unclear. The legislation should include guiding principles recognising the cost of capital and allowing a reasonable return on investment, Koseff proposed.
Rod Crompton, CEO of Crompton Consulting, called for “light handed” regulation of the emerging LNG industry. He proposed that NERSA should publish source-specific pricing guidelines rather than impose a single maximum price across gas sources with different cost structures.
“What we need regarding maximum gas prices is a guideline, not a regulation,” he said.
Gas molecule prices should generally be agreed between buyers and sellers while NERSA regulates natural monopoly infrastructure tariffs, Crompton said. Guideline prices could, however, become regulated maximum prices for vulnerable customers seeking protection.
A static domestic cap may not accommodate LNG prices affected by crude oil-linked contracts, global spot market indices, weather events, shipping costs and geopolitics, Sichinga warned. Vilgro proposed exempting globally traded spot LNG from rigid excessive pricing rules and domestic caps while leaving market conduct oversight to the Competition Commission.
Access and direct contracting
The Bill’s provisions governing direct gas purchases could restrict competition by requiring customers to buy through regional distributors unless the Minister determines otherwise, Sichinga said.
Sichinga proposed replacing discretionary ministerial decisions on eligible customers with objective criteria and a phased reduction of the eligible customer threshold. He also called for Section 18 to be amended to allow direct contracting between buyers and sellers rather than requiring purchases through regional distributors.
Broad ministerial determinations for large new transmission and regasification projects could also create political risk and delays for privately financed developments, Sichinga warned. Such control may be justified for state-backed infrastructure but should not be imposed in the same way on private projects, he said.
Crompton also called for third-party access to pipelines, storage and regasification facilities to be defined in the Act rather than left to ministerial determination, arguing that investors need certainty about what access will entail.
“Third-party access is a big deal when it comes to establishing competition in markets. There’s a need for the Act to define it,” he said.
Booked infrastructure capacity that is no longer required should be tradable between market participants, Crompton proposed. This would allow capacity to move to the shipper that valued it most without affecting the infrastructure tariff already set by NERSA or requiring further regulatory intervention.
