Issue 143, Feb 2025

Roundup of major energy and electricity news and developments: 3 February to 16 February 2025

1. South Africa inks 25-year deal for first LNG import terminal in Richards Bay.

2. PetroSA's troubled deals spark scrutiny of its consulting and legal advisory firms.

3. Manganese Metal Company and Richards Bay Minerals shift to renewable energy.

4. Mining giants unite for 400-million-litre renewable diesel initiative.

5. NERSA subcommittee backs Eskom’s retail tariff plan but puts brakes on fixed charges.

6. South Africa unlocks private investment and cuts red tape for infrastructure development.

7. Exxaro CEO resigns amid governance probes.

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1. South Africa inks 25-year deal for first LNG import terminal in Richards Bay.

Transnet National Ports Authority (TNPA) has signed a 25-year Terminal Operator Agreement (TOA) with Zululand Energy Terminal (ZET) for the development of South Africa’s first liquefied natural gas (LNG) import terminal at the Port of Richards Bay. Zululand Energy Terminal, a joint venture between Vopak Terminal Durban and Transnet Pipelines, won the contract following an RFP award in January 2024. The agreement grants the consortium rights to develop, finance, and operate the terminal, marking a significant step in the country’s energy transition. The project will be executed in two phases. The first phase will establish a floating storage unit (FSU) with a capacity of 135,000 – 174,000 cubic meters and onshore regasification infrastructure handling 400-million standard cubic feet per day (mmscfd). A new pipeline connection will link the terminal to the Lilly Pipeline via Empangeni, ensuring regional access. The second phase will construct an onshore storage tank of up to 220,000 cubic meters to replace the FSU, increasing capacity to 600 mmscfd and supporting gas-to-power projects. A final investment decision is expected in 2026, dependent on securing customer commitments. The terminal aims to mitigate South Africa’s impending “gas cliff” to industrial gas users in Gautengm Mpumalanga and Kwa-Zulu-Natal, although there are some doubts that the timing and ipeline calacity will allow this. Oliver Naidu, president of Vopak South Africa, emphasised the project’s significance, stating, “Our expertise in LNG infrastructure, alongside strong partnerships, positions us to deliver a world-class terminal”. The LNG terminal is expected to create 1000 jobs during construction and drive industrial growth.

2. PetroSA's troubled deals spark scrutiny of consulting and legal advisory firms.

PetroSA is demanding accountability from consultancy firm Mazars, following a series of failed high-stakes deals. These ventures, intended to revitalise South Africa's energy sector, have instead culminated in financial losses and operational setbacks. In October 2023, Mazars in association with legal advisory firm, Centurion Law Group (CLG), conducted a due diligence on businessman Lawrence Mulaudzi, controversially assessing him as “low risk” despite his history of financial instability and alleged political connections. This assessment paved the way for PetroSA to engage in two substantial offshore gas agreements with Mulaudzi's entities: a R21.6bn contract with Equator Holdings and a R5.2bn partnership with EquaTheza. However, by March 2024, Equator Holdings faced liquidation due to financial mismanagement, leading to the collapse of both deals. Compounding these issues, PetroSA had also entered a R3.7bn agreement with Russia's Gazprombank Africa, facilitated by Mazars, which CLG also advised to be “low risk”. This deal, too, unravelled amid concerns over sanctions and financial viability. In response to these failures, PetroSA issued a letter in October 2024 demanding a refund of over R1m from Mazars, citing alleged overbilling and substandard advisory services. An internal audit revealed that PetroSA was billed for 223 hours by a “senior” CLG legal consultant who possessed only 10 months of experience, primarily as a legal intern. Mazars, now part of the global firm Forvis Mazars, has defended its role, asserting confidence in its processes and the quality of advice provided, while disputing claims of professional negligence. These developments have intensified scrutiny of PetroSA's decision-making and the efficacy of its consultancy engagements, especially as the company prepares for its integration into the newly formed South African National Petroleum Corporation (SANPC) in April 2025. Members of Parliament have expressed reservations about PetroSA's readiness, and the potential impact of these failed deals on the SANPC's launch. 

3. Manganese Metal Company and Richards Bay Minerals shift to renewable energy.

South Africa's mining sector is taking steps toward sustainability, with Manganese Metal Company (MMC) and Rio Tinto's Richards Bay Minerals (RBM) initiating major renewable energy projects. MMC, a leading producer of high-purity manganese, has secured a 20-year energy supply agreement with recently licensed electricity trader, NOA Group (part of the Old Mutual group) to source approximately 70% of its electricity from renewable sources. This partnership will utilise NOA's 86 MW portfolio of wind and solar photovoltaic facilities, delivering an estimated 245 GWh of clean energy annually through Eskom's wheeling framework. Karel Cornelissen, CEO of NOA Group, emphasised that this agreement aligns MMC’s operations with global decarbonisation efforts, enhancing environmental sustainability. Similarly, RBM, a major titanium mining operation, is advancing its green energy agenda to reduce reliance on Eskom's grid. The company plans to replace 60% of its power consumption with renewable energy sources, significantly reducing its carbon footprint and enhancing energy security for its operations. These initiatives reflect a broader trend among South African mining companies to adopt renewable energy solutions, aiming to mitigate environmental impact and ensure more reliable power supply amid the country's energy challenges.

4. Mining giants unite for 400-million-litre renewable diesel initiative.

In a move towards sustainable mining practices, Sasol, Anglo American and De Beers have announced a joint venture to produce 400-million litres of renewable diesel annually. This project aims to significantly reduce the carbon footprint of mining operations in South Africa. The collaboration focuses on cultivating feedstocks such as Solaris and Moringa on over 20 hectares of land provided by De Beers in Limpopo and the Free State. These plantations will supply vegetable oil to Sasol's existing facilities, which are equipped to process various feedstocks into renewable diesel more efficiently and cost-effectively than establishing new plants. Alison Atkinson, projects and development director at Anglo American, emphasised: “This is an important initiative to strengthen our commitment to reducing our greenhouse gas emissions by 2040. It is an innovation that contributes to our sustainability journey as a business and our quest to maintain a healthy environment by creating carbon neutral operations.” The renewable diesel produced will power the companies' mining operations, marking a significant step towards decarbonising the sector. While South Africa's renewable fuels market is still emerging, growing demand from end-users aiming to meet their own decarbonisation goals suggests a promising future for such initiatives. The partnership not only underscores the mining industry's shift towards greener energy solutions but also highlights the potential for large-scale renewable fuel production in South Africa. By leveraging existing infrastructure and collaborative expertise, Sasol, Anglo American and De Beers are setting a precedent for sustainable practices in heavy industries. As the project progresses, it is poised to serve as a model for integrating renewable energy into industrial operations, contributing to broader environmental objectives and showcasing the viability of sustainable fuel alternatives in Africa's mining sector.

5. NERSA subcommittee backs Eskom’s retail tariff plan but puts brakes on fixed charges.

The Electricity Subcommittee (ELS) of the National Energy Regulator of South Africa (NERSA) met on 11 February 2025 and recommended that the application by Eskom for significant changes to the structure of its retail electricity tariffs, as detailed in the Eskom’s Retail Tariff Plan RTP 2025, should be broadly approved. This latest decision follows the announcement on 30 January 2025 of NERSA’s sixth multiyear electricity price determination (MYPD6) for the 2025/26, 2026/27 and 2027/28 financial years. The only change recommended by the ELS to Eskom’s RTP 2025 was that the fixed monthly generation capacity charge (GCC) applied for by Eskom for its retail tariffs should be phased in over the next three years for reasons of affordability, and that this should be limited to only 20% of what Eskom had applied for in 2025/26, and to 30% in 2026/27. The recommendation for the GCC in the years thereafter is unclear. The recommendation by ELS will now go to the NERSA board for approval in the next few weeks. Another recent decision of note by NERSA was to deny the application by Eskom for a renewable energy curtailment framework of up to 7.5% of the energy contracted with independent power producers (IPPs). It is said that such curtailment could unlock about 3000 MW of additional new renewable energy projects in the Eastern, Western and Northern Cape provinces of South Africa. However, NERSA has delayed any decision on the curtailment framework pending clarification from Eskom on the expected costs of such curtailment and how such costs would be recovered. In a final recent decision of note, NERSA approved the net-billing rules for electricity distributors and published the rules on its website. The net-billing rules allow for both electricity consumption by customers as well as electricity generation by customers back into the network, and the metering and billing thereof.

6. South Africa unlocks private investment, cuts red tape for infrastructure development.

In a strategic move to enhance infrastructure, the South African government is rolling out innovative, new, funding mechanisms to attract and accelerate private investment in infrastructure development and expedite project execution. Energy & Electricity Minister Dr. Kgosientsho Ramokgopa announced a forthcoming grid funding instrument aimed at strengthening the country’s power transmission network. This initiative is designed to serve as a model for all state-owned enterprises (SOEs) to facilitate private sector participation in infrastructure projects. Ramokgopa emphasised that private investment is key to upgrading South Africa’s electricity infrastructure in order to address some of the immediate challenges in the energy sector, improve efficiency and reduce load shedding. He further indicated that this approach would accelerate the implementation of Eskom’s ambitious Transmission Development Plan TDP 2033 and would also set a precedent for collaborative efforts across various industries. In a complementary move, the National Treasury has cut red tape for public-private partnerships (PPPs) under R2bn, streamlining approval processes to accelerate infrastructure spending. Finance Minister Enoch Godongwana explained that the reforms make it easier for private investors to participate in projects by removing bureaucratic delays. By simplifying the regulatory process, the government hopes to fast-track infrastructure projects in sectors like energy, transport, water and healthcare. It is hoped this will enhance public services, stimulate economic growth and create jobs. The combination of the grid funding instrument and Treasury’s PPP reforms represents a shift towards greater collaboration between the public and private sectors. These efforts are expected to modernise South Africa’s infrastructure and drive long-term economic stability.

7. Exxaro CEO resigns amid governance probes.

Nombasa Tsengwa, the suspended CEO of South African coal producer Exxaro Resources, has resigned with immediate effect, citing concerns over the handling of an internal investigation into her conduct. In her resignation letter dated 5 February 2025, Tsengwa expressed that the investigation demonstrated “a predetermined outcome”, leading to her decision to step down. Tsengwa's resignation follows her precautionary suspension in December 2024, initiated by Exxaro's board over allegations related to workplace conduct and governance practices. The company appointed law firm ENS to conduct an independent investigation into these claims. During the investigation, Tsengwa faced accusations including bullying, conflict of interest and breaches of duty of good faith. She challenged her suspension in court; however, her urgent application was dismissed, with the court ruling the matter lacked urgency. Exxaro's board chairman, Geoffrey Qhena, confirmed the acceptance of Tsengwa's resignation and announced that long-time finance director, Riaan Koppeschaar, will continue as acting CEO while the company expedites the appointment of a permanent successor. Tsengwa, who became Exxaro's first female CEO in August 2022 after leading its coal division, also served as the president of the Minerals Council of South Africa and deputy chairperson of the Energy Council of South Africa. Her departure comes at a pivotal time for Exxaro, as the company seeks to diversify its portfolio beyond coal into cleaner energy minerals such as copper and manganese. The company had previously discussed potential acquisitions, including the Tshipi Borwa manganese mine, as part of its strategic shift. Tsengwa's resignation adds a layer of complexity to Exxaro's ongoing transformation efforts and may influence both internal dynamics and investor confidence in the company's future direction.

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