Nersa welcomes its proposed power in bill to set gas tariffs

The proposed Gas Amendment Bill aims to deal with 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. The regulator approves and monitors the tariffs charged.

Maseti said the current act is 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. This, she said, gives monopolising companies the opportunity to charge exploitative 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 needs to be dealt with to promote transformation and inclusion.

Maseti also supported the provision in the bill enhancing Nersa’s ability to enforce compliance, which is now difficult and takes a long time to impose.

Submissions were also made on behalf of emerging gas producer Tetra4 — a subsidiary of JSE-listed Renergen — which has a liquefied natural gas project in Virginia, 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 set the maximum tariffs to be charged only if agreed in concurrence with licensees whose profitability will depend on the tariffs set.

Tetra4 further pointed out that the amended definitions in the bill could create an ambiguous licensing and regulatory regime for domestic gas, which is already produced and regulated under the Mineral and Petroleum Resources Development Act. The same activities are covered by multiple statutory instruments.

Because of its emissions of greenhouse gases environmental lobby groups expressed strong opposition to the development of the gas industry in the context of SA’s nationally determined contribution to combat global warming and climate change. They pointed out that the global trend is 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 transition that is just.

The Climate Justice Charter Movement’s Charles Simane noted that the International Energy Agency has recommended that no new development of oil and gas be undertaken 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 is the wrong way to go.

Representing business organisation Sakeliga, Martin van Staden objected to what he said are the “racial” aspects of the bill, those related to the obligation to promote BEE. He noted that the bill provides for the regulator to suspend a licence if there is noncompliance with BEE requirements. He said this is a disincentive to the development of enterprise, and asked for the bill to exclude any reference to racial considerations.

The South Durban Community Environment Alliance’s Cassandra Schnoor emphasised the need for public participation and bemoaned the lack of consultation over the bill.

NERSA HAD NOT BEEN CONSULTED BEFORE THE REVISED BILL WENT TO CABINET. IT HAD BEEN IN THE PIPELINE FOR MORE THAN EIGHT YEARS

A LICENCE CAN BE SUSPENDED FOR NONCOMPLIANCE WITH BEE REQUIREMENTS ... A DISINCENTIVE TO ENTERPRISE