Transnet and IFC, a member of the World Bank Group, have signed a cost-sharing agreement for the development of a LNG storage and regasification terminal at the Port of Richards Bay.
The agreement also covers the re-purposing of Transnet pipelines for natural gas transmission to inland markets. Transnet has identified significant industrial demand for natural gas and opportunities to leverage its ports, pipelines and rail assets to facilitate private investment in gas infrastructure in South Africa.
This initiative will unlock a backbone of the country's natural gas network infrastructure to serve existing and growing gas markets, consisting largely of industrial and commercial off-takers located in KwaZulu-Natal, Mpumalanga, Free State and Gauteng provinces. The Richards Bay Nautral Gas Network project will complement the delivery of LNG to new markets in the Eastern Cape and Western Cape provinces through the ports of Ngqura and Saldanha Bay and will support the government's future gas-to-power projects.
The NGN project incorporates the LNG storage and regasification terminal in the Port of Richards Bay, plans for the re-purposing of Transnet's Lily Pipeline and Durban-Johnannesburg Pipeline for the transmission of natural gas, and the establishment of virtual pipelines for LNG to be transported to various markets by road and rail.
IFC has committed $2 million as part of the cost sharing agreement.
The terminal will be developed by private investors that will be selected through a competitive process to own a majority stake in a planned special purpose vehicle. The project is expected to be operational by 2024.
The expansion of South Africa's natural gas network will help modernise the energy usage in the region and increase access to natural gas for end consumers.
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