South Africa's plan to transition to gas for electricity generation is based on assumptions that may prove unreliable regarding global LNG availability and pricing. Experts warn that ignoring these serious realities could have profound consequences for both households and businesses.
The plan assumes that liquefied natural gas (LNG) can be purchased at world prices at any time, and that a neighboring gas-rich country will keep prices low. However, the price is set by buyers in Asia and Europe and tends to rise sharply precisely when the local energy system experiences the highest load. This plan has not accounted for any of these factors.
The plan rests on a convenient assumption: when LNG is needed, it will simply be bought. To compensate for a deficit of 9.5 GW as coal power stations are phased out, IRP 2025 provides for 6000 MW of gas capacity. Under planned operation, this fleet will require about 3.4 million tonnes of LNG annually.
However, no one in the global LNG market plans to sell to South Africa. This was stated directly by an S&P Global analyst during an LNG price webinar held in July 2025, organized by Wits Business School and S&P Global. He noted that no liquefaction project that received a final investment decision in recent years took into account South Africa's demand, as the world does not know when the country will begin importing. Since there is no firm demand, South Africa is not included in anyone's calculations.
This situation is self-perpetuating. South Africa has discussed an LNG import terminal for nearly three decades without making an investment decision because no one has signed a take-or-pay agreement that would make the project viable. Without firm demand, the country remains a residual buyer, and residual buyers pay more. A higher expected price weakens the arguments for signing a contract, and without a signature, the country remains a residual buyer.