South Africa’s Energy Sector Contributes Negatively to Country’s Overall Economic Growth in First Quarter of 2019

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South Africa’s energy sector has contributed negatively to country’s overall economic growth in the first quarter of 2019, the country’s Mineral Resources and Energy Minister, Gwede Mantashe has said.

Announcing a budget of R7.44 billion (about $530 million) for energy in a recent statement, the Minister noted that the sector had contributed negatively to overall economic growth in the first quarter of 2019, declining by 6.9% and making a 0.1% contribution to an overall GDP.

He argued that a stable, predictable policy and regulatory framework must be created that will lead to investment and growth in South Africa’s energy sector.

Minister Mantashe was delivering his first energy budget speech in Parliament since the merging of his mineral resources portfolio with that of energy following South Africa’s general election in May this year.

“Despite the present economic climate and stringent allocations, we must ascertain a secure and sustainable provision of energy,” he said.

He explained that in this context, the country must utilise diverse energy resources in sustainable quantities at affordable prices, and mindful of environmental requirements, to support economic growth and development.

The Minister reiterated his announcement in recent weeks that work is underway to develop the Petroleum Resources Development Bill, a law that seeks to provide policy certainty for the upstream petroleum sector that is relatively new to SA’s economy.

The Gas Amendment Bill intends to leverage available gas resources such as those in the country’s Karoo area and recent discoveries in South Africa’s Brulpadda field, assisting in the implementation of gas-to-power projects.

The country’s government is working on what is known as the Integrated Resource Plan (IRP). The IRP, which considers a diversified energy mix that includes all forms of energy technology such as cleaner coal, gas, hydro, renewables and battery storage, is in the process of being finalised at the National Economic Development and Labour Council (NEDLAC) and will be tabled before SA’s Cabinet for approval in September, the Minister said.

“As a country, we must avoid the currently polarised debate on energy, pitted as coal against renewables. The debate should be about the effective use of all of the energy sources at our disposal, to achieve security of supply,” he explained

The Minister said that greater use of natural gas is being explored in order to ease the impact of rising electricity prices on the cost of doing business in South Africa.


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