Opinion: Non-profit gas aggregation imperative for South Africa

In this opinion article, Industrial Gas Users’ Association of Southern Africa CEO Jaco Human makes the case for pursuing gas aggregation on a non-profit basis, while also urging Eskom and Sasol to collaborate with industry in crafting a solution that is in the national interest.

As South Africa faces an energy crisis with the impending exit of Sasol from the gas supply market, the future of natural gas, a critical resource for manufacturing and economic growth, is at a crossroads. With gas demand already exceeding supply, the country’s industrial base and broader economy stand on unstable ground. Now more than ever, securing long-term, stable access to gas is imperative, and gas aggregation – the pooling of demand – could be the answer.

However, it is crucial that any gas-aggregation model be designed with the broad interests of stakeholders, including end-consumers, in mind. Most importantly, gas aggregation in South Africa cannot and should not be viewed as a profit-driven venture. Instead, it must be structured as a mechanism to enable the development of infrastructure, ensure equitable access to gas energy, and guarantee security of supply. In this context, aggregation becomes not merely a financial tool but a national necessity.

In many global markets, gas aggregation models are implemented with one fundamental goal: to secure a stable and cost-effective energy supply for the national economy. These models are often structured as non-profit entities, either State-owned or State-regulated, with the primary objective of pooling demand, enabling large-scale infrastructure development, and ensuring long-term security of supply.

For South Africa, this non-profit structure is not just an option – it is an imperative. If we approach gas aggregation with profit as the driving force, we risk exacerbating the very issues we are trying to solve: unstable supply, volatile pricing, and unequal access. Profit-driven models incentivise short-term gains over long-term infrastructure development, and in the case of energy supply, such a focus could be catastrophic for industries that rely on gas as both fuel and industrial feedstock.

Gas aggregation, as envisioned through industry’s proposed GasCo, must be designed as a vehicle for enabling infrastructure investment and ensuring broad-based access to natural gas. It cannot serve as a mechanism for profit extraction but rather as a platform for collective action, transparency, and risk-sharing. By operating as a non-profit entity, GasCo would prioritise cost-passing and proportional representation, ensuring that stakeholders across industries benefit equally, without one entity reaping financial rewards at the expense of others.

Government’s Enabling Role

In most successful aggregation models, governments play a pivotal role in assuming the financial risks associated with large-scale infrastructure development. This is essential, as private investors typically shy away from long-term commitments when market conditions are uncertain. In South Africa, where gas infrastructure is still in its infancy, the government must act as both a stabiliser and an enabler, assuming risk in the national interest to ensure that infrastructure investments are made.

The government's role here is not to turn a profit, but to secure the future of the country’s energy supply and its economy. By backing a non-profit gas aggregator like GasCo, the government can help reduce the risks that private sector players would otherwise face alone, encouraging them to invest in the kind of large-scale projects that will ensure a stable, reliable gas network for decades to come.

Without this kind of State intervention, South Africa risks falling into a trap where only the most financially capable players can access gas, further fragmenting the market and leaving smaller industries – and, by extension, the broader economy – vulnerable to supply shocks and price instability.

New Role for Sasol?

Sasol’s historic dominance of the gas market has undoubtedly shaped the energy landscape in South Africa. While this market position has been critical to ensuring gas supply for decades, Sasol’s role must evolve in the face of new challenges. As Sasol transitions from its monopoly status, it finds itself at a crossroads, compelled to seek profitability while the market demands a more collaborative, non-profit approach to gas aggregation.

The reality is that Sasol, like any publicly traded company, is obligated to generate profits for its shareholders. This creates a fundamental tension between Sasol’s need to maintain financial performance and the necessity for a more inclusive, non-profit-driven gas market in South Africa. Sasol’s balance sheet and business model are not structured to simply absorb the significant risks associated with long-term gas supply and infrastructure development without some form of commercial gain.

This leaves Sasol in a difficult position: while it remains a key player in South Africa's gas ecosystem, it may struggle to participate in a non-profit aggregation model unless it can find a way to add value beyond mere gas sales. For Sasol, the key to participating in GasCo or any similar aggregation initiative will likely lie in assuming additional risks and leveraging its existing expertise in ways that justify a profit margin.

For instance, Sasol could add value by taking on greater responsibility in areas such as infrastructure development (using its expertise to build or enhance gas transport and distribution networks); by offering to bear more of the financial risks associated with liquefied natural gas (LNG) imports or the volatility of global gas markets; or by contributing its capital strength to ensure that long-term gas contracts are honoured, particularly in the face of market disruptions.

By playing a role in the riskier aspects of the gas supply chain, such as infrastructure investment and securing global LNG resources, Sasol could position itself not just as a seller of gas, but as a partner capable of adding significant value to the aggregation process. This would allow Sasol to maintain a commercial interest while supporting the broader goal of securing gas supply for the country in a non-profit-driven framework.

However, if Sasol remains solely focused on trading gas for profit, it risks alienating the broader industry and limiting the effectiveness of gas aggregation in South Africa. The stakes are high, and Sasol will need to carefully balance its need for profitability with its role in supporting national energy security.

Collaboration a Necessity

The greatest threat to South Africa’s gas future is fragmentation. If key players like Eskom and Sasol fail to collaborate with the wider industry and proceed with profit-oriented strategies, the country risks perpetuating the monopolistic structures that have stifled competition and innovation in the past. This could lead to inefficiencies, market distortions, and, ultimately, a failure to achieve the security of supply that gas aggregation promises.

The industrial sector, which represents the largest single block of gas consumption in the country, must be actively involved in any gas aggregation process. If Eskom and Sasol proceed without industry input, they risk creating a two-tier system where only the largest, most powerful players benefit from gas access, while smaller industries – and the consumers who depend on them – are left behind.

Collaboration is not just a nice-to-have; it is a necessity. Only by bringing together all stakeholders, including government, industry, and existing players like Sasol and Eskom, can South Africa build a gas supply chain that is both resilient and equitable.                                        

As South Africa grapples with the impending challenges of securing a stable gas supply, the need for gas aggregation has never been clearer. But for aggregation to work, it must be built on a foundation of collaboration, transparency, and shared responsibility. Most importantly, it cannot be driven by profit.

GasCo, as a non-profit aggregator, offers a pathway to securing the infrastructure and access necessary for South Africa’s energy security. By pooling demand and spreading risk, this model can enable the development of long-term infrastructure that benefits everyone – not just the largest players.

Now is the time for government, Sasol, Eskom, and the wider industry to come together to ensure that gas aggregation serves the national interest. Only then can we build a future where energy supply is stable, pricing is fair, and access to gas is equitable for all. Time is running out, and the stakes are too high to let profit motives jeopardise the future of South Africa’s energy landscape.