NJ Ayuk Urges President Ramaphosa to Sign Upstream Petroleum Resources Development Bill to Address South Africa’s Energy Crisis
July 30, 2024
By Samuel Ouma
Whatever the case, my opinion is that further delay is inexcusable in the face of South Africa’s ongoing energy crisis, says NJ Ayuk
NJ Ayuk, Executive Chairman of the African Energy Chamber, has urged South African President Cyril Ramaphosa to take prompt action on the Upstream Petroleum Resources Development Bill (UPDRB).
Ayuk's call emphasizes the importance of resolving South Africa's long-standing energy problem, which has had severe economic consequences.
The UPDRB was approved by the National Council of Provinces (NCOP) in late April and has been pending presidential confirmation for over two months.
The bill, introduced in late 2019, is an essential upgrade to South Africa's legal framework for oil and gas development.
Its passage is critical to aiding the development of the country's massive hydrocarbon resources and addressing the recurring power shortages that have plagued South Africa for over 15 years.
Ayuk said that while the bill's passage through Parliament signals substantial progress, any more delays in its enactment are unacceptable.
He underscored that South Africa's energy situation, aggravated by persistent power outages and economic consequences, necessitates quick legislative action to allow multinational oil corporations to contribute successfully to the country's energy industry.
The chair of the African Energy Chamber pointed out that President Ramaphosa has been in office since 2018 and should be aware of the interruptions and anger created by the energy issue.
“Whatever the case, my opinion is that further delay is inexcusable in the face of South Africa’s ongoing energy crisis. The country has been short on power for more than 15 years now, and supply issues have become markedly worse since 2019,” said Mr. Ayuk.
South Africa's energy situation has deteriorated for years, with Eskom, the country's power provider, using load-shedding techniques to manage electricity shortages.
The blackouts have had a significant impact on both daily life and economic performance. The South African Reserve Bank (SARB) forecasts a 1.8% reduction in GDP in 2023 due to these energy concerns.
Additionally, PwC predicted that energy shortages impacted South Africa's GDP by 5 percentage points in 2022, while a 2023 analysis by Nova Economics found a loss of USD 2.42 billion from 2007 to 2019.
Ayuk said these losses could have been avoided if the government had acted more decisively to diversify its energy sources. Despite being aware for over 25 years of the necessity to move away from coal-fired power, South Africa has not adequately exploited the time to develop alternative energy options.
“South Africa failed to differentiate adequately between the needs of the coal industry, which was developing an established resource base, and the needs of the oil and gas industry base, which was hoping to develop new types of hydrocarbons such as unconventional shale gas in the Karoo Basin and deepwater gas and condensate fields such as Brulpadda and Luiperd in the Outeniqua Basin. Those shortcomings helped lead the government to start work on UPDRB in 2019. But progress on the new legal regime has been agonizingly slow.”
