South Africa’s state-owned power utility, Eskom, has signed a long-term liquefied natural gas (LNG) supply agreement with Zululand Energy Terminal, securing fuel infrastructure for its planned 3,000-megawatt gas-fired power project in Richards Bay.
The agreement grants Eskom access to LNG import, storage and regasification facilities that will underpin one of the country’s largest proposed gas-to-power developments, according to statements released by the two companies on Friday.
The Richards Bay project forms a key part of South Africa’s efforts to strengthen electricity supply, diversify its energy mix and reduce dependence on an aging coal fleet that has struggled with reliability challenges in recent years. The project is expected to provide dispatchable generation capacity capable of supporting grid stability while complementing growing renewable energy deployment.
The LNG agreement marks a significant milestone for the development after months of uncertainty surrounding gas infrastructure investments in Richards Bay. Earlier this year, Dutch tank storage company Vopak delayed a final investment decision on a related LNG terminal project until 2028, citing regulatory and legal challenges that affected project timelines.
Eskom’s planned facility is intended to be located within the Richards Bay Industrial Development Zone in KwaZulu-Natal province. The utility has previously identified the project as a strategic component of South Africa’s long-term energy security plans and a response to concerns over declining regional natural gas supplies.
South Africa faces the prospect of a looming “gas cliff” as production from Mozambique’s Pande-Temane gas fields, which currently supply the bulk of the country’s natural gas needs, is expected to decline sharply between 2026 and 2028. Policymakers and industry participants have increasingly viewed LNG imports as a critical solution to bridge future supply gaps and support industrial and power-generation demand.
The Richards Bay project is expected to play a central role in that strategy by creating a new source of large-scale gas-fired electricity generation. Gas power is widely viewed as a transition technology that can provide flexible generation capacity while South Africa expands renewable energy and modernizes its power system.
Financial terms of the LNG supply agreement were not disclosed. The companies also did not provide an updated timeline for construction or commissioning of the power plant.
Once completed, the 3,000-MW facility would rank among the largest gas-fired power projects in Africa and significantly expand South Africa’s generation capacity at a time when energy security remains a national priority.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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