• Transnet signed a deal with NERSA to build LNG infrastructure at Richards Bay, a $385 million project.

• The company’s debt stands at 130 billion rand ($7.15 billion), partly backed by state guarantees.

• The terminal is part of a wider $5.7 billion port modernization plan and key to South Africa’s gas-to-power program.

South Africa’s Transnet National Ports Authority (TNPA) signed a memorandum of understanding on August 21 with the National Energy Regulator (NERSA) to develop port energy infrastructure.

The agreement places the port of Richards Bay at the center of the strategy, with a planned liquefied natural gas (LNG) terminal valued at 7 billion rand (about $385 million). The project comes at a time when Transnet’s mounting debt raises concerns over the sustainability of such investments.

In February, TNPA signed a 25-year deal with Zululand Energy Terminal, a joint venture between Vopak and Transnet Pipelines, to operate the future Richards Bay site. According to TNPA, the project includes a floating storage unit and an onshore regasification facility capable of handling 2 million tons of LNG per year, expandable to 5 million tons.

However, Transnet remains under severe financial pressure. Its debt was estimated at 130 billion rand ($7.15 billion) in 2024, according to group financial reports submitted to the National Treasury. To ease the burden, the Treasury granted a 48.6 billion rand ($2.67 billion) guarantee.

Transnet defends the LNG plan as a strategic necessity. Both TNPA and NERSA present the agreement as a step toward building a more integrated energy market and securing future supply.

The government supports the initiative, arguing that without LNG terminals in Richards Bay, Ngqura, and Saldanha, the Gas-to-Power program, expected to add around 6,000 MW of new power capacity, would be difficult to implement.

Experience elsewhere in Africa shows how complex such projects can be. In Mozambique, Coral South, the first floating LNG production unit in sub-Saharan Africa, was developed by Eni and partners for $7 billion. Its financing required backing from 15 international banks and public credit agencies.

The Richards Bay terminal is part of a broader $5.7 billion plan to modernize the ports of Durban and Richards Bay.