Eskom and Zululand Energy Terminal sign Heads of Agreement to advance strategic gas-to-power development
Eskom and Zululand Energy Terminal (ZET) are pleased to announce the signing of a Heads of Agreement (HOA) establishing the framework for a long-term strategic partnership to support South Africa’s gas-to-power programme. Eskom will assume ‘foundation customer’ status at the proposed Zululand Energy Terminal that will provide open access to liquefied natural gas (LNG) import, storage, and regasification infrastructure, underpinning Eskom’s planned 3 000MW gas-to-power programme.
Both Eskom and Zululand Energy Terminal reaffirm their commitment to progressing the necessary regulatory approvals, long-term commercial contracting approach and structuring, and infrastructure development required to bring the project to fruition. ZET, a joint venture between Vopak Terminal Durban, owned by Royal Vopak (a company with its head office in the Netherlands) and Reatile Group Proprietary Limited, a South African company, and Transnet Pipelines (a division of Transnet SOC Ltd), was awarded a concession by Transnet National Ports Authority (TNPA) to develop, construct, operate and maintain the LNG terminal.
This partnership represents a significant step in advancing South Africa’s gas infrastructure ecosystem and supports national efforts to diversify energy supply, strengthen energy security and enable economic growth. Backed by the Ministry of Electricity and Energy, the Ministry of Transport and Transnet, the project will help facilitate gas-to-power development, providing the flexible and dispatchable generation capacity required to complement renewable energy, maintain grid stability and support the country’s long-term energy transition.
Eskom’s Richards Bay 3000MW Gas-to-Power Project is to be constructed and operated in the Richards Bay Industrial Development Zone (RBIDZ), in KwaZulu-Natal.
The Eskom Richards Bay Project envisages the importation and consumption of regasified LNG as the primary fuel source of the power plant. The lifecycle of the power plant is expected to be 25 years and the power plant is planned to operate primarily as a mid-merit plant. It is designated as a Strategic Integrated Project in terms of the Infrastructure Development Act 23 of 2014 and by the Integrated Resource Plan (IRP) 2025.
The project will be developed through a Private Sector Participation (PSP) model, leveraging strategic partners, project finance, and long-term power off-take arrangements. The downstream power plant represents a large-scale capital investment, attracting international capital and accelerating industrial development within Richards Bay.
“Gas is being used as a bridge fuel to support the transition to a low-carbon energy system. These gas plants are designed to complement intermittent renewable sources like solar and wind, ensuring reliable 24/7 power, while clean energy technologies are being developed and introduced onto the grid. The availability of dispatchable power is at the very heart of the energy transition and industry cannot operate without it as it forms the backbone for renewable energy integration into the grid. Securing ‘foundation customer’ status at the Zululand Energy Terminal provides a critical enabler for our 3 000MW gas programme, with the intention of a long-term contracting approach to minimise volatility and support system reliability while aligning with the IRP 2025 objectives,” said Eskom’s Group Chief Executive, Dan Marokane.
“Today’s signing marks a significant milestone for ZET as we advance our role in supporting South Africa’s energy future. As one of our anchor customers, Eskom’s participation demonstrates growing confidence in LNG as an enabler of energy security, grid stability and industrial growth. This agreement strengthens the commercial foundation of the terminal, and we look forward to building a long-term partnership as we progress towards a Terminal Use Agreement, financial close and the delivery of South Africa’s first LNG import terminal,” said Zululand Energy Terminal Director and Project Owner, Oliver Naidu.
Strengthening energy security
The IRP 2025 calls for 6 000MW of Gas by 2030, with 3 000MW to be procured under the Gas IPP program and 3 000MW to be delivered by Eskom
To achieve this, the partnership directly addresses three core operational imperatives:
- Energy security and renewable support: Gas is required to ensure and guarantee energy security while reducing coal dependence and supporting the increased reliance on intermittent renewables as per IRP 2025.
- Grid stabilisation and diesel utilisation reduction: Gas will co-exist with Eskom’s other grid stabilisation energy sources such as batteries and pumped hydro and will help reduce diesel usage for mid-merit operation. There is the requirement for all solutions to work together as South Africa transitions its energy system to renewables in a liberalised marketplace.
- Mitigating the Gas Cliff: The project also addresses the emerging and anticipated gas cliff, positioning gas as a key enabler for both power generation and industrial use. While the primary focus is power generation, it remains important to support and enable broader industrialisation.
