South Africa Reshuffle Sows Fresh Confusion
A cabinet reshuffle by South African President Jacob Zuma has sparked fears of further delays in the expansion of natural gas in country.
Political uncertainty and a frail economy have led to ratings downgrades, and the reshuffle may cause further damage.
In political terms, its main impact is the expulsion from government of the leader of South Africa’s Communist Party, Blade Nzimande, a longstanding critic of Zuma who was higher education minister.
Former state security minister David Mahlobo, a Zuma loyalist, was appointed as energy minister October 17, replacing Mmamaloko Kubayi who switches to become communications minister, having only held the energy portfolio since March 2017. Zuma may have been worried by her recent statements that South Africa would proceed with a new nuclear power programme only if additional funding were found. Mahlobo may be less hesitant.
There are concerns about the timing of the reshuffle, which takes place as South Africa is considering not only new nuclear, but an increased focus on renewables and natural gas, including two planned floating LNG import terminals at Coega and Richards Bay.
“There are now multiple uncertainties from (ratings agency) downgrades to cabinet reshuffles,” said Niall Kramer, CEO of upstream lobby the South African Oil and Gas Alliance (SAOGA). “South Africa is sitting on the cusp of oil and gas opportunities that could be growth drivers … We now need more - not less - certainty.”
“The new minister will need to get up to speed and show his hand soon. If not, investors are likely to -- at best -- postpone the investment we so sorely need,” added Kramer.
The leader of South Africa’s opposition Democratic Alliance, Mmusi Maimane, suggested the reshuffle will enable Zuma to press forward with a nuclear deal with Moscow, describing the new energy minister as “pliant.”
“This smacks of an attempt to reignite the ANC’s efforts to chain our country to a multi-billion rand nuclear deal with the Russians,” said Maimane. In early September, state PetroSA signed a partnership with Russian state Rosgeo that may lead to a $400mn offshore gas exploration investment but which has also attracted criticism.
David Mahlobo, South Africa's new energy minister (Photo credit: SA People's Assembly)
John Fraser