African Infrastructure Investment Managers (AIIM), on behalf of the IDEAS Fund, and Reatile Group have agreed to acquire a 30% interest in ROMPCO (the Republic of Mozambique Pipeline Investments Company) from Sasol South Africa.

According to the agreement, an initial amount of R4.145bn will be payable, and a deferred payment of up to R1bn will be payable if certain agreed milestones are achieved by June 30, 2024.

Sasol will retain a 20% shareholding in ROMPCO and will continue to operate and maintain the pipeline in terms of the pre-existing commercial agreement between another member of the Sasol group and ROMPCO.

The other existing shareholders in ROMPCO are the South African Gas Development Company (iGAS) and Companhia Moçambicana de Gasoduto S.A.R.L (CMG), which are both state-owned companies of South Africa and Mozambique, respectively.

Simphiwe Mehlomakulu, Chairman of Reatile, said: “This is a landmark transaction that broadens participation in the South African energy sector and highlights Reatile’s leading role in it. We are excited by the economic potential of increased gas supply to the region and stand ready to support ROMPCO’s long-term expansion potential. We look forward to developing the South African energy sector in partnership with Sasol, iGas and CMG.”

ROMPCO owns and operates the 865km high pressure gas pipeline connecting the Pande and Temane gas fields in Mozambique with South Africa.

The ROMPCO pipeline supplies gas to five offtake points in Mozambique and is the primary supply channel for natural gas into South Africa.

The Industrial Gas Users Association of Southern Africa estimates a 50% supply deficit of natural gas in South Africa for industrial uses. Natural gas makes up 24% of global energy consumption, growing at a rate of approximately 5% per annum.

In contrast, natural gas in South Africa is the smallest contributor to South Africa’s primary energy mix, constituting only 3%, having experienced zero growth over the last seven years. 

Gas can be used in electricity generation with materially lower carbon emissions, toxic emissions and environmental impacts when compared to coal. New sources of gas supply transported through the ROMPCO pipeline could be key to relieving the pressure currently faced by Eskom, and replacing capacity lost through the decommissioning of ageing coal plants in and around Mpumalanga.

Vuyo Ntoi, Managing Director of AIIM, said: “We are delighted to heed the President’s call for private sector investment into infrastructure, supplementing the pioneering role played by ROMPCO’s founding shareholders. Whilst the lion’s share of our investments are channeled into renewable energy, the switch from old to new is not always possible with just one step.”

“Our ambition is to assist SA in meeting its obligations under the Paris Agreement, and we see gas as a key component in the process of transitioning across to clean energy. As a lower carbon-emitting fuel than coal, gas offers dispatchable power at a reasonable cost until energy storage systems are better optimised to fully utilise renewable energy, making it an important transition fuel.”

The investment in ROMPCO marks a significant milestone for Black Economic Empowerment, with the Reatile-AIIM Consortium having black ownership of more than 60%.

The deal will also see Reatile grow its already substantial presence in the energy and petrochemical sectors, in line with the ambitions of the Department of Trade and Industry’s Black Industrialist Policy.