Higher fuel prices helped to strengthen the business case for using natural gas as a cheaper alternative to more expensive liquid fuels, JSE- and ASX-listed Renergen has said.
Reporting last week on its results for the six months ended August 31, it added that pressure on corporate sustainability and more stringent climate change mitigation policies had also led to increased interest in moving away from traditional fossil fuels to cleaner forms of fuel, such as natural gas.
However, despite these positive signs, there was significant volatility in the helium market.
Nevertheless, helium shortages worldwide were expected to persist for several years to come, which, according to the company, had placed Renergen in an ideal position to capitalise on its rich helium concentrates, when its Virginia plant, in the Free State, became operational.
Meanwhile, the company’s compressed natural gas station has now operated for over 885 injury-free days, and has not had any major technical incidents causing the plant to shut down over a similar period.
“We estimate that the buses running on natural gas at the Megabus operation have saved in excess of 2.1-million kilograms of carbon-dioxide emissions, proving the case for sustainability and value for money for the operator,” Renergen said.
Additionally, Renergen had previously announced its intention to raise funds from the capital markets at the end of 2017 in order to start the construction of liquid natural gas and liquid helium plants.
In light of domestic investor uncertainty, owing to the fluid political situation, obtaining funding proved challenging and took longer than anticipated, which was expected to result in delays in the main plant becoming operational.
However, the company announced its underwritten rights issue for R125-million, which it said surpassed the remaining condition to draw down on the facility from the State-owned Industrial Development Corporation, and to start placing orders on equipment and suppliers.