TABLE OF CONTENTS
Executive Summary
Summary of South Africa’s current & future energy issues
Developments in the Gas Industry
Developments in the Liquefied Petroleum Gas (LPG) Industry
Conclusion
Opportunities & Potential Benefits for a bank as investor and/or financier
2. LPG Regulation
4. LPG Pricing
6. Annexures
DOCUMENT
ANNEXURE
White Paper on the Energy Policy of the Republic of South Africa (Dec 1998)
A
3
Executive Summ ar y
Sustainable energy supply and global warming are two controversial issues that enjoy
top priority status by most governments worldwide. Locally, government and industry
specialists recommend gas as one of the most efficient and cost effective alternative
and supplement for electricity as scarce energy source and also as alternative
feedstock to coal to reduce carbon emissions.
Significant developments are taking place in the South African Gas Industry at the
moment and this paper identifies the possible future leaders in the niche Liquefied
Petroleum Gas (LPG) industry. It also highlights the need for substantial private
investment in these companies and the necessity of having the backing of a reputable,
financially strong “household name” as shareholder and/or financier. Finally, the report
suggests that the decision by a bank to take a long term view on these companies in
providing investment and/or funding at this crucial stage, may result in substantial
benefits, both financially and strategically for this bank in the future. The potential
benefits, are listed on page 5 below.
In order to have an in depth understanding of the future of LPGas in South Africa, one
first has to investigate & understand all the strategic issues that influence the current &
future energy scene.
5 The Department of Minerals & Energy (DME) has developed an “Energy Master Plan”
(Annexure B) which incorporates a detailed “Energy Infrastructure Plan” covering
the next five years to address these challenges.
6 The DME will be presenting the Electricity Distribution Industry (EDI) Restructuring
Bill to Parliament before the end of 2007. This will be in line with the Cabinet
decision of 25 October 2006 in terms of which the EDI will be restructured into six
wall to wall REDs as public entities managed through the Public Finance
Management Act and regulated by Nersa.
8 Climate change and the managing of greenhouse gas (carbon) emissions has gained
unprecedented International exposure this year and environmental and tourism
minister Marthinus van Schalkwyk said there would be a stricter regulatory
framework and a hefty price on carbon in the future. “Government will increasingly
assess, monitor and regulate greenhouse gas emissions” he warned. The Carbon
Disclosure Project (CDP), SA’s first attempt to understand how top local companies
are responding to climate change, found that SA’s top companies are failing to
translate the effect of climate change into action. (Business Report, 23 November 2007).
9 Government has set a target of having 25% BEE ownership in the petroleum
industry and the DME has made it clear that all future business and joint ventures
will be with BEE compliant companies only.
• The Government’s stated policy is to develop the natural gas industry, to legislate
for the storage, transmission, distribution and trading of piped gas, and to develop a
minimal regulatory regime ‘consistent with the orderly development of a
competitive gas industry’. (APPROPRIATE REGULATORY FRAMEWORK TO FACILITATE ENTRY OF PIPED GAS
INTO THE MARKET – ANNEXURE E)
5
Kimberley) and the possibility to expand this pipeline inland and to the rural areas
still proves to be unviable due to the high cost of establishing a new pipeline.
• This cheaper and more readily available gas is ideally suited for heavy commercial
and industrial activities and users in these segments account for +-75 % of the total
gas consumption in SA. The remaining +-25% users are mainly households where
the (currently) more expensive LPGas is the suitable choice. (more about this
below).
• The DME will in the near future pass legislation approving the issuing of licences to
bulk users of gas which will enable them to buy natural gas directly from the
refineries. Bulk users of gas include companies like Highveld Steel, Coegga, Iscor,
Eskom etc.
Challenges
• The challenges faced by BEE companies are the ability to import, store and
distribute LPGas. Most BEE companies in this industry are either installers or
small distributors with no containers or distribution channels of their own. They
are totally dependent on the big four - BP, Easigas, Afrox and Totalgaz for their
LPGas.
• Lack of regulation of LPGas, according to the Mail & Guardian of 2 June 2006
resulted in a significant increase in the price of the product.
• The capacitating of emerging BEE companies through training and access to
funds would play a role in achieving the government’s target of 25% ownership
of BEE in the petroleum sector.
In recent years, there have been important changes in government policy towards a
more balanced energy provision to include cleaner, safer, affordable energy for all,
particularly focusing on the residential markets and low income earners.
The BEE and the Petroleum Charter provide a basis for change in access to resources
and participation by BEE companies in the LPGas industry.
In her 2007 Budget Speech, the minister of Minerals & Energy (Buyelwa Sonjica)
made the following statement: “A challenge which continues to confront us is that
most of our people especially the vulnerable groups have limited access to energy to
6
meet their thermal needs. Even when they have electricity, they continue to use low-
grade coal and paraffin for heating and cooking. In studying ways to uplift the
vulnerable groups through efficient energy resources, we have launched a pilot project
in partnership with municipalities in Tshwane and Tembisile to provide 30 000
households with modern thermal fuels, in the form of LP Gas (LPG).
• This pilot is done by a private company called Southern Stream Energy Resources
(Pty) Ltd (SSER) under the leadership of the industry’s well respected Kingsley
Tloubala. (Refer to CV on p5 of SSER’s Business Plan, Attached as Annexure D).
This project (and similar ones approved for other areas in SA, see point 5 below) is
done on the basis that the DME provides funding (grants) for Capex (storage
facilities, tanks, cylinders & household appliances - R22 mil in the initial Pilot) and
SSER must provide funding for the operational, marketing and distribution expenses.
The “spin-off” of these projects are that the households now need to re-fill the
cylinders on an ongoing basis and legally, this can only be done by the owners of
the cylinders who are the suppliers of the gas. SSER operate this spin-off in the
name of a wholly owned subsidiary called ContiGas (Pty) Ltd (also their Brand
name).
• The purpose of the pilot project is to enable the DME to review the regulatory
framework on two counts: (1) the promotion of a more energy efficient carrier like LP
Gas as an electricity demand side management initiative and (2) for the
development of an appropriate pricing mechanism for LPG.
• The Government has over years made noises and tried to talk to the industry
leaders (Afrox) about an appropriate market solution to the high LPG prices but it
has remained unacceptably high. The recent shortages in the supply of CO² (and
Coke) were one of the direct consequences of these hostile discussions between
government and the private sector. In her budget speech the minister declared “We
now have no choice but to regulate the LPG industry
• SSERacts as adviser to the DME in establishing the proposed regulated LPG price,
due to become in force during the first quarter of 2008. The DME’s target price is
R7,50/Kg and Afrox is currently selling at R18,00/Kg
• SSER is officially appointed by the DME to run similar projects in the Free State, Sol
Plaatjies (Kimberley), Limpopo and Mpumalanga
Conclusion
• Heavy commercial and industrial business have started to use NG as their gas of
choice and as clients in these segments continue to convert to NG, the demand for
LPG is declining (refer to official statistics released by SAPIA - Sales of Major
Petroleum Products in South Africa under 2.1 below)
• The decision of 75% of the market to convert to Natural Gas, coupled with the
forthcoming price regulation of LPG and the fact that soon, users of bulk gas will be
able to buy gas directly from the refineries, are driving the traditional players in the
LPG market (the 6 wholesalers listed below) out of the industry.
• As official partner (100% BEE) to convert households to LPG in the majority of SA,
SSER is busy establishing itself as the market leader in the consumer LPG market.
• A BEE consortium called “Xxxxxxxxxxxx” is the favorite to obtain this license. The 2
major stakeholders will be Xxxxx Energy (a partnership between SSER & Xxxxxx
Investments International (Pty) Ltd - 51%) and the Xxxxxx Group. (Exploration
license for coal Bedded Methane; Koni Media, Johnnic Group). The strategic
importance of these two stakeholders are vested in the strong financial position and
the proven performance capabilities of the Xxxxxx Group on the one side, and the
established successful working relationship between the shareholders of Xxxxxx
and government/DME. The shareholders of Xxxxxx are Mr. Y, (advisor to the DME &
major role player in alternative energy projects), Mr Z, (ANC Reg D/G/NEC), Mr. X,
(ANC & ambassador) & Mr P (Apartheids era freedom fighter, ANC & ambassador.
The Xxxxxx Group’s CEO is Dr S, (mastermind of the -------- deal). The other
stakeholders will be -------------- (Pty) Ltd and Industry.
• One of the existing LPG wholesalers is already in the market (unofficially). The
asking price for their infrastructure will be in the region of R100 – R120 mil
• Become one of the first JSE Top40 Companies to take action for clean air as a
committed Private Equity Stakeholder in the “new School” BEE Consortium (National
Storage SPV/Consortium) to provide financial backing and credibility to this key role-
player in the Liquefied Petroleum Gas (LPG) Industry.
8
WHY OUR INDIRECT ENVIRONMENT
MATTERS TO US
As a provider of finance, we enable products and services to be
accessed, and facilitate consumption. We therefore have a role to
play in balancing the conflicting need to facilitate South Africa’s
requirements for a growing and inclusive economy, with the need to
ensure such growth is enabled in a responsible social and
environmental manner. For us, this translates into both risk
management and business opportunity development.
• The distribution of LPG to households is done via mobile technology (ordering, pre-
payment and confirmation of door-to-door delivery is done via cell phone technology
which is part of the initial hand-out to the households). This will give X Bank access
to between 30 000 (immediately) and eventually +- 6 mil previously “unbankable”
customers.
Banking the Previously Unbanked
We continued to provide entry-level banking services through the
Mzansi Account to ensure access and affordability to entry-level
clients who previously did not have a bank account.
Over the last year, we opened 369,506 accounts, up from 280,581
from the previous year. This indicates an increasing acceptance of
formal banking by new entrants into the banking sector.
Other funding requirements to finance Capex and working capital. (Initially, and already
in the pipeline Rxxxxxxx
Helping Start-Ups and Small
Businesses
We provide tailor-made solutions for start-ups with a trading history of less
than two years
with a one-stop shop offering to facilitate financing of transactions regarded
as previously
un-bankable focusing on all phases of the business life-cycle from idea and
concept,
mentorship through to investment products.
• Funding will qualify as “BEE Funding” and will assist towards the
Bank’s BEE funding targets.
Sustaining Transformation
Enabling Black economic empowerment (BEE) is an integral part of our
business strategy.
We developed comprehensive solutions for BEE coinciding with the gazetting
of the DTI
Broad-Based Black Economic Empowerment Codes of Good Practice to assist
businesses to transform in a sustainable manner. Our value proposition
focuses on providing comprehensive solutions such as BEE rating of our
clients, sourcing and procuring from BEE partners and suppliers and ongoing
mentorship.
9
We also provided funding to enable BEE ownership transactions. For the 2007
financial year to date, 30 transactions amounting to an aggregate
disbursement of just over R250 million were financed to enable
empowerment-related ownership buy-in transactions. In addition, we
provided finance in 21 transactions to a total value of R43 million directly to
existing black owned businesses.
• LPG is a clean burning and does not pollute the air – X Bank will be associated with
assisting to create a healthier environment.
• The South African Government has introduced additional depreciation allowances for
permanent structures, as outlined in the Minister of Finance's February 2000 budget
speech, to encourage investment in strategic infrastructure projects: Dispensation
under Section 12(c) can be granted to a third party such as a bank financing a
power plant etc.
Gherda Stephens
Client Portfolio Executive (New Business)
The elongated value chain hinders progress in utilization of LP Gas in SA’s domestic
sector due to complex and fragmented supply chains that leads to unduly high price
build-up.
11
Table 1 shows SA refinery owners and their respective market
share.
REFINERIES
Sapr Genr Calr Natre PetroS
Name Sasol
ef ef ef f A
BP & Total &
Owners Engen Caltex
Shell Sasol
Locatio Cape Sasolbur
Durban Durban Secunda Mosselbay
n Town g
Market
25% 13% 15% 28% 10% 10%
shares
2. LPG Regulation
Energy Policy White Paper
The South African White Paper on Energy Policy 1998 has described gas as an attractive
option and states that the government is committed to the development of the gas
industry.
The White Paper outlined the following key energy policy objectives:
•Competition within and between energy carriers.
•Increasing access to affordable energy services.
12
•Improving energy governance.
•Stimulating economic activity.
•Managing energy-related environmental impacts.
•Securing security of supply through diversity of supply.
•Promoting NEPAD cross-border type projects.
The South African Government has set out the following objectives for the development
of the gas industry:
•Ensure the provision of gas as soon as possible at the lowest possible price;
•Ensure the establishment of the appropriate transmission infrastructure
required for industrial projects;
•Promote orderly development, operation and provision of gas services, the key
being transmission infrastructure;
•Ensure that the gas industry is safe, efficient, economic and environmentally
responsible;
•Ensure that gas services are provided in a non-discriminatory manner that meet
the needs of the customers;
•Promote competitive markets by facilitating gas-on-gas competition through
third party access (TPA) to transmission pipelines; and
•Facilitate the trade of gas between the South Africa and other countries through
formal agreements, gas transmission infrastructure development, and specific
projects.
Section 36 of the Gas Act binds the Regulator to the Government/Sasol Agreement that
pertains to the Mozambique/South Africa gas transmission pipeline and addresses
derogations on the forth-coming gas regulations for a period of up to ten years,
depending on the amount of gas reserves available.
13
The Gas Regulator
The Gas Regulator, established in 2005 as part of a single Energy Regulator that
regulate the electricity, piped gas and petroleum pipelines industries, and will serve as
a custodian and enforcer of the national and regulatory framework.
• Gas Act, 2001 (Act No. 48 of 2001) was promulgated in 2002 and
operationalised in 2005.(note 4)
• National Energy Regulator establishment on 1 October 2005.
• Gas Levies Act 2002 (Act No. of 2002) promulgated in 2002.
• South Africa/Mozambique cross border Agreement was negotiated and then
signed in 2001. The SA/Mozambique Gas Commission was established on the
7th March 2002 to ensure that no bureaucratic interruptions occur. The South
Africa/Mozambique pipelines was completed in March 2004, currently the
pipeline capacity is around 90 MGJ/a, the pipeline will reach full capacity of
120 MGJ/a possibly in 2008.
• South Africa/Namibia cross border Agreement was negotiated and then signed
in 2001. The SA/Namibia Gas Commission was established in 2005 which is
currently investigating a cross border- pipeline from Kudu Gas Field in Namibia
to Western Cape in South Africa. Namibia is moving to commercialise the
Kudu Gas Field
• PetroSA is expanding its interests in gas locally and outside of South Africa
[regionally in Mozambique; Nigeria, Gabon, Sudan, Equatorial Guinea, North
Egypt, Libya, Morocco and Qatar]
• LNG receiving terminals are being investigated at Coega and Saldanha Bay
• GTL Plant in Mossel Bay operated by PetroSA since 1992 and its gas feedstock
supply has been extended by a further four years in 2007.
• Piped Gas Regulations was promulgated and announced on 20 March 2007.
• Methane to Markets - following a preliminary investigation, RSA is in the
process of applying for Methane to Markets membership.
14
The DME's plans to regulate the market may go further than the industry expects.
"We will be examining the industry structure too," says Gumede, spokesperson for
the DME. Government's gripe is that the industry is dominated by a few big players,
and it is difficult for smaller operators to break into. "One constraint is the system
around the usage of gas cylinders," he says, explaining that consumers cannot own
their own cylinders as they belong to the wholesalers. A new industry entrant needs
to own a critical mass of gas cylinders before the system becomes more
competitive. "We envisage some concession areas," says Gumede.
Gas and welding company Afrox tells Engineering News¹ in an exclusive interview
that the size of the liquid petroleum gas (LPG) market in South Africa is growing at
between 8% and 12% a year. Afrox GM for LPG Kevin Munro says the industry is
15
expected to continue to expand and has the potential of effectively doubling
its size within five years.
Munro says there are three main causes responsible for the abnormal growth in
demand.
• The first of these is a change of lifestyle. “The top end of the market is
growing as consumers are developing an appetite for the advantages of gas.
These are driven by electricity supply interruptions as well as lifestyle choices
associated with the convenience, efficiency and immediacy of gas,” explains
Munro.
• The second cause in the growth of demand for LPG is the ongoing grid
electricity shortages, says Munro. “Because Eskom is not able to provide the
security of energy supply, South Africans are finding alternative sources of
energy to fulfill the basic needs of cooking and warmth, especially in the
winter months,” he says.
Generators offer an alternative source of power to reliance on the grid, but
Munro points out that the majority of South Africans cannot afford the
expense of a generator.
• The final cause in the increased use of gas, and possibly the most significant,
is government’s drive to make LPG an essential energy source for low-income
households which currently use paraffin as a fuel source for cooking and
heating.
“The essential energy source drive by government has the potential to add six-
million consumers to the number of gas users, a substantial increase in the
number of people currently making use of LPG as an energy source,” comments
Munro. He says, based on the number of cylinders in the market at present, that the
current number of users is about 2,5-million.
He adds that in June this year, the company commissioned a 3 600-t storage facility
in Richards Bay for imported product as part of a plan to alleviate some of the
effects of current shortages.
While gas consumption is high in Europe, and growing in countries like Botswana,
Sri Lanka and China, growth in SA hasn't been as fast as government would wish.
But the reason may not be related to the cost of gas alone.
Gas appliances, such as stoves and heaters, are expensive; gas cannot be sold in
small quantities, as paraffin can; and the industry itself is constrained by shortages
of supply.
16
Despite the clean-burning usefulness and versatility of LPG, and the high demand
for energy solutions in South Africa, LPG is not widely used in South Africa. Producer
companies such as Afrox, Easigas, BP, TFE Tepco and Exel are of the view that LPG is
capital intensive and requires investment in bulk tankers, bulk storage facilities,
filling plants, scales, cylinders, cylinder delivery vehicles and installation on
customer’s premises. This high level of investment must be weighed against the
elasticity of the local LPG market. As the price of LPG fluctuates in relation to
international oil prices, so the market changes. With an increase in the international
price of LPG, domestic gas consumption decreases as consumers move down the
energy chain towards IP, coal and fuel wood. However as income increases,
domestic consumption move up the energy chain. In order to create constant
demand for LPG, this sensitivity to international oil prices must be taken into
account.
In terms of this White Paper on Energy, whilst the government believes that
competitive market forces should determine prices, it is also of the view that as long
as price control is applied, the import parity pricing approach should be retained.
Government has also stated that any move away from price control will occur in a
phased process, initially removing control of industry margins, at wholesale and
retail level and thereafter allowing price determined on a competitive and
commercial basis.
In South Africa and other countries, a price differential is often used to promote the
use of certain products. The reasons for wishing to promote use of certain liquid
fuels are usually to achieve another objective, such as the use of more efficient or
cleaner fuels. In addressing pricing issues concerning LPG, consideration must be
given as to how pricing policies will provide an opportunity to influence the fuel mix
in order to support economic activities, constrain leisure activities, meet basic
needs and address poverty alleviation. Pricing of LPG can be used positively to
promote an economically and environmentally sustainable use of energy sources.
A huge problem to consider is that of the cost of LPG cylinders, and the rules that
relate to cylinders in the South African market. Although much LPG is supplied in
bulk, a significant portion of the market is supplied in producer branded cylinders.
The ownership of all except the smallest of cylinders (6kgs and less) never passes
from the producer company to the user of the cylinder. Rather, a deposit is paid for
the use of the cylinder to the producer company. This deposit is passed on the next
user down the supply chain. This significantly affects the price of LPG, particularly
for low income, new entrants to the market. As most cylinders remain in circulation,
it is not clear where the deposits all collect, and what the advantages and
disadvantages are of the current system. Part of the reason for this deposit system
is that an LPG cylinder may only be filled from the same company's larger cylinders.
The rationale behind this rule appears to be that of safety and responsibility. For
example, if a cylinder explodes, the source of that cylinder will be held responsible.
If this concern is able to be addressed differently, the affect of the cost of the
cylinder on the price and the market may be more fully considered.
17
Also, producers and distributors do not assist aspirant dealers to learn about the
profitable running of a gas business. This results in the SME dealers competing in
the only way they know best - price war. Therefore, while the retail price of LPG and
cylinders have increased by about 30 % in the last two years, SME dealer's claim
that their profit margins have shrunk. The challenges faced by BEE companies
are the ability to import, store and distribute LPGas. Most BEE companies in this
industry are either installers or small distributors with no containers or distribution
channels of their own.
They are totally dependent on the big four - BP, Easigas, Afrox and Totalgaz for their
LPGas. Lack of regulation of LPGas, according to the Mail & Guardian of 2 June 2006
resulted in a significant increase in the price of the product. During the LPGas roll-
out in the Western Cape the small BEE distributors found themselves without LP Gas
because the local supply was already committed, so they were not able to benefit
from the LPGas roll-out.
18
Projected cumulative demand (220 MGJ p.a) for RSA 'western' market
The minimum gas demand for South Africa is estimated at 240 MGJ p.a. and the
projected cumulative demand is 370MGJ p.a., indicating significant opportunities to
grow the market.
Once these phases are complete, there will be a fully integrated network linking the
major economic centers with upstream supplies of gas enabling one to transport gas
from any inlet flange in the system to any outlet flange where there is a market.
Investment tools
The South African Government has introduced additional depreciation allowances for
permanent structures, as outlined in the Minister of Finance's February 2000 budget
speech, to encourage investment in strategic infrastructure projects:
a. Depreciation at 10% p.a for oil and gas pipelines over 10 years (Section 12(d) of
the Income Tax Act),
b. Depreciation at 5% p.a electricity and telephone transmission lines and railway
lines over 20 years (Section. 12(d) of the Income Tax Act)
c. Depreciation at 20% p.a of power plant (by virtue of the fact that it is a facility for
use in a manufacturing process) over 5 years (Section. 12(c) of the Income Tax
Act). The proviso is that for dispensation under Section 12(d) i.e. (a) & (b) above
can only be granted if the asset forms part of the core business ie the applicant
owns the asset as part of its business.
d. Dispensation under Section 12(c) can be granted to a third party such as a bank
financing a power plant etc.
b) In specific instances there are additional investment incentives such as the
promulgation of industrial development zones (IDZ’s) which will have a tailored
package of fiscal related tools, such as VAT exemption for production that is not
entering the domestic market e.g. imported inputs for a production platform for
export to the global market.
20
Note 1
Gas and welding company Afrox tells Engineering News in an exclusive interview
that the size of the liquid petroleum gas (LPG) market in South Africa is growing
at between 8% and 12% a year. Afrox GM for LPG Kevin Munro says the
industry is expected to continue to expand and has the potential of effectively
doubling its size within five years.
Munro says there are three main causes responsible for the abnormal growth in
demand. The first of these is a change of lifestyle. “The top end of the market is
growing as consumers are developing an appetite for the advantages of gas.
These are driven by electricity supply interruptions as well as lifestyle choices
associated with the convenience, efficiency and immediacy of gas,” explains
Munro.
The second cause in the growth of demand for LPG is the ongoing grid electricity
shortages, says Munro. “Because Eskom is not able to provide the security of
energy supply, South Africans are finding alternative sources of energy to fulfil
the basic needs of cooking and warmth, especially in the winter months,” he
says.
The final cause in the increased use of gas, and possibly the most significant, is
government’s drive to make LPG an essential energy source for low-income
households which currently use paraffin as a fuel source for cooking and
heating.
“The essential energy source drive by government has the potential to add six-
million consumers to the number of gas users, a substantial increase in the
number of people currently making use of LPG as an energy source,” comments
Munro. He says, based on the number of cylinders in the market at present, that
the current number of users is about 2,5-million.
Munro explains that Afrox, which is the largest supplier of LPG in South Africa,
sources its product from the oil refiners that have limited supply capacity. “As a
by-product of the oil refining process, there is a finite supply of LPG, which
strictly corresponds with the quantity of oil refined,” he says.
He adds that in June this year, the company commissioned a 3 600-t storage
facility in Richards Bay for imported product as part of a plan to alleviate some
of the effects of current shortages.
However, despite these initiatives, other vari- ables continue to affect supply.
“Among these challenges is transport logistics, where rail infrastructure, in
particular is not geared to the needs of LPG transportation, often resulting in
erratic and unpredictable inbound receipt of product to the Afrox branch
facilities,” laments Munro.
Nevertheless, demand will continue to grow apace, with new customers entering
the market across the spectrum.
Note 3
ARTICLE FROM ENGINEERING NEWS
(http://www.engineeringnews.co.za
Association partners DME to ensure adequate gas supply
By: Dennis Ndaba
The demand for gas has increased significantly, although the rising popularity of
liquefied petroleum gas (LPG) has been marred by recent shortages, blamed on refinery
shutdowns and a cold and early winter experienced in many parts of the country.
“With gas growing in popularity, we cannot afford for this to happen,” says LPG Safety
22
Association of Southern Africa (LPGSASA) communications manager Kevin Robertson.
“We are working closely with the Department of Minerals and Energy and other
stakeholders to see what can be done to prevent this from happening again.” One of
the challenges identified by the association is to ensure that there is sufficient LPG
supply, particularly in light of expected continued growth in demand.
The LPGSASA is a safety organisation that represents many com-panies, which are
involved in the distribution, retailing and installation of LPG and gas appliances.
The association works very closely with the various fire departments in the control and
approval of all LPG sites, as well as with the South African Bureau of Standards and with
all standards, codes and practices as they pertain to the industry.
“We also work closely with the Department of Labour in ensuring these standards are
met and maintained, while offering training to our members to help them to conform to
the standards.” As a safety measure, all LPG installations throughout the country have
to be carried out by registered installers and the association is working to educate
communities on how to use LPG safely. Robertson notes that the increased demand has
also led to a shortage of skilled workers.
“There is a requirement for gas installers in all facets of the industry. “The growth of
LPG in the domestic area, particularly in rural areas, will create many opportunities in
the gas industry.
“If people are moving away from electricity to an alternative fuel, the alternative fuel
must be efficient, safe, and versatile.” Interestingly, international trends indicate that
the fuel of choice for cooking is gas.
“It’s clear that a move from electricity to LPG is a step forward rather than backward,”
Robertson affirms.
The association believes that LPG will continue to be popular, as it is the right fuel of
choice to be used in all areas. “We will continue to ensure and encourage people to use
LPG properly for the whole indus- try to be safe,” concludes Robert-son.
The association has helped Botswana to establish its own safety association and has
done work in Lesotho, Swaziland and Namibia.
23
[ Send to Colleague ] [ Print Article ]
24